The Dominion. FRIDAY, DECEMBER 26, 1913. STATE LENDING.

Dominion, Volume 7, Issue 1941, 26 December 1913, Page 6

The Dominion. FRIDAY, DECEMBER 26, 1913. STATE LENDING.

One of the many reforms which the present Government has effected since it took office, and certainly not the least important, is that of lifting the State lending system out of the condition to which it was reduced by the plunging policy of the Administration, and placing it upon a sound business footing. The credit of. placing the State Guaranteed Advances Act of 1909 upon the Statute Book belongs to the Ward Administration, but that credit 13 tarnished by the fact that the Advances Department was used in an attempt to sweeten the electorates prior to the general election of 1911. The facts regarding this abuse of a usefid institution were fully brought to light in an inquiry conducted by a Select Committee of the House of Representatives in 1012, and need oc only briefly referred to here. It was established that during some months prior to the election, the Advances Department authorised loans to ' an amount just about twice as great as the resources legally available to the Department would enable it to go on lending throughout the year. One borough, Timaru, obtained advances totalling £116.000 between January and July, 1911. The llemuera Load Board obtained £37,000 three days i before the election, and £-12,000 one ■ month after the election. These arc. outstanding examples from a catalogue of similar extravagances, call them by no worse name. -The "scattcr-cash policy,'' as the-Hox. James Allen has aptly named it, led ' to its inevitable result by so depict-,, iug the resources-of the Advances Department as to cripple and pi'ac- ' tically suspend its operations.for;a. time. In November, only a,■.-lew-months after Timaru had secured £110,000, a limit of £5000 was imposed upon future borrowing by local authorities, a limit of £500-was placed upon loans to settlers, and-;a limit of £300 upon loans to workers. The present Government, upon ■ taking office, was face to face.with large commitments, which the- avauab c funds were quite inadequate to meet. It has since been engaged in the task of setting the Advances Department ' upon its legs again, and, to a great extent, in spite of considerable dimciiltics, has succeeded. , :=■■■'- f The whole field of State, lending - has been overhauled; sounder admin[l istrative methods have been adopted and amending legislation has been :- passed which alters and improves the '- advances system in several import!l ant particulars. The State Advances ' Act of last session is a consolidating and amending measure, which,.will have the effect of considerably, simplifying the administration' of the Advances Department, and will, relieve it of certain duties which,, it. has hitherto carried -out,v . but f which " should have, been in the hands of J the Treasury. ' The' .Act .which'- has . been repealed contained.,;provisions under which the Superintendent, ofs Advances was required to use money. i° not onlv for loans to settlers, work? > ers, and local authorities,;;but-also for the purpose of loans to..finance!' 3 the settlement and opening iup*;os: Crown lands, ■ for'the settlcment-'of Native lands, and mother*,serviced;

