LOCAL BODY FINANCE.

Taranaki Daily News, 26 October 1921, Page 5

LOCAL BODY FINANCE.

BILL DISCUSSED IN HOUSE. OPPOSITION TO PROPOSALS. BILL TO BiE REVIEWED. By Telegraph—Press Association. Wellington, Last Night. In the House to-day, the Hon. W< Downie Stewart moved the second reading of the Local Bodies’ Finance Bill. He said the Bill was one of some importance to local bodies, which, as everyone knew, must have power during the early part of the financial year tc raise money to enable them to carry or until the rates came in. Unfortunately the Wording of the Act had enabled local bodies to borrow by way of overdraft to an extent never anticipated by the Legislature. Local bodies frequently expended in one year sums far in advance of their revenue, thereby casting a burden on the revenue of the following year. One of the worst features was that local bodies received money on deposit to keep down the rate of interest on overdraft. The Bill required local bodies to live within their income for the year. It was still open to them to borrow by way of anticipation of revenue, but the Jiability at the end of the year must not be greater than the outstanding revenue. Funds required for public works must be secured in the proper way, viz., by loan. The second portion of the Bill provided for legislation by which local -bodies were required to pay off their liabilities existing at the end of March, 1921, either by loan or by seven yearly instalments. This would put local body finance on a sound footing. He understood the majority of local bodies supported the principle of the Bill. OBJECTIONS TO BILL.

Mr. T. M. Wilford (Leader of the Opposition) expressed grave doubts as to the wisdom of putting the Bill on the Statute Book. He thought it would greatly hamper the finance of many of the smaller boroughs. Sir John Luke (Wellington North) said the Bill was not calculated to benefit local bodies, but was all in the interests of banks. It would not help the community, because it would not give local authorities the scope they deserved. He suggested sending the Bill to a committee for revision before the measure was passed. The Hon. J. A. Hanan, in the course of severe criticism, said he could not support the Bill as it stood, unless it was consiuerably amended. He must oppose it and endeavor to kill it by every means in his power. Dr. A. K. Newman (Wellington East), said in some respects he liked the Bill, but it had some bad. features. It would mean that persons having money to lend would not be able to advance it to local bodies direct, but would have to give it to banks, which in turn would lend it out to local bodies at an advance of 3or 4 per cent, interest. He hoped the Bill would be sent to a committee.

Dr. H. T. Thacker (•Christchurch East) said the tone of the debate should convince the Minister that the Bi” was not a desirable measure. He was told by the city treasurer of Christo<tircli, a man of sound and stable views, that the Bill would hamper city finance. He did not think the Minister himself believed in the Bill, and he hoped he would see the advisability of withdrawing it, or at least ssnd it to a committee, which, would thoroughly revise it. SOME GOOD FEATURES. Mr. D. G. Sullivan (Avon) said the Government must now be satisfied that the Bill should not be gone on with. The measure was practically, passing a vote of no confidence in every local authority in the Dominion, aind if it were placed on the Statute Book it would be a severe, drastic and unjustifiable interference with local body finance. Mr. C. lE. Statham (Dunedin Central) contended that the Bill was so much m favor of the banks that it became another example which proved that we ©hould have a State bank in the Dominion, run for the benefit of the people and not in the interests of a few shareholders. The Bill was an ill-considered, measure and was brought down at the wrong time. Mr. R. A. Wright (Wellington South) supported the Bill on general There was something in the Bid he did not like, but it contained much worthy of support. A temporary deposit fry«tem was weak, because local bodies were tempted to overburden themselves with money which they could not repay on demand. Borrowing by overdraft was also bad, because it was secret borrowing, a class of borrowing which ratepayers knew nothing about. This BiH forced local bodies to go to the ratepayers and get their coneent to the raising of money for publie work*, which was in the interests of sound finance. Another valuable feature of the Bill was that it gave local bodies power which they at present did not possess power to raise a loan to pay off bank overdraft. The Bill was calculated to put local bodies squarely upon their financial feet, and once there they could go on living within their means. Mr 1 . W. G. Glenn (Rangitikei) wanted to know what provision would be made for county councils whose districts were subject to floods. How was revenue to meet emergency expenditure of that kind to be raised? Further, sheep farmers were hard hit at present. So much so that many could not pay their rates. Had the Minister, he asked, made any provision to meet a case of that kind? Messrs. Witty, Horn, Dixon, Williams and Edie gave the Bill qualified support. MINISTER IN REPLY. The Minister, in reply, said the toundation principles of the Bill had not been seriously attacked, and if it went before a committee he was confident it would be amended in such a way as to be acceptable to all. He thought a special committee representative of the local bodies should be appointed to examine the Bill. All he was contending for was to get local bodies out of their present difficulties, and so frame a law that they could not get back into that position. The system of raising money by means of temporary deposits had a weakness which rendered the passing of the moratorium necessary. At the same time, if there was a general wish for it to continue he, personally, would not object, provided it could be safeguarded. The emergency of floods or similar disaster mentioned by Mr. Glenn was, he thought, provided for in the existing legislation, but he would have the point looked into, and if not wide enough he would have the power widened. The Bill was read a second time on the voices, and referred to a committee to be appointed l a ter. '