THE LOAN BILL.

Dominion, Volume 7, Issue 1869, 1 October 1913, Page 4

THE LOAN BILL.

REVIEW OF THE FINANCIAL POSITION. HON. J. ALLEN OPTIMISTIC. Tho Hon. J. ALLEN moved . the second reading of tho Aid to Public Works and Land Settlement Bill. Tliero were some slight alterations from last year's schedules, ho said. For tho construction of railways last year, £800,000 was allocated, and this year £600,000 was set aside. Tho provisiou for rolling-stock was £500,000 instead of £300,000. The remaining items wero the same as those of last year. There was no necessity to prove to the House the need for going on tho market to borrow money for the development of tho country. He desired, however, to call attention to the position tho country had got into in recent years. For some years past wo had gone on borrowing money which lasted up to October. For the remainder of the fiuaucial ye;jr they had been relying upon bak«Ses transferred from the Consolidated Fund, but' these balances wore not always available. About 1908-9 there was no such surplus to transfer, and the consequence was that there were difficulties in tho situation, unless they made sure that 'such balances were available. What ho was aiming at was to make the loan money of last year last a littlo longer than it did in the previous year. Ho hoped in tho course of time to arrange the Public Works finance to seo them through to February or March— preferably to the end of March. If that were done, the relianco upon the Consolidated Fund would not be necessary as it was to-day. Ho was perfectly well awaro that there wero items in tho Public Works Fund which might very well bo transferred to the Consolidated Fund. For instance, there was tho cost, of immigration, which item they wero charging to tho Public , Works Account., Tho salaries of officers of'the Public Works Department were charged to the Public Works Fund, and might bo altered. No doubtfrom tho strictly business point of view it could be argued that such items might be legitimately charged against loan money on capital account. Tho item of roads and bridges might reasonably bo transferred to the Consolidated Fund. He would not suggest that this should be done at tho present moment, although he did think the time must come later when such items as immigration and public works Departmental expenditure should be transferred to the Consolidated Fund when they wore suro it could bear tho burden'. This would make our finances much surer than they were at the present time. Tho Loan Required. The loan of £1,760,000 was required ,for tho construction of railways and additions to open lines to tho extent of £1,100,000; for. tho construction of roads and bridges £500,000; and for other public works £150,000. Last year tho sum expended on railway construc-1 tion was £084,190; This was somewhat less than the expenditure the year before, but members would realise that expenditure must bo increased because of tho growing speed of the trains and of tho necessity of improving tho track requirements for new linos. Last year £•16-1,636 was spent for additions to open lines so that tho total expenditure upon railways was £1,148,822, which was tho largest expenditure within tho last six years upon this item. Although there had been a considorablo time of stringency tho country would realiso that so far as these necessary constructive works wero concerned the Government had not diminished activity. They had rather increased that activity. Upon other public works, such as roads and bridges, the expenditure last year was £429,252—somewhat loss than it had been before. There wero only two years in tho last six iu which this item had been larger—namely, 1908-9 and 191112—years in which lion, members would readily realise tho expenditure upon roads and bridges was bound to increase. The National Debt. Mr. Allen said he desired to make tho position clear with rogard to tho Public Debt of last year, which had been set down at £5,000,000. Thero had been ccrtain criticisms and tho present Government had boon accused by somo irresponsible critics, both iusido the House and outside it, of being responsiblo for this borrowing. He wanted to make tho position clear onco and for all. From March 31, 1912, to July 1, 1912, the increase in the Public Debt was £2,574,690. "That (was tho increase for the few months beforo wo camo into offico " A voice: Tho Mackenzie Government. Mr. Allen: That' is, I think, tho whole of tho period occupied by the Mackenzie Government. During those threo months they increased tho Public Debt by £2,574,690. (Government laughter.) Mr. J. A. Hanau (luvercargill): llubdish ! Mr. Allon: That is the increase for three months. Mr. Hnnan: Who spent it? Mr. Allen: That is the unfortunate part. It was nearly all spent before we came in. That is the whole truth about tho increaso in tho Public Debt (about which thero has been so much criticism) beforo wo camo in. Mr. II an an: Very unfair I Mr. Allon: So was tho criticism upon me which laid all tho increases upon my shoulders. Mr. Hanan: You admit you aro unfair.

Mr. Allen: I am going to have my say noiv. Sinco July 1, 1912, ho coniiiiued, when the present Government became responsible, to March 31, 1913 —nine months—tho debt increased by £2,925,460, as against the increase of £2,574, C9O in the previous three 'months.

.Mr. Hanan: After using our money. Mr. Allen said bo was not going into details now, although ho could give them if required. Ho hoped those critics who had levelled publicly against him charges of increasing the debt by live millions since coming fnto office would forever hold their tongues.

