The Poverty Bay Herald PUBLISHED EVERY EVENING. GISBORNE TUESDAY, JANUARY 25, 1887. AN IMPORTANT ERROR.

Poverty Bay Herald, Volume XIV, Issue 4772, 25 January 1887, Page 2

The Poverty Bay Herald PUBLISHED EVERY EVENING. GISBORNE TUESDAY, JANUARY 25, 1887. AN IMPORTANT ERROR.

Probably a good many people have wondered on what grouuds the County Council held the terms of the new local finance scheme (replacing the R. and B. Act) to be unfavorable, seeing that during the debates in the House most of the speakers— even those who had most strongly believed iv the R. and B. Act — deemed the terms to be very favorable to the local bodies, and seeing also that other local bodies have applied for loans up to the full limit allowed by the Act this year. As we have pointed out twice before, the failure to take advantage of the new Act means a sudden drop in the road expenditure of this district from £11,000 to £2000 a year, and this will mean very serious consequences. What seemed so inexplicable is now, however, explained. The Council's opinion was based on a mistake made by the usually accurate County Clerk, Mr Warren, and therefore probably all the consequences of ] the stoppage of new road works will be due to an oversight. It is of no use now to cry over spilt milk, but many will think the error a very regrettable one. Mr Warren misread the Act by supposing that the Council would have to pay 5 per cent, interest on the sum borrowed, and also provide for a sinking fund. Although the payment of interest is to be made, yet it is the Colonial Treasurer that undertakes to pay the principal. The total liability of the County Council would have been £300 per annum for 2G years if they had obtained £0000 for the tramway under thiß Act, but in order to provide a sinking fund they were led to believe that £430 per annum would be required. The discovery of the error was made yesterday when the proposal of the Government to inscribe the stock of tho Roads and Bridges Act debentures still current was received. With the proposal the Government sent copies of the clause of the Act bearing upon the debentures to be given, whether for new loans or for exchange for old debentures, and the description of such debentures reads :—-*' They shall bear interest at the rate of tive pounds per centum por annum for 20 years. They shall contain an undertaking by the Treasurer to pay the principal sum of each debenture at the- end of 20 years." The mistake that has been made here is that tho " Treasurer " has been supposed to be the Treasurer of the local body instead of the Colonial Treasurer. Tho i> per cent, paid liquidates both principal and interest, like an annuity. Tho Treasury pays a lump sum down, aay, £0000, and tho local body pays it back in L'G yearly payments of £300. Of course it may be contended that eveu if the mistake of £130 had not been made tho Council would still not have taken advantage of tho Act, but this seems unlikely. At any rate further cogency is now given to the arguments for re-opening the subject and giving it further consideration. The Council now certainly ought to consider whethecit should apply for any gleaning of money there may be owing to some of those who have applied failing to get all they have asked for owing to the refusal of the ratepayers to vote for it or from any other cause. With regard to the inscription of stock proposed by the Colonial Treasurer, it stands thus : The County is indebted to the Government under the R. and B. Act £2421, payable during three periods of 7, 8, and 12 years, respectively. To pay this amount under the new system the Council is asked to pay £103 8s 4d a year for 20 years instead of £317 Us a year for 7 years, £59 133 for one year, and £34 13s for 4 years ; or, in other words, for an easement of £214 2s 8d per annum for 7 years, the Council will have to pay £207 14s 8d at the. end of the 2G yeara, and during tho other 10 years have to pay £318 IG3 8d more than by continuing their present system of payments. With so small a debt possibly it may not be wise for the Council to pay away £207 14a 8d for so inconsiderable an advantage. If tho annual charges were £3000 instead of £300 it would probably be an advantage to retain for present expenditure £2000 a year, but £200 a year for 7 years is too small to be of any great use. The oiler to re-arrange the liabilities under the old system is made because it was insisted in the House that those bodies which had borrowed under the R. and B. Act should be put on the same footing exactly as borrowers under the new scheme, if they so desired and thought the terms more advantageous to them.