These? ii ferred-,to sthcJ;-yarious-|f;De|iai;lmehts!; fs ?admimstering;:thojMets|Sregulatings r<> ithcjcxn.cnii.iture. of.;'thc^nohey'SX" c !!i - 'i ;lie n ee't ort h? j liegT re as u k' be' ■' rc-J, -. I i raising':thi'sei moneys,* 'b .^ijjtlfenp.t>i?i. Siiporiii.ten ticn P^bf ,r" A' \y .ya'iiccis: - - :A;i ,s iia«j^prflvisionv:has t 'n Native°laiids : i;SMlei3the s .Native..Lantl o ::ActC^piß;.^l]||)elfaJ)!e; s to' obtain. : J ia'dyancrajf si leases ii )■ ,ii fa 1 tera t ion? i ntf lieSl Jt ! d ii ceil Jw it hi rcga fcKfejsifik' i ng|f ii iidsK ■ |j |1; been"'paid :,!i n.tblthcShandsSi:of|;fth£: ;!ji Public#iTr'ustce>j;?Th@ Je ;sinking :i Vii ?t spficial..sinki.ng!!.f und.;' accounts ill':':tho\J '■! i Ad\'auees\l)cpavtmont.^;^licseJsjnk~' ; l -ingy !ri future,':be^ihvcsted' ; ,by^tliej>iiper'in i r, offered"lp : -th2sDcp'artmentf-This;wi!l t n -futoircjiloans. ji -'j sions.'of , '.tKe':Tiiblic;Debt'-;Extinction- p Act,- ..which'-., provides;,,for ; :the!',repay- ..n ment ofipans-in'a period .of. seventy- t five years from :-.thc- : date- of'their..be-,, e ing . s . .the provisions'with'regard to'lend-' r ing money to local':-.autliorities are re- i moved from' the .State .'Advances Act. ,n and arc placed:.inrtheiLocal.- Bodies' t Loans : Act,' : also/'passed : 'last.--'scssion: ..t The conditions governing the grant- c ing of .'these.-, loans, arc practically. : \ the same as'-previously, ■ but one, or e two notable features' have... been, in- k .troduccd. -It is now possible for t local bodies to borrow money under . the guarantee'of the State _ (to an .;. aggregate amount not exceeding half a million .sterling in one year). This , should be'found a useful amendment in the. event of the Government _ at .any time'having difficulty in raising !. money in the.London market. The J local bodies arc not restricted to any particular market, and it may easily , happen that they may have oppor- ' tunitics of raising small loans in the Dominion itself or. in* Australia, even ,• at times when, money, in larger sums j ■is difficult to obtain. In operations , of this nature... the., Stat- guarantee l should be a= considerable-.assistance.. , I'On^thtf-other.hand;-local'..bodies may. c combine' to-'raisc-.K.'-jbiiit'-loan, under ■ the State guarantee;-"and,' as.tlie.law j now stands, ; ?it:;provides,*that'-.■ the « areas of. local .bodies' which; combine ( to raise a loan :: nced not"be,contigu- i ous. :■' The maxiinuih-amounts which j maybe raised annually-.for the pur- '. poses of the i have not been ; altered:iin the new ■ legislation'.-! iThcse-amounts stand at < £1,500,000 in the case of .'advances to ■ settlers,- £750,000 -I' for- advances' to workers,-and £1,000,000 for'advances ; to local authorities.. ■}In; . practice j these amounts;.are ..never approached , at all closely,-and. unexhausted loan authorities to ,a, considerable-total . have been written'off. ...":.:,..:■(■■■.' -. One feature of-the State''Advances Act which gave rise to a good deal of discussion- in ,the House of Hcproscntaiives is-the alteration- in the constitution..of-.the Advances .Board. Hitherto the Finance Minister has bscn a mcmbo'r'of the Board, but it lias been thought advisable to make the Board entirely free from any political influence so far,as the granting of'loans : is concerned, and for thrit..roason'':thffi.-Minister has been removed. ' Up to the nrescnt time the Board has meiuded.,two members, not connected .with the Public Service. The term of. appointment of the two gentlemen"now sitting on the Board as non-Service members exjpires in. February next, and the new Act provides; that their places shall bo filled by officers in the Public Service.- The dominant tendency of..the State Advances Act and Us companion measure,' the Local Bodies' Loans Act, is.to simplify procedure and cut out- unnecessary ' red tape. This is cxamplcd 'in .its .title, which is a revised version of "New-Zea-land State Guaranteed Advances Act,-' and in the reduction of the style of the .Superintendent from "New Zealand State Guaranteed Advances Office Superintendent" to the simple designation .of "State Advances Superintendent." A similar simplication extends to various more important matters throughout the Act, and to the-legal documents used in connection with the administration of the Advances Office, and the result, will be a considerable saving of time and expense. , The new Act reduces the maximum amount of [ loans granted by the Advances to Settlers' branch from £3000 to £2000. The idea underlying the reduction is that a settler.in a, position to raise a loan of £0000 should be sufficiently affluent to borrow the money recurrent rates from private institutions. The primary purpose of the Act is to assist small.settlers, arid under the rules of the office a, settler obtaining a loan to the late maximum amount of £3000 was required to possess an unencumbered security ■ valued at £5000. In. any case the actual working limit in the.Advances to Settlers Branch is at present a long way below the statutory limit;".' It stands at present at £750, and the Department is busily engaged in'catering .- for settlers' who need loans up to . this amount,' and finds that they absorb all its'available funds.- .■■ '..■ The aim of'.the present Finance 'Minister'" (the':llo>:.: James Allsx) ' has been to'.-substitute a policy of ■'■■ maintaining--a steady- flow of loan- ; money 1 from-.- the Dcpa-rt-.ment'for'the plunging .policy which ;■ obtained.before,lie-took office.. Dur- ■ ing his administration the limit upon ■ borrowing,' in;-the...case of Advances to.Scttlers.ihas been praised from £500 ' to £750, and'hi.tho'casc of Advances I ''.'to £400. ' ..Spcaki.ng;.,iri';thc House.last October, ' Mk, Au.EN.'stated'tliat' advances made to settlers'during the previous month ; had ■'tU":illcdj|'£l c - , .2i00q v .C'lf: this rate 1 were maivitaiiied.; 3 it..v.'ould come to ■within a-!few...thousand pounds of the ; '£1,500,000- thit :; the : Department-.was ' entitled to. borrow for /purposes''of ' advances'to'scttlers in any one year.- '. 'Under;;; the'i ; jWAiir>,;;yAdniinistration loans •''.">■ aggregating ■ £255,000, ,'-wero ; :; authorised- in... July, I I 1911. but.this entailed, lending at the j 1 rate of-tln'ec'million's s a-..-ycar,' that 1 is toisay.. to'-';jnst.'doublo..'the-amount ; authorised, under the.law." Obviously ' this was'.a policy-of.Uuero'.'plunging. < i The operations'; of.;'thc-:Advances Do-1 • partment"-have-been.-steadied _under I ' the now. ■.■■Administration'';-.:' while,! at! " the- same ■ time,,"as ■ nn'ich'v money, as " can be.'.obtairied.'is being made avail3. able foiv: loans.;.!;;:, Tliei'e. is '"'every rea--3 son -to, i.<elieve.':.that,.under the new 1 ])olicy-!!tli«lDepartinent';;will: attain -its nmximumjppssilileiiusefulness to s iis'elients'fan : as a