STATE ADVANCES.

Dominion, Volume 6, Issue 1821, 6 August 1913, Page 8

STATE ADVANCES.

CONSTITUTION OF ADVANCES BOARD. SINKING FUNDS. The Hon. JAS. ALLEN, moving the sccond reading of tho State Advances. Dili, said tliut it was supplemental to the Bill just considered (tli» Local Bodies.' Loans Bill). The constitution oi tlio Advances Board was amended. Tlie Minister was removed from the board, ana tue outside members were aone awaywith. Every Minister wlio had been 111 office woula admit that it was unnecessary 'that t'ho' Minister should sit on the board. In order to remove any suggestion 01 political influence, and to leave the board free and unfettered, to recommend what' it thought best, lie had thought it.. rigiit to remove the Minister. from the board. Departmental officers, he considered, .would make more valuable members of the board than outsiders. . The board as reconstituted, he considered, would be ' strong ■ and safe. A clans# which hitherto had applied only to loans lor. advances to settlers and to workers was made applicable, m tho Hill, to loans for advances to local authorities. Tho provision was that a portion of a loan not raised in tho year might be raised in a subsequent year. 110. somewhat doubted tlie wisuoiu oi these cumulative provisions, and would ask the committee to consider them very carefully, 'i'ho conditions relating to sinking funds had been materially altered. In the past the superintendent had sometimes lound it necessary, in order to. comply witli the Act, to pay over borrowed money to the Puohc Trustee as sinking funds.' Henceforth loans raised for advances would come under the provisions of tho Public Debt Extinction Act, of 1910. Generally speaking, the position was that the old Act was split up into parts, of which the two most important were this Bill-and the Loans to Local Bodies Bill. Tho provision made in the old Act for borrowing for lands for'settlement purposes, for mines advances, and for some other advances of that kind would be placed, during, the present session in legislation dealing with the-so particular matters. Tho power of tho superintendent to borrow Was done away with. Tho constitution of tho board was altered and the-sinking funds were remodelled. Tho amount of money that .misht be borrowed fcfr any one Department remained as it was, except in the ease of loans to local authorities, wlioro cumulative power had been introduced to put this section of the Department on tho same footing as Advances to Settlers.and. Advances to Workers ... ' SIR JOSEPH WARD. ADVOCATES MINISTERIAL CONI'EOL. SIB JOSEPH WARD (Awarun) said tho Bill was'such "an important ono that' it should l)o carefully scrutinised. He ; considered the projxteal empowering local; bodies to take up'their loans in progresspayments might, if tho full amount of a million were applied for, and if only ono quarter of it were token up, compel tho Minister to carry over authorities for .£750,000 to the next year.. This might conceivally mako it necessary for tha Minister to borrow double or treble the amount allowed under tho "present law. Ho thought it very'dangerous to allow tho authorities to be ; cumulative in this way. He disapproved strongly of the proposal to remove tho Minister, who was respon : siblo to Parliament, and so to:the people of New Zealand, from tho State Advances and to leave the control of the millions borrowed on behalf, of tho people to a few Civil Servants, however good they might be. .Ho wished not at all to reflect on the Stats employes?, and he had no doubt the ■ new board ' would be oom posed of very gcod men, but tho people as a whole would not bo rE'iM-wented on tho board. 110 was certain that there would he a clamour in a i'oiv years for the repeal .of the legislation to set up a board independent of tho people. It would be well, in discussing the question not to bo confused.by the Minister's references to what, ihe called .C2'2,f100 losses made by tho Department. The fact was simply that some money had been ad van cod to local bodies at a slightly lower rate than the Government had had to pay for it. In other-words, the country had lost a little money to assist the local bodies. But tho original intention of the old Act was that tho State should doliberataly make very heavy losses -in order to help the country as a whole. What the Minister had said might lead the House to suppose that the ,£22,000 the State had forgone was some money in respect of wliie.li the State's interest was supposed to have been protected. This was not the case. Nor was th 9 new proposal with regard to sinking funds a very remarkablo one. What the Minister suggested was that after the loan was repaid to. the State the sinking fund should continue for 50 years under tho (Public Debt Extinction Act. In his own opinion, the term of the sinking fund should be coterminous with the period of tho loan. 110 repeated that the Minister should not bo removed from the board, for if he wore not to tie allowed to sit on the board'bscausS of the danger of wrong influence being exercised by him over his brother members for political ends, lie ought certainly not.