BOROUGH FUNDS

Timaru Herald, Volume CXXXIX, Issue 20055, 12 March 1935, Page 6

BOROUGH FUNDS

QUESTION REGARDING INVESTMENT COUNCIL’S DIFFICULTIES The Timaru Borough Council had before it last night a report by the town clerk (Mr E. A. Killick) in regard to the investment of Borough funds. In the report, the town clerk said that he had to draw attention to the difficulty under which the Council, in common with other borough councils, laboured in regard to investment of funds. In connection with the proposed omnibus loan, he had intended pointing out that there would be no need to go to the trouble of raising the necessary amount from the public, as they had funds themselves to invest, and this would be a very convenient form of investment. They were their own Sinking Fund Commissioners for the No. 3 Renewal Loan and had £1,391 at present to invest, plus some £2B interest, which would be received at the end of this month. They were, however, debarred from investing this amount, or any further amount that might be available, in any df their loans other than the renewal loan itself. The position seemed to be a stupid one. A borough council did not adopt any different attitude towards one loan than another and each of its loans was as safe an investment as any other. Whenever they desired to pursue a prudent and businesslike course, they were hampered, not always so much by direct prohibition, as for want of power. Workers’ Dwellings In other respects the financial clauses of The Municipal Corporations Act were elementary in the extreme and merely provided that monies pertaining to a corporation should be paid into a bank. In this connection, he pointed out that they had an amount in their Workers’ Dwelling Account of £B4O which should be invested so as to provide the necessary revenue for the redemption of the Workers’ Dwelling Loan. This loan was a conversion loan repayable under the annual instalment system to the State Advances Office, but the superintendent of that office would not at present accept any extra payments and as the amount in question resulted from the sale of property, the proceeds should be preserved and invested, otherwise they might have to come on the rates to find portion of the amount for the annual instalment. Council Hampered Directions, other than the abovementioned, in which they were hampered were the refusal of the Government to permit one local body to place its money on deposit with another. For instance, in Timaru they found that when the Hospital Board was in funds, and the Council were in overdraft, that they could not accept money on temporary deposit from the Board, nor when the position was reversed, could they place money on temporary deposit with the Board. They had also the case of the refusal of the Government Lending Department to recognise the Council’s claim for rates, which other mortgagees were compelled to recognise. Another instance was the refusal of the Government to permit borough councils to invest in hospital board debentures though Government departments were permitted to do so. “It is of little use our approaching the Government ourselves. Little sympathy or understanding has been shown in the past with local body finances, the idea apparently in Govem- , ment circles being that local bodies are unbusinesslike and extravagant, and should be kept well within bounds. As a matter of fact, however, although local bodies may have got into debt it has generally been for some very good purpose, and expenditure is much more jealously watched by local critics amongst the ratepayers and money is consequently less likely to be wasted on extravagant purposes by a' borough or county than is the case in regard to expenditure by the general Government. This probably is even more so in regard to individual local bodies, such as borough or county councils than in the case of groups of bodies such as hospital or power boards; though doubtless heavy capital expenditure by hospital boards, which has been the subject of criticism, may have been forced upon them by the Government. The Government apparently regards local bodies’ endeavours to find investments with jealous eye, as causing competition with the Government in the money market and, therefore, relegate to second place local bodies regardless of the fact that ratepayers are nothing more or less than local taxpayers and are worthy of equal consideration with the general taxpayer.” Suggestion Offered The town clerk suggested that the whole matter be referred to the Municipal Association with a view either to the matter being discussed at the Conference, or steps being taken by the Association executive to have the matter remedied and the financial clauses of the Municipal Corporations Act, which were obsolete and inelastic in a number of respects, amended. There should be some discretionary power, at all events, placed on Treasury or the Internal Affairs Department, and it would be helpful if an inspecting accountant were attached to either of these departments, who could investigate and advise upon local body proposals in the same manner as already existed in the Health Department in regard to hospital finance. The Finance Committee recommended that the matter be referred to the Municipal Association. The recommendation being adopted.