OUR PUBLIC DEBT.

Dominion, Volume 3, Issue 909, 31 August 1910, Page 9

OUR PUBLIC DEBT.

THE EXTINCTION SCHEME. THE DILL IN COMMITTEE. 11l Committee on tho Public Debt Extinction Bill, .. . Mr. MASSEY called attention to the interpretation clause. He said that 'it was provided that "public debt." meant any portion of tho moneys borrowed- uv the Government, for tho repayment of which no assurance ,or reserve fund or oinking fund exists, but should not include Treasury Bills. In this connection he wished to know what was to bo the position of tho loans for local bodies. Wero they to be paid as hitherto? or when-were tliey to be paid? ' The PRIME MINISTER stated that tho. accumulations' of the sinking funds in respect'of loans to local bodies, which amounted to .£900,000,- were to' remain intact. '.That amount was to remain exactly as' it \vus for the purposes for ;which they were Raised. After the coming into operation of . the Act, whatever amount was' payable under the old: system goes to the: commissioners under .this system for investment in' the future. Mr. Massey: Where is there provision to pay off'the loans for local bodies? Scupe of the Scheme. Sir Joseph: This scheme is to pay off all loans. ■ Mr. Massey: No; you except these loans. •Sir Joseph: No; only those which have internal sinking funds uot coming from the consolidated funds. Air. ALLEN (Bruce) said that as long as .the apcumulation's of the loans for local bodies were in the hands of the Public Trustee the loans could not bo classed as'"public debt." The same remark applied to the war. loans. Loans, unde'r the Dairy Industry Act and the Coal"Mines Act' were in the same category... Then what; was ■ the position its :to . .'the Reserve: Fund securities- and the" Bank of New Zealand sliures and the Neiv, Zealand . Consols? 'The - definition of "public debt"' needed amcndihent. If tho Bill was passed as it, stood the. Govern-; ment would 'still have to pay the 1 .per cent, sinking fund in respect of the loans for local bodies. ■

Jlr. T. ,13... TAYLOR .(Christchurch fJvorth) was not right that the workers - should he called updu-to meet the repayment of loans - which. . were creating enhanced land values; .. The' stated that -the •loans to local bodies and the'war loans were in the C 3 millions dealt'with'under the-scheme. If of accumulation in respectrof them were invested, it would pay olf 10 millions in 75 years. The amount would, therefore, make full provision for -both 'of - the loans, l.io 63 millions included all other loans. "Under the old system of loans to-local, bodies, which, was a necessitous system; only' '3£ millions : were • loaned out in! 30years.' : Already- over one . millidn - had,however, been loaned out to local bodies' under the State' Advances Act in- a com-' parativ.ely small period. It would bq imiibssible to run the old .system- side byside with' the new system. The' Act would, however, bo amended to meet the cases where applications for-loans under the old system .Were not completed. There - could be no doubt but that the local bodies appreciated the-new system.To meet certain ambiguities which' had been mentioned, he intended to move amendments to a subsequent clause.

A Peculiar Definition. Jlr. . HERRIES (Tauranga), said that, as drawn up, the interpretation clause defeated the object of the Bill,-for as soon as the Act came into operation all tho■ loans would have a sinking'fund, a provision which under . the definition took them; out of the category of "public debt." (Laughter.) Tho PRIME MINISTER said thai in order to make the point alluded to by Jlr. Herries quite clear, ho would agree to have an amendment inserted in the Hill. If the scheme were examined from beginning to 'end it would be found to be actuarially correct. He had not heard from any quarter' any complaints as to the scheme. i Mr. JAMES ALLEN (Bruce) said that if the Prime Minister would agree to leave the loans to local bodies and war funds under ■ their. present sinking funds he would be entirely in favour of the rest of' tho Bill. i Sir Joseph: No, I can't do that. Subsequently, Sir Joseph said that.no undertaking was given to the lenders of the moneys for the local bodies' loans and tlie war loans that sinking funds .would lie provided, so therefore under his scheme there could be no. breach of faith in that regard. He entirely disagreed with those who stated that- no sinking funds should be provided in connection with the railways, post and telegraphs, etc. No one. could tell what improvements, might take place in connection 'with those public utilities, lie was not surprised that air. Allen was opposed to the proposals; but he took comfort from the fact-.that that member's- predictions had always gone astray. Mr. Allen: What about the superannuation schemes? A Prophecy. ' Mr. JIASSEY said that if the Prime Minister were still in New Zcahnd seven years hence he would be greatly disappointed with this measure. As, -regards the railways ho agreed that they were a very valuable asset, but if they-were to be sold—and he was strongly opposed to such a thing—the price they would fetch would depend on tho legislation as to freights. He believed that the monorail system would-shortly be introduced in New Zealand. But that was by the way.' It was to be hoped that the "Primo Minister ...would not insist on the details 1 as they appeared in the Bill. AVhen Clause 8' (which provides that, the Auditor-General shall furnish an Animal return to I'S riiament) was readied,' the Premier, ill riply to Sir. I'rassr, said that what was proposed under tho Bill was that at the end of sevenly-five years the present debt would be liquidated, and that in regard to fresh loans each of them wonki bo paid off at (lie end of seventy? five years 110111 the date of each loan. Mr. Herries: Well, the clause does not express that intention. Jlr. ALLEN (Bruce) moved as an amendment that the words which appear in parentheses should be included in the following clause-. "Within thirty days after .the. end of each financial year the Auditor-General, shall furnish tho Minister with a certilicato showing . . . tho sum which if invested each year at compound interest at four pounds per artnum . .. . (with accumulated sinking funds and all accumulations thereon) would in sevenly-five years equal the total amount of the public debt." The PRIME MINISTER declared that the clause as it stood gave effect -to the ! intention of the scheme.

