STATE ADVANCES

Evening Post, Issue 126, 29 May 1936, Page 10

STATE ADVANCES

CORPORATION BILL

DEBATE CONTINUED

TOLERANT CRITICISM

MR. FORBES'S SPEECH

The second reading delude on the State Advances Corporation Bill! •was resumed in the -House of Repic-. | , s;cntatives today. Opposition speak-1 ers confined themselves chiefly to tolerant criticism of the inea?m-e, ■which was described as a hybrid of the Mortgage Corporation and the State Advances Department. The Leader of the Opposition (the Rt.;Hon. G. W. Forbes) said he did not intend to condemn altogether what the .Government proposed. The previous Government, in establishing the Mortgage Corporation, felt that it was providing a better machine than the Stale Advances. Now a new Government . had.come in, and it thought it had a still better machine. One could not take any objection to that. It was not . the legislation that mattered so much s as:.the spirit behind that legislation. NcJ one could find fault with the ideals, but the Opposition had seen some of the: weaknesses of ideals, and it was the Opposition's duty to point them out. • The prevention of speculation had been the pious wish of every Government. The difficulty with that was that it was not possible to deal with it : en bloc. The people of New Zealand were' a speculative people; the fact that the Dominion had more race meetings than any other country showed that. He said that prices must rise, and his advice to anyone was to get in now, before they did rise. The' previous Government set out to reduce costs, and it could be proved that the purchasing power of the £1 „ during the period of the last Government was greater than it was going to be in the future. Mir. YD. W. Coleman (Government, Gisborne): The people did not have a pound when you were in. ' Mr. Forbes: They did not have it because our produce was not bringing the' same amount of money into the country. . He went on to say that a risk. was being taken with the welfare of the people. The Prime Minister did not like it being said that what he proposed could not be done, but the ele- ' inent of risk was so great that the chances, of failure had to be taken into consideration. So far as housing was concerned, he pointed out that the previous Government had gone some distance along the road towards meeting the housing problem. He suggested that in those cases where a prospective purchaser could not find any deposit, and where the State had to advance 100 per cent., the Government should'buy the house ■ and let it at a cheap rent. That was being done in the Old Country. One of the difficulties of the State Advances Department was the number of applications made to it for advances—members of Parliament were constantly being pestered by their constituents to press: .their claims. Under this Bill they would probably - find members forming queues outside the door of the Minister of Finance instead of outside the door of the Superintendent, as formerly. He hoped that the new machine would work effectively, and . that ..the needs of the community so far as housing and farming were concerned would be met. He wanted to see the scheme administered successfully, and the difficulties the Opposition saw' straightened out. NO FLAWS DISCOVERED. Mr. C. Morgan Williams (Government, Kaiapoi) said he did not realise ' how. good the Bill was until he had heard' the speech of the Leader of the Opposition. Mr. Forbes had not played the part expected of the Leader of the Opposition. He was looked to to find flaws in the Bill but he had not been able to find any flaws and had criticised the spirit behind the BilV Mr. Williams said he would take up ! the challenge and say that the spirit behind the Bill was that the public benefit must prevail over the individual. The late Government had hand--1 ed over the State Advances to a semiprivate Corporation because it had a different spirit. . . ■ j . While he would admit that there was ! a. case for the charging of interest, j said Mr. Williams, the whole aim ofi the idealists • of the world had been j towards the abolition of usury. The Bill gave, power to the Government to reduce the burden of interest. The rates of interest should be lowered according to the needs of the country. The Bill gave power for interest to be carried according .to public ability, but under- the existing legislation interest ■ rates varied according to the value of the security. That brought in an entirely riew principle. .Mr. Williams said that the Bill was the most important measure, with the exception of the Reserve Bank Bill, that had come before the House. It gave the Government power to direct capital,where, it was most necessary, ■and where it wouM give the greatest benefit to the public. • A RETROGRADE STEP. ' The Hon. Sir Alfred Ransom (National, Pahiatua) said there was practically nothing new or original in the • Bill. There was no new thought. The Bill was a hybrid of the Mortgage Corporation and the State Advances D&partment, and was really an endorsement of legislation enacted in the past by non-Labour Governments. The only thing about the Bill was that it was a .backward rather than a forward step. The weakness of the measure was.that it placed a purely business concern. under political control, and the Opposition regarded that as a retrograde step and'not in the best interests of the country. The Bill was remarkable for. the dropping of all forms of costless credit,.and the.recognition of sound forms of finance was recognised once again. He was glad that-for once the/Minister of Finance had his feet on firrft ground. In his opinion, toe. Bill was less liberal than the Mortgage Corporation Act; it was of a more conservative than liberal character. Sir Alfred paid a tribute to the speech of the Minister of Finance in moving the second reading, but remarked that it was the speech of an idealist, although he had no ' quarrel with a man with ideals. The Minister, however, had been inclined to skim over important sections of the measure. In his view it \vas desirable that there should be share capital in the Corporation, so ; that outside in-1 terests would have representation on i the board of management. Instead of I ■ that every member of the board would , .. be appointed, by the Government, and outside interests would have no say in the control or policy of the institution. There would be straight-out political control, and he was satisfied that before long Mi-. Nash would find out exactly, what that meant. The directors would be departmental officers, and they would have to do as they were told or get out. There could be \ no question about that. It was a pity

