SHAREHOLDER CAPITAL

Press, Volume LXXI, Issue 21410, 28 February 1935, Page 14

SHAREHOLDER CAPITAL

OPPOSITION BY MR W. J. POLSON AMENDMENTS DEFEATED IN iiorsE [From Our Parliamentary Reporter.! WELLINGTON, February 27. I Renewed keenness marked the resumption of the committee debate on the Mortgage Corporation of New Zealand Bill in the House of Representatives to-night. Clause three, providing for the establishment of the corporation, came under review when the House met at 7.30 after an afternoon spent on other business. Announcing that he did not propose to "prolong the agony," the leader of the Opposition (Mr M. J. Savage) said he would ask members to vote against the clause. Machinery existed to give effect to what the House wanted, and the bill was the thin edge of a wedge for the destruction of public lending institutions. The Prime Minister (the Rt. Hon. G. W. Forbes challenged Mr Savage's statement, and declared that the bill would not destroy but would improve lending operations. It represented a genuine attempt to help tile farmer. lie did not expect the leader of the Opposition to see any merit in any measure brought forward by the Government. The Opposition wanted to score off everything the Government did. In the past, New Zealand had a system of mortgages on a flat basis, and it was generally agreed that a better system of lending was wanted. "How far does the Prime Minister think he can mislead the House?' asked Mr A. J. Stallworthy (Ind., Eden). "Instead of giving cogent reasons for his opinion that the bill will improve the position, he immediately proceeds to attack the Opposition, and all those against the bill, saving they have no right, motives. He has said, 'ln the past we have had a sysiem of mortgages on a flat basis.' Does he not know that the State Advances Department has been operating under table mortgages for the last - l 0 years? It has come to a sorry pass when the Prime Minister gets up in a weak-kneed way and makes a statement which is not in accordance with fact." Other members added their criticism of the measure, and on a division the clause was retained by 36 votes to 27. Mr Poison's Amendments The determination of Mr W. J. Poison (C., Stratford) to oppose sections of the Mortgage Corporation Bill dealing with shareholder capital was shown again when Mr Poison moved several amendments to the bill during the committee debate. Mr Poison, who voted with the Government on the second reading and on the short title, in committee voted with the Opposition on the clause which explicitly establishes the corporation, presumably because it involved the appointment of shareholders' directors. When clause 5, setting out the rules of the corporation, was being considered, he moved two amendments deleting all reference lo shareholders and shareholders meetings. After a brief discussion these were defeated by 36 votes to 25. Mr Poison briefly explained that he intended to oppose everything referring to share capita], and anything pertaining to shareholders' representation on the board. He was supported by Mr A. M. Samuel (Ind., Thames), who said that this point revealed wide differences between the Government and the farmers. The bill before the House would mean that every State lending department would be vested in private ..interests, and that the landlords of the mortgagors would be contained in a board composed of representatives of private share capital. It would be the aim of the shareholders to keep dividends as high as possible. Mr Samuel pointed to the example of the Reserve Bank. There had been, he said, a great deal of opposition by Government members to the principle of share capital when this measure was before Parliament. The present bill should meet with the criticism of the op-

ponents of share capital, because it was a direct concern of the farming community they represented. It would be interesting to see how these members voted. Mr Poison explained that the clause as it stood was extremely objectionable, because it put the shareholders in control of the schedule of rules. In the subsequent division, Mr Poison was the only Government member to vote for the amendments, and Mr R. A. Wright (Wellington Suburbs) the only Independent member to vote with the Government. Minister's Opinion The opinion that full authority should be vested in the members of the Board of Management to be set up to govern the corporation, was expressed by the Minister for Finance (the Rt. Hon. J. G. Coates), when speaking to an amendment moved by the Leader of the Opposition (Mr M. J. Savage), who sought to give the Governor-General-in-Council power to amend the schedule of the corporation without reference to the board. As the clause stood, such amendments might be made only at the request of the board. The board would be composed of men chosen for a special reason, Mr I Coates said, and he thought that they should have full power to manage the affairs of the corporation without Government interference. They ' would have a far-reaching public responsibility, and such authority as was conferred on them would give them an incentive to obtain a thorough grasp of the situation. "The clause brings the Government of the day into close association with the board," said Mr Coates, "and the board cannot have the authority it. requires unless it has the support of the Government." Mr A. S. Richards (Lab., Roskill): A board to govern the Government. Mr Coates: Well, we'll see whether that is so or not. It is a case where a board should have control, and whore it should have the full responsibility for the conduct of the corporation. Mr Poison: It puts power in the hands of the shareholders to veto anything the Government might want to do. Mr Coates: With the inclusion of shareholders there is a great, advantage, in that the affairs of the board are placed before the public at the annual meeting. Advantages Outlined Continuing, Mr Coates said that nothing had been said about the advantages of shareholders, or the advantages of a shareholders' meeting. It gave them an opportunity to discuss all matters concerning the corporation, and the interests of the corporation and of the country would be best served by such a meeting. He thought that Mr Poison under-esti-mated the advantages of shareholder capital. Mr Poison said the shareholders would decide what was to go into the schedule of rules, and how it was to be amended, while the Government with its £50,000,000 of securities would be prevented from doing so. Mr Coates: Will you say how the shareholders can pass an Order-in-Council? Mr J. A. Lee (Lab., Grey Lynn): By the back stairs. Mr Poison: It is in the clause, and no amount of side-stepping will alter it. Mr Coates: You are very offensive. Mr Poison: I am not trying to be rude. I am not desirous of being offensive. Perhaps you mistake my earnestness lor oticnsivencss. Second Amendment Mr Poison, speaking to his second amendment, said that Hit? bill save the shareholders the right Lo over-ride the decision of the board or the Governor-General-in-Council in the matter of alterations to the schedule of rules. Hiis was a most extraordinary siluaand ivl;' Poison ho;jed that the Minister would even now consent to modification of the clause Mr Coates .<a:d that Mr Poison had over-staled his case. The board itself initiated matters of policy, and if it desired some alteration to the schedule it would naturally go to the shareholders, who were entitled to some say. Mr C. A. Wilkinson (Ind., Egmont): They have all the say. Mr Coates: No, they haven't. All alterations must come through the Government. Mr Wilkinson: The clause says nothing can be done unless the shareholders agree. Mr Coates: That is so. Mr Wilkinson: Then it is definite that without the sanction of the shareholders, the Government is powerless. Mr Wilkinson was speaking when the House rose at 10.30 p.m.