LOCAL GOVERNMENT LOANS BOARD REVIEW OF OPERATIONS FOR THE YEAR ENDED 31st MARCH, 1947

Appendix to the Journals of the House of Representatives, 1947 Session I, B-17

B—l7

1947 NEW ZEALAND

LOCAL GOVERNMENT LOANS BOARD REVIEW OF OPERATIONS FOR THE YEAR ENDED 31st MARCH, 1947

Laid on the Table of the House of Representatives by Leave The 31st March, 1947, marked the end of the twentieth year of the Board's operations, and during that year the Board dealt with a greatly increased number of local-authority borrowing proposals. The total amount of the loans considered was £10,722,893, the largest amount dealt with during any one year of. the Board's operations. Of that amount, £9,843,543 consisted of new applications and £879,350 represented amounts previously referred back. Loans for new works totalled £7,289,436, while redemption loans to the extent of £1,006,430 were sanctioned. The balance of £2,427,027 was referred back for reconsideration or was deferred pending further investigation. The following is a summary and an analysis of the loans dealt with during the year, compared with the figures for 1945-46 : 1945-40. 1946-47. £ £ £ £ Applications .. .. ..3,497,820 9,843,543 Previously referred back .. .. 55,350 879,350 ■ £3,553,170 £10,722,893 Sanctioned— New loans.. .. .. .. 2,643,935 7,289,436 Renewal loans ... .. .. 243,235 1,006,430 Referred back .. .. .. 666,000 2,427,027 — £3,553,170 £10,722,893 New loans — Waterworks .. .. .. 94,100 155,465 Drainage and sewerage .. .. 133,525 386,120 Roads and bridges (counties) .. 43,800 42,629 Street works (boroughs) .. .. 35,850 369,050 Municipal buildings, offices, &c. .. 57,700 86,315 Recreational facilities .. .. .. 312,480 Transport .. .. .. 28,600 1,018,000 Housing — Permanent .. .. .. 50,950 341,017 Transit.. .. .. .. 177,100 147,850 ■ 228,050 488,867 Electric supply— Power Boards .. .. .. 731,000 1,011,500 Other .. .. .. .. .. 460,400 —- 731,000 1,471,900 Hospital works .. .. .. 953,750 1,502,005 Harbour works .. .. .. 135,000 1,065,000 Eire Board loans .. .. .. 27,500 39,500 Gasworks.. .. .. .. 35,000 32,000 Abattoirs.. .. .. .. 1,000 107,900 Education authorities .. .. 47,700 17,425 Machinery .. .. .. .. 54,730 Miscellaneous .. .. .. 91,360 140,050 £2,643,935 £7,289,436 The diversion of the unexpended balances of loans amounting to £17,310 was approved under section 47 of the Finance. Act, 1929, and approval was given under section 20 of the Finance Act, 1934, to the use of capital moneys amounting to £310,694. This

B—l7

latter sum was much larger than usual and included £238,000 representing the purchasemoney of assets sold by two local authorities. The purchase-money could not conveniently be utilized in loan-repayment, and accordingly approval was given for it to be expended on capital works. The amount sanctioned for new works shows a very substantial increase, as was to be expected with the expansion of local-authority activity following the abnormally low level of activities during the war period. Increased costs also are reflected in the amounts of loan proposals. The borrowing by Hospital Boards was again very heavy and was the highest annual figure on record, being more than 50 per cent, higher than any previous year's figure. Hospital Board borrowing was also the highest of any individual category for local-body works-. Large increases are shown in proposals for drainage and sewerage works, borough street works, recreational facilities, machinery purchases, and transport. The latter' item is largely accounted for by the Dunedin City Council's scheme for the complete replacement of electrical tramways by a trolly-bus service involving loans totalling £858,000. Proposed harbour works resulted in another item which exceeded £1,000,000, mainly for major long-term programmes at Auckland and Wellington. Notwithstanding the immediate difficulties associated with the shortage of power, electric-supply authorities are undertaking heavy capital expenditure in the extension of supply to new areas, in the further reticulation of areas already receiving supply, and in increasing the carryingcapacity of reticulation lines. The new loans under this heading show a £740,000 increase over the 1945-46 figure and reached a total of £1,471,900. Local-authority housing proposals have shown an increase during the year, transit housing still being a substantial item. It is noteworthy, however, that whereas in 1945-46 transit housing proposals well exceeded the amounts provided for permanent housing, in 1946-47 permanent housing predominated greatly. Municipal buildings, offices, &c., show a very modest increase, presumably giving place to the more urgent provision of housing. The amount referred back during the year (£2,427,027) was considerably higher than usual and reflects in a measure the fact that the Board is unwilling to -sanction excessive borrowing under buoyant conditions that might later prove unjustified or too great a burden for the local authorities concerned. Approximately half the amount referred back was in respect of Hospital Board proposals. Applications dealt with by the Board have been as follows :

2

Sanctioned. Total Applications. ISTew Works. 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 1937-38 3,362,173 3,098,445 122,758 1938-39 5,138,917 3,013,872 1,188,525 1939-40 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 1946-47 9,843,543 7,289,436 1,005,430 84,697,776 47,000,609 26,193,158 < 73,193,767

B—l7

The difference (£11,504,009) 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 1946 .. .. 60,025,864 The domicile of local-authority debt has been as follows :

The low interest-rates mentioned in last year's report are still being maintained, and accordingly during the year the Board revised its policy with regard to the interestrates it was prepared to sanction. The maximum rate which the Board will now approve is per cent., and permission to pay interest at that rate would be given only in exceptional circumstances. The basic rate applicable to the majority of local authorities is 3f per cent. It is interesting to note that several of the larger local authorities have recently floated loans at 3 per cent, and 3| per cent., those closely approximating the interest for Government securities. These lower interest-rates, to some extent, are a set-off against the present high cost of capital works. The very heavy increase in the cost of undertaking capital works is, however, having a marked effect both on rating and on the amount of loan proposals, making it increasingly difficult for the smaller boroughs and town districts in particular to achieve the basic services of water-supply and sewerage. The present appears to be an inopportune time for local authorities to undertake works for which there is no immediate urgency. The Board desires to acknowledge the valuable assistance it has continued to receive 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 (050 copies), £B.

By Authority: E. V. Paul, Government Printer, Wellington.—1947.

Price 3d.]

3

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 1946 6,604,725 1,484,40.) 51,936,739 60,025,864