STATE LOANS

Waikato Times, Volume 119, Issue 19903, 4 June 1936, Page 7

STATE LOANS

GUARANTEE OF BONDS

CLAUSES KEINLV DEBATED. COSTLESS CREDIT PROPOSAL. \VELLIXGTOX, \\'ednesday. Twenty-three clauscs or the State Advances Corporation Bill had been passed when the House 01' iicpresen—tatives rose early this morning. Further clauses were discussed in the after'noon. Suggestions that the guarantee clause in the Bill might in operation impair the credit of the country overseas were made by Opposition speakers. The Minister or Finance, Ilon. \\‘. Nash, strongly deicnded the clause and quoted stock exchange figures in his claim that the legislation so far brought down by the Government had not reduced New Zealand‘s standing in London financial circles. The Minister claimed that there was no greater liability in effect on the State under the bill than there was before the re-constituiion of the Mortgage Corporation \\‘as proposed. The difference was, that under the Mortgage Corporation the country was paying three-eighths per cent. more on the money required. on the interence that it was not State guaranteed. The country's credit. h in this discussion, mention has been made 0! the credit of the country in’ London.“ the Minister continued. “But what can be said about our credit when on the stock exchanges we see New anland securities quoted for consider—ably more than those of Australia. There are two comparatively similar securities which lately have been at £lok its 9d for the New Zeaiund stock and £lO2 23 (id for the Australian. The New Zealand stock matures in 19110. and the Australian earlier, but they are similar securities in most rcspouts.

"Now after the London flnanclers have been told of all we are doing here, after they have becn‘ informed of our legislation and that we have ticktsn over the Reserve Bank, our scturmes um realising £5 more in some cases than the Australian. In fact, H. appears that there is more fearlulness about our credit. on the Oppo< smun bunches than there is in Low don."

The Leader of the Opposition, the Rt. Hon. ti. \\‘. Forbes. said that naturail} there was relief in the knowledge that New Zeainnd stocks stood as high as they did in London. That was due to a great extent to the reputation which New Zeaiand had established long before. That reputation stood so high that it could stand a fair deal of knocking about before people lost confidence. So far the Labour Government had not shaken that confidence. Finally, the Opposition called for a. division on the clause providing for corporation bonds to be guaranteed. The clause was carried by 51 votes to is. Free Inn. of eredlt. ‘ An amendment to the Bill designed‘ to arrange for the raising of funds for the corporation along the lines 01 costless credit was moved by Mr H. Atmuri- tln(lepenrlL‘ilt——.\'cisuii). but was rcjerled by the chairman of Coniizittees. Mr 1:. J. Howard. on the “grounds that It involved an appropri—-‘-.ition, but the ruling \\‘uS challenged. and eventually it was decided to send for the Speaker, to obtain a dcilnitc ruling. The Speaker decided to consult. \\rittcn authorities before en—uount‘ins his decision. .\lr .\tuiure said that it‘ it was intended to build 20,000 houses costing £IOOO each, the total cost would be £20,000,000. If that sum could be made available by the Reserve Bank in the form or a national credit along the lilies suggestcd in the amendment, there would be a saving of over £1,000,000 a year in interest. The amendment really gave eii'ect to the policy that had been enunciated by the Government during the election campaisn. Danger of complications. The serious complications which might arise if the Government embarked on a policy or using non-in-terest bearing credit for State purposes \\'ero stressed by the Minister of Finance, iion. \\’. Nash. “Such a step would mean. I take it. that tho Government would see that all the mom-3~ requirements or the Dominion were free ot‘ interest." said the Minister. “That would destroy the foundation of the Post (Juice Savings Bank from the View of interest earning. it would destroy such concessions as bonus payments on life insurance policies with the state and it would even have its effect on local body tin—ances. which are linked with the State. We could not select some aspects of our iinancing and apply that policy unhout applying it to all of them. “i admit there is a section of the credit or the country which is rightly under the control of the tiovcrnnn-nt that roui-i he utilised at a minimlun rust and poSSibiy at no interest, what 001‘. 1 Jill not saying, of course, that . .such a step would he taken. but. thul ‘bcction oi‘ the country‘s rrcdit has hitherto been used by primie cuter-pi-isv. \\'i‘ \\ant in use it ourselves. put for the “so of ”ll‘ entire «'lllllililillrr it) and for its lwncm. To do that \\iih thi'sc corporation bonds as has liven suggested \\ouill l'l'l'Hlt' a his tangle. \s it is \\-" li-Hi‘ tutu-n Hi" Itl|\\‘t‘l' in i><~iv the bonds under urdimry pip. t-u'ustaiici‘s'. \\r \\iii dclcrniinr \\hat intent \\iii in- ii\4-d." N MEASURE PASSED. 'l'ilillli itliUilXt‘. CARRIED. \\'lii.i.l.\i‘.‘l‘u.\" 'l-m..~,.1_._\, The ”nine .nijuln‘in‘d Min" 1’ ;|.nl. 'rhi' >l.ii«~ \d\.inrc.~ l.ur]mi'utini| liill \\a: put through committee after a )ii‘ii‘l‘ ilisi'lissinii and \\.is haul ii lliii‘ii mm- .ind pencil. ‘i'ht- ilonsu i'irht,‘ at 2.5 unit. a.“ ___