ELECTRIC POWER SCHEME.

Southland Times, Issue 23000, 21 September 1936, Page 5

ELECTRIC POWER SCHEME.

To the Editor.

Sir,—With reference to Mr H. Ritchie’s letter in Saturday’s issue, I make the following statements and ask Mr Ritchie to contradict thein if ne can: (1) It is quite evident that Mr Ritchie has never perused the boards balance-sheet which is duly audited each year by the Controller and Auditor-General. (2) The board s revenue, exclusive of rates, last year was £146,758. It will be more this year despite the concession made in meter rents, and despite the remission of the Invercargill special payment. (3) The average income of the board for the past eight years, exclusive of rates was £130,737. Mr Ritchie quotes the figure of £112,300 (should be £117,300?) This latter is not the whole revenue from the sale of power but apparently the revenue based on the sale of units. It is in exactly the same position as if, in quoting the revenue of the Invercargill City from electricity, I left out the amount collected for floor space which is undoubtedly, howr ever, revenue from electricity. (4) Mr Ritchie makes the statement that nothing has been paid to the renewal fund and he and Messrs Smith and Farrant have suggested that the board should provide in addition to the 4.1 per cent, sinking fund a renewal fund of £40,000 per annum. My statement is that £16,411 has actually been paid into the hands of the Public Trustee towards the depreciation fund and a further amount of £11,867 has been brought to charge. Under the conversion loan with a sinking fund of 4.1 per cent., the board is not required by the Electric-power Boards Act, or by any other Act, to provide any renewal fund. (5) In connection with the Government schemes, the maximum depreciation or renewal fund that has to be provided is 2 per cent, per annum until a total of 121 per cent, has been provided; then it is not necessary for the Government electrical department to make provision for further depreciation. The Government sinking fund is 1 per cent, but is only chargeable when a particular scheme is making a profit. Therefore, the maximum charge in any one year for depreciation and sinking fund on the Government power schemes is 3 per cent. (6) Under the terms of the conversion loan the board is required to provide a sinking fund of 4.1 per cent. This money has to be taken out of the business and invested with the Public Trustee where it bears interest and is still the property of the board, but can only be used for the redemption of the loan. The Government electrical department’s sinking funds and depreciation funds are brought to charge in the accounts but are not usually invested outside the business.

(7) Mr Ritchie quoted Mr Nash’s statement in the broadcast wherein he said that the board’s funds of over £500,000 had gone to London. The utilization of these funds was as follows:—The London loan was reduced by £168,000. The exchange overdraft in London amounting to close on £50,000 was paid off. There is still in the hands of the Public Trustee the depreciation fund of £16,411. There is still in the hands of the National Bank invested in the separate account over £90,000. The balance of the £500,000 will pay for the loan conversion expenses, also the exchange on the remittance of any moneys which have been or will have to be remitted to London in connection with the conversion. (8) Now Mr Ritchie made a statement, and staked his reputation upon it, that the board would, if it retained the scheme, have to collect i £200,000 in rates during the next five I years. Mr Nash who certainly would not understate the position, puts the figure down at £115,000 or five times the amount the board is levying in rates this year. Even this is an overestimate because it does not take into account the growth of the board’s revenue during the next five years, nor does it take into full account the reduced charges for interest, London exchange on interest and sinking fund, which will ensue as compared with the charges on the old loan. I am prepared to stake my reputation as a Fellow Public Accountant (F.P.A.N.Z.) and as a business man of over 40 years standing, and as a member of important public bodies, such as the Invercargill

