LOCAL GOVERNMENT LOANS BOARD REVIEW OF OPERATIONS FOR THE YEAR ENDED 31st MARCH, 1946

Appendix to the Journals of the House of Representatives, 1946 Session I, B-17

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1946 NEW ZEALAND

LOCAL GOVERNMENT LOANS BOARD REVIEW OF OPERATIONS FOR THE YEAR ENDED 31st MARCH, 1946

Laid on the Table of the House of Representatives by leave

The year ended 31st March, 1946, was the nineteenth year of the Board's operations and during that year the Board dealt with a steadily increasing number of localauthority borrowing proposals. The total amount of the applications considered was £3,553,170, £3,497,820 of which consisted of new applications and £55,350 amounts previously referred back. Loans for new works totalling £2,643,935 and redemption loans to the extent of £243,235 were sanctioned, and the balance, £666,000, was referred back for further consideration or was deferred pending further investigation. The following table summarizes the Board's operations for the year, and the figures for the previous year are incorporated for reference : 1944-45. 1945-46. £ £ £ £ Applications .. .. .. ..3,242,327 3,497,820 Previously referred back .. .. 150,000 55,350 £3,392,327 £3,553,170 Sanctioned —■ New loans* .. .. .. 1,737,807 2,643,935 Renewal loans .. .. .. 698,120 243,235 Referred back .. .. .. 956,400 666,000 £3,392,327 £3,553,170 New loans*— W aterworks — Urban .. .. .. .. 146,800 94,100 Rural .. .... 146,800 94,100 Drainage ajid sewerage .. .. 22,700 133,525 Roads and bridges (counties) .. .. 41,500 43,800 Street works (boroughs) .. .. 204,750 35,850 Municipal buildings, offices, &c. .. 10,000 57,700 Recreational facilities .. .. 31,250 ... Transport .. .. .. .. .. 28,600 Housing—■ Urban .. .. .. .. 364,200 228,050 Rural .. .. .. .. . - » .. 364,200 228,050 Electricity supply— Power Boards .. .. .. 194,000 731,000 Others .. . . .. .. 22,000 216,000 731,000 Hospital works .. .. .. 431,500 953,750 Harbour works .. .. .. .. 135,000 Fire Board loans .. .. .. 25,500 27,500 Gasworks .. .. .. .. 137,400 35,000 Abattoirs .. . . .. .. 68,000 1,000 Education authorities .. .. 29,290 47,700 Miscellaneous .. .. .. 8,917 1,360 £1,737,807 £2,643,935

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The diversion of the unexpended balances of loans amounting to £458 19s. was approved under section 47 of the Finance Act, 1927, and approval was given under section 20 of the Finance Act, 1934, to the use of capital moneys amounting to £11,502 16s. 3d. The amount sanctioned for new works shows a substantial increase, and borrowing by Hospital Boards was again very heavy, the amount sanctioned being exceeded only in 1942-43, when the figure was £996,250, as against £953,730 last year. The supply of electricity has called for heavy capital expenditure and approximately twice the amount authorized in 1944-45 was sanctioned. Despite the electricity shortage in the North Island, new building, opening up of land for development, and increased demand by individual consumers have made it necessary for Electric-power Boards to extend and increase the carrying-capacity of reticulation lines. The amount sanctioned for housing shows a substantial decrease, probably accounted for by the acute shortage of materials. A noteworthy feature of the housing-loan proposals formulated during the year was the extent to which local authorities exercised the powers given by the Local Authorities (Temporary Housing) Emergency Regulations 1944, which authorize the raising of loans by special order without a poll of the ratepayers for the purpose of providing, with the consent of the Minister of Finance, temporary accommodation for persons awaiting homes. During the year, loans totalling £177,100 were sanctioned for this purpose. The amount referred back during the year (£666,000) was much larger than usual and included proposed loans for hospital buildings amounting to £542,000. In these cases the Board was of the opinion that the proposals could with advantage be reconsidered by the respective Hospital Boards with a view to reducing costs and thus lightening the levies on the contributing local authorities. A further safeguard to the expenditure of loan-moneys by local authorities has been introduced by the Engineers' Registration Amendment Act, 1944, which came into force on the Ist April, 1945. That Act provides that loan-moneys may be expended only under the supervision of an engineer who is the holder of an annual practising certificate issued under the Act. The Board acted in conjunction with the Engineers' Registration' Board in drawing the attention of local authorities to the provisions of the Act.