Mr. Hanan: You aro very unfair. Mr. Allen said he had already placed on record tho balances at difforcnt

poriods, but would do so again, in ardor to show how tho credit of tho country had risen upon a solid basis since they came into office. At Juno 30, .1912, tho balance available was £1,864,841. Tho loan money received was £734,000, making a grand total of £2,588,000. Tho liabilities at that dato ' were £3,468,000, leaving a shortage of £879,000. At Juno 30, 1913, tho balance availablo was £2,580,000; tho loan money receivablo was £1,060,474, making a total of £3,641,339. The total liabilities at that dato wore £2,608,184, leaving, instead of a shortage, a credit of £1,033,1-55. This was startling evidence, and he hoped honourablo members would not criticise unfavourably tho statement ho had made, but rather would accept it in tho spirit in which it was given. Tho statement was' ono which Lad amply proved that tho Dominion had put itself in a very much better position, and which ought to induce people lending money in London to lend it to Now Zealand at" a lower rate of interest than the previous. Government had been able to get it. Now Loans. In addition to the three million loan, the Government sinco raised amounts totalling £900,000, of which £100,000 would go to redeem a loan falling duo early in November. He was pleased to bo able to say that the lowest prico at which any of this money had been raised was 98J, and tho whole of tho charges over and above the advertising had been a quarter por cent. All tho money had been raised at 4 per cent., and all tho loans were long _ dated. Most of them were repayable in 1963, but three of them, £200,000 ill amount, foil duo in 1929. Revenue and Expenditure. Ho wished also to state clearly what tho position of the' general finances of the country was at the present time. Ho was glad to bo ablo to say that for tho iivo months elapsed of the' financial year there was an improvement in re--1 venue as compared with expenditure. Tho revenuo for these months was higher than tho revenuo for tho corresponding months of last' year, by £172,551; but ho would remind honourable members that by legislation of last year cash proceeds from tho sale of land wore now transferred to tho Land Settlement Account, instead of being credited as revenue to tho Consolidated iMnid. If he were to add to his revenue tho amount derived from the sales of land, his total revenue would bo increased by £25,000, and to make his working comparison fair, he should include that. Oil that basis the revenuo would havo shown an 'increase of £197,608 for tho iivo mftnths of tho year already past. Tho increase in expenditure for tho same fivo months was £146,530. He thought honourablo members could congratulate themselves and the country upon tho fact that, notwithstanding tho large and increased burden the Consolidated Fund had to bear, the buoyancy of tho revenue had been such that tho increase in revenue was considerably greater than the lucrcaso in' expenditure.

Mr. Russell: You havo started on your reform now?

Mr. Allen: Started! Yes, we are in full working order. Our Loans and Others. He wished to make a comparison of tho rate at which the last three million loan was floated wrftli the rates I at. which Australian States had recently floated loans, and for tho purposes of his, comparison ho would put fno position as unfairly as possible for New Zealand. Ho would not include for tho purposes of his comparison tho loans New Zealand had floated since the three million loan,. bccause; : tliey 'had been floated on' a somewhat diifercnt basis. • Tho New Zealand loan was- repayable in 1943 or 19G3 at our discretion. Tho rate was four per cent.,- and the price of tho issue was 98, and 80 per cent, was left in the hands of .the underwriters. That was in February, and in Jthe next month Now South Wales raised a loan of three millions at 4 per" cent, at 98, and 84 per cent, was left with tho underwriters. And instead of being a long-dated loan it had a currency of ton years only. In tho next .month, April 17, West Australia raised a loan on apparently better terns than ours. Tho rate was four per cent., tho term 49 years, tho price 98i, and tho underwriters were left with 87 per cent, of it. He thought tlioy might have some difficulty in getting rid of it. South Australia: had raised a 4 per cent, long-dated loan at 97. and 77 per cent, was left with tho underwriters. Other loans, which ho cited, likewise had been raised on terms less favourable than ours. Ho quoted thoso figures to show how high ■ New Zealand stood in tho estimation of tho British moneylender. We could present to the English investor so valuable a security that he did not hesitate to lend money to us at a more reasonable rate than other countries could obtain. Ho quoted also tho market prices of inscribed stocks, to show that tho only Australian State that could compare at all favourably with us was Now South Wales. The maximum price of New South Wales stock • was J highor, and tho minimum ono per cent, higher thau tho prices of New Zoaland inscribed stocks. Provision _ had been made for all the loans coming duo up till tho beginning of tho year. Next year the' four and v a half million loan, and the unconverted balance of the five million loan, about £3,000,000,. would bavo to bo repaid. Negotiations wero in progress to arrange for tho repayment of those loans. Publlo Works Fund. He could not ask the House to agroo to tho Loan Bill without showing tho necessities of tho Public Works l''und. On Septombor 11 tho cash balanco in tho Public Works Fund was £158,000. There was loan money to coniolo hand to tho amount of £72,295, and thero was a repayment to coma from tho Irrigation and Water Supply Account of £10,000.. An amount was also on. transfer to the Aid to Water Power Account of £30,000, making a total amount available of £270,295. This amount would keep tho country going until tho middle of November, and then tlioro would bo £675,000' to bo transferred from the Consolidated Fund. Ho hoped with this, and tho balance' now available, to bo ablo to provide for the continuation of tho public works of tho country up till February or March next. It inignt bo necessary to anticipate the' loan for which they were asking for ono month or two months of tho current financial year, but even if they did anticipate it tlioy would bo in a stronger financial position thnn tlioy were on March 31, 1913. Honourable mombers would therefore see that a loan ought to bo providod to enable tho Government to carry on the public works of the country. No Unemployment. : Mr. Glover asked whother it would relievo the unemployed difficulty. Mr. Allen said ho believed tho Minister of Public Works had found employment for all the men who wero in need of work. Fortunately, tho demand for employment had not been very heavy, and now tho very early spring .had enabled numbers of men to get work in the Tho unemployed difficulty last winter had not been a great one, and it was all over now.

