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Progress, Volume XVI, Issue 8, 1 April 1921, Page 173

Building Control Abolished.

Much to the relief of the community generally, the Board of Trade has relinquished its control over building operations. It has been urged to do so on many occasions by the New Zealand Institute of Architects, which brought many effective arguments to bear on officialdom, but was always overridden by the demand for workmen’s dwellings, and the keen sympathy of Parliament with the Government's desire to overtake, to some extent, the great shortage which had arisen through the lack of materials. Government control over any industry always causes inconvenience and loss in quarters which have no right to suffer, and it was so in the case of the building regulations. They actually added to the already high cost of operations by the increased amount of preliminary work which had to be done before any contract could be let. The deciding factor in removing control was no doubt the increased supply of building materials, and their reduced cost. The scarcity of dwellings continues, but the Government, in removing control before this has been overtaken, tacitly admits that no amount of officialdom interference and issue of “permits” can dispose of economic factors. Dwellings would be built if there was a prospect of a fair return from letting, but while the tenants’ protective legislation remains in force enterprise is likely to be restricted in this sphere. We notice that during the recent short session, when the housing question was one of the many urgent matters brought under the notice of the Governmentthe average Member of Parliament has a wonderful faith in the efficacy of a question to a Minister-—that the Prime Minister plainly indicated the necessity for amendment of the law so as to make it less one-sided. He is of opinion that protection is needed, not only for tenants who deserve it, but for landlords who have been exploited by unscrupulous tenants who come under the sheltering aegis of the war legislation. Results of Control. Looking back over the events of the past few years it is difficult to find that official control

over building has materially relieved the housing shortage. It failed to deal with the problem squarely, because it did not overcome the financial handicap placed on the construction of houses for rent. What degree of preference was given to dwellings over picture theatres and racecourse grandstands was in favour of the owner who built for his own occupation, almost regardless of expense. The proposal to group a few big firms for large-scale building of workers' dwellings came to no definite result, and no doubt the arguments placed before the Minister of Labour by the Institute of Architects had some influence on the Government’s failure to take up the scheme. “The position,” stated the Secretary of the Institute in his letter to Sir William Hemes, “is not going to be improved by eliminating from the market a large number of the smaller firms who are habitually engaged in house building, and who are really the most efficient house builders, and giving all the work to larger firms which have a limited or past experience of this branch of building Persons who wish to build for themselves should be encouraged in every way, for a great number of those who want houses to-day are people who desire something better than the ordinary workman s home, and who are prepared to build for themselves if they can get the material. Indeed, this class of person in Great Britain L actually assisted with a building bonus from the Government. Our Government could reasonably do the same, or advance money at low rates of interest, and on a narrow margin of security. Our Wanganui Branch points out that of 40 builders who are erecting houses in that town, not one is putting up the cheap class of house which is required for the manual labourer, simply because houses of that description do not pay, and only about six arc engaged in work other than house building. It would appear from the information we have available, that a similar position . exists in many other towns. In any schemes adopted for execution by the Government or by municipalities, special attention should be paid to the needs of the lowest paid class of workers, regardless of whether they are manual or other workers. All houses built under

such conditions should be for letting only, no sales of any kind being permitted.” The Fall in Prices. Since we last discussed the position of the building trade some substantial reductions have taken place in important lines of materials, imported and otherwise. Had the hnancial position remained favourable to enterprise, the building industry would now be on the eve of a real boom, for there is an immense amount of leeway to be made up in all classes of buildings. Unfortunately, money has become scarce, and the interest rates are rising steadily, despite all the efforts of tne Government to keep them down. The money market is in such a condition that wild-cat speculations, whether in building or in the serious over-trading which has been going on in this country, have been effectively checked. The way is being paved for a return to reasonable conditions of trade, and although the path is rough and uncomfortable, it seems inevitable that it must be trodden; and the business community, by facing it with courage and determination, will get through with credit and success. The ominous word “slump” has been heard throughout the world, and New Zealand can scarcely fail to experience something of that phenomenon as a result of the fall in the prices of its leading export products, but the Dominion is so constituted as a producing community that it should feel the evil of slump less in proportion than any other country in the world. _ It must not be overlooked that during the last six or seven years, the values of New Zealand exports have been at record height. This has resulted in the accumulation of many millions which were not spent, possibly owing to the fact that it was difficult to import. This splendid reserve of credit, the Government’s share of which is represented by something like twenty millions sterling of accumulated surpluses, has not disappeared, though we admit that much of it has recently been pledged to carry us over hard times. The soundness of New Zealand’s economic position comes from the fact that the community contains very few drones. We have no large class living on interest—the great majority of our capitalists are themselves hard workers—so that all energies are being directed to useful production, not of luxuries, which can be done without in times of stress, but of food necessaries, for which there is always a market, though, as the farmer will dismally remark, “at a price!” Hard work will pull us through with flying colours. Another Moratorium. The recent short session, though not specially called for the_ purpose of dealing with the questions of deposits and other special contracts, came at a very opportune time to secure the passage of important legislation which has the effect of widening the scope of the principle of the moratorium, so as to cover deposits with institutions other than

banks and the savings banks. Had this legislation not been passed there is reason to believe that some large institutions, absolutely sound financially, would have been forced into liquidation owing to the fact that they had borrowed large sums on short call, for the purpose of lending to clients on longer terms on the security of a mortgage. The borrower on mortgage being protected by the war legislation against foreclosure, could not be forced to pay when the mortgage became due, but the scarcity of credit was preventing the usual stream of deposits flowing through the ordinary channels. Haying protected one class, the Government was obliged to go further, and give some security for the deposit companies against difficulties arising from the moratorium, and the result was an amendment of the Mortgages Extension Act, passed in one sitting through both Houses, enabling holders of short call money to hold it until May 31st, and longer if they give notice to the lender that the money is further wanted. The renewal of the deposit is, however, subject to the payment of at least one per cent, additional interest. If this legislation is very generally acted upon, it will result in an automatic rise of at least one per cent, in interest, and the effect is sure to be felt in the rates of interest on ordinary mortgages. This section applies only to contracts of deposit which existed on the passing of the Act, viz., March 21st last. It was made quite clear during the discussion on the measure that it applies to building societies, which have large sums on deposit. Fhere was a good deal of relief in certain commercial circles when the Act was passed, and the indications point to the fact that the financial tension has lessened as a result. We hear of some firms with deposit money who do not propose to take advantage of the measure. This will give confidence to the investor. Where the holding 113, of a deposit is likely to cause hardship, the depositor can at once proceed through the Supreme Court to secure an order for its repayment. The proceedings are to be in Chambers, so that there will be no publication of the circumstances which may make it necessary for the depositor to have prompt recourse to his deposit. We should imagine also that in case the depositor proved that he had a reasonable case for repayment, the Judge would order costs against the institution which had refused to accept his arguments privately, and had forced the depositor into Court. During the same session the Minister of r mance had to take power to authorise the payment, by local bodies, of a higher rate of interest t an they have hitherto paid on their debentures Ihe former rate of 5$ per cent, is out of the question, and efforts to secure money outside New Zealand have only succeeded bv offering the investor 6J per cent, on this fine class of security. Some of local bodies’ financial requirements for electric reticulation must be met speedily, otherwise the State s hydro-electric developments, which we are glad to note are continuing with vigour, will have no profitable outlet.