TIMARU BOROUGH INDEBTEDNESS

Timaru Herald, Volume CXLVII, Issue 21507, 21 November 1939, Page 5

TIMARU BOROUGH INDEBTEDNESS

Loan Repayment

Town Clerk Commended

Revised tables giving detailed information concerning the loan indebtedness of the Borough until the last of the existing loans is redeemed in 1959-1960 were presented by the Town Clerk, Mr E. A. Killick at the meeting of the Timaru Borough Council last night. Mr Killick was commended by the Council for his lucid and concise exposition.

“All possible necessary work for some time to come in the Borough has now been provided for,” explained the Mayor, Mr W. G. Tweedy in commenting on the data, "and there is no indication at present of any further loans.

“The argument may, of course, be raised,” continued Mr Tweedy, “that it is necessary to spend money in order to stimulate the progress of the town, but this has already been done in every reasonable direction. If the population and rateable value increase, then, of course, further loans for development purposes, if such were necessary, might be possible without any increase in the rates. At present, however, it would not. “The fact that out of a rate, including the twopenny water rate, of 9}d approximately 4ld is require# for interest and redemption purposes shows that we are not shirking our task,” concluded Mr Tweedy, "and that we are not endeavouring to pass on to those who come after us a debt incurred for the construction of such works as are necessary to keep the town abreast of modern developments.” Progressive Reductions The tables presented by the Town Clerk showed that for 1939-40 the annual payments for interest and sinking funds or redemption amounted to £34,325, the annual burden on rates was 4.25 d in the £; the gross debt at the end of the year would amount to £586,150, and the net debt £365,696. At the end of the year 1949-1950 the position would be:—Payments for interest and sinking funds or redemption £2200; burden on rates 3.29 d in the £, gross debt £152,400, net debt £114,600. At the end of the year 1959-1960 the position would be: —Payment for interest and sinking fund or redemption £10,216, burden on rates 1.53 d in the £, gross debt nil, net debt nil. Town Clerk’s Explanation Mr Killick explained that the data should be substituted for the previous table, as it included the additional ten per cent, on the Airport and Water Supply Loans, and also the shortening of the term of the Waterworks (London) Renewal Loan. In only three cases would there be any need for consideration by future councils of the existing debt, viz.:—The Renewal Loan, the Water Supply Loan and the Kerbing and Channelling Loan for the balances of which, when they matured, renewal loans would be required. In this case he had foreshadowed the renewals on a method that would spread the annual burden evenly on a gradually reducing basis until the existing loans were all wiped off in 1959-60. To accomplish this the Council had had to incur substantial annual sinking funds or redemption payments which, when the loan proposals before the Loans Board were included, would mean a payment annually of about 4 per cent, the loan interest being a triflle under 4 per cent. (These, however, varied annually under the various systems of redemption.) To make the percentage of sinking fund and redemption payments equal the percentage of interest payment appeared to be a justifiable ideal, though difficult to realise unless interest rates were low as at present. As a result of the five years' survey all requisite capital works had now been provided for by loans, or otherwise. Tribute to Town Clerk Cr. J. S. Satterthwaite congratulated the Town Clerk on the schedule he had prepared. Every member of the Council would find that the data was not only interesting, but very illuminating as it gave a clear idea of the position of the Borough indebtedness as it affected the loans. He was sure that the Mayor and the councillors were deeply indebted to Mr Killick for setting out the information so clearly.

Cr. W. H. Hall remarked that he would like to add a word of praise to the Town clerk. Mr MUler. secretary of the Local Government Loans Board, had commented to the speaker on the concise and lucid manner in which Mr Killick dealt with loan matters in his correspondence with the Board. Mr Hall remarked that tributes were rightly paid to the pioneers on their achievements, but in one matter they had failed, and that, had been in regard to setting aside sinking funds for local body loan redemption. He felt it a disgrace that the Council had been obliged to renew a loan to pay for the original water supply scheme which would shortly be scrapped after many years of service. Cr. P. B. Foote said that in the early days the idea of sinking funds had not been conceived. There were fashions in finance, as in everything else, and in recent years it had been the custom to provide for sinking funds.