LOANS TO LOCAL BODIES.

Gisborne Times, Volume XXXIII, Issue 3671, 5 November 1912, Page 5

LOANS TO LOCAL BODIES.

STATE ADVANCES SYSTEM. ALTERATIONS PROPOSED PREFERENCE FOR OUTLYING DISTRICTS. [BY TELEGRAPH—PARLIAMENTARY CORRESPONDENT] WELLINGTON, Nov. 4. Important amendments in the State Guaranteed Advances Act, 1909, are proposed in the Bill introduced in the House of Representatives. It embodies the proposals regarding financial assistance to needy local authorities in backblock districts, and gives effect to the policy enunciated by the Minister for Finance.

The existing law provides that the interest to be paid by local authorities on loans from the State Guaranteed Advances system is to be at the same rate as that at which the money was raised, and that the borrowing body is to pay a commission not exceeding one-half per cent, of the loan to cover the expenses of administration. The Bill now proposes the repeal of the provision for commission and the substitution of a new provision that the rate of interest shall be one-eighth per cent, more at the rate at which the money was raised, and in calculating the rate all fees and commissions, discounts, and other charges connected with the raising of the loan are to lie allowed for. These provisions are to apply to all loans or any part of loans paid to a local authority after the date of the passing of the new law, whether the application was finally granted before or after that date. EFFECT OF DEAR MONEY. Another important section authorises the payment of a higher rate d interest on loan moneys than originally contemplated. Without obtaining the further consent of the ratepayers the authority is to pass a resolution at a special meeting making a special rate sufficient to cover the increased payments. It is also proposed that no local authority shall have right of action against the superintendent of the Advances Department for failure-on his part to advance moneys at the rate of interest at which the application for the meneys was finally granted by the Advances Board. Surplus moneys remaining after the completion of any public work for which a loan is granted are to be repaid to the Superintendent. Provision is made for a local authority to repay a loan in whole or in part at any time. USE OF ADVANCES RESTRICTED. The 1909 Act requires that the purpose of any advance to a- local authority shall be lawful and reasonable. The Bill now proposes that no loans should be advanced except for the construction of roads, bridges, water supply works, drainage works, or sanitary works. This section is not to restrict the power of the Board to grant any loan application which has been provisionally approved before the passing of the new Act. __ If the moneys available for advances to local authorities are insufficient to satisfy all the applications, preference is to be given to local authorities which apply for loans for the purpose of constructing. roads and bridges in outlying districts. BURROWING POY/ERS LIMITED. The Boards shall not after the passing of this Act grant to any local authority, another clause reads, any loan which, together with all other' loans granted by tiie Board to that local authority within the three years, exceeds £60,000. £2,500,000 FOR EACKBLOGKS. Special provisions are made _ for loans for works in outlying districts. During each of the 10 years after the passing of the Act a sum not exceeding £200,000 is to be set aside for advances to local authorities for the construction of reads and bridges in outlying districts and for metalling such roads for the first time. . For the assistance of bodies in obtaining loans under this section contributions are to be made from the Consolidated Fund towards the payment of interest and sinking fund on each loan. During each of the first 10 years of the term of the loan the State contribution will be at the rate of 1 per cent, of the amount of the loan, and during each of the next 10 years onehalf per cent, of the amount of the loan.