Ho did not propose to go into details of the proposed Public Works expenditure, but ne was sorry to say that tho buildings vote was going up, and that it seemed impossibly to reduce it this .icar. Tho biggest item was tho new Parliament House. For school buildings ho would liavo to provido at least £150,000. Probably, also, the Government would liavo to make provision for tho purchase of a site for tho Auckland University College. In conclusion ho said that tho necessities for tho bor-

rowing of the money seemed to hirtf very apparent. LEADER OF THE OPPOSITION. CONGRATULATIONS AND CRITICISM. , SIR JOSEPH WARD said tho Miaister had given a lot of information' about tho Loan Bill, and ho wished to - congratulato tho Minister on the cheerful view he took of the financial position of tho country. Tho change was a most welcome one after the gloomy view he had taken when ho was in Opposi- 1 tion. He! regretted, however, that tlioi Minister had not refrained from mak-; ■ ing party capital out of the position of the country. Ho wished to tell tho-: House , and the country the effect of 0110 change which tho honourablo gentleman proposed. The Minister was uotf content'to havo tho loan providod to| carry on works, not until October, but' until February or March following, i That would enable a Government' t<j! carry on for twolvo months-after tho end of tho financial year, and that would! confer upon the Government far too' great a power. If, us Mr. Allen had) claimed, there wero certain amounts which should bo charged to the Con-' solidatod Fund not now so charged, I why could they not bo charged to tho' Consolidated Fund ut once ? Tho ncb4 result would be exactly tlio same, and' all tho talk about it was no more thauj so much political flapdoodle. ' The hon-l ourablo gentleman had declared that be-j cause borrowing had been kept down in tho part of tho financial year for which' the Government had been in offioe, tho financial position of tho country had improved. But at whoso expense had tho borrowing rato been kept downq He had refrained from using his authorities for loans, and lie had starved thai settlers and tho workers of the Dominion.' Anyone would suppose, to hear] tho statements about liabilities underi tho head of Public Works Expenditure,! that there was some < system ,by which liabilities could bo avoided in' a country carrying on public works, j Ho know of no such system, but ho, did' know that an attempt had been mado' to distort tho position. Concerning tho' writing off of t'ho liability of £350, in respect of tho Midland Railway, ho 1 confessed that he was unable to sea! how anything could be written off when no expenditure had been incurred upon! it. How -could a liability of this kind} bo written off? Tho Minister liad al-| ways insisted wrongly in referring' to] the cost of the Midland Railway as aj liability, and generally seomed to havol a mania for making the liabilities of; New . Zealand appear as high as pos' 1 siblo. Whose the Credit? Ho wished to refer to tho floating ofa tho three million loan, and he was! pleased at tlio honourable gentleman's success in floating this loan, and also' the additional £900,000. But uponi; whoso finance had tho position of tln>icouiitry improved so much as tho Mill-] ister had set it forth? Upon tho lion-' ourablo gentloman's ? Mr. Massoy: Yes,' certainly. Sir Joseph Ward said that tho increased revenue from land shown in tho loan prospectus was tho result of what. had been arranged boforo the Govern-' ment took office. Ho compared tho' rates on the fivo million and on tho' three million loan. Tho five million', loan was a 3J. por cent. I loan, and .the threo million loan waff at 4 per cent., a high rate of interest* for 30 or 50 years. • Over tho period tha', added cost to t'ho country of the ex*' tra I per cent, of interest would rua into hundreds of thousands of pounds/ It was, therefore, quite unfair to compare tho cost of tho two loans. Ho ha<J) seeii the-(liabilities-.-of r i Now Zealand) used against tho Government, and used, wrongfully ho thought, while ho waa in office. But thero was a country across the water wliioli had loans of £171,000,0b0 falling' due, and 110 ono heard anything said about tliem. • Mr. Allen: When..aro they falling l due? ' ' ' 1 . ...

