FARMERS' FINANCE.

Auckland Star, Volume LIX, Issue 198, 23 August 1928, Page 5

FARMERS' FINANCE.

BREAKDOWN SOMEWHERE. RESULTS or RURAL. BONDS. FINANCE MINISTER EXPLAINS. (By Telegraph.— Parliamentary Reporter.) WELLINGTON, Wednesday. The machinery had been provided for farmers' finance, the Government had triven the scheme a start, and there had been no breakdown in the machinery. This was the assertion of the Mimstcr of Finance in concluding the Financial Debate in the House of Representatives to-day. If there had been any breakdown, he added, then it must be due to some other factor. It was significant, said the Hon. W. Downie Stewart, that the mam topics in the debate had been those of farminf interest, and this was to be expected. It"was alleged by the critics that the finance provided for farmers by the Government was inadequate, but was this the case? In the Advances to Settlers branch the applications came to under £1,000,000, and his experience was that during the sifting process about one-third of them could not reasonably be considered. In the rural advances branch the Government had done all that it had been asked to do. It provided the machinery, floated the bond issue, dealt with all the loan applications to date, and there was no breakdown due to lack of funds. Mr. H. E. Holland: How much more monev has been available? The Minister: We have paid out over a million sterling and the sale of bonds up to the present is between £600,000 and £700,000. As the Government had carried out its share of the contract, he suggested that it was not the lack of system which constituted any problem". If the bonds were not going to be popular in New Zealand, owing to the criticism raised that they were not part of the public debt, he could still sell them at any time in Australia or England, where" no question of that kind would be raised. While the bonds were specifically excluded from the public debt, he had frankly admitted that if emergency arose the Government would 6ee them through. Interest and principal were paid through the Consolidated Fund, which had the right to recover from the rural advances branch. That was all the investor was concerned about. He would get payment from the Consolidated Fund and knew that his interest was safe.

What the Bank Bought. Mr. Savage: Is that why the bonds were rushed ? The Minister: No. They were not rushed, though that is what we were told would be done. Before it was known whether the issue would be a success or not he made an arrangement with the Bank of New Zealand for underwriting. The bonds were isßued on February 23, they did not sell freely, and on March 27 the bank applied for an investment in the loan in the usual form. It received the bonds on the terms stated in the prospectus, viz., £94 10/, and as it was underwriting it did not get the commission which other brokers got. If there was to be any difficulty in getting the New Zealand investor to take up these bonds, he would have no difficulty in obtaining the money, though he assumed that it was the wish of the farmers, expressed when the scheme was advocated, that they should be popularised in the Dominion, because that was the whole basis of the scheme. It was thought that the farmers would buy them at a discount and use them for repayment purposes. The term fixed was 20 years, but he was wondering whether a shorter term would make the issue more popular. He proposed this session to take steps to make it clear that the bonds were not to be treated as a part of the public debt. Ample Funds for Mortgagors. Mr. Hansom: What is the amount subscribed by the public! The Minister: The bank took between £350,000 and £400,000 and the publie took the rest. He pointed out that, in addition to the rural credit scheme, many Government departments were lending money freely when the security existed. The Public Trustee informed him that he had loaned on mortgage last year between three and three and a-half millions, but he was unable at short notice to separate country from city mortgages. Mr. Forbes: He lends to local bodies, not farmers. The Minister: Three millions loaned on mortgages last year and no mortgages are turned down where there ia security. The Government Insurance Department was also lending and there were the trust companies and lawyers with ample funds. "It is not in the lack of funds where the hold-up occurs," concluded the Miaister. "Whether it is a fact that the margin is too tight I do not know, but that difficulty must be a North Island difficulty, as there is no* suck trouble in the South Island. If the hold-up is due to the margin I do not know how you can remedy it by legislation, because the valuer will immediately under-value to safeguard himself in the other direction."