SOUTHLAND POWER BOARD

New Zealand Herald, Volume LXX, Issue 21596, 14 September 1933, Page 8

SOUTHLAND POWER BOARD

New light is thrown on several aspects of the Southland Power Board's attitude toward London interest payments by the statement of the acting-Prime Minister. Mr. Coates has announced tho Government's determination to pay the difference between what the board tenders for the September instalment and sterling, and to proceed by legislation to recover this sum. Thus, the controversy will, in effect, be" removed from London to New Zealand. Lively developments may be expected during the coming session. The extensive statement of negotiations between the board, the Government and Lonckm shows how the decision not to pay in sterling was formed and gradually hardened. What has been revealed suggests that the board has not a very strong case, and at heart is conscious of the fact. It has notion the known evidence, so strong a case as the Auckland Transport Board, which, with an equal desire to avoid the loading of the exchange cost, took a less extreme course than the Southland body. The latter has obviously decided to be a law unto itself. It has almost certainly been encouraged to adopt this attitude because of the State guarantee behind its loan. In the circumstances, the Government is entitled to exhaust every resource in" the endeavour to collect what has to be paid to make up the board's deficiency. The rest of the community, which is feeling the burden of exchange loading on all overseas transactions, is not to be called upon to pay for Southland. These are the main conclusions to draw from what Mr. Coates has revealed, but there is one more, and that is in some ways the most strikifig point in his statement. The board has an option, maturing in 1936, that would enable it to convert this very costly stock to whatever lower rate the market promised to yield. Money is cheap now. It should still be cheap in 1936. But the board has gone the right way to alienate both London and the New Zealand Government to such an extent that when the time for conversion arrives, it may find the door closed in its face, and the Government not disposed to help. Its decision in such circumstances seems unutterably foolish.