CO129-561-10 Estimates 1938 2-9-1937 - 23-9-1938 — Page 343

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have endeavoured to avoid proposing any new taxation for 1938 I am satisfied that it would be possible, without imposing any undue burden, to proceed on these lines in future if our existing resources were decided to be inadequate.

5/53684/34/201

6.

I propose further that the expenditure on ew water-works construction envisaged in the proposals in my despatch No.386 of the 3rd June, 1937, which have already received your general approval, should be

financed from loan funds. This is remunerative

expenditure of a kind which it appears fully justifiable to charge to loan account; the whole system of water charges is at present under review and it is hoped to

arrange so that the full cost of the water, including

at least all new capital expenditure, shall be met by such water charges. There are no loan funds at present

available as the whole of the 1934 Loan has been

allocated, but I propose to follow the 1929 precedent

of meeting this expenditure out of advances from surplus

balances in anticipation of a loan to be raised. There

is already a sum of about $11,000,000 advanced in that

way against the 1934 Loan and if cash is required the

balance of that loan can be issued, I believe, on about

the same terms as the first issue. It is not, however,

thought necessary to raise any further part of that loan

at present as there is still sufficient cash in hand.

7.

This method of financing has the obvious

advantage that Government avoids paying interest on

the loan until absolutely necessary and, so long as

there is as at present no reason to fear a rise in long

term interest rates, (when it might be better to raise the loan at once) I propose to continue the practice.