MORTGAGE BILL

Ashburton Guardian, Volume 55, Issue 124, 7 March 1935, Page 6

MORTGAGE BILL

COMMITTEE STAGE ENDED. A CLAUSE DELETED. FURTHER LABOUR OBJECTION’S, (Per Press Association.; WELLINGTON, March 6. In commitee to-day, the House reverted to clause 11 of the Mortgage Corporation Bill, which had been held over. Mr M. J. Savage (Leader of the Opposition) said the Corporation was not necessary. He said that as the Corporation made profits, it had power to increase its capital so that all the profits would go to benefit the private shareholder and not the borrower. He therefore asked the House to oppose the clause. , Mr Forbes said, that no Minister of Finance would allow an increase in capital unless it would he in the interest of the bondholders. He could see no reason for Mr Savage’s apprehension.

Mr P. Fraser (Lab., Wellington Central) said the matter of an increase of capital was removed outside the control of Parliament altogether. He claimed that as the provisions of the Bill became known an increasing number of members of the House must have opposed the measure, and as was well known it did not have a friend outside the House. If the House had a free 1 vote there wag no doubt what would happen. Mr H. M. Rushworth (Ind., Bay of Islands) said, he understood the clause was held over because no provision was made for the Government to participate ’in any increase of capital. At present the Government’s share was limited to half a million No amendment had been brought down, and he wanted to know what the position was. Mr Langstone (Lab., Waimarino) characterised the clause as pernicious. He said that in the case of the Bank of New Zealand it could not increase its without the consent of Parliament, but that consent was not needed so far as the Corporation was concerned Mr AV." A._ Veitch (Ind., Wanganui) said that when the clause was before the Committee previously he moved an amendment to the effect that the capital could not bo increased without the approval of Parliament but it was lost The position was that any new shares would have to go to the shareholders, as the Government had no power to purchase any. He considered that there should be no power to increase the capital, but if there was that power the Government should be able to take half the new shares Mr H- T. Armstrong (Lab., Christchurch East) said that people who put money into the Corporation would do so to extract profits and the onlj persons from whom profits could be extracted were the mortgagors, the farmers of the Dominion. Mr J. A. Lee (Lab., Grey Lynn) said that although the Corporation was not to be a State institution, the State was to be responsible for any liabiliies incurred, while the shareholders took the profits. Many members of the Government had objected to private shareholders, but some stronger unseen hand had; influenced them. Minister’s Offer.

Mr Coates said it was correct that the clause was postponed to enable something to be added to it. Some members desired to retain the httjfiftv basis, and he was prepared, members allowed the clause to go through in its present form, to alte it when it came back from anothei Pl Mr AV. Nash (Lab., Hutt): What batmens if it never comes back? Mr Coates said the Bill must come back, and lie would give an undertaking when it did that an amendment would 'be introduced J Governor-General’s Message. 1 whs because a Governor-General s Message was necessary that the amendmen could nob be made that night. ae added that it did not matter what happened.. If they wanted money they would have to come to I arliament for authority to raise it. • The easiest way to overcome the objections was to withdraw the clause with a proviso that a new clause be substituted. , , . The Rev. Clyde Carr (Lab., Timaru) said he did not want to have a lepetition of a previous happening to another measure. An assurance was given that an amendment would be made in another place, and then it was found that an amendment could not he made. Mr Savage moved that clause 11 be deleted. This was carried. A new clause giving power to appoint associate directors was introduced. Mr Savage sought particulars of the working of the 'Corporation. Mr Coates said the appointment of associate directors would expedite the working of the Corporation. He could not say at present how many would be appointed. The clause ay as adopted. The schedule to the Bill was agreed to with a number of machinery amendments, and the Bill was reported with amendments. MINISTER’S LETTER.

REPLY TO THE MUNICIPAL ASSOCIATION. WELLINGTON, March C. Replying to representations made ,I’ecently by ’the Municipal Association as to the effect on local bodies of the Mortgage - Corporation Bill , the Minister for Finance, the Rt. Hon. J. G. Coates, in a letter to the president, (Mr D. G. Sullivan, M.P.) says:— “It would appear that your association is under some misapprehension as to this matter. The effect of the clause is that the existing protection of the Crown from liability for rates is maintained for mortgages handed over the reason being that the State will ’still be financially responsible for

these mortgages, as, in effect, they are to he guaranteed 100 per cent. This position, however, continues only so long as the existing securities remain, and in respect of any new securities taken up by the corporation, either for cash advances or in the course of adjustment or refinancing operations, the corporation will he in the same position as a private mortgagee. Repayment of mortgages will also decrease the volume of securities in respect of which the' corporation, virtually as agent for the Crown, will he protected from liability for rates. It will thus be clear that, far from becoming worse, the position of local bodies will be progressively improved.”