Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, MONDAY, OCTOBER 24, 1932 THE SINKING FUNDS BILL

Poverty Bay Herald, Volume LIX, Issue 17918, 24 October 1932, Page 6

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, MONDAY, OCTOBER 24, 1932 THE SINKING FUNDS BILL

In making an announcement that the Local Authorities Sinking Funds Bill was being amended to provide for future payments to the Public Trustee to be specially invested, with a possibility of a higher rate of interest being paid, the Prime Minister expressed the opinion that this alteration would remove all reasonable objections to the bill. This, however, is far from being correct, for the measure as now proposed, is every bit. as obnoxious as when it was first introduced. The only satisfactory aspect of the amendment is the evidence it contains that the Cabinet is not inflexible in its attitude towards the bill, and from this fact there is reason to hope that when the real effects of the proposals are made clear to the House, as they assuredly will lie, the requisite modifications will be made. The purport of the bill, if the Ministerial explanation on its introduction is to be accepted, is merely to grant temporary relief to the Public Trustee to counteract the disabilities enforced upon him by the recent emergency legislation which prevents him realising upon his securities. To that much, and no more, the Public Trustee is entitled, and then only because the Government has already committed itself to a policy of granting relief to debtors generally. The bill before the House, however, not only gives the Public Trustee the necessary protection, but it also gives him a virtual monopoly in handling the vast sums involved in local body sinking funds, not for the period of emergency only, but for an .indefinite term extending, in some cases, to .‘lO years. In addition to preventing local bodies from withdrawing tlicir funds and reinvesting them at current rates, it compels them to pay future sums to the trustee notwithstanding the fact that the interest that is offered is incompatible with existing financial conditions. Further than this, the bill has the extremely objectionable feature of nullifying previously effective decisions of local bodies and resolutions that have been validly passed but have not l;-cn given effect to because of the stand taken by the Public Trustee. As a final gesture of defiance against all established principles, the measure indemnities the Public Trustee from the consequence of litigation in which he is already involved. Had this measure been drawn up in the .ordinary way most, of its provisions would have been incomprehensible, but the ndmi.ss.ion by the law draughtsman that the legislation has been promoted by the Public Trustee and that at least, one important omission is explained to be a matter of policy ami not of draughtsmanship lends to 1 ho whole position a significance that, cannot be disregarded. The only possible inference is that the customary procedure has been set aside as a matter of policy on the part of the promoter of the bill, who seeks, not merely to safeguard his legitimate interests, but endeavors to confer upon himself privileges to which he has no just claim. An enormous amount is involved in local body sinking funds and to insist, that these should all pass through the one channel is a point, in itself, that is inde-

fensible. On top of this, however, the Public Trustee, having already reduced interest on current holdings to ;m extent greater than llie reduction provided for in the general legislation, does not now propose to pay a rate that, even approaches that, obtainable from other sources. Not. only does lie refuse to permit local bn lie;: to reinvest on profitable terms, but he demands the right to handle all their future moneys at aa arbitrarily fixed rate of interest which take no cognisance of ruling rates, nor gives any consideration to the commitments of the local bodies themselves. Moreover, once lie lias seemed a monopoly over all sinking funds, there is milking to prevent him declaring that the common fund can only afford a still lower rate, and interest might even be reduced to 2 per cent, per annum. The very fact that the common fund is at present unable to pay current rates of interest is the strongest possible argument against forcing local bodies to continue to invest iu it. Placing the most favorable construction upon the position, the Public Trustee, under the bill, will be assured of deposits of many thousands of pounds on which he will pay 4 per cent. This money will be relent by him, possibly to the Government., at at least fi per cent., thus giving him a profit of 1 per cent. Why should not the local bodies who are zealous in the interests of their own ratepayers receive the full amount of interest instead of paying a gratuity of ! per cent, to an intermediary? If the object of the Government. in supporting the bill is to assure itself of a steady flow of loan money, then the measure savors of a compulsory loan over one section of the community, and oven if this is not the end in view it is the one that probably will be at tained—unless the Puli lie Trustee anticipates seeming better than 5 per cent, on the funds by advancing them to such bodies as the Thames Borough Council, for instance! If the idea is merely to guarantee the Public Trust Office a certain amount of revenue in order to compensate for some of its less fortunate investments, then it. is still less easy to defend. In view of the legislation already passed, the Public Trustee is entitled to a moratorium on sinking funds now held; that much and no more. Otherwise, local bodies should be free and unfettered to invest their moneys as they see fit, in their own interests and not to their detriment and the advantage of a third party. When the bill is amended in this direction all reasonable objections to it will be removed, and not before.