Sir Joseph Ward: They ar© falling duo, manv of them, in bigger amounts: than we have falling duo in any 0110 year. It was a fact, ho Baid, admitted by every man who understood the position, that no country carrying on loan operations could escape having loans falling duo from time to time. In conclusion ho remarked that ho had not heard a statement of the total amount to be borrowed for advances to settlen or advances to workers.

THE PRIME MINISTER

STATE ADVANCES.

The Hon. W. F. MASSEY said thai no statement of the amount had been given, but a very strong indication had been given of the intention of the Government to carry on the policy or lending money to settlers' and workers. And he woyld refer tho honourable gentleman to the' State Guaranteed Advarices Bill, dealt with this session, em-* powering tho Minister to borrow certain amounts yearly for tho purposes indicated.. ' Mr. Hanan: Hoiv much aro you going to borrow under tlioso authorities? Mr. Massey: Wo are going to-bor-row as much as may bp necessary for the purposes indicated . '. . always bear; ing in mind that tho credit of thq country must bo maintained at its pro - sent high standard. ... Improving Credit. Tho financial position of the country had improved Mr. Witty: Owiug to tho prosponty of tho country. Mr. Massey: I am pleased to bo abo to say that tho country i 3 exceedingly prosperous, falsifying the predictions of the honourable gentleman and his frionds, who said that if ever wo got into power tliero would bo an end to prosperous times. Ho said tho I'nblio Works Fund of tho country was in a very much bettor stato than it was whon tho Government took offico, and this in spito of increased expenditure on railways. Mr. Russell: What about roads? Mi\ Massey said that the expenditure 011 roads was certainly £50,000 less, but the fact -was that tho bulk_ of all tho road expenditure was authorised during the month of April. Prior to that tho financial, position was so unsatisfactory that tlie Government liad hesitated to authorise expenditure. As showing how good wero the terms upon which New Zealand had raised its last loan, lid mentioned that only last month tho great Dominion of Canada liad raised a 4 per cent, loan at 98, and it was a long-dated loan. Australian States, too, had also borrowed on rathor worse tonus than Now Zealand had raised its loan. All this ho took as evidence that tho credit of tho country had im< prove" during tho present Govern,, incut's tenuro of office. Reform Finance. Nothing in tho way of salaries, Mi\ Massey went on to remark, should be chafgod to loan account, lhcso should bo cTiarged to revenuo account, as also should tho cost of immigration. Iho Government had alreakly done something for tli© reform of accounts by instituting a special firo insurance tuna for tho re-erection of puolic buildings in case of firo, and also by changing the account to whioh tlio money received from tho sale of Crown lands was paid. Tho Leador of tho Opposition had alleged that tlio Government had not utilised its power of raising loaii6. 'l'ho reason was that tho Mackcnzio Government had just been on tho nionoy market' whon tlio present Government took offico, and it would have been perfect madnoss to liavo rushed on tho London money market and raised a now loan for the samo purpose as that for which the former one nad been raised. Tho right thing to do was to liave patience, and ho gave tho people of tlio country credit Tor tho patience t'hoy had exorcised in waiting till the uosi-

tion changed. If tho Government had not ' been careful possibly at least half of the men employed by the Public Works Department would h«ive had to be discharged. The position was far more serious th&li it was supposed, and care had to be exeroiscd to tido over tho difficulty. So far as tho loans to local bodies were concerned ho did not think it possible for any Government to raise all the money wanted by them for development purposes, it had riot bion possible so far for the' Government to raise the limit of - £5000 imposed in January, 191'2, upon tho amount desired to be raised by the local bodies. What tho Government had done was to give the local bodies the guarantee of the State when t'liey desired to go on the market to borrow. This would be a big help to them, it was not to be taken by this that tho Government was not going to 'ltiiii to the local bodies. It was still goliig to do that, and would help them all that it could. - Municipal Compotltors. Recently,' the Prime Minister continued, municipalities in yarious parts of Now Zealand ha,!'© got into the habit of taking large sums of money on call and giving solid interest thereupon, so that many poople instead of going to the Post Office in t'he ordinary way, went to tho municipalities, and got a very good rato -of intorest. Anyone taking up the returns for the Post Office Savings Banks and the returns of municipal borrowing would see how the Post Office had been affected. The moro the. municipalities borrowed tho less there remained for the Post Office. In tho past the Government had boon able to get considerable sums from this source, tut now if they wanted money/ and were unablo to get it from the Post Office then they would have to look to other sources of supply.

