THE STATE’S CASE

Southland Times, Issue 22993, 12 September 1936, Page 6

THE STATE’S CASE

Control of Power Scheme

ADVANTAGES AND CONCESSIONS

MR NASH REPLIES TO CIRCULAR

(Special to The Times.) Wellington, September 10.

When interviewed about a four-page circular which is being sent out to Southland ratepayers by interested parties and containing certain statements adverse to Government control of the Southland electric power scheme, the Minister of Finance (the Hon. W. Nash) remarked that his first thought on reading the circular was that these parties evidently had not the interests of themselves or the ratepayers at heart. The Government had hitherto refrained from active publicity and was content that, as recommended by the special Parliamentary Committee and provided by the recent Act, the issue as to control be left to be decided by the ratepayers in the pending ballot. It did appear to him, however, that those who would have to pay should at least know the important facts. The Minister said that in the first instance he had been pleased to note the Rt. Hon. J. G. Coates’s contradiction of the statement in the circular, that Mr Coates had promised a sinking fund rate of £2 10/- per cent, as against the rate of £4 2/- per cent, required by the Local Bodies Loans Act of 1926. Mr Nash said that the allegation of such a promise had caused him some concern six months ago, but a search of the records showed that it had not heen made. Even the £4 2/- rate gave the board the benefit of the doubt whether the exchange disparity would still exist 18 years hence. If the exchange had been brought into account the rate would have been over £5 per cent. Statement Contradicted. “Another matter of importance,” continued the Minister, “is the implication throughout the circular that the Government has done nothing to help the Southland electric power scheme and is anxious to take it over because of large profits to be made from it. This is distinctly contrary to fact. Ever since the inception of the board the various Governments have helped the board, and the present Government is continuing on rather more generous terms the proposal of the previous Government whereby that Government decided that the best way to assist the Southland scheme was to take over its assets and its heavy liabilities. Were it not for the Government guarantee of its loans the undertaking would have been in a much more difficult position or else much more than the accumulated total of £527,000 would have been paid in rates. The Government has also extended the period beyond which other power boards are not permitted to postpone the setting up of a depreciation fund with the result that at March, 31 last the board had in its depreciation fund a balance of only £16,411. The Government has lent the board money when it was in difficulties and has permitted an amendment of the law relating to the sinking fund under which the board has been able, in connection with its annual interest bill, to charge against the sinking fund the exchange which other power boards pay out of each year's revenue. This has relieved the board anl its ratepayers for approximately £20,000 a year since the last rise in the exchange rate. The Real Position. . “Rather than the Government seeking to make a special profit out of Southland, the real position is that the Government is offering to extend to the ratepayers and electricity consumers of Southland the benefit of its stronger financial standing, its cheaper costs, and the advantages of inter-connection with the much larger Government works and the areas where denser population makes the cost of providing electricity much less per unit. The Government offer includes permanent relief from rates (£23,000 this year), permanent abolition of meter rents (equivalent to £3500) and a reduction of jd a unit for the first 42 units in the board’s scale of charges to consumers, representing probably at least £3OOO. The total of these concessions is £29,500 per annum more than the board is able to ■- offer. A point to be emphasized, too, is that this is an annual gain to the ratepayers and consumers, whereas if the board carries on it is likely to require substantial assistance from rating for years to come.

“There are other deficiencies and inaccuracies in the circular in question,” continued the Minister, “which I could deal with in detail, but perhaps it will suffice to give the ratepayers some better conception of the nature of this communication if I point out that:— Cheaper Electricity.

(a) Hie ratepayers can only regain something of their past rates by obtaining electricity cheaper in the future. The Government proposes definitely that they obtain it cheaper henceforth at £29,500 a year less than they would pay under board control. (b) It has yet to be demonstrated that the efficiency of other wellknown Government activities is marred by “red tape” or that the electric supply staff is any the less truly “civil servants” whether under board oi’ departmental control. (c) The “few years” mentioned in the circular after which the scene would be free of debt would be at least 18 years, and probably longer, depending on exchange and other factors. (d) The circular specifies certain assets, cash and otherwise, but omits to memtion the heavy liabilities or to give particulars of the cost of obtaining additional electric power. (e) The annual statistics show that the progress of the electric supply business in Southland has been much slower than in other parts of New Zealand. This is due to the high charges, a disadvantage which the Government’s lower capital costs (and these form the largest part of electricity costs) will eliminate more speedily than lies within the ability of the board. (f) There is no prospect of the annual liabilities as set out in the Southland Electric Power Supply Act 1936 being reduced.

Government’s Strong Position.

“The Government accepted the Parliamentary Committee’s recommendation, undertook the responsibility of repaying the board’s London indebtedness, and the terms of recoupment from the board are settled. In

conclusion,” said the Minister, “the Government’s electric supply reserves already total nearly £1,900,000 and give some indication of the strong position of the Government In continuance of the proposal decided upon by the previous Government, the ratepayers and consumers of Southland are being offered this and the other advantages and concessions clearly set out in the copy of a letter which was forwarded with the voting papers.”