LOCAL BODIES’ LOANS ACT WAS LONG OVERDUE.

Star (Christchurch), Issue 18576, 26 September 1928, Page 4

LOCAL BODIES’ LOANS ACT WAS LONG OVERDUE.

MINISTER OF PUBLIC WORKS GIVES VIEWS. Justification for the passing of the Local Bodies Loans Act is expressed by the Minister of Public Works in his Annual Statement. U nder the Act it is necessary for the Local Government Loans Board to obtain expert reports on almost all the projects for which local authorities wish to borrow money, and, while .all Departments of State are at the disposal of the Loans Board for its purposes, the greater weight of the work falls naturally upon the Public Works Department, because the greater number of the loans of local bodies are for the construction of works. It is necessary'. therefore, for the officers of that Department to investigate all local bodies’, proposals, not only looking into the engineering soundness of the proposals technically, but also going into the question of probable life of the asset to be created and its necessity or otherwise for the community ' at large. Naturally', the sinking fund which it is necessary to set aside must be governed by the probable life of the as-set, and not, as has been the case in the past, by the ideas of the local authority as to. their ability to pay, or the willingness of the money-lender to wait for his money. “The Local Bodies Loans Act,” states the Minister, “was long overdue, and will probably in the future be looked upon as one of the most important Acts ever passed in this country. Most of us know of instances of loans that have been raised and spent on works that have never produced any beneficial result for the ratepayers. The provision of a sinking fund is the great feature; but this in. some cases presses hardly on the back blocks, where the estimated life of the loan, coupled with the sinking-fund rate, prohibits the raising of a loan. It might be remarked that what may to-dav appear a sound proposition as a metalling loan may in a few years, with the rapidly changing methods of and increased desire to travel, assume a very different aspect and become a burden rathei than an asset.”