Loans Comparsd. , In regard to loans, what they had to look at was not tho rate of interest, but what a loan cost. Dear as money now was, it would be possible to raise b three per cent, loan in London, but the price obtained for stocks would be something liko £70. The actual cost of the loan would be much tho same as if it had been floated at a higher rata of intorest. _Ho quoted a Treasury return showing as under tne cost of the loans indicated:— Five million loan, 1910, £4 12s. BJd. Four and a half. million loan, 1911, '£5 2s. Bd.

Three and a half million loan, 1912, £4 os. 6d.

It had been contended, the Primo Minister remarked, .that when money was dea;rer short-dated loans should be preferred, and when money was cheap long-dated loans. Nothing could be said against that in theory, but in fact previous Governments had been raising short-dated loans for years past wljon money was cheap. Tho Rato of Advances. As to the statement that the Government was not lending enough through tho Advances Department, the Prime Minister - made the following comparison, in April and May, 1912, the amounts advanced wefe: —To settlers, £160,700; to workers, £81,940. Total, £242,040. In August and.September, tho amounts lout were: —To settlers, ' £177,785; to workers, £66,785. Since these figures wcro compiled < loans "to tho amount if £32,000 had beon authorised during tho past fow day's. Tho total lending for August and September was £276,570. This meant that during the last two months £34,000 more had been lent through tho Advances Department than ,during the two.months in. 1912 to which ho had referred. AN OPPOSITION CRITIC. TOO LITTLE LENDING. Mir. G. W. RUSSELL (Avon) assert ed that tho Government had lost.the confidence of tho people who depoiuteil savings in tho Post Office havings Hank. This source of supply had been unfailing during the fimo of the Liberal Administration, but had run dry when' tho ptesent'. Government came into power. Tho reason was that tho Government had fixed the rate of interest paid for loans on tho London monoy market at four per cent., while paying a lower rato to Post Office depositors. This was the first Government for twenty years that had iloated loans in London at four per cent. Now Zealand was •tho only country that had iloated its loan in London at 4 per cent, and Bt 98. / . ' M|r. Allon: That ia absolutely inDorrect. Roars of laughter rose from the Government benches ias Mr. Russell' declared that the Primo Minister did not like tho home-thrusts he was giving him. Ho declared that the four and a half million loan of 1911 would * eventually cost tho , country much less than tho loan . raised by the present Government. "The Minister of Finance, in comparing rovenuo and expenditure had given Ggures for five months, instead of waiting for a week, and giving comploto totals for the present quarter. During th'o first year it was in office the present Government' had lent £1,000,000 less through tho Advances Department than its predecossor had lent m the preceding year. ,

Mr. Wilkinson: In election year. Mr. Russell (after a thoughtful pauaa) said that whether it was election year or not tho settlors had,got the benefit of it. The Government had "held on to the money," and had raised the rate of interest on mortgages. Would this bo denied?

Government members (loudly): Yes, 'Absolutely incorrect.

Mr. Russell said that the Government had failed to curtail borrowing. Mr. Massey: You say wo don't borrow enough.

Answering an interjection by the Minister of Finance, Mr. Russell said that temporary borrowing during the year was part of the Public Debt.

MR. RUSSELL ANSWERED. A KALEIDOSCOPIC MIND. Dr A. K. NEWMAN (Wellington East) said that the membei foi Avon wa3 the clevorest meniber of tho Opposition. He was about the only member of his party who had any weight in his punch. At 8 o'clock, ho continued, Mr. llussell was vohemwitly denouncing the Government for not lending moro to settlers. Five minutes later, Mr. Russell was fiercely denouncing the Government as the most profligate' Government ever known in New Zealand. "His mind," oaid Dr. Newman, "is kaleidoscopic." Mr. llussell, ho continued, had supported a Government in 1911 which decided that it could not lend moro than £500 to any settler— and they almost stopped lending that. The truth was that the Government at time was panic-stricken at the atato of affairs. They kept it dark until after the election, and only in January—after, the elections wfere over —was it announced that they had cut tho amount down. Much drivel was talked about :rates of interest, and the cost of loans. Tho 'facts were that one 'Government borrowed as wisely as another. What people in London would j lond for was tho determining factor. The contention of the member for Avon that £560,000 would bo saved in intorost on the loan raised by Mr. Myers was absurd. That loan would have to bo renewed at much the same rato of interest as the thirty-year loan . raised last year. The present Minisx try had dono very well with its financos. It had mado the best of a, difficult position, and would do bettor as time went on. Mr. Russell had talked about "tho baseless fabric of a dream."