-when removed from tlie board, interfere in any way with th.e members of it. This meant the handing over unreservedly of a very important State function to a body in no way responsible to the people, on whose account the millions of money to l>e handed over to the board had to be raised. The work of the State Advances Department was a. great work-, and a work over wlricli 'Parliament should have direct control through the Minister. This board was independent of all control and all authority, and if it was nnt so constituted as t/> have this complete tjowt. then it would not he able to avoid effectively what the Ministpr called political influence. He wnild like fo s?o tlie Minister strengthen the board, if lie wished, by tho addition '•f r'-presr.itath-e?; of other Dop.art-ir.ent-3. Ho hoped Ihe Minister would also delete tho cumulative principle in regard to authoritv for raising Icons. Ho was sure it would work out^badly. Little Against the Bill. The Hon. W. F. M.ASSET (Prime Minister! said lie was satisfied after listen-, in? to the right honourable rentleman'c speech that ** a ry little . could bo said against the Bill, however much could be s<\>d for it. The proicsed changes in tho Board would, hp thought, mako for en improvement in- the working of the Department. The reason for the change was,that rightly or wrongly—wwly. h« thought—there was a feeling right through the country that political. inluo"cc had a great deal to do with the lending Department. He had had pemnal rvperience of thi= over and over aeain. U '<-a« not realised by !)!) people out of 100 that, tlie State .Advances Board was intended to be free'of political control, and the intention of illi - Bill was to make it quite clear that'th" Board was free r" ?uegev.tion of political influence. He did not nirree with Hi" P r for Awarua that the .£22,000 to which Mr. Al'e" had referred wet; rot a lh=s. Part of tho loss which undoubtedly had taken n'-if" was due to the rate of interest which the Slate had to pay having rxlijenlv risen, but some of the J 0 « Kid also been cau-ed by sums of money b-inj held uninvested for some time. ' When the State borrowed money for advances to *<iHl<ir». and the Stata'- jwwer to" raise oiw and ft hali millions yearly, tho

authorities were cumulative. This was not (lie case in regard to moneys to bo raised for lending to local authorities, and 1,0 thought, as the cumulative principle worked, well enough in regard to udvances to settlers and advances to workers, it would work as well or butler in connection I'itu moneys- for advances to local authorities. ' The Sinking Funds. 11l regard to sinking funds, what was proposed in the Dill was that, instead of handing tho sinking fund of 1 per cent, over to the Public Trustee, (here should be set apart a sufficient amount to meet the claims under the Public J>cbt Extinction Act, ami tho balance reinvested in tho ordinary way. Ho thought this was tho prepor thinjf to do, because when money was boriowiid it was borrowed for definite ami specific purposes, and when the money was iuimlcd over to tho Public 'trustee the Government lost control of it. Sir Joseph Ward: You have power to make him invest it at the direction of tho .Minister. Mr. Allen: We don't propose to use that power. Mr. Massey said the lion, member seemed to have the idea that when moneys advanced by the State were repaid to tiio lending Department, there was no necessity to make ally further payment under tho Public Debt Extinction Act of 1910. Sir Joseph Ward: I don't contend that at all. Mr. Jlassey: That is the impression the hon. gentleman left in my mind. Ho added that when borrowed money was repaid to tho State, tho State must go on paying sinking fund under the Public Debt Extinction Act, until j,he debt was paid off. Inpayment to tho State had absolutely nothing to do with payments nnd*r the Public Debt Extinction Act. The country had had fomo years' experience of the working of the.Stnto Advances Act, and the amendments now proposed wero those which experience had suggested as diwirable. Ho bslievod the amendments in the law would make for the batter working of the Department. He was-glad to say tlmt he recognised that the member for Awaruo, hod not sought to mnko party' capital out of the question, but ho did not agree with tho opinion recently expressed by tho hon. . gentleman' that finance should never bo a partv matter. On tho contrary, be thought if was tho uuty of tho Opposition, a.nd for the good of the .State, that the Government's financial pTopo.-alc should bo carefully scrutinised by the Opposition.

