HOSPITAL BOARDS

New Zealand Times, Volume L, Issue 11660, 26 October 1923, Page 7

HOSPITAL BOARDS

EXPENDITURE INCREASING government to be asked to CONSIDER MATTER. DIRECTOR-GENERAL'S OPINIONS. The capithl expenditure of hospital Boardr. throughout tho Dominion hn* increased to such an extent as to require careful review, both in the interests of the boarts themselves and of the Government. says a circular received by the Well, ngton Hospital Board from Dr T. Valintine. Director-General of Health. The matter of financing such works also requires to be considered with a view to ascertaining whether any assistance could be afforded boards in this respect. CONTROLLING THE BURDEN. It is in the capital expenditure only that it M possible to any great extent to control tho increasing burden on the rate and , taxpayers of hospitals and charitable aid. With the exception of ensuring that thero is a* sound and busina»slike administration of tho maintenance expenditure little can be done in regard thereto, but as any substantial capital expenditure has the direct result of a perennial increase in the maintenance expenditure, it is desirable that the greatest care should be exercised in the expenditure up an capital purpose©. RAISING LOANS. Of late years there has been a tendency to meet capital expenditure to a much greater extent than hitherto by means of loans. In 1914 the average levy for capital purposes was l-20th of a penny in the £ of rateable capital value, last year it was approximately only l-4th of a penny owing to much of the expenditure having been met by loan. These loans, however, are accumulating to such an extent that the time will come when the burden of the levy to meet annual ©inking fund payments will be heavy, and it is considered that boards should not proceed to raise long loans in cases -where a levy of about l-20th of a penny in the £ would produce in two or tVirec tho amount required. A LEVY DECLINED. Somo boards whose maintenance levy is low could' bear m en a higher capital levy than this. The department had recently to recomI mend the Hon. the Minister lo decline to approve a loan of 3(U years in the case of a board, who in one year could have raised by capital levy and subsidy the amount required. That is to say that this board which could have raised tho amount required, .£15,000, in one vea r by capital levy and subsidy, which together with its maintenance levv would I have approximated the average for toe Dominion, proposed lo incur an expenditure during 36$ years of no less than A 55,325 in interest and sinking fund. A FORMIDABLE AMOUNT. When it is considered also that in addition to this amount, during the period in question numerous other loans would very possibly be raised, it will require little imagination to foresee the burden ■on the contributory local authorities that would result. From tables and estimates prepared bv the department from the data available, it would seem that the burden of levy and subsidy to meet loan repayments and intarqst alone will in a few* years become a formidable amount. On the other hand another board more properly proposes to meet a capital expenditure of £BO,OOO by levy and subsidy of five equal annual instalments. Its capital value is half that of the first mentioned board, but its combined maintenance and capital levy is also lower. S TAB! LI S A TI ON W ANTED. These two instances show the desirability of devising, if possible, some method of stabilising the financing of heavy but reasonable capital expenditure both from the board's point of view ami also that of the Government. Boards comparatively wealthy as regards an unencumbered property may be able to meet heavy capital expenditure imined?-'

ately to tho obvious embarrassment of the Government if it has to similarly, find the subsidy all’at once; whilst poor* er boards on the other hand tend to accumulate heavy burdens of lengthy loans. A FALLACY. It would take too long in a circular such as this to discuss the fallacy of attempting to place the burden on poster* ifcy. and to combat many other meats which have been advanced in favour of long loans. It is sufficient to say that the matter was thoroughly investigated by the Hospitals Commission, whoso recommendation was that in. the case of buildings constructed of wood or other non-permanent material, the. loans should not be for longer periods than lo years, whilst for buildings erected with permanent material, or in the case of purchase of land, the loans might be extended to 20 years. COGENT REASONS. Very cogent reasons would therefore require to be advanced before the department could recommend the Minoeter to approve of any loan exceeding 21 years and it is considered that in a great number of cases the loans should not be 1 for a longer term than 10 years. I However, it is understood the Publid Trustee, who is the main source. from which boards obtain their loans, is no! agreeable to lending money on a shorter term than 21 years, and moreover itf cases where a board requires to lift hi large loan in instalment© is naturally unable to guarantee that the second instalment will be made when required* which means that boards have to make arrangements to lift the whole amount before it is required in order to ensure obtaining the lorn. GOVERNMENT TO DECIDE. This, and the fact that board© are at present paying interest at the rate of 6 per cent., together with the difficulty some of them have in arranging loans, and the concern the department naturally feels at the growing amount of capital expenditure, makes it desirable that the matter sdiall be placed before tho Government with a view to the proposals of the boards ns a whole for their capital, expenditure being thoroughly reviewed and, if possible, that some assured meani of financing such works as may be deerrn ed to be absolutely reasonable may b« devised. CO-OPERATION "WANTED. To accomplish this desired result the hearty co-operation of the boards themselves i>, desired, and I should be glad fherefare if at its next two meetings your L>nrd would carefully consider what capital expenditure is lequired in it« district during five years commencing on April Ist next, i. 0.. what works are neoeesary other than those provided for in this year’s estimate*. T would be glad then if you would fill in and return tha attache ! table showing such proposed expenditure. ' The board decided to furnish thf in* format.on by next meeting.