LOANS TO LOCAL BODIES

Dominion, Volume 6, Issue 1560, 2 October 1912, Page 8

LOANS TO LOCAL BODIES

; ANOTHER DEBATE. SIR JOSEPH WARD DEFENDS HIS ADiINiSTRATiOPI. , REPLY BY HOft JAMES.ALLEN.' ; SPEECHES BY THE PREMIER AND OTHERS

A long discussion upon tho administration of- the State Guaranteed Advances . Department, under tho last two Govern- . ments,;tpok place in the House of-Repre-sentatives last evening under cover of a motion by Sir Joseph Ward that an article published in The Dojii.nion on Monday, /apjl;- headed ."A Useful Exposure," constituted a breach of privilege. During . the discussion which followed-it lasted from 7.30. p.m. yesterday until 1.20 a.m. this ) morning—the Prime Minister stated that no'breach' of privilege, had been committed, and that (he nicmfcr for '■Awarua knew it. On tho other hand the 'Prime-' Minister offered no objection to a .'Proposal that various questions connected J with the. administration of the Advances 'Ofjijio should-:be referred to the Public lAccourits 'Committee for inquiry-ami report. -This, course was ultimately decided -upon.'. ■:• • .-■■-.'• '.'■ ; .....,: -. •; • -Sir V JOSEPH . . WARD (Awarua) i opened, the'- debate' by stating that m an article appearing in "The Dominion of the. preceding day certain statements had been- made which ho wished to place betore the House, and concerning which he ■■proposed Id' movo a resolution. -The Brticlo'was hoaded "A Useful Exposure.'" • The article was read by'the clerk of the'. ■'House. '-..'•'.■ . Sir- Joseph. Ward .moved: That aibrcach' of privilege has been committed ny T-iiE Dominion 'newspaper in tho publication of- statements- quoted; and that uho same- bn referred to a committee to consist'of the'members of the Public accounts.Committee, with power to call ,for persona and papers, and to inquire into and report on all loans by tho State ..'(tdvancos Department, the inquiry to be .jpen to the.-.prws. He was-sorry the .Minister had not thought it fair to give Mm an intimation that ho intended to loring'the matter up. , :. Mr. Allen: I was challenged to do it. ■ Mr. Russell: You had the papers here to do it. ■'■-•'■ .. ■ S'r, Joseph -Ward.-repeated'-that .lie did iiiot-think the Minister had been -quite ,fair to him, -The.article in question conItained statements from' beginning to end jthatwere absolutely untrue. If the- statejments mado-in the Honsa upon which the ! al i -If"'? , verr exa Sßerated article, ho were true, then thev ■ were easily capable of 'proof. His 'proposal was that the whole matter should b» tully.investigated. . If the statements were I true, r he-was one of those who would jadrnit- that tho. worst form of political bribery .known in any South American [republic existed in New Zealand, and ho .would be one of those to urge the-Minister to have the matter sifted to the bottom. "Certainly Remarkable." It was certainly remarkable to him to fee a. Minister of the Crown accusin0^? ers .?f hls Olvn Department— M.J.J Allen: I never did. bir Joseph: Ward said he had never Efeji a Minister before -reflecting upon oibcers in the Department he was administering. For the statement was that tnere liad been .wasteful squandering of money by the Advances Board. If that Ktateuient were trno.it was likelv to injure the country's credit to an im- ■ known.extent.' He urged that the Prime -M-'Eister- should agree to accept the resolution he had moved. If the Prim« Minister was jiot prepared to allow the Public Accounts Committee to conduct the inquiry, then he was prepared to allow the Prime Minister to nominate a committee from his own party, or he was prepared that the inquiry should bo canducted by- Judges of the Supremo Court. It was necessary in.'fair'iieEs.to the Board and the officials of tho Department, and to a former Minister that this -inquiry (•hould- bo heid.' The statement made was that county councils and road boards • were starved in the interests of big bDToughs. That statement, whoever hnd made it, was entirely untrue.. Ho had never, attended any meetings of the Board, nor had any other Minister of the Crown-, during election year,-and in that year no application from read boards or county councils had been refuit'd until in. the middb «f Januarv last a .limit of .ESCOO was fixed for 'all local bodies, including boroughs. The limit was fixed-because applications were coming in for very nearly double the tha amount, of £ million a year which was borrowed for lending to local bodies. In the Budget, of 1310 there had been an explanation of the Government' policy With regard to future loans to local bodies. It'was to the effect that the amounts lent for luxuries should hi cm-tailed, and that loans 'Sov necessary roads and the like would have 'preference.Loans Under Old System. Ho wanted to put on > record the total of advances niado' under the old loans to local bodies .-ystem .during twenty-five .years. ■'Comil-u * »ot J:i.2oU,ol)b, ' v l>ormi!Jhs .eG'JO,OOp, ro::d boards IEUIIO.OOO, and drainago boards a' 71,0110. Smaller amounts ■ la oi.her hadjes muds a total of ,A2,G75,f100. ThP'-uvwage ppr.yrai , for the whole of tha lucftl , -public bodies was . .6107,0110. As against I his, ilia amount-paid in two years under the Advances Department" was jE917,7i0 and .£1,330,484 finally authorised; total, J;2,9!15,25-1. In the two years which had been the subject or criticism tho other night, the c-outitks ro-id boards, and town boards had received three to ten times as much in one jvar-os.-in any of the preceding year;. There had been no squandering; every loan had been fully secured. No loan had l::en mado except' , upon the unanimous decision of the board. 