LOCAL BODIES

Waipukurau Press, Volume XXVIII, Issue 63, 8 March 1933, Page 7

LOCAL BODIES

<£> Interest Reduction SPEECH OF AIR JUEL ON THE BILL A CUSHION FOR DEFLATION In the course of his speech in the House of Representatives on the Local Authorities Interest Reduction and Debt Conversion Bill Mr. A. E. Jull (Waipawa) said he did not agree with the Leadei- of the Opposition that the measure was another step in the direction of deflation. Mr. H. E. Holland: I said it was a consequence of the Government s deflation policy. Mr. Jull: I look upon it rather as the reverse of that policy—as something that will enable us to cushion any species of deflation we may have had in the past. Only in this morning's cables there is an annoucement that the British Chancellor of the Exchequer intends, if possible, bring about a further cheapening of money in Great Britain with a view to raising prices; and there is every indication that we are going to have the British Exchequer embarking on some measure of inflation brought about by measures similar to this Bill or on somewhat different lines. I hold that this is in no sense deflation. Indeed, in my opinion, it will check, or help to check at any rate, any attempts at deflation we may have made in the past. Clause 6, sub-clause 2, says: — Not withstanding anything to the contrary in any Act or in any Order-in-Council or other authority in force on the thirty-first of March, nineteen hundred and thirty-three, it shall not be lawful or competent for any local authority to borrow or to contract to borrow money at any time after that date pursuant to any authority in force on that date (otherwise than in anticipation of its revenue within the limits of its powers, if any, in that behalf) at a rate of interest in excess of the prescribed rate reduced by twenty per centum thereof, or in excess of four and one-quarter per centum per annum, whichever rate is the higher. Now, I understand that the Minister indicated that this can be varied by Order-in-Council. But since the sub-clause says “Notwithstanding anything to the contrary in any Act or any Order-in-Council,’’ a local authority must do a certain thing, in what way can an Order-in-Council j override this? It seems to me that j some amendment is required here, be- I cause we discovered last year that i special legislation had to be put through to enable the Governor-Gen- . eral in Council to change a previous j Order-in-Council fixing the rate of interest in respect of a local body loan. The rate was fixed at, say, 5£ per I cent, and was further altered to 53 I per cent., and the financial body lend- . ing the money claimed that once an Order-in-Council had been made, no further Order-in-Council could be invoked to alter the rate of interest, and special legislation was introduced in respect of that particular local loan. I mention that in order to make sure that some local bodies may not be held up pretty severely in respect of some of their local loans. A local body may be operating on an I authority issued at, say, 5? or 5} per I cent., and if it is told suddenly that it cannot raise any more money at a higher rate than 4 1-4 per cent, it may not be able to continue a work in progress because it is un-

able to secure money at 4 1-4 per cent. I suggest, therefore, that the Minister should make quite sure that he is able to vary the rate of interest as stated. Loans Board Criticised In regard to the Local Government Loans Board I am not a great lover of that Board's methods. I have had quite an amount of experience of the Board, and I claim that it is the most bureaucratic Board I have ever come across. It has powers which are greater than the powers I,of the Government itself. It is a i star chamber of the worst descrip- | tion. This Board consists of three I departmental heads and four other i gentlemen, and has to deal with apI plications, most of which have to be ! reported on by the very departments whose heads are members of the board. Those reports come before the board, and are interpreted to the members of the Board by the heads 'of the departments that make the reports, and the applicant for the I loan has no opportunity of knowing 1 what those reports contain. The local l j body applicant is not allowed to see | those reports. Indeed, only by great ' courtesy of the board is it even allow- | ed to go before the board to explain ’ anything that it feels it is desirable ; to explain. The board is a judicial ’ body which, if it were not so very | serious, would be Gilbertian in its , attitude in respect of dealing with big I questions of local government. Here i we have a body constituted as I have indicated, and operated in the way I have indicated, and there is no appeal against its decision. If there is one board in this Dominion that needs looking over a bit it is the Local Gov- | eminent Loans Board. Air. Richards: What is the honourable gentleman going to do about it? Air. Jull: Never mind what I am going to do about it. I am just reciting to the House a few features in respect of that board which make it necessary that the Alinister should be clothed with greater power in respect of its decisions. The local authority concerned should have the opportunity to appeal against the decision of the board. There is nothing to-day to indicate that the Minister would ever know what application was before that board, and what applications had been turned down. I Clause 18 of the Bill is the little persuasive clause. It really says, ‘'We do not compel you to convert, but if you don’t, look out.’’ The point I wish to make in regard to this clause is that it is quite different really from the clause in the general scheme of the Government. The clause ! reads: — Where dissent from the conversion of any existing securities into new securities is signified in accordance with the provisions of an Order-in-Council under this part of the Act, the rate of interest payable under such existing securities, as reduced in accordance with Part I. of this Act, shall be further reduced to a rate that is thirty-three and one-third per centum lower than the rate originally prescribed by the securities. We fix a rate of 4 1-4 per cent., and it is possible that a man dissenting from conversion might have his rate reduced to 3| per cent. That is to say, local government loans have been raised at 5 per cent., 5 1-4 per cent., 5| per cent., 6 per cent., and so on, but irrespective of the amount that it is reduced to it can go down 33 1-3 per cent., with no minimum. I think this is a matter that only wants the Minister’s attention drawn to it and it will be put right—that is, if I am correct in my interpretation.

With regard to clause 21 ( I do not share the fears of the Leader of the Opposition. Many local bodies' districts from time to time become changed. Portions of a county come into a borough or vice versa, and there are mergings and alterations taking place pretty continuously. It has been found necessary that some authority, the Controller and AuditorGeneral being the most likly, should be set up for the purpose of adjusting in an equitable way the relative shares of the different local bodies in respect of any liabilities. It is just the same under this clause. The clause itself may appear to be a little involvf d but there is nothing to be alarmed about. It will work out quite satisfactorily, I think, and it is Very necessary. Without it, one local body might not be able to pass on a portion of the concession which it itself had obtained because of conversion or reduction of interest.