that the Bill had riot definitely stated what' the rate of interest on loans would be. It had been argued that New Zealand's need was a revaluation of land,' but in his view what was needed was lower interest rates on rural securities. The Prime Minister last night had made his visual optimistic speech and suggested that the Government could do anything under the sun. He said he was going to deliver the goods, but what the public lo know was who was going to receive the goods. LOWERING CF INTEREST. Mr. J. G. Barclay (Government, Marsden) said the Bill would enable tarmcrs to receive money at a reasonable rate and workers to build, homes |at a reasonable cost. It had been said | that the Government was £o;ng to | nationalise the land, but the Bill before the House proved that that was not so.' He did not think that costs would rise. The aim oC the Bill was to lower the ratos o£ interest to the farmers and the workers. The member for Wallace had said he wished that the activity o£ the Mortgage Corporation could have been extended, but if he had seen the letters that had been received in the Auckland Province about the Mortgage Corporation he would think differently. The Mortgage Corporation did more than anything else to put the last Government out. The Bill was wrapped up very much with the monetary system. The Government had taken complete control of the credit and currency of the Dominion, and it was only a question how far the credit could be used for the purposes of this Bill. It was the intention of members of the Government to go out during the recess and explain it to the farmers and to the workers, and Mr. Barclay invited the member for Wallace to come to Whangarei and discuss the Bill. Had the Government not taken control of the credit and currency the rate of interest in the Dominion would now be rising, in sympathy with the hardening of rates in Australia. Before the deflationary policy of the last Government was introduced the mortgagor and mortgagee were the best of friends, and this Government aimed at bringing that about. again. He was sure that the Bill would be acceptable to the farming community. Mr. W. J. Broadfoot (National, Waitomo) denied the statement that the Mortgage Corporation had made it possible for the cream of-the business to go to private interests.- He thought it was an unfair statement to make. Mr. Broadfoot said that the Minister had the power to meddle with the activities of the board at any time. It was the duty of Parliament to decide the policy and leave its carrying out to the experts. The Bill cast on the Minister a responsibility trial would bring him a lot of trouble, as he would be the virtual arbiter in the case of every man who was disappointed with his application. The position could not be free from bias. Mr. Broadfoot feared that the Bill might have some effect on overseas borrowing. The last loan raised by the former Government was oversubscribed—it was evidence that the investing public had confidence in the stability of the Dominion. On the other hand, the recent loan raised by the present Government was undersubscribed. Thirtyfour per cent, was left with the underwriters, and worst of all the issue went to a- discount. He urged that | the proposal to guarantee loans should be thoroughly looked into. ■ llr. Broadfoot referred to the housing scheme, and said that the task oi prbvidi^<T adequate housing accommodation -*1" the whole of the population bristled with difficulties. It was impossible to build houses at a price that came within the purse of the people; that had been the experience or other countries. How was the Minister going to combat this difficulty? . Was he going to grant a direct subsidy? Mr. Broadfoot wanted to know also whether the Jlinister had thought of assisting the building societies, which had helped, by sound financial means, thousands of people to build homes. Referring to the question of the nonpayment of Crown rates, Mr. Broadfoot urged that there should be more provision for-the payment of rates on properties taken over oy the Corporation. He suggested that the part of the Bill dealing with this should be referred back to caucus for revision. (Proceeding.)

Last night's speeches arc reported on page 6. •