1?e----3uirements in., tho way of sanitation, rainage, am! water supply under the Public Health Act had imposed a heavy burden on lpeal bodies. Prior to tho Batting up of the Advances Department, a number of bodies had bebn at their wit's end to find money. Before Ira went to .Kngland in the. year before the Advances Department was introduced, a number of local-public bodies throughout Xcw Zealand had informed him t.hrj, they could not obtain th-s Money necessary to carry ofi their works, .and could not. borrow except, at a.'usurious rate,of interest. Some ' of.them could not get money at.ail.'There, -n'ero some local bodies which could not get -money at -4J per cent. One at least had asked the Minister to raise the rate of'interest to 5!- per cent. The Minister oould not contradict it. One local body had-been told that it'would'have to raise roonoy at 90—ten below par—and at a rato of -1) per cent. While in England ho had interviewed leading members of tho London .Stock' Exchange, and had suggest- . cd a system of grouping local bodies, to enable' them to borrow. Ho wa3 (old that nn local.body that wanted less than .felO.0,000" would have tho slightest chanco upon the London Stock Exchange. In case of grouping, local bodies would have .(o borrow .4250,0(10 or .£500,000, unless they were- prepared to loso heavily in cliicounts, interest, and brokerage, , A Primary Requirement. On returning to this country he found (.hat matters were even worse among local bodies than when he went away. He prupnred a scheme, and submitted it to Parliament in. 1009. One of the primary requirements of the time was. that some boroughs. requirjng money,, particularly ••fir drainage and water purposes, should iiavo an. opportunity of obtaining lonns wider the Advances Department.. Tho Act. was placed on the Statute-Book to help all local bodies with the exception of harbour boards desiring to borrow vnry largo sums. Tbo suggestion upon which tliis article was based was that counties, town boards, and road boards in thia country sosld eiHsA a, »Mm. flrjcaii

The bodies named could not expend a million-in one year or in two years. The article implied that the Minister for Finance had flourished • it that ho had made, a discovery in regard to losses on working. Sir Joseph Ward quoted from the Budget of-1910, with intent to showthat it had heeii intended that the State should bear some portion of the cost of raising loans. Special provisions of onetenth of a penny in the £ had been made, and the- Department was not losing a penny piece. Ho had told members of the board that he would ask. Parliament to pass a vote on the Estimates to cover any loss from .a local public body not taking over money as soon as it was obtained, lie had agreed :to this as Minister for Finance, and the members of-the board would-bs bound to affirm upon oath what he had said. In the' Budget of 1911, as in the previous Budget, it was.stated, that the board had refused to entertain applications, for loans for recreation grounds; electric light, town lmlls, ■ libraries, etc. Favourable consideration was given to loans for roads, bridges, water supply, and drainage. Loans for repayment had also been refused. -A statement had been made that JMO.OOO had been .given to a local public body -which had. banked it. That virtually v.-as what was said. What was tho fact?. The first duty of the Stato Advances Department when it finally completed a loan was to get the local body concerned to- take over the money as soon as possible. There -was no reason why local bodies should not deposit the money until they "wanted it. The whole thing was scrutinised by the Audit Department. "V\(ithout a Threat " If boroughs had been excluded from (he legislation of 190!) these local bodies would have had to go on to the local market, and absorb money that was wanted by farmers, merchants, and traders, or else to employ a banking institution at a greater expense than they would have cared to meet. Would' the Prime Minister submit-a-resolution'to tlio House saying that boroughs should' not receive ■ any moneys through the •' State Guaranteed Advauces Office? Ho ventured to say that the lion, gentleman would not submit any such-proposal, and if he did idiot chance, would he have of passing it through the House?' If such an attempt did succeed, it. would mean giving counties and road ! boards radne'y at thu expense of more-than half tho population. Another result would bs to throw boroughs into the hands of If need be ho could specify instances. Ho would undertake' to say without a threat that if the Government made the attempt he had mentioned they would get the finest exhibition of good, clean opposition that they had ever had in their lives. Ho would himself undertake to provide 600 amendments, and with half-a-dozen 'members to help him. would go on uulil they had their Christmas dinner there. Bα was speaking as a man who had provided a million .sterling, for the back-blocks mors than : had been-pro-vided before. He did not get much credit for it. I. Political Influence. As to political influence ■ for nearly twelve months he did not attend a meeting - of the Advances Board. Neither had any. other Minister of tho' Crown. Hβ had followed the same course as in tho ciiso.of the Advances to Settlers. Ho had attended tho board meetings until tho whole machinery was working smoothly and from then on had never, under any conditions, attended the board, but hail given it a free hand. If a member of the board could say that ho was ever asked by him to help along or stop a loan and could prove it, he was prepared to retire for ever from the. public life of this country. He believed that the Minister for Finance had unwittingly made a very great blunder. Ho had spoken of advances mado three days before the election. When were they approved by tho board, and when did the ratepayers vote upon them? He believed that the Government candidate for Iftmuera was 12,000 miles away from New Zealand when tho loan to that road board, which had been- mentioned, was autlioriswl. Ho asked the/Minister, in fairness to everyone, to let this matter go to a public committee. .Sir Joseph Ward next quoted 'detailed figures to show that a certain borough in this country would havo to pay £24,G00 more for a loan of £100,000 if it were debarred from using tho Advances Office. An Extension of Time. At this stiigo (8.5 p.m.) ' Sir Joseph Ward, having almost reached the limit of tho half-hour for which he was entitled to speak, aslctd for an extension of time. The Prime Minister: Go.ahead! (sir Joseph Ward: Thank you, very much.