M.E.D. FUNDS

Timaru Herald, Volume CLVII, Issue 23205, 19 May 1945, Page 4

M.E.D. FUNDS

Question Of Transfers Town Clerk Explains Position “The question of transfers from the Municipal Electricity Department to the District Fund Account will have to be considered in framing the estimates,” states the Town Clerk (Mr E. A. S. Killick) in a report to the Finance Committee which will be considered, with the estimates, by the Timaru Borough Council. “Last year,’’ Mr Killick continued, “the District Fund Account benefited to the extent of £4OOO at the expense of the Electricity Department. This was made up as follows:—Qeneral administration £5OO, street lighting, which, it was decided, should not be paid for. approximately £2OOO, and the usual transfer of £l5OO. These transfers are being used by those who wish to take our Electricity Department from us as an argument in favour of so doing. "The department belongs to the ratepayers.” Mr Killick continues,-“and not to the consumers. “(1) It was not the electricity consumer alone who had to face the heavy cost of hydro-electric works, but that the resources of the whole country were at the back of this enormous expenditure. “(2) That the ratepayers as a whole stood behind the launching of the electricity undertaking in the borough. “(3) That private enterprises could not have raised the whole of its capital cost at such favourable rates as that obtained by the Council. “(4) That the Electricity Department is free from rates, and pays no incometax, and has the full use of streets, etc., for its poles. “(5) That even the Council has not been strong enough to prevent a rake off by the Power Board from the amount we pay the Government for the current, and any private undertaking would no doubt have been swallowed up long ago. “It may, therefore, be said that the borough is entitled to some recompense for tire protection it affords the undertaking. Charge for Services “I made it quite clear, as long ago as 1935. that such annual charge is in the nature of a charge for services rendered as distinct from ‘rake off’ from the profits. The undertaking being in the nature somewhat of a monopoly the profits can always be whatever the Council may like to make them. After, therefore, debiting the dep irtment with any legitimate charges the remaining profits should go to the consumers and would be passed on to them in the shape of reduced charges. Though some doubt existed as to the amount to be transferred there was no doubt that the amount representing the equivalent of directors’ fees and general administration should be transferred to the District Fund Account, and since 1939-40 such amount nas been transferred and shown separately in the District Fund Account as Electricity Department for general administration £5OO. Inclusive of this amount the following transfers have been made since 1935:—1935-36 £l5OO, 1936-37 £l5OO. 1937-38 £l5OO 1938-39 £Bl7 (cash position owing to capital works did not warrant full transfer), 1939-40 £2183 (this is equivalent to £l5OO per annum for the two years), 1940-41 £l5OO (total of £2OOO placed on estimates and reduced to £1500), 1941-42 £2OOO (total of £l5OO placed on estimates and faised to £2000), 1942-43 £2OOO (total of £l5OO placed on estimates and raised to £2ooo>, 1943-44 £2OOO (also special charge of £3841 for E.P.S. expenditure), 1944-45 £2OOO < also no payment to Electricity Department for street lighting). "The matter was again, as usual, debated at length last year and a decision arrived at that no payment should be made to the Electricity Department for street lighting, but I have not been able to find any very pertinent reasons for such decision. There the matter at present stands, and presumably the same transfer of £5OO. plus £l5OO will be placed on the estimates this year. I would submit, however, that street lighting be paid for. Should Ignore Criticism “It would be interesting, however, to know whether our critics from the Government, or elsewhere. Can themselves exhibit the white flower of blamelessness in this matter. From a report by the Electrical Engineer I notice that the Government has taken from the Hydro Electric Department annually almost £500.000. Whether or not. therefore, we transfer anything from the Electricity Department to the District Fund Account, those who cast - covetous eyes on our undertaking will ■ continue to do so. Though the word steal has been frequently used in regard to transfer of profits from the i Electricity Department to the District i Fund Account, I think this expression could just as well be used to describe the matter of those who would like to deprive us of our undertaking. I think, therefore, that we should pursue the even tenor of our way and take no notice of outside criticism at all. Revenue Required “The only reason that I have brought the matter up at the present juncture is that the Electricity Department will need its revenue this year, and a decision will require to be made as to the amount to be transferred. I think that the amount of the standing charge of £5OO is quite small enough to cover everything that should actually be charged for, but it could well be £lOOO. As regards the remaining £lOOO this is a matter that is open to argument. If £lOOO is taken as representing actual and tangible services to the department, then the remaining £lOOO is not a very heavy charge against an undertaking whose gross revenue is about £55.000 per annum and whose assets amount to £186,000. It must be remembered that the ratepayers stood behind the department in the early days and enabled loans to be raised to acquire such assets. Nevertheless I have always felt that about £l5OO per annum is as much as should be transferred, though I cannot produce definite arguments therefor. I think that the expression that there is reason in everything sums up the position. “Finally,” Mr Killick concluded. “I understand the Electricity Department is not in a position this year to make such heavy transfers to the District Fund Account as it did last year.”