INTEREST CHARGES

Evening Post, Volume CXV, Issue 14, 18 January 1933, Page 9

INTEREST CHARGES

FARMERS' BURDEN

OPPRESSIVE PROPORTION

REDUCTION SOUGHT

Most of the discussion yesterday afternoon at the. meeting of primaryproducers held under the auspices of the New Zealand Farmers' Union turned on the question of interest rates and their relation to tho difficulties of the farming community. Two schemes for relieving the burden by a radical change in the mortgage system were outlined to the meeting, and a motion urging the' Government to reduce interest charges generally was carried unanimously. The following motion was moved by. Mr. H. Seifert (Palmcrston North) : "That the Government. _be asked to use its influence to bring interest rates in New Zealand down in conformity with reductions in other parts of the ■world." Mr. Seifert gave'details of farming costs to show that interest charges formed an oppressive proportion. Mr. A. E. Harding (Dargavillo) said that interest reductions would give more immediate relief than any of the other proposals before the meeting. The interest rates in New Zealand were about the highest in the- world, and there was plenty of room for a general , reduction. The Government had the power to give the farmers immediate relief to a very large extent from their troubles. A reduction would benefit not only the farmer but all tho rest of the community with, the exception of those who had money on fixed deposit. INTOLERABLE POSITION. Mr. C. A. "Wilkinson, M.P., supported the resolution. He pointed out that the rates for Government securities influenced the general rates, and apparently the Government's necessity was so great that there could be no reduction. In view of the necessity of taking drastic steps to relievo what was rapidly becoming an intolerable position, Mr. Wilkinson outlined a scheme for freeing all farm land in New Zealand from mortgage liability in respect of both capital and interest; He proposed that henceforth no mortgage liability should be allowed on farm land, TrMeh should be entirely free from any such encumbrance. All farm land, over and above what was considered a rea- . sonable area, should be resumed by tho State without payment for further settlement purposes, being acquired by the Crown on the basis of the reduction made by the.abolition of the mortgage debt. Such a scheme, Mr. Wilkinson considered, would place phe primary producer in a position to compete with any country in the world. Tho main feature of the scheme was that it would bring money values into line with production values. After arriving at the true value of the mortgage, interest payments would be made on a 3 per cent, basis to provide for fluctuations according to export values. The State should take over the whole of the liability under the mortgages, as adjusted, by issuing bonds payable to bearer and saleable on the Stock Exchange. The , liability would not under any circumstances exceed £00 million pounds, ■which would entail a burden of interest payments not exceeding six million pounds annually. In order to provide funds for the payment of that annual amount Mr., Wilkinson suggested three alternatives—an'income tax upon the net profits of all farmers,, a sales tax upon,.all produce or stock sold s .offi,,the. farms, or an income tax on the gross receipts from farms—r-tho balance to be made up by general taxation. LEGISLATION NEEDED. In the opinion of Mr. H. E. Blyde (Taranaki), the resolution should have been couched in stronger terms. Legislation should be brought down; to' prevent.interest on mortgages being above a certain rate, and that would bring the banks into line as well.' He moved as,an amendment that the Government be urged to reduce interest Tates. The amendment was carried. ■ Details of another scheme were given by Mr. W. B. Fletcher of Wairoa, whose idea was a system of revaluation based on a gazetted price, level for all primary products the basis arrived at to stand for seven years, after which, another valuation would be made. He proposed that there should be an adjustment of all existing genuine mortgages by allowing re-registration up to the value declared by the owner or occupier, and in all cases where the mortgage exceeded that value the mortgagee to be given negotiable bonds. The whole scheme could be controlled by a realisation trust board to be completely free from all political influence. : EATING BELIEF. Without a great deal of discussion tho meeting passed) the following resolution: "That rating relief, by way of bonus or petrol taxation funds be given to all rural lands as a preliminary step toward the complete derating of farm lands for roading purposes." The next resolution advocated the abolition of land tax and the substitution of. income tax. In moving a resolution, Mr. W. B. Matheson (Wellington) said that the principle of class taxation as typified by the land tax, was wrong. Th© tax imposed a deliberate handicap on anyone trying to earn a living on the land. To impose a special tax on those who took up land was to hit at those who were making the best use of the' country. Every opportunity and encouragement should be given to land settlement. The motion was carried. GOVERNMENT EXPENDITURE. Mr. "W. Machin moved: "That Government expenditure which has not been reduced during the past three years be now definitely brought down to an amount which the Dominion can afford to pay." He said that those who had followed the Budgets of the past three years would have noticed that Government expenditure, instead of being reduced, had been slightly increased. The Government was making many unnecessary payments involving a huge total sum, and it was noteworthy that the second half of the Economy Commission's report had not been put into' effect. It was desirable,to press more strongly and in a more enlightenod way for reduced-Government expenditure. SHOULD SET AN EXAMPLE. Mr. J. D. Hall said it should be brought home to the Government that the farming community was staggering under a burden-which it could not possibly bear much longer, and that the Government should set an example of what could and should be done to reduce expenditure. . The suggestion was made that in departmental economies the necessary investigation should be made, by an- outside Commission. The resolution, was carried unanimously. Another proposal was that a mission should be sent to Great Britain to arrange for the conversion of New Zealand loans to lower interest rates. Mr. Machin suggested that Now Zealand should first put her own house in order before making any overtures to Great Britain. ■ This view was generally supported. Several other proposals on the order paper were referred to the Dominion executive of the Farmers' Union. A committee was set up to place the views of the meeting before the Government.