- ■■'•.■• The Speaker put the question, and as no one dissented. Sir Joseph Ward was alk> wed to j>rocfled. Ho went on to declare that every pnblic man in this country should 'commence to resign system of criticism absolutely one-sided,-unjust, and untrue;. br.Mil upon ■ misleading statements which were intended to mislead-"for'the purpose of gaining some kudos of one kind or the other." The article implied that members of tho Government party had used this Stato institution for political purposes. In tho Prime Minister's district, in proportion to population, a roud board got a. larger loan than Timaru did. (Government laughter.) Mr. Massey: Oh, nonsense! Sir Joseph Ward said that the municipality of the member for Wakatipu also got a loan. Mr. I-'raser: How*much? Sir Joseph Ward said that' ho did not know how much. There were two boroughs in tho electorates of the Minister for Railways, ho continued. Was it considered highly\mproper that Te Aroha and Tauranga got loans?- Tho district of the member for Onehunga (Manukau) had got ,£54',f100 for water supply and sanitation.'awl'two of his-coadjutors had included that in tho "squandering and waste." nil of which was properly secured. What about t.ho member. for Eden and Now Plymouth? Mr. Okey: AVe have had none. Sir .1. Ward: Ve-,. you have had j>12.000. He went on to ask "what about"• Eltham, Waitemata, and other electorates, .and drew from .Mr. J. Bollard the remark: "We will tell you all about it by and ,j y-" . ■ Sir .T. Ward: The hon. member admits ho got a lot of it, anyhow? Mr. Bollard: How much did I get? Sir J. Ward:'l haven't got it here, so I can't tell yon. He continued that there was a place called Pukekohe. It had got a loan. Government members: Why not? Mr. Bollard: How .much did they gire Remuera before tho election? . Sir Joseph Ward (producing n- newspaper): Here is tho Mayor of Remuera saying that it is a concoction! Mr, Bollard: It is not. Sir J. Ward: L«t us have him dowji here, and seo what ho says. Hβ went on to complain that "tho satellites of tho Government" said nothing when they got loans, but said it was polities when members on the other side got loans. Mr. Bollard: You will see stars when I get up! Sir Joseph Ward said that the principal borough in his own 'electorate had been refused a loan of JMODO. Mr. Okey: No security, I suppose! Sir .7. Ward: Undoubted security! He nddod that a roud board in the electorate of the then Leader of the Opposition had (tot a loan, although its security was "not ..ft Safeft" 9M feSLfiNßDite'BilUSfl.MJlMft.

offered by the. borough in the Awann electorate. "A Terrible Example." Tiniiiru liiitl been .->ut up as a terrible example. Ho had ar. intpre.-siuii that Tiliiiii'u applied for a good deal more than it sot. ill-. Nosworthy: .etil.OOO; they did not nslc for linicli! Sir J. Ward .-aid that Tiinaru was a very important town.' A larger ctii-pora-tioii than Tiinaru had teen unable to gut money on the open market, mid had "been at" the Minister for Finance to get him to raise the rate to 5 per cent. The bulk o's the amount lent to Timorn whs for waterworks and .sinilation.' Ho had nevor asked the Advances Hoard to take any action in regard to loans, except such as they doomed advi?aj;lo. Ho wished to have, this matter properly investigated publicly, with all the witnesses oa their oaths. If tht>. charges made were established,-then the officers of the Department and the members of tho Advances Board ought to be at once removed from oHite. It was surely not necessary for the new Minister for Finance in order to. advance himself, to club his predecessor. Ways and Means. Hβ maintained that the amount of ways and means now • available .for tho Minister for Finance was .£1,805,000. , Mr. Allen: It is nothing near to it. Sir Joseph Ward: I am going to show him that it. is. otherwise lie must show (hat this official rctm-n in B 13 is wrong. He, argued that because authority was given in the Act to borrow, a million a year, ami as this was the third year of the operation of the Act, the whole amount authorised was three millions. Mr. Allen: I thought you knew your Acl better than- thut. . . ' Sir. Joseph Ward: 1 haven't read , it lately. . Mr. Allen: Then it is time you did read it. .... .' ■' Sir Joseph Ward repeated that the amount now must be .