SINKING FUNDS.

Dominion, Volume 7, Issue 2192, 3 July 1914, Page 4

SINKING FUNDS.

ARGUMENTS FOR AND AGAINST' SOME OF THE DANGERS:..' A jtong discussion on tho wisdom of tho State setting up sinking funds whrio' new loans are stili being obtained couinuously was provoked by the presentation of a paper by the Minister, of Finance giving information about tbe investment of sinking funds set up under the Public Debt Extinction Act. Mr. G. W. RUSSELL (Avon) said that although tho Minister of Finance had ridiculed the scheme when it was first introduced b,y Sir Joseph Ward, he had' made a statement in.his Itist loan prospectus drawing tho attention of inv» 3 - ■tors to tho'fact that sinking'funds were set m> for the repaymontof all loans Mr. A. M. MYERS (Auckland East) ■ said that tho remarks of Mr. Russell were fully justified. ' . What Had Happened Before. The Right Hori. "W.' If. MASSEY (Prime Minister) said that ho remembered what took place with ward to the Public Debt Extinction Act, but Mr. Russell had not been candid enough to tell the House. Did the honourable gentieman remember afout the sinking iund in. connection with the old war lo.onv Did lie remember akmt tlie sinking h™d under the loans to local authorities' scheme? Did 3>o know that undoHia Bill for which ]i e , professed admiration these sinking funds wore collared? Did he not know that that was not tho first occasion en which sinking funds' were so'taken? Did ho not know that picvioasly, when a Treasurer becamehard up, hp had resorted to tlio expedient of using the sinking funds? That might happen again. Mr. Myers: That can't happen.under this Bill. ■

Mr. Massey said . that Parliament could do anything, and as a Treasurer must have a majority in Parliament, lio could always persuade Parliament to agree to his proposal. Authorities on finance had expressed' tlio opinion again and again 'that, it was useless for a borrowing country' to provide sinking funds so long as borrowing was continued. Now New Zealand, in setting apart sinking funds, was virtually providing, the money for .them out of loans. At present, however tTie fund was doing no.harm. Thero could bo jio .objection to it, but he thought it probablo that some future Treasurer, as soon as ho got hard up,, would ask Parliament for permission to i:so tho accumulated funds for tlio purpose of carrying, on tho business of the country. Ho had not any doubt tTist some Treasurer would do exactly as he had predicted. - Mr. Myers: Is it your intention to collar the sinking funds? Mr. Massey: \Vc have not the very slightest intention of collaring tho sinking funds. We lave no occasion, to no it, because tho financial position of this country was-never fietter, and tbe outlook was never bettei, than it is at present. Opposition Cavilling. Mr. H. ATMORE (Nelson) contended that the Ministry, by drawing attention in "the prospectus of their Inst loan to the fact that, sinking funds were provide! for all loans, had endorsed tho policy of the Public Debt-Extinction Act. Mr, W. D. S. MACDONALD (Bay of Plenty) said the funds were all invested'in tlio State A'dvan'ccs Department, and i:nul<{. not be appropriated by mix Treasurer. SIirjOSEIMI WATCD (A\varua( said that- the same statement as that to which reference had boon made had appeared in a previous loan prospectus by. tho High Commissioner, and had been approved by the J'rimo Minister. Tiiis farmer circular was issued in London at a limo when tho. Minister of Finance was thi'i'<\ so that he was bound to have soon it before it was isr.iied. Tlip Government could not t.lipii say that thn circular was illo work of tlio Hicli Commissioner, lie did not agrpp that the sinking funds of the war lonn .were ".collared." Tim whole object of the Act was to consolidate all

the sinking funds. He strongly defended the seliOTlw, and lie added, tlwt since Jio had left office he had luecn in— torviewed by ksidiitg responsible jjin* isters of other ttdfettimeitts about the scheme. The sfaltinjj funds wove, he claimed, in'a very sound mu! saiisfa;torv condition.

Mr. A. H.'HIXIDMAKSH (Wellington South) took Mr. Mftssey to task for his doctrine thai ParH-airtent ougkS not to pass legislation in caso a future Parliament 1 might Repeal it.

Tho Bintsisf of Ftn.ap.ca,

The Hon. J, AXtliN said ho ivas entirely in' favour oi the principle of sinking funds evfta s conotrj- which was borrowings Ho wouW b« very glad indeed if the country wna stroaig enough to make tho fund stronger than it was. With rofjsivd to tho prospectus in ■ londoa., jit- had been adrisatt hy tho- (KoveSTi" ment's own lirojjcr that ii liad very, vory littfe effect eij imyhody, a-ffit no-effect ata'tt at* the underwriters. Tiio prospectus retomlfl t<? was prepared by the Commkeiouer, and' suljm.it. ted to him. . Jrlc (Mr. Alton) wradi? no alteration in ifr s aiw ho took full responsibility for it On the gcjie-ral qiMsiioa of sinking funds ho -ijwted a previous statement of the LtfniJor of the Opposition against tile petiey of a fcoKowaig country setting tjp sinking funds. Sinee then tfie honsnif-aibh; goflOuKtaa had coano round to liis- (Mr. Altai's) ivay of thinking. Persssi-ially, Ik- was in iWcrni' as ho always' had Mbeeu qf the' Setting up of sinking funds',