RATE STRUCK

Southland Times, Issue 25309, 12 June 1935, Page 8

RATE STRUCK

POWER BOARD THREE-FIFTHS OF A PENNY GENERAL LEVY By a small majority at the monthly meeting yesterday, the Southland Electric Power Board decided to make a uniform general rate of three-fifths of one penny in the £ on all ratable property in the Southland Electric Power district, on the basis of the unimproved value, for the year ending March 31, 1936. This decision was reached after a discussion arising out of the refusal of the Loans Board to give consent to a suspension of the depreciation provisions. As a result of the decision of the Loans Board, the Power Board was required to consider the following questions which arose from the decision and from the fact that a sum of £B5OO would be required to meet the depreciation charges:— (a) Whether the general rate was to be fixed at seven-tenths of a penny, in which case the budget would balance. There would not be any overdraft, stated the secretary (Mr C. Campbell). (b) Whether the rate was to be fixed at three-fifths of a penny in which case there would be an overdraft of £4OOO (estimate) and the profit and loss account would show a debit for the year of £2900 (estimate). (c) Whether the rate was to be fixed at a halfpenny in which case there would be an overdraft of approximately £B5OO and the profit and loss account would show a debit for the year of £7500 (estimated). (d) Whether the depreciation was to be “brought to charge” in this financial year but payment to be made in April of next financial year in which case the profit and loss account would show a debit of £7500 for this year. There would be no bank overdraft on March 31 in this case, added the secretary. “Sound Business.” “I think it would be good sound business to fix the rate as suggested on the estimates at the last meeting at threefifths of a penny,” said Mr W. McChesney. In view of the information they now had before them, it was clear that the board should have adhered to that rate. Further, the board had to take into consideration the fact that next year the conversion of the board’s loans would take place. Debenture holders naturally would be interested in the board’s position and the price they would get would be affected by that position.

Mr T. Golden said he was opposed to Mr McChesney’s view. Developments had taken place since the last meeting and these were reflected in the reports of the secretary and the engineer. The figures showed that thy had budgeted below what the actual receipts were likely to be. Nothing abnormal had happened and he felt that there would be no risk whatever if they decided to make the rate a halfpenny. There was never more reason for reducing the rate than at present. The ratepayers were looking for a reduction. He did not think the bondholders would be influenced, by one year’s balance-sheet. They would require to see the balancesheets over a period. Mr McChesney replied that the course he advocated was sound finance and was the attitude adopted by most local bodies. Chairman Favours Three-Fifths. The chairman (Mr W. Hinchey) said that he thought a halfpenny rate was cutting it too fine. He agreed with the three-fifths of a penny rate as suggested by the office. If they adopted it he thought they should come out all right. They would be safe there. The position had improved considerably. Nothing abnormal had happened; and they could reasonably expect the position at the end of the year to be better. He advocated taking the middle course of three-fifths of a penny, which was between the rate of seven-tenths of a penny struck last year and the halfpenny rate suggested by Mr Golden. The secretary stated that a rate of a halfpenny would produce £23,214 and a rate of three-fifths of a penny would produce £27,857, a difference of £4500. This deducted from £B5OO, not provided for in the first budget, left £4OOO, which it was estimated at a rate of three-fifths of a penny would be the amount of the overdraft. At a rate of a halfpenny the overdraft would be £B5OO.

The chairman said he did not think the rate struck could have any influence in London on the bondholders. The floating of a conversion in London was treated the same as a State loan. That was' what the debenture-holders looked to. Mr J. T. Carswell said he voted for the halfpenny rate at the last meeting, but now they knew the circumstances and that the depreciation would have to be provided for, he considered they should take the safest course and fix the rate at three-fifths of a penny. He moved accordingly. Changed Position. Mr A. McKenzie remarked that it was a pity that they already had made it public that the rate would be a halfpenny. The ratepayers might think they had changed about. Mr Carswell: Not if they read the report properly. They must realize that the board had to get the approval of the Loans Board and that the position has altered. Mr E. K. Sim said that if what the chairman had said about the conversion was correct they could take the risk of levying a. halfpenny rate. Mr McChesney: But don’t you think that the better our balance, the more enthusiasm will be shown by the State in handling the board’s business? The chairman said that all they had to worry about was the depreciation. They would get the money all right, perhaps at 31- per cent. There would be no worry at all about raising the money. London was full of money. He quoted a friend as saying that “it wasn’t millions they had available in London; it was millions of millions.”

Mr A. le H. Hoyles and Mr J. D. Heenan supported the three-fifth of a penny rate, and after a resolution to amend the estimate to include £B5OO for depreciation was carried, Mr Carswell moved and Mr McChesney seconded that the rate be three-fifths of a penny in the £. Mr Golden moved as an amendment that the rate be a halfpenny in the

£. The amendment was lost by six votes to five and the motion adopted. Those voting against the amendment were Messrs Hoyles, McChesney, Carswell, Arnott, Norman ■ and Heenan. Mr Arnott remarked that the difference between the two rates worked out at about 5/- a ratepayer.