£3.000,000. Mr. Allen: It is not, and you ought'to know better. • Sir Joseph Ward said that if the amount were less lie would be only too glad to hear what it really was. He recognised that there must at times be caution in borrowing, but many of the I counties and,road boards could not have lived without this State Lending Department. . Instead of finding fault -with' it members might suggest something that was going to put- tho local bodies of the colony into a better position. The, price of money had risen, biit. that, was no reason for condemning the institution and blaming'tho people in charge of it by saying'it whs a groat bribery' institution. He had never attempted "to get a political loan on behalf of ahybody, and ie had very little.doubt in his own mind that no other Minister . ever attended' a meeting of tho Advances Board. He regretted that he.had tt>.introduce a newspnuer into tho matter, but that was. the only way he could introduce the subject 1:1 s did not want, to drag up'a newspaper, oven if it did not mind lying about anybody opposed to it. :. . . .' Tho lion. R,'M'KEXZIE (Motuoka) seconded the motion. ' ' .: '. I HON. JAS. ALLEN IN REPLY. ACTION- TAKEN. IN S.ELF-DEHi.NCE. The/ Hou JAMES ALLEN (Minister for Jnnance) said his only, regret was that tils.Honourable gentleman was not in the Mouse when this mnltei came up on Salurday morning. He did not bring the matter up. Tho member, for Avon brought it up by challenging a vote on the ICstimates. Of course, the-member for Avon liad done this for. political nm-pese*-everybody • understood that at tho time Ho could not accept the .honourable gentleman s amendment then,'mid he had, therefore, in self-defence to say w!nt he had said that night. He denied absolutely that he had the papers with him: on purpose to do it. He would not have used thoso papers then—he had intended to uso them later on—unless challenged b> mo member for Avon. He was rather astonished that the member for Awarua did not know his own legislation better—the legislation that lie and Ids friends had placed oh the Statute Book. He (Mr. Allen) would have no objection to tho committee holding the .inquiry Jnto. the Guaranteed Advances.- Department i-,. -He hoped the Prime .Minister, -would accept that part of the honourable ■ member's suggestion. Tho -honourable, gentleman had said that a million a year could bo raised, and that, therefore, the amount available for lending in that period was iC3,000,000. But was this the fact? If the amount authorised was not raised in one year, it could not under this Act be raised in tho '. next. The honjurable gentleman was entirely wrong in the supposition that there was .£3,01)0,000 to be. lent. As a matter of fact he (Mr. Allen) had told the House on Saturday night that on September 16,- instead of there being ,£1,800,000 available there was only .£825,000 available of tho million that, was to be raised this year. And that money was not raised yet. A Policy of Plunge. His grievance against tho honourable gentleman and his party was' that thu legislation had given-rise to a policy of plunge. It was a, pure policy of plunge to authorise a loan of a million a year, and allow large boroughs to como in' and take the bulk of the money; but of that .£825,000 he had to meet commitments to tho amount of .£625,000, which he had not entered into. Sir Joseph Ward: This year? Mr. Allan: . I have to meet the bulk of thorn this year. On September 1G the bank balance to credit in tho Advances Account was .C7OOO. What, were the receipts to come in ? Nothing. The amount invested, as the Act provided, was ,£20,000. The total of all credits was therefore j27,000. This was tho position'exactly as given to him by the Department, and he believed the statement to be absolutely accurate. Ho made no accusations against-the Department, and no accusation against the 'Minister. He did make an accusation against the policy, and he was going to-stick to.that, because lie thought it was a thoroughly unsound policy. • ■ Departmental Disclaimer. He would in justice to the Department, read a communication which he had received from the-"Department:— - "At to-day's meeting of the New Zea land State Guaranteed Advances Office Board, the following resolution wn 3 passed; This board regrsts the statements made in the House- of."Representatives on last Saturday morning to the effect tint loans havo been granted by it to local authorities under political influence, and with a view to influencing the genoril election of last December, 1911. No lean has been granted by this board to any local authority under any pressure whatever. The only considerations influencing the board in granting loans were: (l)-Was the money required for ■ necessary works, irrespective of. the class of local nody applying for the loan ? (2) Was the security sufficient? (3) Were, funds available? The Board asks that a copy of this resolution be sent by the superintendent to the Hon. the Minister in Charge of the Department. The board further respectfully asks that: '1) A'copy.of the abovo resolution be handed by the Minister.to the press. (2) A. tribunal ho. setup as soon as possible to investigate the charges of political influence made against tho. board.- In forwarding the above; I would point out that tho objection to the board lending to. boroughs has no .weight, for these reasons: (a) There. was no power given ■ to tho board to discriminate amongst different classes of local authorities; (b) had the board done so and accumulated funds while certain classes of bodies entitled to them were refused loans, it would havo been properly condemned for favouritism, losing money through haying funds uninvested while local authorities wcro refused loans; or breaking "the law by assuming powers it did not possess. No proper application by any local body was refused'so long as funds ivero available."—(Signed) J. W. Poyhlon, superintendent. The Minister , Responsible. . Mr. Alleri said ho made no charges against the Department or against the late Minister for Finance, but did anyone suggest that the Minister did not have con-, trol over that Department.? It was the Minister's business to control n Department like ■ that. Loans could lint Iw granted until the Minister signed authorisations. For his part, he.did mil. propose to shelter himself behind tho Ilppurlmcnl, and he. would take all the for nil loans granted. Whnt v.-.-i's really wrong waa the law, and lie and his friends hnd opposed it "hen it va.- first proposed. Tlusy had said at the Hiu* jsfckLssuAd, Jupupn, _ He.did aflt bl&mo.

