STATE ADVANCES.

Dominion, Volume 6, Issue 1792, 3 July 1913, Page 8

STATE ADVANCES.

i (; REPLIES TO RECENT CRITICIS 211-

MINISTER'S STATEMENT.

The Hon. JAMES ALLEN, Minister foi Finance, made a 'statement upon' ths working of the Advances to Settlors' Department. He said there had proba Jbly. been some misunderstanding which he dessired to remove. He thought thafr the; board as originally constituted was free of. political influence. The Minister iwas a member of it, but he understood ' Sir Jo6oph Ward had attended its meet ings only on two occasions. He had purpt >sely stayed . away from meetings because ho wished to keep the board free of poli itical influence, and he desired it to re. piain so. Everybody knew there had be en a stringency in the money market, an< 1 unfortunately .the source of supply for the board had. been affected. , Mr. Russell: What source do you liefer to ? ■ • Mr. Allen: I think the honourable gentleman need not press that rjucsti on. I would be very pleased to reply to the Public Accounts Committee. The Minister proceeded to 6tate the position 'of the Department. The .£SOO limit in respect of advances to • settlers camo int f> force on March 1, 1912, and .the prese; nt Government came into office on July ' 10, 1912. On May 26,1913, the limit of £500 imposed on March 1 was raised to ,£OOO. Owing to the better position of the Una' aces, the Advances Board had now deci'dei 1 to further extend the limit of advanc- ss to settlers' loans;from £600 to ,£750. ' The question as to whether loans should t p granted for the Tenewal of mortgages cc Iming due" had been carefully considered, f ®d it was not deemed advisable by the bop ird to provide for these at the present; moment. It was hoped, however, that tl (o increase from .£6OO to £750 would mat ,-e it easier for those who had loans c pming duo to renew them from outside, j .Mr. Wilford: Where are tb» people to get the money from ? j Mr. Allen: If we pour the : money, into tlie market then they can get the money to use. Continuing, he said the limit of' .£SOOO for loans to local, authorities, was made on January 15, 1912, and of £1000 under Section 9 .of the Act of 1912, on May 17 last. The Advances Board had now decided to grant loans not exceeding .£2OOO to local bodies in out jying districts. The board . was now als< ( prepared to consider all applications for loans in outlying districts within the purposes provided for in 'the State Guaranteed Advances Act, 191' 2, which do not exceed £2000 in amount. 'I'hat was to say, if the application was n bona-fide-' one from an outlying district in a county, the £5000 limit would' rjot apply to that county. . Roads and B ridges. The sura of £50,000 had been set asido for advances to local authorities for tho purposes mentioned in Sub-9ection 2 of Section 9 of tho New Wealand Stato Guaranteed Advances Amendment Act, 1912, namely, for constructing roads and bridges in outlying districts,, And for metalling such roads for the fir st time. Under SubSection 3 . of the same section the Government would have to pay out of the Consolidated Fund into the Advances Account in each ten years of the term of any loan, an amount c/qual to one per cent, of the amount of the loan, and in each of the succeeding ten years an amount equal to half pei; cent, of the amount, thus relieving tHe local bodies to that extent. The loans to workers were. reduced to a maximum of £300 in November last, but wore increased to £100 on May 15, 1913. He also wished to make this further statement regarding the Advances Oflieo and its dealings under Seclions 77-83 of the Now Zealand Stato Guaranteed Advances Act, 1908. Theso sections gave power to tho superintendent to ndvanee money to tho loans Department for the purposo of opening up Crown lands for settlement by the construction of roads and bridges, etc. That morning 1,0 had signed autlwrity for closo upon £25.979 for opening up Crown lands for settlement', by the construction of roads and bridges under this Act. Questions. Mr. T. H. DAVEY (Christchurch East) naked why the Board declined to lend money to writers where there