City Council and the Southland Power Board, for a period of over 13 years, that the total rates that will be levied from 1936-1937 onwards, if Southland retains its scheme, will not exceed at most £55,000 to £60,000. In making this estimate I have not taken into account any reductions that may take place in the London exchange, although if the Government’s promises are worth anything there surely must be a reduction during the next quinquennial. (9) The annual total of interest, exchange on interest, and sinking fund calculated at 4.1 per cent, on the new conversion loan of £1,332,000 will be £112,654. The annual total of these charges on the old loan of one and a-half million pounds was £125,213, which means that under its new loan the annual saving to the board, even with the high rate of sinking fund, will be £12,559. (10) At the end of the five year period visualized by Mr Ritchie there will be in the hands of the Public Trustee cash funds amounting to approximately £270,000 plus accrued interest being the board’s sinking fund of 4.1 per cent., or nearly five times my outside estimate of what may be required to be provided by rates.—Yours, etc.,

JOHN T. CARSWELL, Chairman, Southland Electric Power Board. Invercargill, September 19, 1936.

To the Editor. Sir, —Mr S. Rice in his broadcast debate with the Minister referred to the fact that the city of Invercargill was purchasing power from the Power Board at 3d per unit and was making a profit of £15,000 on the retailing of current. Mr McChesney has stated that the city is not receiving any concession at this price as the current can be delivered at the sub-stations at Ad a unit. If this is so, how is it that although the board retails power throughout Southland including Gore and other boroughs and charges up to 7d per unit with meter rents (which are not charged in Invercargill), the board still has to levy rates amounting to £23,000 to make up the losses on the undertaking?

At a meeting at Pukerau, Mr McChesney said that power poles were falling down in Canterbury and that this trouble was not experienced in Southland. The Lake Coleridge scheme has been in operation for 23 years against 11 years in Southland and I have no doubt that when the Southland poles have been up for 23 years we will have just as much trouble with them and will be faced with a heavy cost of replacement. We have, heard a great deal about the reliability of

Monowai which the board members say has never failed us. The answer to this was given at the Pukerau meeting during the speech of Mr Carswell when the lights failed and he had to finish his address by candlelight. The figures quoted by Mr Ritchie, who is a qualified accountant, are of considerable value in pointing out the real position of the Power Board. Mr Ritchie has taken his figures from Government statistics and they can be accepted as correct. The board members who comprise the heads of the Farmers’ Union movement induced Mr Gilkison and Mr Grieve, as spokesmen for the board, to give addresses in the country centres to influence the ratepayers to support the board. This occurred during the stage when the board had undertaken not to indulge in any propaganda. I would like to ask why the board gives special concessions to the Southland Frozen Meat Company. The board members admit that the company is purchasing power at Makarewa for 3d per unit, at which rate it is probably entitled to buy, but I contend that the occupiers of cottages and huts attached to the works should pay the ordinary household rates instead of receiving the benefit of the concessions given to the company. Will the board members state the rate paid for power by the occupiers of these cottages?—Yours, etc., FRED TRAPSKI. Pukerau, September 19, 1936.

To the Editor.

Sir,—l read with interest your leader in to-day’s issue on the unemployment question where you rightly condemn the Government on its extravagant promises. This is only one of its many unfilled promises. What about the promised abolition of the sales tax, promised reduction of exchange, promise that the cost of living would not be increased, promise that taxation would not be increased (increase this’ year of over £2,000,000), promise that every one would be in employment in six months, etc., etc. . Now we have more promises it we hand to the Government (free of cost) our Monowai scheme. No; after experiencing ten months of broken promises and unfulfilled pledges which you have exposed from time to time I, together with hundreds of ratepayers in the province simply cannot vote to hand over our Monowai electrical undertaking to the Government.—Yours, etc ” JUNO. Invercargill, September 18, 1936. [Does our correspondent seriously suggest that Mr Nash would not fulfil the undertakings set out in a letter to the chairman of the board of which every ratepayer has received a copy; or is our correspondent merely trying to bring politics into a non-political issue?—Editor, The Southland Times.]