Hie board, but h» would ask the honourable gentleman whether the purpo.-cs iif his Ji'iiiunml Statt-iiioitt nf 1510 wore cisrriwl out by l.mn.s to Harbour iJonnt.-. Were all (he Irons lo harbour boards-ami boroughs meant for necessary works? Amongst works which had been done '■villi h>llll3 were Iht i>iiruha.sc anil fencing iif a piece or land; was this a iiMe.varv work? Was a loan «f .£20,000 nwe-.--arv lo Hio Motueka Harbour- Hoard? Wn"i I lie loan of Ji7B,l)Dft to the Wairoa Harbour Hoard tor necessary wurks? .Hi., coinplaint about the business wars that tho Minister, haying power to raise n million n year, had committed tho country to an »xp?mliturp in two years of U.'2,15L , 1 1')00, and ciiiil-'iigent JJabilitie.s on account of loans conditionally approved brought llm amount up lo £2,800.000. .And this money had been scooped up b,y the larjsur l<ii.:il bodies. Demands came lo him Ircqueiifl.V trom small comity councils, and he could not. give them any money. If appeared that the larger and wiser local bodies knew tho thin? could not last, and when Ihe Act came into force they hail hastened to borrow os much as possible It was a wild policy of plunge. Me argued that the large cities lifco Tiniaru and 'Hangamii should be able to go inta the open market and get their money; perhaps-not-on such good terms, but tinresult of this last policy was that necessary development work could not be done by the poorer local bodies, because all tho money had been absorbed by the bi"ger bodies. Losing Money. A return would be presented to tho Hon.se in the course of a few days which would' show where, all the oiunoy had Stone. The State had lost money, but the reason why much more money had not been lost was'- that the .State could borrow money from the Post Office at par. In three years the loss, had already been •£22,557. He hoped to make provision against suck losses for the future. Could any honest, man say that it was a right thing to allow large boroughs to borrow from tho State at the expense of the general taxpayer, when a loss such as this was being made? Hβ had made no charge of bribery, but was it to be supposed that the pouring of a whole heap of money into a district jus.t before an election would have no effect? Probably no ono was specially to blame, but certainly the legislation was at fault. Was it right, that ,£37,001) should bs paid to the Eemuera Road Board three days before tho election? The legislation "allowcd it, and ho thought the legislation ought to be corrected. SPEECH BY MR. WILFORD. "JULIUS KNIGHT." Mr. T. M. WILFOHD (Hull) maintained that the Minister had insinuated a great-deal against the Board. ' ' As Mr. Wilford -continued ir. tragic tones, Mr.-Fisher- raised a laugh bv interjecting: "This is Julius Knight." Mr. Wilford continued, and a«k«d whv it was that thu-Hoard had felt it necessary to write to the Minister mid demand a public inquiry. ■Mr.Mandcr: Misunderstood. ■ Mr.. Wilford said that the Prime Minister had stated in debate that there was no doubt that money had been spent.for purposes for which it was not intended. . Tho Prime Minister: Hear, hear! • • Mr. Wilford went on to. criticise tiio Minister's statement in detail. He advocated an inquiry by a Judge «f tho Supreme Court, ■ the Solicitor-General (o lend his assistance at the inquiry. He asked the Minister for Finance 'whether ho would veto the decision cf the Bonr<l.! Mr. Allen: I would if I could not find the money. Mr. Wilford asked what the Minister had meant to prove by producing the return." Mr. Allen said that the final person approving of theis loans was tho. .Minister I'cr Finance. And he did it. under his signature. , Something that he said being laughed I at by Government members, Mr. Wiiford spoke of "tho common or garden jackass chorus" on the other side of.the House. The. Speaker called tho member for Hittt to order, anil Mr. Wilford substituted, for his previous phrase, "common or garden chorus; -, Mr. Wilford conI tended that the Minister had .suggested a procedure iha.t woujd nover have been followed. "[•• :;:■• ,v' .; MEMBER FOR AVON. DISAGREES WITH THE MINISTER. Mr. G. W: itUSSEI.L- (Avon) said he hail moved the reduction of the vote on the Estimates as an indication that tho limit of .£SOOO should Ire removed. Ho entirely disagreed with the Minister's statement that .£172,000 was all that the Minister had available for lending this year. The Minister had failed to take, into account one sum of J;3i!p,ooo which was in the fund since . the first year. In. the first year the amount borrowed was ,£400,(100, and the amount lent against it was .£IO,OOO. The total amounts raised totalled -£1.617,000. Against this loans of .£2,104,000 had been finilly approved. Consemiently there was a shortage between the amounts raised and t'hn amounts to by expended of .£117,000 and not .6656,000, as the Minister had stated. If the Government, would borrow the million it was entitled to borrow it would have available for advances .£51.1.000. Mr. Allen: You are entirely wrong. Mr. lius-ell. maintained that he would .be able to pay off all the commitments of previous Governments, some of which were not yet' payable, and still have this sum left for lending. He charged tho Government with insincerity in that although they had come into power as a back-blocks Government, it had converted into a permanent policy what was intended by tho Into Government to bo only a temporary expedient. Ho argued that there was no need any longer for the limitation of .ESOOO. Cheap money for the opening up of New Zealand would be the life-blood of the country's progress. But it was absurd to say that the half a million people living in the cities and.boroughs should not be allowed to borrow cheaply. The question wjis now whether tho Government would in the interests of the private money-lender, bo allowed to stamp out the Stato Lending Departments. This was what members on his side of the Hoiifc had always said would happen when a Conservative Government got into power. ' They wero starting on tho cheap money, next they would attack the lands ior settlement; he. trembled when he contemplated the possible fate of tho • old age pensions scheme. (Laughter.) This was just where the country was beginning to see the difference between having a Liberal Government in power. THE PRIME MINISTER. NO BREACH OF PRIVILEGE, The Hon. W. F. JIASSEY (Prime Minister) counselled the member for Avon to leave misrepresentation nlono in his attempts to make out a case. He (Mr. Massey) had no desire to assist honourable gentlemen in wasting the time of (lie House. Prospects of winding .up the session before Christmas were becomin" small by degrees and beautifully less". I-or tho greater part of its progress this debate had. been a waste of time of Parliament. For this the member for Awarua was primarily responsible. Hβ had been given an hour in which to make his speech, and would have done if muo.'i more concisely and effectively had ) ie united his speech lo a quarter of f .n hour. He hiirt dealt first with an alleged breach of privilege, and then had proposed that the matter be referred to the Public Accounts Committee. The hon gentleman knew- perfectly well that there' was no breach of ■ privilege in The Dominion' article to which ho had ref»i--' ml. He excused the hon. gentleman for this because ho understood that he had used the article as n peg upon which to hang his speech The Prime Mnvistei continued that he thought it a pity that .Uγ. Speaker was rot empowered to rule ftt the outset as to-what constituted n breach of privilege, so that such timewasting as had occurred several times lately might be avoided. Mr Massc'v quoted from "May" the definition "of breach uf privilege, and stated that the article in The Dominion did not come under any one of the heads.' Mr. Jsitt: Was it not a reflection on character ? Mr. Massey (rending): "A> reflection on the character and conduct in Piu-ltn-inenl." not (he hou. gentleman see th« di.-tiuetioii? .Mr. ImU: No. Mr. Ma«py:-Tlien 1 am -orry f ur ll\« hon. \'?ntiemot!.' He w opposed In rliu motion, !<> fur « Hip. breach nf nrii'ilojji USM conseruK!;. but fed no objetiion ,t a .

