Local Bodies’ Loans.

New Zealand Graphic, Volume XLV, Issue 4, 27 July 1910, Page 48

Local Bodies’ Loans.

MILLION AND A HALF WANTED. HELPING THE MAN OUT BACK. Dealing with loans to local authorities in his Budget speech, Sir Joseph Ward said that since the coming into operation of the State-guaranteed Advances Act on February 1 to June 30, the total applications for loans received numbered 188, and amounted to £1,570,048. Of these applications 28, for £604,820, were declined, 131 for £754,047 were provisionally approved, and 24 for £ 184,-

491, were finally approved, five for £27,590 were postponed. Loans for necessary works such gs roads, bridges, drainage, and water supply, had preference, and applications for electric .■ light installation, Itown hnlls, recreation grounds, and other things of that kind were refused. The struggling settler, whose children could not get to school for the want of a bridge, or whose wife could not receive medical aid at a critical time through the impassability of roads, must be considered first. As there would be a very large development of the loans to local authorities’ branch of the Advances Office in the near future, alterations of the procedure in obtaining loans would have to be made. His intention was to so simplify the procedure that after the wish of the ratepayers that the loan should be obtained was clearly expressed, the whole of the remaining work to complete the borrowing operations could and would be undertaken by the Department. The time for raising any objections by a dissatisfied ratepayer to the validity of the proceedings would be reasonably limited, and after the expiration of the time fixed no legal steps could be taken to have the proceedings invalidated. The term for repayment of loans by local authorities might reasonably be extended to 50 years. It would make the instalments lighter. For each £ 100 the instalment of principal and interest at 3J per cent., with a term of repayment of 361 years, is £4 17s 6d per annum; for 50 years it would be £ 4 5s only. Even at 4 per cent, interest the annual instalments would be only £4 13s lljd per £lOO. Money may not always be obtainable at present rates. After a short experience of the working of the system, he was satisfied that the charge made by the Department, namely, a comm’ssion of one-half of 1 per cent, was too low. On a loan of £lOO a fee of £5 was paid, and everything in connection with the loan had to be carried on for 36J years on this fee. In addition, the costs of raising the loan must be paid. A difference of one-tenth of 1 per eent. would be a very slight charge, but it would probably pay the cost of raising the loan, and the interest lost while funds were waiting investment.