were existing mortgages upon which they were paying from li to 8 and 10 per cent. Mr. T. M. WILPORD (Hutt) inquired if the Minister wus aware tnat the refusal of tho board to execute renewals was forcing people to go to tho big land owners who naii spare cash to lend. Because of this the rate of interest in Wellington had gone up to 8 and 3 per cent. Mr. G. J. ANDERSON (Mataura) suggested tliat if the Minister gave tho.date when the board first refused to grantj money for the repayment of loans it would be shown clearly that the lirst slcp towards the reduction of the usefulness" of the advances to settlers took place a considerable time before the present party catne into power. Air. W. A. VEITCH (Wanganui) askbd if it was possible to make exemptions to the rule about renewals of mortgages in the case of widows in poor circumstances. He was sorry that the efficiency oi* this cold-blooded' anil relentless board had been impaired by the regulations passed. Mr. G. W. EUSSELL (Avon) said he wished to congratulate tho Minister upou tho improved tone in his remarks and wag prooeeding to make further remarks when the Speaker interrupted and ruled that only questions could be asked. "1 will nsk n series of questions then," declared Mr. Russell. "Is the hon. member prepared to take back , the chargra made last year in connection with this board in which tho management was treated as a political thing and not as solely the 'responsibility of the board? Is he prepared to • tako back the statement that the Government of the day was responsible for there being only .£■20,000 in hand as against ,£600,000 commitments for which the board was responsible? Will he admit that had tho Post Office, Savings Bank- continued to supply money all. the commitments would have been met without in the slightest degree inconveniencing the country? Why did the Government, as lately as last November, find it necessary to cut down the advanoes to workers to .£3OO, a redaction of-JBlOO?" THE MINISTER REPLIES. MORE ABOUT MISCONCEPTION. ■ ■ The Hon. J. ALLEN replied. "I shall answer tho last honourable questions first," ho said. "I never made tho statement that the late Government left us with commitments of .£600,000, and only ,£20,000 to meet them, but I did make the statement that they left commitments of .£770,000 arid nothing to moet them with. I repeat that statement, and I repeat that it i 6 absolutely ludicrous finance." With regard. to the Post Office Savings Bank, and tho question as to whether the Government would have been in any financial difficulty if loans from the Post Office Savings Bank to tho State had continued, tho answer, was that the Post Office Savings Bank payments did not continuo and' the Government were landed in a financial difficulty. ' -The other question was in regard to'the reduction of.the maximum advance to workers to .£3OO in November .l.ist. Unfortunately this, had been necessary owing to the state of the finances, but tho amount had now been raised to >6400, and he hoped that very shortly it would be raispd to ,£l5O, the nmimuin amount allowed by tlio Act. Regarding tho making of advances to pay off ■loans coming due, tho "Act was constructed for one purpose only—to provido liomes for workers who had not got I them. (Cries of , "No, . ICo."). If tho j. Government were to extend the operations 'Of the Act to provide for all the mortgages coining due,' the Government would Ibe absolutely swamped with applications ,ivhich they could not possibly meet. .But while the Government were'loaning into the money market as much money as they could, and they were doing that, they were leaving private money free for these other purposes, and the competition would decrease tho rates of interest. ! Mr. Wilford: They are going -up all the time. \ Mr. Allen, continuing, said that ho would be very glad indeed to do anything he could for the widow whose case Mr. Veitch had mentioned, but the troublo was' that if they relaxed the rule they would put themselves in the difficulty of providing for thoso people who advanced money on risks which were unsatisfactory. Tho State could take some of the risks, but there were a great many that' could not be taken over by the State.' Not Cold-Blooded. . Ho wished to repel the statement mado by the member for Wanganui that the board was "cold-blooded and relentless." His own experience of the board was that it was neither cold-blooded' nor relentless. It was doing all it. could in the interests of the workers, and in the interests of settlers and local bodies. He was only sorry that there was 'no more money available to provide for renewals, but tne question had been very carefully considered, and they had como to the conclusion that the best way to meet the .difficulty would, be to-increase the competition among private lenders by increasing th© amount the Government would advance to J!750. It had always been tho practice to refuse loans for renewals of mortgages. This had been .the rule long before tho present Government came into office.