referring the matter to a Committee of tin- Hoiisj—ln (hi. most important committee of the. House, the Public Accouuts Committee. Ho was quite willing that every officer whom the committee asked for should bo compelled lo give evidence. Ho ventured to say that when the inquiry wa> concluded it would be found that tho figures quoted by the, Minister ior Finance were absolutely correct. Ho was willing lo roi'ei- the matter to the I'ubtic Accounts Committee, but would oppose the first part of the motion. Sir Joseph Ward: I accept (hat. History of the Act. Mr. Maisi'j- went on. t<i slate that in the eighties, when the Loans to Local Undies Act was fir-i. placed on the Statute Book, this intention was to provide money for local bodies engaged in development work, county councils, and road boards. It was not intended to lend money to borough councils or harbour boards, but only for new work's- for roads and bridgo. Sir Joseph Ward: Boroughs were included. Mr. Massey: Not at that time. It was for now work. Thsj understanding was, ho continued, that the greater part of the .sinking fund—in some cases the whole of it—was to como trom the funds of the colony. Tu Mr. Scddon's time Ihc scojio of the Act. was enlarged, and it- was applied to purposes (o which it was not intended to apply in the first instance. When Kir Joseph Ward came into office the pressure no doubt became 100 strong for him, and ho brought down the STato guaranteed scheme, which wiped out tho old Loans to Local Bodies Act, and set up instead a scheme which was intended to provide money for every local body in every part of New Zealand. It was a'n ambitious and an absurd scheme. He had opposed it, and other members had done the same. They bad predicted ivhat would happen in connection witti the scheme, and the predictions had been as nearly as possible boruu out It was absolutely impossible for any Government to find money for all the local bodies that wanted it. In proof he need only refer lo the figures quoted by tho Finance Minister, which showed that huge sums had been borrowed, re-lent at a loss to largo local bodies which could obtain money on tho.open market.at much the samo'rate as the Government. This had been borno out by the experience of Gisborne. l'li.> scheme was. wrong in principle. Mi. JJl'Kencis-. Do you propose Ho iepeal if ? ' . A Scheme Inoperative. Mr. Massey: I propose to put. it right, nnd I hopo it will be put right before tho end of the. session. The hon. gcntloman knows that the sdiunu is practically out of operation at the present time. Part of the money obtained by Timaru had been lent at rates- under the old Loans to Local Bodies scheme, which ■ was intended for the use of local bodies in the oiit-disti-icls. He said that this thing was wrong. Sir J. -Ward: If that is so, it was before tht! now Act came into operation. Mr. Masssy: Probably, but I say that, tho scheme was never intended for local lxxlies of the importance of the borough of Timaru. The credit of the country had been -seriously affected bv what had taken place. - . - " ~. ■ Mr. M'Kenzie: No! Mr. Massey: The lion gentleman says No, .but tho result was the very high rate of interest that wo had lo pay for the loan raised a few months ago. The effect was that it was impossible for local bodies to obtain money at tho present .tinio. As a result the work of settlement -the most important that this country had to undertake—was practically at a standstill. That was the effect of New Zealand State Guarante?d scheme of 190!). He sincerely hoped that before the present session came to an end the Government would bo able to make better provision for •local bodirs than they had had for a very long time post. He repeated his previous statement that under the advances scheme money liad been usad for purposes lor which it was never intended. One tody borrowed approximately J!S0,000 The greater part of the money was handed over la.'.t year, and the greater part of it was now in tho bank on fixed deposit. It had never teen intended that tho money of tho Stats should bs used in this way. Trra Loss on Loans. t-FilS.'fS? , S? ntlel,la " "ad alluded, to the 11.000.000 raised for back-blocks roads, but, he knew perfectly well that themoney had not been expended, as Parliament had intended it-to be. It had bceu> said by members opposite that (hero had been no loss on these loans, but comparing the average interest paid by the Government and the average interest received from local bodic-, it would be seen that there had been a loss in every instance. As to the ,£BOO,OOO borrowed from the Post Office, a fair rate of interest had been paid under the circumstances. He agreed , that, the.' current rate of interest should be paid to depositors in the Post Office. It had bean said that no Finance Minister would veto a loan after it had been passed by the board, but there were conceivable circumstances in which u Finaucc Minister would be perfectly juslined in exercising his right of veto. ■ Tho last speaker had made Mime extraordinary statement;. . Not a member or supporter of tho (.lovernnient had proposed to stop borrowing. What ho hajl said was that country could not continue borrowing from six to seven millions per annum. In 1911 the public indebtedness was increased by 61 million?. Anyone knew that tne country could not, stand that. Authorities and Liabilities. Mr. Massey read a Treasury document dated September Iβ, which showed that the unexhausted loan authorities to March ■;«,. 1913, totalled JCBii,COO. Against ihls commitments totalled .£651,310. Amounts temporarily transferred from other branches totalled. JC30,000 This increased ,Hie liabilities to .£681,310. Credits, amounted to <£27,550, leaving .£653,700 in the. way of commitments. This benm subtracted from the unexhausted loan -authorities left .