J. G. WAJtUJ

69

I.—lla

by the Board as being the rate actually produced to the lender by the money actually lent; and that is the reason why i ask the right honourable gentleman, in regard to the rate of interest, whether he was borrowing the money at par or at a discount, because if it is at a discount the local bodies will have to pay for that discount. Under the existing law the local bodies can borrow for thirty-two years at 4 per cent, without having any sinking fund to pay, or they can borrow for forty-one years at 34, per cent, without any sinking fund to pay. Under this Bill as it is proposed to be put through, not only will they have to pay the rate of interest the loan actually costs us, but they will also have to pay a sinking fund of 1 per cent. So they will be paying more for the use of the money than they do under the existing law; and the right honourable gentleman admitted it, because he stated in the course of his remarks that he had made up his mind that the Dominion should not in the future make up any loss in respect to local bodies' loans. Hitherto we have been deliberately making a loss as part of the policy of the Parliament of the country in order to enable these local bodies to carry out their necessary works. And it has been a good policy, too. That policy is being departed from, and I regret it, because it is a step that is not in the interests of the local bodies." Now, 1 want to say that in replying upon that occasion 1 said, " When I was introducing the Bill I called attention to the fact that, in addition to the sinking fund, there was provision made in this Bill for the securities to be handed over to the Public Trustee, so as to ensure the sinking fund being strengthened. Now, if honourable members will look at clause 29 of the Bill they will find that provision is there made for reinvestment of the amount of the sinking fund which the Public Trustee obtains from this Department. After that is reinvested by the New Zealand State-guaranteed Advances Department, then the securities for those advances have to be handed over to the Public Trustee, so as to be sure that the sinking fund is a solid and undoubted one. The moneys which are received by the Public Trustee by way of sinking fund may be reinvested through the State-guaranteed Department, and when this is done the actual securities are held by him. That position is made clear in the Bill, and there is no doubt the whole position will be strengthened in this way. Then I want to call attention to the fact that some honourable members do not appear to understand what is contained in the Bill as regards small loans, which were referred to by the honourable member for Hutt. Under clause 71 honourable members will find that provision is made whereby ' any local authority within the meaning of the aforesaid Part ll—which, if that Part were fully in operation, might lawfully apply to and obtain from the Minister a loan thereunder—may apply therefor to the Superintendent, who, with the approval of the Board, may grant the same on the instalment system under this Part of this Act, subject to the like limitations of amount as are prescribed by that Part in the case of loans granted by the Minister.' He gets it upon the instalment system, and he gets small amounts just as he does now. And, in addition to that, he has extended rights which are provided in this Bill. In other words, in addition to those small amounts, he may obtain further loans under this Bill, so that his position in that respect is rather strengthened than otherwise. There is another matter I wish to refer to, as it was spoken of, and then I shall pass on to a general criticism of the speeches of some honourable members. Clause 25 was referred to. Now, honourable members will find that what is provided there is the placing of the funds under the control of the Controller and Auditor-General. That is what it is for. The clause reads, ' (1.) All moneys in the Advances Account, or payable into that account by any person whomsoever, and also all moneys owing by any mortgagor or borrower under this Act, whether the same are accrued due or not, are hereby declared to be the property of the Crown, and recoverable accordingly as from debtors to the Crown. (2.) All such moneys are hereby declared to be public moneys within the meaning of the Public Revenues Act, 1908.' " That has a bearing upon the statement made that money has been lent and put upon deposit in banks. That money is under the control of the Controller and Auditor-General, and has to be expended for purposes for which it is intended by the Board, and it is the property of the Crown until expended. Then, again, I say, " The difference between the old measure and the new one is that under the former the sum total of borrowing was limited to the extent of £6,000,000 in all, and nothing beyond that total amount could be borrowed. That limitation is now removed. In the ordinary course, however, the amount has to be reported upon each year by this State-guaranteed Department, and so Parliament itself can without any difficulty control the amount for future borrowing should it consider it necessary to do so. The amount authorized to be borrowed in one year under the Advances to Settlers Act is £1,500,000 sterling. I also want to say a word about another suggestion made by some honourable members. Ido not think that they really understood what would be the effect of the proposal when they suggest that the amount of £3,000 provided in this Bill should be reduced —I think the leader of the Opposition said to £1,500." Mr. Lee: It seems to me that this is not the question that is before the Committee. What have we to do with whether it was expedient to pass this legislation 1 The law has been passed, and there is the Act of Parliament before us, and 1 should have thought the scope of the inquiry was not as to whether the reasons of the debate for or against the Bill were sound or otherwise. Having the law before us, it seems to me that the investigation is, has it been properly administered by the Board? I do not wish to curtail the honourable gentleman, but I think he should endeavour t > direct his evidence as far as he possibly can to the question before the Committee, and not, as I take it, to support the proposition that it was a proper Bill to introduce at the time. The Chairman: I would like to remind you, Sir Joseph, that the order of reference is that we should inquire into all the transactions as to whether they were right or not; but in regard to bringing in criticism or argument of other members of Parliament, I do not think that is within the scope. Mr. Hanan: What I take it Sir Joseph is establishing is whether the conditions which operated before this legislation was passed were such as to necessitate the passing of the measure, hence the intention of the Legislature as evidenced by the speeches made; and essentially what the new conditions are to-day which have developed.