STATE HOUSING FINANCE.

Hawke's Bay Herald-Tribune, Volume 81, Issue 16, 12 October 1937, Page 4

STATE HOUSING FINANCE.

The Hon. Walter Nash is certainly about the most reticent Minister of Finance we in New Zealand have ever had, that is, of course, so far as regards his methods of working the public finance of the country. As to his sources of supply, other of course than taxation, which had necessarily to be disclosed, he has afforded the people only a very minimum of information, and the same may be said with regard to many othef matters of detail in which the. public are deeply interested. It is therefore weicome news we have to-day that he intends to make some full statement in reply. to financial questions that have been raised in the course of the still proceeding debate upon his Budget. Among other subjects of very definite public interest with Ivhich We may perhaps hope that he may deal is that of financing the Govemment's house-building scheme, for in it is probably involVed the Government* s much heralded use of the "national dfedit,,, a phrase that, so far as noted, has as yet had tio definite or intelligible itttefpretation at his of any other minis^efial hands^ In his lirst Budget no reference whatever was made to the source whence the.requisite.housing clapital was to be drawn. In that now before Parliament he dismisses this phase of the housing plan in the following curt words: "As honotlrable members are aware, the money for the housing scheme is being provided by the Reserve Bdnk" — just that and nothing more. What, however, the public are desirous of knowing, and are surely entitled to know, are the terms upon which this credit, apparently of unlimited dimensions, is to be made available by the Bank to the Government. Whether, for instance, it is to take the form merely of temporary banking accommodation to be wiped off, as all banking accommodation should be, within some defined period, or whether it is to be regarded as a long-term loan, presumably J to be gradually likuidated by the rents received from the dwellings built with it — :scarcely an "orthodox'* banking pro- - • position. Then, if this latter, as seems most likely, is to be the case, it will be of distinct interest to know the rate of interest on the advances that is to be debited against the scheme. When in Canada a month or two back Mr Nash was repOrted as telling them there that he was going to get this money on the footing of interest at ii per cent. per annum, which, of course, for a long-term loan would be practically a nominal and quite delusive rate. Evidence of this is to be found in the fact that in offering to find funds for municipal house-building schemes, the Minister himself set a rate of 3 per cent. per annum. Moreover, for a comparable State undertaking, the building of railways, the Government itself is paying for loan-money spent on them interest at a rate of probably 3 or 3^ per cent. per annum, though on this point, too, Mr Nash would seem to have kept the public entirely in the dark. Why, then, if it is the fact, should the State housing scheme be debited with an entirely artifiical rate of interest as low as i£ per cent. per annum? Then another question that arises is as to the period over which the liquidation of these housing advances is to run. Is it to be spread over a time estimated at the rent-producing life of the houses themselves and, if so, at what is this set? And is any allowance being made for the fact that the houses themselves will pretty rapidly deteriorate and fall out of date and so command a progressively diminishing rerttal return? .These are ali pertinent questions that go, in the first instance, to the root of the further question as to whether the rents to be charged for these houses — stiff and all as they may be, and within the means .of only the highest paid workers — are even then really adequate to produce a fair rate of interest and a sufficient sinking fund on the cost of construction. And this says nothing of the reduction in rents that at no great distance of time must assuredly follow as the houses grow old and less desirable in comparison with those of more modern type that will be developed. Distinct intetest must therefore attach to the basis upon which the initial rentals have been calculated and assessed. Possibly the Minister, being apparently in a more communicative mood than usual, might, if asked, lay his figures and his computations on them before the House and before the public, who in the end, in the next generation, if not in this, will in one way or another be called upon to "carry the baby." Then, finally, the Minister might well be asked into what other State ventures he proposes carrying this resort to the "national credit1" through the Reserve Bank. As to housing alone he said in his Iast year's Budget that "the only limit would be the number of tradesmen and the materials available." This is certainly something less than the cerulean limit set by his chief, the Prime Minister.