An Alleged Volte Face, Mr. G. W. RUSSELL (Avon) accused tn? (xovernmarit of having made a volte fjico in proposing to take authority under tho Bill for heavier borrowing ' power 3 after they had practically declared against ■borrowing. (Mr.. Allen - : "No, never.") This was surely not consistent from a nonborrowing Government, or from a Government which had declared for the reduction of borrowing. Tho second volte fnce was that tho Government were now committed to a cheap money ?clieme. The Prinra Minister, when in Opposition, had declared against Hie when it was first introduced to Parliament. The Prime Minister had also apparently changed his opinion in regard to tho Public "Debt Extinction Fund. ■ The Prime Minister hod declared that the fund was 'a delusion, and now lie endorsed the method as .tho proper ona by which ' these sinking funtls should b'a assessed. Mr. Russell declared also that the Government had not' been fair to the Department in saying that it had made .1 loss of .£22,000 in two years. Tho fact' was that one branch of the Department bad made this small loss, whilo the other branches had made substantial profits. Would it not bo better to treat'the Department as ;i whole?'. Ho was'absolutely sick of hearing the cry in, tho House against political influence; Wero members all dishonest! men that they should vote away from their own. control 'matter? of great importance, lest tjiey should'do some wrong? Members had certainly written, lettors to tho Department, but these letters could bs made public without any wrong being discovered, and h-V .did not think any wron? influence had ■ been exercised bv members. He. was convinced that the Minister, as .representing Parliament and tho people, should not hand over control to this board, partly official ayd partly non-officinl. If the Government wished to submit : oi really democratic proposal, let them submit th« names of suitable' lion-official representatives on the board to t.hq. House, and let tho House elect tliem. Ho accused the Government of lx?ing "the greatest lot of' turncoats that ever sat on the.Treasury .benches." "Enough to Make a Cat Laugh." The Hon. W. 11. HURRIES (Minister for Railways) replied to Mr. Russell. "It is very amusing," lie said, "to hear the member for Avon talking about turn-, coats. It is almost enough to make a cat laugh." Ho did not agree that tho Minister should, bo on tho Board, , nor did ho think that a representative of the Government could rightly bo called a rejtesentative of the people. • "The whole trouble," ho said, "is tiiat tho Opposition ar:; eo disgusted with us because we won't take the Tory coat that they try to put 011 us. They have always alleged that directly we got into ■ office we would abolish old ago pensions, wc would abolish advances to ecttlers, and wo would do away with lands for sat'tleniMit, and all the munificent measures Sir Walter Buchanan: Tho graduated land lax! > Mr. Hemes: We would do away with tho graduated land tax, of coursa; and tliey are m astonished and so disgusted by 'the fact that we are continuing these measures and improving and extending them that they don't know what they, are to do when they go before the people at next election. The old cry will be gone —tho old cry that if you get the Tories in power you will have a party of reaction is entirely destroyed, and the honourable fentlemen will have to construct a policy. They will have to say what they are going to do. ... The honourable gentlemen are opposing this Liberal measure simply from jealousy, bccausa we brought it down and not they." "The Bill Is No Good," 'Mr. A. E. GLOVER'(Auckland Central) was tho next speaker. Mr. Macdonald had planned to reply to tho Minister, and lie rose to do eo, but Mr. Glover caught Mr. Speaker's eye. Mr. Glover's opinion' of the Bill was: "The Bill is no good," and he said something about a working man not being nblo to get a home with mi advance of ,£3OO. Tho advauco should be largo enough to permit of a worker getting a home. Mr. J. PAYNE (Grey Lynn) urged that tho Government should allow workers to havo recourse to the State Lending Department to repay private mortgages