LOCAL INDEBTEDNESS

Southland Times, Issue 19278, 24 June 1924, Page 5

LOCAL INDEBTEDNESS

A MARKED INCREASE GROWTH IN TWENTY YEARS ' LARGER PROPORTION RAISED LOCALLY. (Special to the Times.) WELLINGTON, June 23. The gross debt of local governing bodiea in New Zealand per head of population haa increased from £lO 14/4 to £39 6/8. It increased by 17 ;>er cent, during the latest yeat for which official statistics are available, lhe growth of local boditv’ indebtedpeo has tended to increase.a. such a progreasiva rate that a review of the position as revealed by the figures is not, says the Government Statistician, without interest to those concerned with the question. The gross indebtedness of local governing bodies on account of outstanding loans haa increased in the 20 years- - 1902-3 to 1922-3 —from £8,217,196 to £36,0.59,382, exclusive of moneys borrowed from the which represented a further gross indebted* ness of £7,604,067 at March 31. 1923, made up as follows: - Inscribed debt debentures under the Roads and Bridges Constructioe Act, 1882, converted, and amounts borrowed from the Treasury under the Govern* ment Loans to Local Bodies Acts, £2,341,667; loans from the State Advances Office £5,262,400. It will be seen accordingly that the total gross indebtedness of all local bodies at March 31, 1923, aggregated £43,663,449. The corresponding net indebtedness wan £38,160,046, but it is on the greater amount that all interest and kindred charges must be calculated. Of the gross debt at £43,663,449 there were interest and pinking fund charges amounting to £2,579,571. Sinking fund payments, while essentially different in their nature from interest payments, have nevertheless to be paid from the pockets of the ratepayer in the form of special rates. The total annual debt charge on each class of local liability on March 31, 1923, was as follows:—lnterest on debentures and stock, £1,827,992; sinking fund on debentures and stock, £380,848; charges on State Advances loans, £283,457; and on inscribed debt due to the Treasury, £87,274; total, £2,579,571. The following analysis shows the relative growth of the debt per head of the population :

Boroughs with over three millions of debt and Electric Power Boards with a million and a-half are the principal contributories to this phenomenal addition to local indebtedness. There has been an increase in the net indebtedness of local bodies on account of outstanding loans from £7,338,676 to £32,144,922 during twenty years, exclusive of borrowing from the Government which represents a further indebtedness of £6,015,104, made up as follows:—lnscribed d?bt, £1,244,969; State advances, £4,770,135; making a total net debt of £38,160,046. Against the relative growth of loan it> debtedness it must be remembered, however, that there is a more than corresponding augmentation of assets, in the case of boroughs, for example, which are responsible for approximately half the debt. The outcome of loan money raised has been the introduction and extension of such public utility services as electrical works, gasworks, (ramways, drainage, and water system and a multiplicity of similar undertakings. Taking the 1913 figures as an index of 1000, the net local indebtedness as at March 31, 1923, is 1898, and the assete 2172 for all local bodies. For boroughs only the index numbers are 2098 and 2405 respectively of the total indebtedness (other than loans from the Government) £25,688,390 was raised in New Zealand and £10,370,992 abroad. The rapid increase in the proportion of locally-raised loans is no doubt due to the statutory encouragement to lenders.

Year Loan ended Gross Rate per Charge March 31. Debt. per head. per head 1894 .. 7,253,072 10 14 4 12 7 1903 .. 9,886,676 12 2 8 12 8 1913 .. 22,212,555 20 18 5 20 10 1921 .. 32,465,058 26 12 8 28 10 1922 .. 37,205,539 29 16 9 34 2 1923 .. 43,663,449 34 6 8 40 6