THE TOWN HALL PROPOSAL.

Otago Daily Times, Issue 18894, 21 June 1923, Page 2

THE TOWN HALL PROPOSAL.

' EXISTING LOANS. REPRODUCTIVE AND NON- 1 REPRODUCTIVE. The Mayor (Mr H. L. Tapley) writes as follows: At The public meeting held on June 12 in the Council Chambers io consider the proposal to ask the ratepayers to sanction a loan ot i/90,U00 to erect a town Hall worthy ot the city and its pressing needs, Dr Gordon Macdonald submitted a series ot questions regarding the existing debt of the city. i undertook to have the figures supplied to the public, and arrangements were accordingly made to do so. The information is not only interesting, but it is information that the public have a right to have at such a juncture, and any suggestion of withholding it or unduly delaying its publication need not enter into the discussion. It is yet a full week to the date of the loan poll, and experience teaches one that information of the description referred to, be it repeated ever so often, is all too readily forgotten or ignored in any subsequent discussion. The questions submitted and the official answers are as follow :

1. The total indebtedness of the city.— The total loans raised by the City Council amount to £1,725,988. Tne Drainage Board loans are excluded, but will be referred to later.

2. Total amount that is reproductive.— The sura of £1,309,300 of the above total has been spent on gas, water, abattoir, tramways, and electric light and power undertakings, all of which are directly reproductive and entail no burden on the rates. 3. Total amount non-reproductive.—The balance of £417,638 has been spent on works that properly belong to this dess. 4. Method of repaying each.—All the loans raised by the City Council carry a' sinking fund varying from one-half per cent, to per cent, as a provision for extinguishing the debt. The total amount of These payments is £17,228, or an average over the total loans of practically 1 per cent. 5. How were the non-reproductive loans incurred ?—The sum of £417,688 represents the whole of the ‘(public works” loan liability of the city for such works as streets, bridges, existing Town Hall, the earlier expenditure on drainage, public baths, and such like provisions The sum of £152,550 was spent in recent years on street paving and other permanent improvements. Another £30,000 was spent in widening King Edward street; £38,013 represents the residue of loans incurred by the suburban boroughs prior to amalgamation; while the balance represents the existing loan liability for the class of non-reproductive public works already referred to. That is, I take it, a full reply to the series of questions given by Dr Macdonald. Each ratepayer is, of course, free to interpret them and deduct from them just what conclusions may the more strongly appeal to him. I may, therefore, be permitted a similiar exercise, and I would earnestly ask the public to bear in mind the following significant facts : (a) That the £1,309,390 spent on reproductive undertakings, while supplying the public of this city with necessary utility services at a lower - cost than the same services are supplied in any one of the other chief ceiitres, is debited with all the working costs that pertain to them. These costs include interest on the loans, sinking fund, ample provision for renewals and de-. predation, and after these several charges are debited, they give ns a handsome profit. This profit last year amounted to £59,858, a portion of which we use jn relief of rates, which is a perfectly sound and justifiable policy. , (b) The total charge for interest on the sum of £417,688, shown as The non-repro-ductive expenditure—that is, the expenditure on streets, bridges, baths, the existing Town Hal! building, and all other such expenditure that has been incurred since the early days of the city and which still remains a loan liability—is £20,248 per year. That amount is a charge on the direct rate for borrowed money, or rather that is the amount that would be a charge on the direct rate but for one significant fact, and it is that point I want to stress. I have already said that the loan money spent on reproductive undertakings pays all the charges and gives us a substantial surplus. Of that surplus we are able to transfer in relief of rates a sum on the average, taking one year with another, equal to or greater than the yearly charge for interest on the non-reproductive loans. This year we are transferring £19,000 as against the yearly charge for interest of £20,248. In 1920-21 we transferred £28.968. or almost £9OOO over and above such yearly charge. The diminished amount this year and for the previous year is duo to the heavy calls on the water account for the expenditure on the Southern Reservoir.

The amount of loan liability of the Drainage Board is £655,000. This is a charge on the rates of the hoard collected over the district under the board’s jurisdiction, and is, of course, non-reprodnetive in the sense in which we are now using the term. It is plain, therefore, that the loan transactions of the City Council, taking them either on the division made in the questions or collectively, will stand the full blast of any investigation to which they can be subjected and justify one in saying that there is not the slightest fear of a charge of over-borrowing. .The responsible officers of the council, whose business it is to know these facts, assure me that it. is probable that no local body in the dominion whose ramifications embrace anything at all comparable with ours can show such a result—a result in which the income from the reproductive loans, after all possible and legitimate charges have been debited against, them, is sufficient to permit of a transfer equal on a yearly average to the interest charges on the non-reproductive indebtedness.

I trust that with such a splendid case as this any suggestion of withholding or unduly delaying the publication of the facts may be dissipated, because it is a knowledge of these facts that dissuades me from hesitating to advocate the provision for a Town Hall for the city. If Dunedin cannot afford such a provision—and that, I fake it, is the motive that prompts the questions—then, obviously, such a contention utterly fails to command the least semblance of support on the score of our present loan liability and the cost to us of previous borrowing. Personally. I think Dunedin can afford a Town Hall and that the proposals now before Ihe ratepayers are easily within our financial resources. The total charge for interest on the proposed loan is, say, £SOOO, or less than n rate of lid in the pound. This year the council reduced the total rate by 3d, or double the amount required to meet the interest bill on the proposed loan. It is not suggested that the proposal will be self-supporting. Obviously, there will he revenue from the venture, but I shall ,he disappointed if the average deficiency is more than the product of a rate of Id. in the pound. Surely, for such a modest impost no one is prepared to allow the reproach that is hurled at us on so many occasions to continue for another day. The fair name of the oitv is at stake, and I hope the citizens will take the necessary slops to remo'e a valid cause-of reproach. They can do that by voting for the loan proposal on Wednesday next, June 27.