LOCAL BODIES LOANS.

Rangitikei Advocate and Manawatu Argus, Volume XXXVI, Issue 10479, 15 October 1912, Page 4

LOCAL BODIES LOANS.

Per Press Association. i Wellington, October 15. The enquiry by the Public Account Committee into the allocation of loans to local bodies was continued to-day. Mr Poyntou, Superintendent of the Department, produced various returns, including one showing the average amount paid over per year from February 1910 to 30th ber 1913, under the State!Guaranteed Advances Act. The figures were as follows: —Borough Councils, £819,030; County Councils, £104,433; Eoad Boards, £59,333; Town Boards, £39,694; Drainage Boards, £18,604; River Boards, £933; Harbour Boards, £18,300. Another return nreseuted showing the approximate loss to the State on moneys lent by government under the various Local Bodies Loans Acts was as follows; Amount of inscribed debt, i.e., of moneys lent to local bodies at 4 y 2 percent, £1,161,329; amount at 4 percent., £104,443; amount at percent., £1,720,335. On each £IOO lent at iU p®r cent, the local body will pay 4)£ for 26 years, when its liability ceases both as to payment of principal and interest. The State meanwhile pays 3per cent._ on the moneys, and at the end of the 26 years must continue to pay interest and ultimately the principal. As the local body will for 26 years pay one per cent, more than the interest uaid by the State this must be allowed in calculating the loss. Details were given by witness, who in reply to Mr Allen read a letter which he wrote to the Minister of Finance «n 1911 in which he stated that the provision that all loans should be made at the rate at which the money was borrowed was unwise. He also said in the letter that future applications for loans should be at 3% instead of 3>£, that loans for the purchase of native lauds and opening up laud for settlement should be at 4 per cent., and that there be a limit of £SOOO, The Minister (Sir Joseph Ward) sent .that letter to the Secretary to the Post Office who replied per cent, was not a profitable rate of interest to the Post Office.

Mr Allen asked if the correspondence did not show that the fact of the Treasury taking so much money from the Post Office prevented the Pose Office from investing funds outside at a higher rate of interest? Witness said tor years the custom had been that investments from the Post Office should be offered to the Treasury first. Mr Allen: “And since that policy was pursued has not the Post Office begun to feel the effect of it?” Witness agreed that was so.