ALL ACCOUNTS IN CREDIT

Taranaki Daily News, 2 May 1933, Page 9

ALL ACCOUNTS IN CREDIT

BOROUGH FINANCE REVIEWED NEW PLYMOUTH LOAN POSITION. RATE REDUCTION NOT TEMPCJ.ARY. 'Of the 82 accounts covering the activi- ’ ties of the New Plymouth Borough Council, not one was in debit when the financial year ended on March 31, said the Mayor (Mr. H. V. S. Griffiths) at the public meeting of electors in the Empire Theatre last night. The accounts amounted to £71,230 9s 2d and, in a period when economic conditions had been adverse, it was gratifying to record credit balances, said the Mayor. “The effect of the sound and cautious administration of the several councils which have controlled borough finances during the.-last ten years is reflected in the fact that it has been found possible to make a substantial reduction in the rates for the coming year,” Mr. Griffiths continued. “In spite of the increase in the harbour rate, the increase in the drainage loan rate, .and the increase in exchange amounting to nearly one penny in. the £, all, with the exception of the drainage rate, being matters over which the council has no control whatsoever, it has been found possible to reduce the rates by Id in the £l. CALL ON LIGHT DEPARTMENT. “Had the increases mentioned not occurred, the rates would have been reduced by 2d in the £l, and would have afforded much needed relief to every ratepayer. Certainly, in order to make the. reduction, we have had to' call upon the . electric light department to provide the sum of. £5OOO, but, even so, the reduction would not have been possible had riot every account of the borough, with the exception of the tramways, been in a sound financial position. “This sound financial position of the accounts enables me to say definitely that the reduction in the rates will not be merely temporary. Unless something exceptional occurs, which cannot be foreseen, the reduction can be maintained, and it is quite possible and even probable,, that a further reduction may be made next year.” Mention was then-made of the £553,000 loan being raised to provide money for the repayment of borough loans totalling £644,600 which fell due on April 1. Sinking funds totalled £156,073, the available, amount being £151,800. The Mayor referred to the remarkable achievement of the sinking fund commissioners (Mr. C. H. Burgess, Or. F. J. Hill and the Mayor as treasurer and secretary). The flotation of the loan, synchronising with the policy of the Government interest reduction scheme, had proved beneficial to. the borough, enabling money to be procured at a lower rate of' interest than was thought possible. In view of the fact that the available sinking fund was more than anticipated, and that the expenses would almost certainly be much less than estimated, the council felt assured that it would not require to raise more than £512,600 of the £553,000 authorised. That represented a reduction of about £40,400, which would relieve the interest bill to some extent. FLOATING THE LOAN. i Of the amount required, £153,500 had been raised in London at 1 41- per cent, for 20 years at £96, the expenses being estimated at 3 per cent. It was gratifying to know that the issue was largely over-subscribed within a few hours, thereby evidencing the confidence of investors in the soundness of the borough and in the security offered. The negotiations for the raising of the balance in New Zealand not being completed in time, the balance of the maturing loans was repaid out of an overdraft arranged with the Bank'qf New Zealand. The negotiations for the raising of the amount required to pay off the overdraft had been proceeding for some time, and he hoped to announce very soon that the whole of the money required had been .'secured. 'N . ' The money was being raised on the amortisation or table mortgage plan, whereby half-yearly instalments of principal and interest would repay the whole loan in 26 years.’ It was considered the raising, of loans on flat mortgage by way of the ordinary debentures had not proved successful.. Sinking funds had been inadequate to pay off the loans at'maturity and the consequent was. that the present generation was loaded with financial burdens for which it had received no material benefit. The borough was at present, and would be for years to come, paying interest on loan moneys expended on street works in 1880, over 53 years ago. “ONLY SOUND WAY.”' “The only sound way of public body finance is to raise all loans required on the amortisation or table mortgage plan,” he continued. “There is very litle difference in the annual payments to, be made, but the currency of the loan is a little longer. By adopting this method, the possibility of future generations- being loaded with a large public debt without a corresponding asset for the liability is absolutely prevented. It was only in. 1921 that borough councils were permitted ’ to adopt this system of raising loans on the open' market. .The amendment in the law was made on the representations of the New Plymouth Borough Council which, in 1920, circularised all borough and city councils in the Dominion, and obtained their cooperation in bringing pressure to bear on the Government to pass the legislation.”

Unfortunately the system was not suitable for the smaller investor,’ and- for that reason the' London portion of the loan had'been made‘on the flat debenture basis. However, the larger portion of the loan was being raised in New Zealand, and would be on the table mortgage basis. Mr. G. Ellis asked’ the Mayor if the. council had entered into an agreement with Mr. F. T. Bellringer, town clerk and borough solicitor, for a further threeyear period at £9OO a year. The Mayor: That is correct. The actual amounts are £675 for clerks’ and £225 for solicitor’s work. Mr. Ellis: Why should one man get £lB a week and others £1?

The Mayor said the magnitude of the council’s business was such ’ that none of the senior officers were over paid. It was estimated that the growth of the town and the resulting, additional legal business would now cost the borough at least £3OO a year in legal fees and there would also be the loss of perusal fees. The presence of the borough solicitor at every meeting and his advice arA suggestions must have saved the council thousands of pounds a year. The contract had expired some months ago and, for the sake of continuity of service, it had been necessary to renew it. Mr. Ellis: Why should four men receive a total of £2400 a year from the borough when there is all this distress? The Mayor: I believe a man should be paid what he is worth. At this stage he was interrupted by cries from the body of the hall where there were a number of relief workers. —Low salaried men should also receive their full worth and I hope the day is not far distant when cuts can be restored, the Mayor concluded.