LOCAL BODY BORROWING

New Zealand Herald, Volume LXXV, Issue 23107, 4 August 1938, Page 12

LOCAL BODY BORROWING

Local body borrowing has shown a tendency to increase in recent years, although it still falls short of the volume recorded in the three years before the depression. The report of the Local Government Loans Board for the year ended March 31, reviewed by the Minister of Finance yesterday, records the sanctioning of loans amounting to £3,098,445 for new works, compared with £2,400,000 in 1936-P7 and less than £1,600,000 in each of the two previous years. Looking back on past experience, local bodies may well reflect on the wisdom of borrowing heavily in good times, leaving crippling and inescapable burdens to be carried when revenues are straitened. As it is, some of them find more than half their current income pledged for debt charges. Fortunately, as Mr. Nash shows, the gross debt has decreased in recent years and so have the annual charges, but prudence will have to be exercised if hardly-won gains are to be held. The Local Government Loans Board, joined with other factors, has exercised a restraining influence in the last decade and has attached conditions to loan sanctions discouraging "debt in perpetuity" and encouraging providence. Mr. Nash is thus able to quote impressive figures showing the effect in securing repayments now and in the future. Of new loans sanctioned last financial year, it is significant that one-quarter of the total, or £755,430, was wanted for hospitals. The fact again draws attention to the heavy demands made on local bodies and their ratepayers for this particular social service, demands over which they have no effective control and which are tending to compromise the balanced planning of general finance for the discharge of their proper functions.