There was a dream that was a baseless 1 fabric—the idea that tho member for Avon was going to get on to the Treas- ' ury benches. (Loud laughter.) When the hon gentleman met his Waterloo in Do- i combor, 1914, ho would still go on hoping. 110 regretted that oi(r dobt had pone up so alarmingly. It was already over 90 millions, and when ho thought that it would (won bo over the 100 million mark, 1» was afraid lest our country not be ablo to stand it. Of tho amount of the loan, £1,100,000 was for railways, but' he regretted that with tho exception of a few miles of line nothing was being done for Wellington Province. Two lines Wellington needed, a lovel line to Palmcrston ,and a new line to avoid the Rimutaka inclino to Vi'airarapa. These works were abso- ' lutely necessary. He hoped tho new General "Manager of Railways would try to develop some of our country with motor-bus aaid motor-wagon services, as feeders to tho railways, in the same 1 way as the big railway companies in England and America had been feeding their lines of recent years. Ho believed that the roads in many districts in New Zealand were quite good enough for motor-bus and wagon _ traffic. He hoped that tho central railway station in Wellington would not be any longer delayed, and that at once the Minister would authorise tho works necessary to enable the Manawatu trains to run down to tho Lambton Station. Whore Honour Is Duo. Mr. G. WITTY (Riccarton) asked how much of tho money they were em.powered to raise for advances to local bodies, settlers, ind workers, the Government proposed actually to borrow? Tho Gvernment, he aliened, had forgotten tho j)oor back-blockers of whom they had onco been so fond of talking. The Government, he alleged, had for- ' prosperity. But wero they to be given credit for the climate, or for the increase in stock? Was it because the Government were in power that tho cows gave' moro milk? I Mr. Wilson: Yes, moro contented. Mr. Witty asked whether tho Government would claim credit for dearer money. It was, he said, due to them. Mr. J. PAYNE (Grey Lynn) said ■that as a Socialist he heartily rejoiced to hear that the Government were prepared to go on'with Socialistic enterprises' such as Government railways. He did not share the alarm of Dr. New■luan about the incrcaso of our debt, for the greater part of our debt was secured by valuable assets. While wo could borrow money and with it develop more revenue-producing assets it was sound business to go on borrowing. An Ex-M Inlster. Mr. W. D. S. MACDONALD (Bay of Plenty) said that the people would not bo satisfied with tho Government's "bounce" at next election about what they had done. Tlio people would judgo them on realities. Tho Government had. adopted tho late Liberal Government's public works policy, although when in Opposition tho party had accused the Government of extravagant public works expenditure in order to buy votes with it. One statement made uso of at last election was that Sir Joseph Ward had borrowed six and a half millions .of money to buy votes with. Tho effect of the Government public works policy had thrown hundreds of men out of work. He knew this absolutely,, because he lived in a country district. Daily at his house swaggers called now, whilo they had never been seen before. Mr. Mac Donald said that the present prosperous condition of New Zealand was due 'to tho wise and progressive legislation of the twenty years that tho Liberal- Government had been in office. His only regret was that the Liberal Government had not raised another 'millions of money at low rates of interest to carry on road and railway construction. Waste In the Past. Mr. O. K. WILSON (TaumaTunui) said that in 1911 the Advances Departments had squandered money in advarices, but in 1912 tlio funds of those offices were left in a deplorable condition;- No friond of New Zealand would over find fault with tho present Government or with any Government which borrowed money for loans to local bodies and settlers. Personally, lie w°uld like to see the amount of -£1,750,000 increased to two millions, " ™ 1S

were done he would like to see the extra £250.000 oar-marked for expenditure on the back-blocks districts. It was useless to spend a great deal of money if we were not to get value for it, and he was prepared to prove that we had not had 7s. 6d. worth for every pound of expenditure on our public works. In the past the expenditure had been frittered ; away. He cited cases of blocks: of land which had been loaded for roading, but now the money was all. spent and the settlers were without roads.'. Regarding tho statement, of the member for tho Bay^of_Plenty about swaggers and] men out of work, he would undertake to find work lor every one of them. Mr. Brown: Ah, what wages? Mr. Wilson: Nino and ten bob a day and found, and that's moro than the honourable mefaiber who makes- bee) Air.,Payne: What hours? - Mr. Wilson: Eight hours a day. in fact they can worlt six ir they luto, because the rate for fencing is up to i!os. a chain, and a. man uonsnt need to work niore than six or seven hours to make 16s. a day. The onlj conclusion he could come' to, he saiU, was that these men that Mr. MacUonald spoke of did not want work. Ho would uiidertalce' to find employment tor oUO men. Ho went on to discuss public wonss waste. There were roads in plenty in the back-blocks, whore there were no settlers, and there wero settled Districts where there wero no roaas. llio real .trouble seemed to bo that an attempt had been made to spend millions or money ■) from tho Under-Secretary 3 office without proper supervision in the country. The country never would get value for the money expended until there was more supervision in tno districts where the works wore situated.