£171.240. That was all the.money that they had to carry on with for purposes of loans lo iocal bedie?. •'• Sir J. Ward said that somo of. the loans authorised would not lie wanted for two years. :' Mr. Massey: Hut we have (o provide for them. The ,£SOOO limit, he continued, was imposed by the. Government which the member for-Avon had supported, and continued- b? the Government of which hn. was a member. Considering that the present Government had been in office for. only Ihreo mouths, the line of action adopted by the member for Avon marked him as illogical, unreasonable, and iniiucere. The limitation would be lifted at the earliest moment at which the finances of tho country would allow. If they lifted it now and pursued that policy cf plunge to -which the Minister for Finance had referred the effect would uot be to reduce the rate of interest. Instead there would be dear money as there had been some years ago. They were allowing the country to overtake its liabilities. If they did uo,t do this there would be no prospect of cheap money for a very long tirao to corns. The Government was not going to do away with, the cheap money scheme. It was going to make money as.cheap as possible tor the people of the country. The lands for settlement scheme was not going out of operation. On tho contrary, the Government hoped to strengthen it, and make it more useful and beneficial to the people of this country. Finally, the Prime Minister asked the member for Awarua to drop the first part of his motion, referring to breach of privilege, and staled that he was quite willing to have an inquiry- An order of reference could be arranged later. THE HON. R. M'KENZIE. SOMETHING ABOUT MONEYLENDERS. The Hon. E. M'KENZIE (Motueka) said that it was well understood that, the Gov ernment represented the wealth of tho country, and desired to force loc.'il bodies nnd everybody else into the hands of tho moneylender. 'He denied that in any single instance tho Advances Department had been used for other purposes than was originally intended. He accused the Minister, for Finance of backing ilown from the statements which ho had made in the Hnnso on -Saturday morning. Mr. M'Kcniiip was proceeding Io read a published interview with tho chairman of thu Kemuera Knad Board, but was-in-' formed bv the Sneaker that he was mit cf order. Mr. M'Ksr.zin ajkvd the indulg-oni-o «f the Mouse, but parmisfion to m> r:ii with his reading was rcfuMd. Mi. M'Kwisie contended thai the ch<>apmijiipv 'chcpio luirl been one of tho beft Bliinlis in Hio l.ibnri)] polit-y. Mr- M'lvfiv .tie deic\ii«d io detail the .various-loaas..l

which had been mentioned and also the practice of local bodies in taking up loans by instalments. Personally he was of opinion that fully three-quarters of a million was available for expenditure in local body loans. Mr. Allen: J said that there were authorities for ,£825,000. Mr. M'Kcnzio said thai the Government would not bo allowed to fore.' the local bodies into tho hands of the moneylenders. Mr. Allen: Do you want to force the whole country into the hands of tho money-lender in England? Mr. M'Kenzio said that the game at present was to force up the rale of inlere>(; in Xew Zealand. If tho hon. gentleman wore given his way thero would he no more cheap money in this country. The Ward Government had done more for the back-block settlers than any other in this country. The nrcsoiit t-iovorniuent would not spend as much in the back-blocks a* the Ward Government hnd done. Mr. M'Kcnzie predicted that the Government would .-lop road and railway cnnMruction and would l>rin;» on an era of staeiiation. Mr. L. M. ISITT fCliristchurch North) contended that tho Minister for Finance, had insinuated that local body loans had been used for political purposes. He urewd that an inquiry ought to be held, isler for Marine. "A ROTTEN SYSTEM." PLAIX SPEAKING By ME.-FISHER. The Hon. F. M. B. FISHER-'(Minister for Marine) referred to the member for Hutt and the last speaker as the "tragedy kings of debate. The speech of the m?m- ---' or for Hutt had been the most amusing ho had ever hcjrd in the House. It was a .strange thing that the member for .Awarua and the niembcr for Avon could not agree on one single item, nor could either of them agree with the Minister for l'inauce. It was a testimony to the rottenness of the system of accounts used by the GoveninientMhe rotten«t that could ever exist in any country. But the Minister for Finance deserved the thanks of tho Opposition party. For tho first '.niQ in 20 years an inquiry asked for by a member of the Opposition party hb>i been granted at once—spot cash. "What had happened in regard to the Hine inquiry? They had to force tho Government to grant that.' .They asked to have tho press present, and who opposed it?— Sir Joseph Word. They asked that tho inquiry l>3 conducted by Judges of tho Supreme Court. Who opposed it?— Sir Joseph Ward, Prime. Minister. A system which.allowed anyAdministrntion to pay into.an electorate within 'three days of an ehctinn' was a rotten system. Mr'. Wilford interjected. Mr. Fisher:. The member for Hutt is a by-product of that system. There havo been more political jobs perpetrated in that member's district than in any other part of the country. AVhat about' the Nai Niii pnrchasa? Mr. Wilford: That's not my electorate. Mr. Fisher: Fancy buying a bog for workers homes! . . . The honourable gentleman has been bought into the Houjb year after year by this system. He went on to refer to the by-election a.t ■Ramjitikei when Mr. Smith was first elected. Then, when public feeling ran lujn, the Government had paid iiO.ooo by way of loan to Taihape fer the purpuse of buying a seat.' Money had been used for political purposes in all the 20 years of the Liberal party's regime. It would be impossible to' get documentary proof of it, but constituencies had been told that if they elected members of the Government party certain things would Iμ done—he would give. them a bridge. It was a rotten system, and the power to use it ought to be taken out of the hands of any Government.

