Forum and Acinum

Loan Charges And The Ratepayer

The elimination of open stormwater drains within Nelson city has long been high on the list of priorities of the City Council's works programme. Householders who have put up with these open drains outside their properties will have noted with joy the news that the finance committee is to seek full Council approval to the raising of a loan of $512,000 to complete this work.

But, unfortunately, there's a snag, and it is one over which the City Council and every local body in New Zealand has no control - the final cost of works financed by loan. Under the present financial system within New Zealand, there is no way in which local bodies can finance necessary works outside of rates than by raising loans. And the interest on such loans is staggering. Take a look at these figures. If we raise a loan of $512,000 (as we must), we pay back, over the 20-year loan term, $900,000. In short, almost $400,000 of the rates collected in the next 20 years will not be spent on Nelson works, but in paying the interest on the loan. The city treasurer (Mr W. G. Milne) - told us that of the $271,895 required from special rates during the 1970-71 year to repay loan charges, about $100,000 of this is interest.

What can be done about this? The Council doesn't like it, neither do its officers for they are heavily restricted in carrying out urgent works. One political party advocates the lending of money by Government to local bodies, free of interest. Others say this is not feasible. It has also been suggested that the Government lend money to local bodies at a small interest rate. This is feasible but, we hear, there are arguments for and against it. What we would like to know is this. How long are the ratepayers of New Zealand going to put up with a system which is obviously wrong - a system which keeps heaping additional taxes (rates are a tax) on the people and keeps the local bodies short of finance so that they have to raise rates again? It's certainly time it ended.