THE HERALD. Alexandra: Wednesday, Nov. 10, 1909. STATE ADVANCES.

Alexandra Herald and Central Otago Gazette, Issue 701, 10 November 1909, Page 4

THE HERALD. Alexandra: Wednesday, Nov. 10, 1909. STATE ADVANCES.

More* than unusual interest is being centred in the State Guaranteed Advances Bill recently brought down in the House. It is a most comprehensive measure, being practically a constitution of the Advances to Settlers Department with free provisions relating to loans to local bodies. The administration part of the measure provides for the establishment of a State-guaranteed Advances Office under the management of >a superintendent with perpetual succession. A Stateguaranteed Advances Board is constituted, consisting of four ex-ollicio members—the Minister, the superintendent, and two members of the Civil Service appointed by the Governor-in-Council; two competent persons not being members of the Civil Service, appointed by the Governor-in-Council to hold ollice for two years, subject to removal and reappointment, with salaries fixed by Parliament. Until otherwise constituted, the Board will consist of the present Advances to Settlers Board, and it will advance money to settlers, workers, and local authorities by way of loan, and also to mining companies under guarantee. The Minister is authorised to raise money to be guaranteed by the Government and chargeable upon the asset of the Advances Office to the extent of a million and a-half per annum, provided that if that amount is not raised in one year the uuraised balance may be raised at any subsequent period. Funds are to be provided for advances to workers amounting to £500,000 in any financial year. Authority is also given to provide funds for advances to local authorities and guaranteed mining advances. The Minister is further empowered to raise an amount not exceeding £20,000 in any financial year. During the present financial year the Minister is only empowered to raise half a million for loans to local bodies, and in each subsequent year such sum as is fixed by resolution of both Houses of Parliament ; and it is provided that, within ten days after Parliament meets, details of the advances approved and funds available shall be submitted. The money raised under the foregoing provisions is to be guaranteed by the Government, and it is provided specifically that when any default is made the principle and interest shall be paid out of the Consolidated Fund without further appropriation than is provided by the Act itself. This guarantee will be enforceable against the Crown by the holder of any debenture or security. The rate of interest is fixed at 4| per cent, per annum. The money required will be raised subject to the provisions of the New Zealand Loans Act, with the necessary modifications. All the sums before mentioned are to be paid into a special account known as the " advances account," to which, on the coming into operation of the Act, will be paid the funds of the Advance to Settlers and Advances to Workers' Account. Also, all moneys payable out of those accounts will in future have to be paid to the Advances Account to which will be "charged the costs of raising moneys under the Act, interest and sinking fund, moneys required for the payment on redemption of interest, and so on, and for the purposes of advances. Provision is also made for the temporary investment of moneys, and for the establishment of reserve funds—not less than £50,000 in the advances to settlers' branch, and in the case of the workers' branch the whole of the net profits.

lii connection with the advances to settlers and advances to workers' branches, provision is made for the establishment of a sinking fund, consisting in each case of one-tenth of the gross amount and interest received during each financial year. When directed by the Minister so to do, the Public Trustee is enjoined to pay over the sinking fund to the superintendent for investment on mortgages. Provision is made for the transfer to the newly-constituted office of existing liabilities under the Advances to Settlers' Act. Under this part of the Bill, advances to settlers shall be on first mortgages on freehold land held in fee simple; Crown lands held on perpetual lease under the various Land Acts; Native lauds held under the West Coast Settlement Reserves Act and other restrictive Native legislation; arid educational and other reserves; andrlaud held j under lease from Maori Hand Boards; and Crown lands held nuclei' the de-ferred-payment system. But in each instance the class of land is to be determined by the Board. The -minimum ! advance is £25 and the maximum £3OOO. I Applications for loans not exceeding ! £SOO are tp have priority over applications for larger sums. Advances on free- | hold lands are limited to three-fifths of j the value of the security or two-thirds of | the value of the security in the case of j first-class agricultural land, no advance being granted until all the conditions of the lease have been complied with, No advance on the security of leasehold lands is to be granted for an amount exceeding three-fifths of the value of the lessee's interest. Loans will be for a term of 36 i years, with interest of 5 per cent., paid half-yearly. Each instalment will consist partly of interest and partly of principle, and the loan will thus be repaid at the end of the term, In regard to leasehold laud which is subject to mortgage it is provided that the lessee mortgaged may not surrender his lease without the consent of the superintendent. Prompt payment of interest will entitle the mortgagor to a rebate and one-tenth of the amqunt due. The Bill goes on to provide that " for the purpose of giving greater elasticity to the existing provisions affecting 10a%5," when at least one-tenth of the principal has been repaid, the mortgagor, if not in arrears, may treat the balance of unpaid principal as a fresh loan, duly granted for a fresh term, Power is given to make further advances on existing loans, within the limits of advance imposed by the Act. In the case of land other than freehold giyen as security for a loan a Land •; Board is. not to have the power to forfeit qv cancel the mortgagor's, title for breach of condition, or to accept any surrender, without giying three months' notice to the superintendent. In regard to advances to erect homes for workers, it is

provided that not more than £350 shall he granted to any one borrower, and no advance is to be granted exceeding the value of the dwelling-house or exceeding three-(iftlis of the value of the security in the case of freehold land, or threefourths of the lessee's interest in the lease in the case of freehold land. The loan is advanced by progress' payment, and applications are to be made to the superintendent and approved by the board and Minister. A fee for administration expenses up to one-half per cent, of the amount of the loan may be charged, and the borrowing powers of a local body are not to be affected by any borrowing carried out under this Act. Advances for mining must be recommended by the Minister of Finance, and the rate of interest is fixed at U per cent. In auditing the Audit Office is given full control under the terms of the Public lievenues Act, and the Minister of Finance shall have access to all accounts m the Advances Ollice. An annual statement of the business of the department is to be submitted to Parliament in respect to each branch of the department, setting forth a complete statement of its financial position. Power is given to the Governor to make regulations for the conduct of the Advances Ollice, the custody and control of the moneys in the advances account, the investment of securities and so on. We have detailed the summary of the provisions of the Bill in order to give our readers an insight into the proposals of the scheme. The whole idea is an admirable one, and affords ample proof that there are still unexplored regions in the realms of State economics. The principle is an elaboration of several lending plans which have been extended by our Liberal Government for uplifting the mass of the people in this Dominion. So eminently laudable is the scheme in the interests of the settler, the worker, the public body, or the mining venture that its place on the Statute Book will gladly be welcomed as a means for helping people to help themselves. .