WORKS IN CITY

New Zealand Herald, Volume LXX, Issue 21618, 10 October 1933, Page 11

WORKS IN CITY

UNEXPECTED DELAY LOAN SANCTION WITHHELD INTEREST RATE LIMITED FINANCE MINISTER'S DECISION Permission to raise the Auckland City Council's, relief loan of £116,000, which was sanctioned by the ratepayers at a poll almost six weeks ago, i s still withheld by the Government. The council lias ascertained that the money can bo obtained at 4J per cent on tlio in-stalment-repayment principle, but ad- \ ice was received yesterday by the Mayor, Mr. G. W. Hutchison, that the Minister of Finance, the Rt. Hon. ,T. G. Coates, would not authorise the raising of the loan at more than 4J per cent. The letter received by the Mayor yesterday was from Mr. A. .1). Park, Secretary to the Treasury, and was in reply to the council's application of September 22 requesting authority to raise the loan at 4i per cent for a term of 30 years on tlio instalmentrepayment system. Mr. Park said ho was directed by the Minister of Finance to state that it was regretted authority could not be issued for tlio raising of the loan at that rate of interest. State of Money Market "Tou >rill no doubt be aware that gome time ago the Local Government Loans Board decided that the rate of interest to be sanctioned for first-class local authorities should not exceed 4 per cent," said Mr. Park, "and when your council's application was originally being considered by tho Loans Board this rate was adhered to, but tho board added a recommendation to tho Government to the effect that if necessary tho rate of interest on the loan should be increased to 4£ per cent if raised on tho instalment-repayment system. After careful consideration of the whole position, the Minister of Finance is prepared to recommend the issue of an Order-in-Council authorising the raising of the loan at 4)1 per cent, provided that repayment is arranged on the instalment-repayment system. "It is noted from your letter under reply that applications for the loan from various lending institutions mentioned therein have been declined on the basis of interest at 4 per cent. I would suggest, however, that your council should renew its efforts to raise the money at per cent, and if an Order-in-Council at this rate is required, will you please telegraph me", and immediate action will be taken. "In conclusion, the Minister directs me to state that there are definite evidences that money is available at 4 per cent and 4jr per cent, and is, in fact, being raised by local authorities which are not of the standing of the Auckland City Council, and it is feared' that if your council is authorised to pay interest at the rate of 4i per cent for such a large loan, the effect on other local bodies which have loan programmes to complete would be disastrous." Long Delay Involved Keen disappointment at the decision of the Minister was expressed yesterday by the Mayor. He said the original application was for a loan at 4| per cent, and when the Loans Board approved the loan for submission to the ratepayers the rate stipulated was 4 per cent. The official notice received by the council, however, stated that if it were found impossible to arrange the finance at 4 per cent, the question of increasing the rate would be considered on application being made to the board and provided that repayment was made on the instalment system. The difficulty of obtaining the money at 4 per cent was mentioned by Mr. Hutchison, who said application had been made to ten of the leading financial institutions, among them being the Government Life Insurance Department. They all stated they were not prepared to advance the money at 4 .per cent. All that tho council could do would be to approach these institutions again in an effort to raise the money at 4J per cent. It was now over a year since the scheme of works to help the unemployment situation was originated, said Mr. Hutchison. The work had be.cn planned on account of the unanimous, desire of tho council to take men off the No. 5 scheme and employ them at constructive work at standard rates of pay. It was therefore most disappointing that there was to be further delay in carrying out this scheme. It would be equally disappointing to tho men who had anticipated doing something better than ordinary relief work.