To the Editor. Sir—l regret that owing to my absence from town I was unable to associate myself with Messrs Smith and Farrant in their reply to Mr McChesney’s invitation and challenge. 1 wisn to state my reasons for declining both. When the board refused to proceed with the referendum I took- the initiative at the request of many prominent citizens and called on the ratepayers to meet. Result-the referendum; and no rhetoric can now stop it. Now that the owners of the power scheme (the ratepayers) have secured the right (which never should have been denied them) to settle the question, I am content to leave it at that. Was it not Mr McChesney who asserted that the ratepayers were incapable of voting intelligently on the question? Did he not state that the onus was not on the board to furnish the facts? My committee held that it was clearly the board’s duty to have done so, but realizing that there was no hope of it doing so, we accepted the responsibility. Now, those who pay the piper can call the tune, whether it pleases Mr McChesney or not. Has Mr McChesney disproved I anything we have published? He has had ample opportunity to do so. It should surely be convincing proof of the weakness of his case when he has so badly failed. You have given generously of your space to all and sundry, and had Mr McChesney so desired he could have reached in one issue of your paper a vastly greater audience than he has been able to do in all his public meetings. He has now led the board into a needless waste of the ratepayers’ money. He offers free this and free that, presumably at the further expense of the ratepayers. What purpose could be served by attempting to bandy words with Mr McChesney on any public platform, more especially when there is positive proof that he is not prepared to stick to facts? For instance, his statement at Menzies Ferry that there were less than 2000 genuine signatures to the petition. When he repeated this untruthful statement at Riverton, and was promptly called to task by one who knew the facts, what did he do? He sidestepped. Take the utterly foolish and untruth-

ful statements in the circular issued to Invercargill ratepayers, notably the one that in the event of the State acquiring the power scheme city rates will be substantially increased. What an insult to our intelligence. If Mr McChesney will discuss the power scheme on its merits, or demerits, then I am willing to meet him on any platform.

In conclusion, I ask Mr McChesney to answer the following questions: (1) Were the ratepayers promised from the first that there was a remote possibility of collecting a maximum of £14,000 in rates? (2) What sum actually has been levied in rates to date? (3) Are there any arrears? If so, how much? Have any such arrears been secured by way of caveat on the properties of distressed ratepayers? (4) Is there a London bank overdraft? If so, how much? Why was this overdraft necessary? If the bank called it up how would it be met? (5) Is the Monowai scheme yet able to function without rating? If it cannot do so at present, when will it be able to do so? (6) What did the Monowai scheme cost? Was there a grave waste of money during the construction period? How much? Is there an asset for this wasted money? (7) What sum does the board hold by way of depreciation? (8) How can it be claimed that after 12 years of operation Monowai is worth (say) half a million more than it originally cost? (9) Will Mr McChesney show how, without generous aid from the State by way of guarantee, and further substantial concessions Monowai could ever have come into being, or continued to function?

(10) Without rating powers what would have been Monowai’s fate long since? Would it not have passed into a receiver’s hands and be wound up as a hopelessly insolvent concern? (11) Does not the present offer relieve us for all time from capital liability (considerably in excess of the asset), from rating liability, from exorbitant meter rents, and does it not give us an abundant supply of current at lower charges? (12) Would we not be regarded as the laughing stock of the Dominion were we to miss the acceptance of such > a magnificent offer as is now submitted by Mr Nash? Let me suggest to Mr McChesney that if he wishes to deserve the gratitude of an already overburdened community he will furnish true and dependable answers to my questions. If, instead of attempting to convince a very few ratepayers (or none at all) in different localities, he will show the whole community through your columns, that we have very much indeed to gain, and nothing whatever to lose

by accepting the State’s offer, then he will have done Southland an immense service.—Yours, etc., R. P. MEEK. Invercargill, September 19, 1936.

To the Editor.

Sir, —The Government wants our power scheme. From the wealth of controversy on the subject this fact is patent to everyone. Firstly, the Government asked the board to hand the scheme over; secondly, it embarrassed the board by increasing the sinking fund and so compelled it to maintain the rate. This was despite assurances from the previous Government that when the time arrived the rate question would receive favourable consideration. The Government now uses the rate as an argument in its favour. Why, even our County Council would hardly dig a hole in a main highway and then state that a man with a damaged car is not competent to hold a driver’s licence.