Mr. Hanan on the Past. Mr. J. A. HANAN (Invoroargill) said ' he could hardly believe his eyes and his ears when tho Minister of I'inauco, the same who hud been the member foi Bruce in Opposition, asked the House 'to increase "the indebtedness 01 the country by £1,760,000. Less than two years ago Mr. Allen had said that £1.600,01)0' was too much to borrow in one year, but now he asked l arlianient to authorise t'ho raising of a bigger sum. The Minister had displayed a wonderfully changed opinion. ■ ' Mr. Massey: Vote against the Bill. Mr. Hanan said he would ask the Minister to be consistent, and to support him (Mr. Hanan) in a motion to reduco the amount of tho loan. \ Mr, Eraser: You are not gamo to move

Mr. Hanan: Wait and see. He wont on to quote from some speeches of Mr. Allan when ho was in Opposition. Sovoral Government members, lie declared, including Messrs. Pearco and Nosworthy, had gone back on their previously expressed opinions on tlio subjcct oi borrowing.

A DAMACINC REJOINDER. SIR JOSEPH WARD'S INCONSISTENCY. Mr. C.' A. WILKINSON (Egmont) said that the great troublo with the Mackenzie Government was that it ever took office at all. The. country, ho was sure, repudiated tho action of the Government who formed that Ministry. They did not face tho country; they did not ovon faco tho Houso until they had to, and as soon as they did meet the House thoy were turned out of office.

Speaking of the charges of inconsistency that had been loveilcd at members of the Reform party, Miv Wilkinson said that in tho Budget of 1893 tho gentleman who was now at the head of the Opposition (Sir Joseph Ward) stated: "i'lio Government believe that horrow-

lig is not necessary and have decided :o conduct tho business of the country .vithout having recourse to it." The jolicy of self-reliance had borne fruit

ad economy in both privato and public le had produced good result's.

Sir Joseph Ward: Do you say I made lat statement?

Mr. Wilkinson; Yes, sir. Sir Joseph Ward: Better have another look. I was not Treasurer in 1893.

Mr. Wilkinson; It is some time ago since 11 copied the statement, but it was made by the right hon. gentleman, and I am prepared to prove it, Ho continued that ho would accuse the lioader of tho party on tho other side of tho House of being just as inconsistent as anyone could possibly be. In tho Budget of 1908, dealing with the Advances to • Settlers' Department, Sir Joseph Ward stated emphatically that in his opinion the total 'amount of money to be borrowed for the Advances Department should be £6,000,000. That amount had been exceeded considerably.

In the same year Sir Joseph Ward, then Treasurer, stated that the then limits were: County Councils, £6000; Road Boards, £300; Borough Councils, £2000; Town Districts, £300. He further 'stated that frequent representations had been made to him both in the House and in tho country, that these limits were 'insufficient to meet tho requirements of tho local bodies and that ho proposed to bring in legislation by which tho limits for local public bodies' loans would bo removed in cases where loans were obtained outside the Government, but with a Stato guaranteo. Where the local bodies continued to borrow from the Government, the then limits must remain. In'lol2, Mr. Wilkinson went on to remark, the borough of Timaru obtained a loan of £117,000 from the Advances Department. Mr. Craigie: Plenty of money in tho Treasury then. Money was going to waste.

Mr. Wilkinson: But it was soon emptied out of the Treasury. He spoke also of- tho borrowings of the liemuera Road Board! Ho congratulated the Minister of Finance on having reformed our public accounts mothod. People had been led to believe that surpluses were genuine, but in actual fact they were made up in great part by the charging of moneys to certain accounts where they did not rightly belong. He would ask the Government to take heed of tho largo amount being -spont on publio buildings in Now Zealand. It should be reduced if possible, but whether it could be reduced Or not, he hoped the amount to be spent on roads for the back-blocks would be increased.

SIR JOSEPH WARD (Awarua) said ho had been misrepresented. It had been said that whilo he was Treasurer in 1893 he had made a certain- statement. It might be that in tho debate he made a statement that he was against borrowing, as he had always been against it. Sir Walter Buchanan: That was the language used. Sir Joseph Ward: But I was not Treasurer. The late Mr. Ballance was Treasurer in 1893. We wero all anxious to keep down borrowing. ' Mr. Wilkinson (reading from a Blue Book): You were Treasurer in 1893. Sir Joseph Ward: I thought Ballance died in 1893. .