THE END. MATTER REFERRED TO PUBLIC ' ACCOUNTS COMMITTEE. Mr.' G. LAURENSON (T-yttcltbn) said that this was the first occasion ill his experienco of Parliament that (he officers of a public . Department had found it necessary to appeal to a Minister of the Crown for an inquiry concerning statements made by the Minister reflecting upon those officers. He. deprecated generally tho indirect chargemado bv innuendo now and during the last election campaign. Hβ believed that an inquiry would dise-ioso the fact that everything had been done properly and in order. Sir JOSEPH WAfif) (Awarua), in replying, said that tho statement that tho Minister for Finance was responsible ior the granting of loans was only partly right. The Minister need not sign the authority, but if the Minister refused to sign it it would amount in effect' , to a repudiation of what the board had previously done. He did not that .£■40,000 had been advanced to Taihape, for electric lighting, as stated by the Minister for Marine. ■ Mr. Wilson: Not for alectric lighting alone. Sir Joseph Ward continued that he had not brought this matter up as a breach of privilege by way of a subterfuge. What he had said in his earlier speech was that the only way in which he could bring the matter up to enable him to discuss if- was to take the criticism of the paper referred to and discuss it. ! Tho Hon. .Ta;-. Allen said that, no I loan could possibly be approved until tho Minister had signed the authorisation. Loans could only be provisionally approved by the. board. The Act provided that the board, before passing a loan, should satisfy itself that it was approved by the Minister. Sir Joseph Ward , said that he did lot v think that any Minister would refiisa to sanction a. loan passed-by the board. Mr. Allen said that he had a loan nowbefore him which he thought ho would have to veto. . The discussion upon Sir Joseph Ward's [ motion terminated at U'.53 a.m. ■ As the Speaker was putting:the motion, the Prime Minister.asked whether it was competent to • divide the motion. The Speaker replied that ono part of the motion deppMled;on the other. The motion was then put and declared lost on tho voices. Messrs. Witty and R. M'Keiuio called for a division. After thu bolls had been rung, Sir Joseph Ward and Mr. Massey, wearing their hats, hail a brief conversation across the House. The Prime Minister undertook to move iu set up an inquiry, and Sir Joseph Ward thereupon agreed to withdraw his motion The non. W. F. MASSEY (Prime Minister) then moved: "That the Public Ac-1 counts Committee be directed to inquire fully into all loans paid or applied for, or provisionally or filially approved, to local authorities, under the New Zealand State guaranteed Advances Act since its inception, the committee to report on losses made, if any, since the Act came into operation, on. the commitments, available means, and unexhausted loan authorities as at March 31 1012, and Septembsr 16, 1912, the committee to bo open to tho press; also that the letter of the- Superintendent of the Government Advances Bepartment be referred to the committee for inquiry; and report, tho committteo to Teport within ten days." ! The motion took tliis shape after a brief discussion. It was carried on-.the voices. The Houss rose at 1.20 a.m. PENSIONS FOR WIDOWS. .The Bill to amend the Widows p cn ; sions Act of lost year was introduced by Governors message in .tho Uou«<> of-R-U presentntives yesterday afternoon.. Thn benefits of the scheme are tr- l-« exfeiulcil to any woman whose hn?biir.il is detni'M'd in a mental hospital, and whn is incurable and likely In. be ineui-iMe. for -it least, twelve months. The Bill al-n briii'-s wit hi ii the soope of the priiicipal .\"i any child born out; of New Zealand if ii s mother was only temporarily, absent from Now Zealand at tho time of its birth and any child Irani out of Km- Zealand if its mother has conriiiunuslv'resided in I New Zealand for no "fewer than ten veavs i immediately' preceding m, nprilical-ioii for a pension. The present law is somewhat obscure in its definition cf animal income, and a new and elaborate definition is. iucludctl ■in the Bill. Power is to be given to Magistrates to review nny pension certificate duriug its currency on the ground of altered circumslance."" It! i* estimated that the extension -of the : scheme will involve nn additional expen-' diturc of ,timo per annum. . I