Mr. MASSEY expressed tho opinion that it would pay tho Premier even now to send tho Bill to the Public Accounts Committee, so that the Government actuaries might bo examined as to the effcct of various provisions. Sir Joseph: No, I won't do that, Tho amendment iviis rejected by 41 votes to 17. - ' Mr. MASSEY moved an amendment that the following words l>e inserted in the clause before tho wor(!s "in screntyiivo' years equal such amount," viz., "would from the passing of this Act in ease of leans raised up to .March 31, 1910. or in seventy-live years from tho raising of each subsequent Joan." , Tho proposal , was thrown out by 39 votes to IS. . ' . War Loans and Loans to Local Bodies. Mr. JA.MES ALLEN (Bruce) moved an amendment to Clause 12, providing_that, payments out of the Consolidated Fund io Hie Public Trustee in connection with War and\ Defence Loans should not cease.. ; . Tho amendment was negatived by 37 to 15. . ; . Jlr. ALLEN then moved a similar amendment in regard to the Sinking Funds of Loans to Local Bodies Act. He asked members seriously to protect an obligation that they should not ignore in the interest of tho Dominion's credit A statutory obligation had been entered into with tho money-lender at Honie, and it should be respected. Now tho _ taxpayer would have to suffer. The PRIME MINISTER said to repay tho whole amount at 11 per cent, would take thirty-eight years. If they wanted the loans paid in twenty-six years they would have to pay! per cent, more than they had been paying. Tho taxpayers would'realise that this proposal was entailing only a very light loan to "bring about a very fine position in the future. Upon a division, the amendment was rejected bv 35 votes to 15. ■ Mr. MASSEY moved to deleto subSection 2 of. Section 12,- providing that the interest on the capital funds now in tho hands of the Public Trustee arising out of payments to tho sinking funds of tho loans abovo referred to shall hereafter be paid into the Consolidated Fund .instead of being accumulated by tho Public Trustee. This, he said, was very /like collaring the sinking funds. • The amendment was negatived by ( 35 votes' to 15. The PRIME MINISTER moved certain amendments to the clause, .which was finally passed by 35 votes to 14 in its amended . form as follows:—"The payments out of the Consolidated Fund to the Public Trusteo' under Section fiftyfour of the New Zealand Loans Act, 1903, and unaer Section eighty-eight of tho Local Bodies' Loans Act, 1908, shall cease on the coming into operation of this Act. .The interest on the capital funds now in the hands of the Public Trusteo arising out of such payments shall hereafter until tho public debt is wholly extinguished ( be paid into the Consolidated l r und at' such times during each financial year as the Minister and the Public Trustee'may, arrange, instead of being accumulated by the Public Trustee.. When the public debt is entirely repaid the capital fund '• aforesaid shall be paid by tho Public Trustee into tho public account al such times and insuch sums as the Minister may direct. Section 5-1 of the New Zealand Loans Act, 190S, and Section 88 in the Loans to Local Bodies Act, 19(18, are hereby repealed. Tile loans referred to in tho said section shall for the purposes of this Act bo deemed to be portions of tho public .debt." ,'. Mr. MASSEY,' at 1.25 a.m., suggested that the Prime Minister should agree to report progress. ■ The.PRIME MINISTER said he would agree to stop after clause 20 bad been passed. . Clause 20 was amended to provide that surplus funds'may be applied. under discretion of tlm bc-ard to the purchase at or below par, for cancellation, . .of any' stock ,or debentures being part of the public debt. - v - At this clause the Houso-reported progress,- and' adjourned .at, 1.50 a.m.• C CRIMES AMENDMENT BILL. Tho Crimes Amendment' Bill, which was reported on by the Statutes Revision Committee of the Legislative Council ..yesterday,' with a recommendation that it be allowed to proceed, has not been very much altered by the committee., Amendments have ..been made'in. the clauses providing'- that reformativo detention may be-included in any,'sentence for indictablo offences or summary, •conviction. . As they' stood originally, these clauses provided ' for a- further period of reformative treatment in addition to tho-ordinary sentence in suitable cases. . While the Bill retains - this power, an alternative mode of. procedure is provided ... for,.. , Judges ■and,>,magis-trates-are empowered, baying -regard ■:to the, j conduct,:. character,' .-.associations, : or mental condition of-the person-convicted, to "'direct as part of. the sentence that on the expiration of the term of imprisonment then imposed . . . the prisoner be detained in prison for - reformative purposes," , or without imposing. any precise term of imprisonment upon, the prisoner, sentence him- to be forthwith committed to prison, there to be detained for reformative purposes. As previously, . the maximum periods .of reformative detention are to-be ten years and three years for .indictable offences and summary conviction respectively. .The constitution, of the Prisons Board is. nltercd,' the maximum membership being increased from five to seven, and whilst retaining. the Supreme Court Judge, the committee has struck out the clauses providing that- all- the other members of the board -shall be permanent officers of the public service. The provision in roferenco to crediting wages -to prison labourers has been altered by tbo' sub-, stitution of the word "may" in place of •'shall;"'. •