STATE LOANS

Auckland Star, Volume LVIII, Issue 108, 10 May 1927, Page 17

STATE LOANS

FOR FARMING AND HOUSES. jfITENTION OF GOVERNMENT. THE RURAL ADVANCES ACT. ,r,y Xelosrapli.— Special to "Star.") FEILDING, Monday. The endeavours of the Government to jjeet vfie enormous demand for State Joans were fully described by the Finance Minister, the Hon. W. Downie Stewart, in his speech to-night. '■Complaint is rife that applicants for Joans are kept waiting for many months for their loans," said Mr. Stewart. "That complaint can only be remedied if the Government is prepared to borrow far more heavily than at present. Another complaint often made by farmers js that too rmieh money is being lent for building houses in the towns instead of the farmer to develop and improve his land." To remedy that complaint, the Government had imposed restrictions on city borrowers, but in spite of those restrictions they received about three times as many applications from town as from the country. They were trying to see that country settlers got their fair share of the money available, and in recent years it had been about half and half. They had also expedited the country loans so that 6ome time ago they were only three months in arrear, but with the tremendous pressure they had now dropped back •gain. "But in my view the position is not satisfactory even with regard to country loans, as far too large a proportion of the applications are to pay off existing loans," said the Minister. "It is surely more important that loans to develop land, to clear bush, to apply fertilizers, should take precedence, but these applications form a small part of the total." Object of the Act. The object of the Rural Advances Act was to meet the enormous demand for millions to finance farmers and houses without adding to the Public Debt, and incurring the criticism which followed on each increase, even though such debt was no burden on the taxpayers. The Act provided for the raising of money on bonds secured on mortgage of rural lards instead of being raised by way of Government loan charged on the revenues of the Dominion. That was the central idea of the Commission's report, and the machinery of the State Advances Department was being used to operate it. "I hope that when the bond issue is made the public will readily subscribe at a price which will enable us to lend money at approximately the same rate as it is now lent by the State Advances Department," said Mr. Stewart. "If these bonds are freely subscribed for it will enable us to expand the operations of the Department, and if the bonds are taken up in New Zealand it will avoid the creation of further oversea liabilities." Problem of the Cities. "There still remains, however, the problem of copying with the housing difficulty in the cities, and here again we have applications in for loans to the extent of millions more than we can hope to grant in any reasonable time. In each of the large centres those citizens who take an interest in housing and the prevention of slums are anxious to carry out a heavy house building programme. If the Rural Advances scheme proves successful I do not see why a similar scheme should not be inaugurated for the housing problem in the cities. There is undoubtedly a good deal of money in each centre available for investment, and if a strong citizens' committee in each centre were to make a patriotic appeal to its own citizens to subscribe funds for housing purposes, I think the difficulty could be coped with without the Government raising more millions to- be added to the Public Debt. A temporary advance could be made to build houses on the understanding that later on the citizens' committee would appeal to citizens to take up bonds secured on mortgages of the houses, and if they were willing to lend their money at about 5$ per cent the houses could be Irailt at a cost which would enable working men to pay a reasonable rent and sinking fund. The advantage of such a scheme would be that each city would take a pride in grappling with *its own problem, and the State Advances Department could be used as the channel for controlling the bonds and administering the Act without the bonds forming part ef the Public Debt." "Springs Have Dried Up." "If this scheme of long term bonds does not prove satisfactory we win have to fill up the coffers of the State Advances xgain. For it is quite dear that there are many farmers who have good security whom the private lender has ceased to cater for. The money is available but it has to be collected and lent out through some State Department. In my view this question of farm loans is one of the most urgent and important national questions of the day. The springs of finance which formerly supplied the farmer have dried up, and if I eaw any prospect of inducing them to" supply the want I would urge the State to hold back. At present it does not appear any reduction of taxation on money invested in mortgages, or other expedients will in the near future draw cut private funds on the long terms that are necessary for the farmer. All we can do is to absorb private funds into the. State coffers and lend- them ont on the amortisation principle; otherwise they will go into other channels whid are of lese importance from a national standpoint."