Mr. Wilkinson: He died in May, 1893, and this speech was delivered in July, 1893. , , Sir Joseph "Ward remarked before he sat down that the Government (had created fourteen now Departments sinco then, and among them tho Advances to Settlers Department. Mr. G. V. PEAROE (Patea) spoke of what Mr. Mac Donald had said about men* out of work. -He thought the fact was that men were badly needed, and that farmers were trying to get men. THE MINISTER'S REPLY. POLICY OF PLUNGE DENOUNCED. The Hon. J. ALL.o<.i, in reply, said tho member for invercargill had t prof essed to be staggored at his having__ introduced a bill for a loan of £1,750,000. The honourable member had quoted

fiorn one of his (Mr. Allen's) speeches, but it was clear that the honourable gentleman had not read that speech carefully. It contained no statement to the effect that he was opposed to borrowing. On tho contrary, ho had,'said ho was not against reasonable borrowing, but ho was opposed to,tho wasteful oxpendituro of borrowed money. Tho honourable member thought he had a grievanco because the Government wero borrowing for public buildings. Ho (Mr. Allen) would cut down tho borrowing for public buildings if he could, but tho Government Vero committed to public buildings by past Governments. He hoped presently to be ablo to stop wasteful expenditure, but it could not all be dono in a moment. Tho commitments of the previous Government had to be -jnet, and when they were met ho hoped to got our public works finances on a more sound footing. The Risk of Shortage.

Sir Joseph Ward, ho said, had objected to tlio Government so arranging tlieir borrowings that they could make tho monoy last beyond October in each vear: Did the Right Honourable gentleman put this forward as a sound argument ? . Sir Joseph Ward: You must increase

the loans to do it. Mr. Allen said ho would ask Joseph Ward what ho would do between October and March 31 if'the surplus ill the Consolidated Fund failed, as it had failed Sir Joseph Ward on one occasion while he was treasurer. His (Mr. Allen's) object was £ m « ko borrowed money last a little longer every year, so as to bo independent o the Consolidated Fund surplus. It might not bo necessary if lie were successful in carrying on to J>? rr ° w •60 much money next year as this year.

Stato Advances. He had declared, he said, that the rate of lending in the year 190S from tho Stato Advances Office was | very much aocelerated by reason of the tact that it was election year. Tho rate ot expenditure in that year could not possibly have been maintained. It had to be reduced in the following year, and was reduced. The result of &o P W"g nolicv of the Liberal Administration was exemplified in tho fac } fi tl ]§L : September 15 to November 16, 1908, not a single loan was authorised by the Advances Department. Over a Million a Year. The' Minister supplied the following particulars of tho operations of the Advances Department during tho last too months. In August, 203 settles obtained loans amounting to £/9,<40. In September (return, not quite completed), 246 settlers obtained loans Mr Allen: The honourablo gentleman is alluding again to that election year a year of plunge Advances wcwrnow coing out to sottlers at tlio rate of about £1,200,000 a yoar. Advances to workers {luring tlio two months were J,, Mow: August, 119 loans, aggregating £33,015; September (incomplete), 112 loans, aggregating £3 ? ,8<0. Totals, 231 loans aggregating £ob,<So. As to tho Midland Railway he had always maintained that a Bill should hayo been brought down to authoriso this work, so that Parliament could havo dealt with it. Instead the amount hart

been quietly smuggled through on the Estimates. Replying to another point, raised by Sir Joseph Ward, Mr. Allen said that local bodies had to take their loans from the Advances Department within twelve mouths. Tho honourable gentleman apparently approved of short-dated loans. The five million loin raised by him (Sir Joseph Ward) was i short-dated loan. About two millions of tile amount had been converted, but over three millions liad to bo mot next year. The dillerenco between short-dated loans and long-dated loans was that short-dated loans did not gen into the hands of legitimate investors and gavo rise to continually recurring expenses for renewal. Now Banlilns Mothod. ' The member for Avon had said that tho Government wore responsible for the decline in tho amount paid into the Post- OfliDo Savings Bank. Tho honourable member wanted tho House /to imagine that there had been created a sort of want of confidence in tho mind of tho Post Office Savings Bank depositor, because tho present Government had como into office. ould the House bo surprised to know that tho deposits in tho Post Office began to bo reduced while tho honourablo gentleman was in office? In the last week the Mackenzie Government held office the withdrawals from tho Post Office exceeded the deposits by £60,000. Mr."Russell: They knew you wore coming in. Mr. Allen said tho fact of tho matter was that the rates of interest wero high outside the Post Office, and there was also another reason for the reduction of deposits. It was tho receipt of deposits by local bodies, companies, and dairy factories, and these were all deposits which would otherwise come to tho Post Office. The Government could mafeo' no objection to the practice, because the money was being used for development work, but at tho.same time it was a matter for serious consideration, whether the practico could bo allowed to go on without some protection being given by legislation to thoso who deposited their money in this way. Mr. Russell's final charge had been that, he had brought the Bill down now in order to avoid quoting revenuo and expenditure figures for six months- Nothing of tho sort had been m his mind.. As a matter of fact ho thought tho six months figures would havo been rather better for his purposes. ] Tho Bill was read a second time on tho voices. HAURAKI PLAINS BILL. The Hauraki Plains' Amendment Bill (Mr. Massey) was read a second- time on the voices after a brief discussion, in the course of which Messrs. H. .Poland and T. W. Rhodes commended the good work being done in draining the Hauraki Plains and providing land for settlement.

The House rose at 0.40 a.m