falling due, in order that they might be protected from privato moneylenders wlio demanded usurious rates of interest. He said the State Lending Department was no more than a State bank, and the Government ought to establish themselves in the more profitable branches of banking. Ministers and "Responsibility." Mr. W. D. S. MACDONALD (Bay of Plenty) said it seemed to him that the Ministers were seeking to divest themselves of all responsibilities. Tho members of tlie Government had opposed all tho measures under which advances were now made. Mr. Jfassey: Which? Mr. Macdonald: Every one of them. Mr. Massey: What about advances to workers? Mr. Macdonald: You voted against that. too. ,Mr. Massey: Why, I was the first to propose it. Cries of "No, from the Opposition benches. Mr. Macdonald went on to repeat Ins accusation that the Government had been, stingy in its administration of the State Advances Department. Mr. G. LAURENSON (Lyttelton) upbraided the Government for inconsistency on the ground "tfiat while tho chief plank of (heir platform, before coming into office, was the curtailment of borrowing they now proposed to take increased lwrrowiiig powers. After all tho chief difference between Liberals and Conservatives was that tho Liberals said: "Trust the people," and the Conservatives said': "Keep ns much power as possible out of the hands of the people." This Government li.id already nut the Public Service out of the people's control, and now (hey proposed to put the handling of liu«e sums of the people's money into the control of a Ixinrd not representative of the people. He would niovo in Committee to hove this provision deleted flio Bill. Mr. .T. A. HAXAN (Invorcargill) said the Bill seemed to show that the Ministry were aiming at destroying democratic government in this country by : filching ,-wav the people's rights. It seemed to show that the Minister did not trust, tho pooplo, Ho protested against tho Minuter.

dissociating himself from the administration of tho State Advances Department. Sir. G. Wl'I'TY (liiccarton) raid the (jovermnent wero simply amending the Literal legislation already on the Statute-book, and some of the amendments were not literal. It was tlieso illiberal amendmeuts that belonged to the Government. Mr. L. 11. ISITT (C'hristclmvch North) said that he was not going to allow i\ measure of this kind to pass without a word of protest. Under the legislation of the Government the people of this country were having all control of their institutions iilclud from them. In this Aew Zealand was following tho evil exnniplo that was being set in Great Britain, where one man (Mr. Lloyd-George) was exercising all tho powers of government. the Hon. AY. H. Hemes laughingly interjected that it was the same in New /eain.iul ten yearj ago. Mr. Isitfc went on to stato that tho Government, bei'oro taking oliice, had asserted on many platforms that when they got into power tliero would l;o 310 neod for any- more borrowing. This Bill falsified nil swell pretensions. hup' Hcrr ' fS: en vol:e a K a ' ns t ; Mr, Isitt: No, I won't do that. (Laughter.) Proceeding, ho asked: "What about your talk about our reckless extravagauco when we wero in power?" -Mr. Anderson: What about your independence? Jir. Isitt was going on to speak about a trip from PaJmerston which 110 had mado with Sir Joseph Ward, when he was requested by tho Speaker to return to the subject of tho Bill. Mr. F. H. Smith (Waituki) said that the member for Christchurch North had advocated graft. Mr. Isitt angrily protested that he was being accused of a dishonest suggestion. TIIO Speaker did not uphold tho protest, taking tho view that Mr. Smith's remark was not intended to be of personal application. Mr. SMITH said that the removal of tho Minister from the Advances Board was a movo in tho right direction. Ho went on to state that under, the previous Administration large sums had been lent to local bodies which should not have been lent. Askeil by Mr. Wilford to supply specific instances, Mr. Smith said: ,r What about Timn.ru and the Eemuera J?oad Board ?" Mr. Wilford (getting up and moving towards the door): I must get Mr. Craigie. (Laughter.)