Applications dealt with by the Board have been as follows :

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—- Total Applications. Sancti New Works. .onecl. Redemptions. £ £ £ 1927-28 4,636,649 3,212,185 1,048,796 1928-29 6,007,045 3,866,551 809,221 1929-30 4,218,730 3,563,842 967,875 1930-31 3,840,505 1,766,256 838,901 1931-32 3,412,365 781,195 2,483,810 1932-33 2,951,645 406,521 2,348,231 1933-34 3,884,132 917,560 2,744,245 1934-35 3,859,363 1,585,440 2,379,955 1935-36 4,061,076 1,550,690 2,051,790 1936-37 .. .. 2,804,308 2,411,358 430,313 ■ ; ... 3,362,173 3,098,445 122,758 1938-39. 5,138,917 3,013,872 1,188,525 1939-40 .. .. -O,. 2,674,450 1,701,460 355,800 1940-41 5,336,640 2,709,505 1,602,670 1941-42 4,589,653 1,898,096 1,391,728 1942-43 3,336,770 1,497,120 1,121,000 1943-44 3,999,665 1,349,335 2,359,755 1944-45 3,242,327 1,737,807 698,120 1945-46 3,497,820 2,643,935 243,235 74,854,233 39,711,173 64,8S 25,186,728 17,901

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The difference (£9,956,332) represents amounts declined or referred back by the Board during the period. The following table shows the movement of gross local-authority debt: — £ £ 1915 .. .. 24,538,721 1939 .. .. 68,206,674 1920 .. .. 30,187,942 1940 .. .. 69,486,970 1925 .. .. 53,353,466 1941 .. .. 67,974,687 1930 .. .. 71,207,539 1942 .. 66,645,990 1931 .. .. 72,686,036 1943 .. .. 65,131,074 1932 .. .. 72,402,282 1944 .. .. 63,262,828 1933 .. .. 72,476,056 1945 .. .. 61,237,937 1934 71,969,387 It will be noted that, although additional loan works are being undertaken continuously, the gross local-authority debt is now steadily declining, a fact largely attributable to the policy of the Board of requiring the repayment of loans within the estimated life of the assets to be acquired.

The domicile of local-authority debt has been as follows

Local bodies have shared fully in the benefits from the general fall in interest-rates ovet the last few years. Furthermore, the improvement in the status of local-body securities since the Local Government Loans Board was established is reflected in the narrowing of the margin between the rates for these securities and the rates for Government securities. The conversion of local-authority loans effected in 1934-35 generally brought interest-rates for these securities down to per cent., but the current market rate is 3J per cent., with some local authorities raising loans at an even lower rate. The present rate has probably never been equalled and the low interest charges have enabled substantially lower rates to be struck by local authorities. The Board desires to acknowledge the valuable assistance it received from the comprehensive reports prepared for its information by the various Government Departments and to acknowledge also the ready co-operation of the local authorities concerned, which greatly facilitates the smooth administration of the legislation governing local-authority borrowing. B. C. Ashwin, Chairman.

Approximate Cost of Paper. —Preparation, not given ; printing (510 copies), £6

By Authority: E. V. Paul, Government Printer, Wellington. —1946.

Price 3d.]

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31st March, London. Australia. New Zealand. Total. £ £ £ £ 1931 17,533,425 8,574,529 46,578,082 72,686,036 1935 16,088,525 2,564,693 52,592,240 71,245,458 1940 12,284,225 2,264,220 54,938,525 69,486,970 1941 9,893,025 2,198,211 55,883,451 67,974,687 1942 9,381,825 2,043,718 55,220,447 66,645,990 1943 8,461,325 1,851,273 53,656,498 63,969,096 1944 7,837,225 1,624,458 53,801,145 63,262,828 1945 7,074,925 1,544,382 52,618,630 61,237,937