Why does the Government want our power scheme? The ratepayer who is perhaps confused over the issue should ask himself this question. Surely he cannot be convinced that the Government is altruistic even to the extent of forcing its altruism on us. All ratepayers have not been stampeded by the propaganda of the Petition Committee. Indeed, they have all along realized that it was not from unenlightenment that a majority of the board has been so far convinced of Southland’s potential asset that it has resisted the hysterical clamour for immediate relief and the throwing away of an asset. Under a constant fire of abuse and misrepresentation these gentlemen have shown that even under such an acid test of patriotism they stand true to their convictions. May many more patriotic Southlanders on public bodies put duty to the province before popularity with the shallow thinkers of the public. One wonders why the Petition Committee did not raise their voices and pens and roundly condemn the power scheme when the previous Government was negotiating. The inside story of the public platform debate between the Petition and Retention Committees shows the former in rather a bad light. The petitioners were anxious to meet the Retention Committee in debate while the latter were gagged to a certain extent because they could not use anti-Govern-ment control arguments through fear of Mr Nash refusing to guarantee the loan. Now with the loan settled and the board able to fight with the gloves off we see the Petition Committee very feebly refusing the public platform idea. The cat may frolic with abandon while the dog is chained up.—Yours, UC '’ SOUTHLANDER. Invercargill, September 19, 1936.

To the Editor. Sir, —“Anti-pothole” seems greatly concerned at the refusal of Messrs Smith and Farrant to debate with Mr W. McChesney. Probably realizing what a poor showing Mr Rice made when he debated the question for the retention of the Power Scheme with the Hon. Mr W. Nash he hopes that Mr McChesney will be able to do better and so retrieve the position a little. Perhaps he hopes that Mr McChesney in a debate will be able to cloud the issue still further. We all know how dearly Mr McChesney loves an argument. The Gilbertian debates for which the South Invercargill Council was notorious when he was Mayor of that borough have won Mr McChesney a reputation. But I am afraid the public has had enough of talk. All the public wants now are plain facts and figures, not verbose statements that take them all over the globe. Mr Smith has issued a clear set of figures showing how the public of Southland will be exploited during the years to come if the scheme is retained under the Power Board. He is willing to pay £5O to any charitable institution if he is wrong, provided those challenged do likewise if he is right. If Messrs McChesney, Gilkison and Company are so certain that they are right and are as sincere in this belief as they would have us believe, why have they not accepted this challenge? Money talks all languages, and their acceptance of Mr Smith’s challenge would prove to many doubting ratepayers that they are sincere in their views even if these are incorrect.

Mr Smith does not pose as a debater, but he has the business acumen to build up a business from nothing until now he controls one of the biggest retail shops in the Dominion. And he knows that Monowai has been a great burden to the ratepayers of Southland and will continue to be such for many years. Any ordinary business man who sincerely studies the position must come to the same conclusion. It behoves any ratepayer then, who has not yet voted, to do so immediately so that this Monowai scheme which has been bungled from the start, will be handed over to the Government which alone is in the position to work it economically. What we want is not debates, but no more rates. —Yours, etc. RATEPAYER. Invercargill, September 19, 1936.

To the Editor. Sir, —I don’t mind admitting I have always b.een in favour of the Power Board retaining the scheme. But after reading yesterday’s Otago Daily Times I notice that they require a power station assistant. As I get both The Southland News and your paper and read them both very carefully I cannot call to memory that a similar advertisement appeared in either of your papers. Of course we have no one locally who is qualified to take over a job that has been advertised for. Perhaps Mr McChesney or Mr Carswell will tell readers why this job was not advertised in our local papers. Of course, I may be wrong.—Yours, etc., SUBSCRIBER. Invercargill, September 20, 1936.