NO LOAN MONEY

New Zealand Herald, Volume LXXV, Issue 22990, 18 March 1938, Page 12

NO LOAN MONEY

MOUNT ALBERT COUNCIL UNABLE TO RAISE FUNDS POSSIBLE liATE INCREASE WORKMEN MAIY SUFFER If the Mount Albert Borough Council does not secure its loan requirements of £42.000 for both the current and the coming financial years, it will be faced with the necessity of adding to the rating burden until the debt of £20,000 already incurred is liquidated. The Mayor, Mr. H. A. Anderson, said yesterday that to ensure sound financial administration, the council would have to levy an extra £SOOO to £7OOO a year in rates for the next three or four years.

In a joint statement, Mr. Anderson and the town clerk, Mr- T. R. Congalton, said that if such an increase were made, the council might find it impossible to carry out further capital works in the years when extra rates had to bo levied, to meet annual principal and interest costs of £ISOO to £2OOO a year. Such a situation would be impossible, they said, and the result might be the loss of employment for 70 or 80 men. Application to State The difficulty which the Mount Albert council has experienced in raising loan moneys for works almost complete for the year ended March 31, 1938, was discussed in committee on Tuesday evening. It was then resolved to issue a statement setting out the position. Ln this statement it was said that a letter from the Minister of Finance, the Hon. W. Nash, conveyed the information that arrangements were complete for the State Advances Corporation to take up the portion of the council's loans required for its works programme in the coming year, provided the council was unable to raise the money from another source. The essence of the case was that it had already spent approximately £20,000 on capital works, but in spite of every endeavour, it had been unable to raise the money. Meanwhile, commitments had been financed by overdraft on the general account, in anticipation of the money becoming available. Included in the inquiries made was an application to the State Advances Corporation six months ago. This followed Mr. Nash's statement that arrangements had been made for the corporation to meet the requirements of local authorities. Efforts Fruitless "In October, the Minister said it was not intended that the extra finance should be used to take up the loans of all local bodies, and that it was hoped the stronger ones would co-operate with the Government and endeavour to place their loans with other investors," the statement continued. "Mount Albert has, ever since the programme of works was put in hand, made every endeavour to locate the money from outside sources at the rate of interest allowable, namely 3} per cent, but has failed. • . , "We went, to Wellington to interview the Minister of Finance. In his absence we saw Mr. J. A. Lee, who said he agreed with our submissions and premised to make the strongest, representations to the Minister. A\o have since heard that the matter is being considered by the Treasury, but that certain difficulties may arise hecause the council has financed its capital works in the present yenr on day-to-dav overdraft., and not by hypothecation of debentures to the bunk. . "The main reason for the council continuing the works during the present year was to assist the employment situation, and to keep together a body of 70 men who have given excellent service to the borough."