LONG DUEL.

Auckland Star, Volume LXVI, Issue 50, 28 February 1935, Page 11

LONG DUEL.

MORTGAGE BILL. COATES Y. POLSON. PRIVATE SHARE CAPITAL PERSISTENT OPPOSITION. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. The Mortgage Corporation Bill lias begun to make progress through committee in the House of Representatives, and as clause 6, specifying the capital, is approached, the difficulties of the Minister of Finance in piloting the measure through rough waters are becoming more evident.

The whole of last night's discussion, except for one intervention by the Prime Minister on the subject of the State Advances Office, was a duel between Mr. Coates and his critics from the ' Labour and the cross benches. Government members remained silent with the exception of Mr. Poison, whose criticisms were so strong that at one stage he was rebuked by Mr. Coates for being offensive, and lie apologised, •explaining that the slip was due to his earnestness. The issue of the State Advances Office was quickly decided. The Leader of the Opposition, Mr. Savage, who challenged the rejection of the clause constituting the Mortgage Corporation, declared that he did not wish to waste time in discussion. He mustered 27 votes against the steady 3G secured throughout the evening for the bill.

The private shareholding principle was attacked at the first reference to it, though Mr. Poison failed to carry one amendment on this issue, the voting being 36 —25. The Leader of the Opposition found an opportunity in the same clause, moving to delete the words which had the effect of preventing the corporation rules being altered by Order-in-Council, except at the request of the board. Again 36 votes maintained the clause, against 25 opponents; but it was evident from last night's expcricnce that tho real "heavy weather" will arrive on the next clause, providing for the corporation's million of capital, of which £500,000 is to be held by the State, and the remainder offered to the public at par, subject to an individual limitation of 5000 shares.

" The Reserve Bank Mistake." The private shareholder issue was raised by Mr. Poison, who moved to eliminate reference to the first general meeting of shareholders. He said lie would not waste time discussing the matter, as his views were well known, but lie wished to eliminate any reference to shareholders. Mr. A. M. Samuel (Independent, Thames) declai-ed the farmers' reason for objecting to the bill was "the private capital involved, which meant that the shareholders, who would bo in it only for profit, would control every State lending department. Ho did not wish to see a repetition of the Reserve Bank mistake, when private shareholders were presented with 20/ or 27/ of a premium on their shares. . There was strong opposition ito the private capital in that bank, and he maintained that members were "let down" on that occasion. Therefore, it was all the more important that they should get a fair deal with the Mortgago Corporation. Mr. Poison's amendment was defeated by 36 votes to 23, but ho found another advocate for his principle in the Leader of the Opposition, who moved to eliminate the words "at the request of the board" from the clause providing that the Governor-General may amend any of the 71 rules governing tho conduct of the corporation. Mr. Savage contended that if rules could only be amended at the request of tlie board it meant that the control over the vast quantity of State securities to be handed to it would be exercised by the board, upon which private shareholders would have a large proportion of the representation.

Advantage of Shareholders. The Minister of Finance declared that the responsibility for its rules must rest with the board if tlio corporation was to achieve tho objective he hoped to seo it achieve. Mr. Poison: But it puts into the power of the shareholders the right to veto anything the Governor-General wishes. Mr. Coates replied that he would deal with this question of shareholders. Members would see there was a tremendous advantage in having the afl'airs of this corporation placed before a public meeting of shareholders. It meant that at the annual meetings the whole business of the corporation would be publicly revealed, and the shareholders could discuss it from the viewpoint of the mortgagor or anyone else.

Mr. W. Nash. (Labour, Hutt) pointed out that the clause referred to powers exercisable before the first annual meeting.

i Mr. Coates: There has been criticism of' shareholders, but nothing has been said about the advantages of the shareholders' meeting, inasmuch as it definitely gives the .public—whether mortgagors, bondholders or shareholders, or the Government —an opportunity to present facts and discuss matters affecting the corporation. ■ While there may be opposition to the shareholders, I say again that the interests of the country and the corporation are best served by having an influence of this kind.

The annual reports would be presented to Parliament, added Mr. Coates, but more interest would be taken in the matter if it could be discussed at a public meeting, and Parliament had tho advantage that if as a result it found mistakes had been made ho was sure Parliament would take its cue from the shareholders' annual meetings. The Profit Motive. "My point," persisted Mr. Poison, "is that the control of the institution has been placed in the hands of shareholders, though the corporation looks after 60 millions of State securities, and tho shareholders only look after their dividends." Mr. Coates: Just what business will they do if they only look after dividends? Mr. Poison: May I answer that with another question? What shareholders will go into it for any other purpose except profit ? Mr. Coates; Is the Government going into it for profit? Mr, Poison: The Government is going into it in the interests of the unfortunate farmers, but the shareholders are not, and they are in this ludicrous position—that tiiey will decide what goes into the schedule, and the Government, with its 60 millions, is precluded.

Mr. Coates: Will you tell us how the shareholders are going to get an Order-in-Council? Mr. Poison retorted that the bill said an Order-in-Council was only possible with tho concurrence of the board, not otherwise. "That's the plain English," ho continued, "and no amount of sidestepping can get away with it. I am not saying this to be rude to the honourable gentleman." Mr. Coates: You arc. You are very offensive. Mr. Poison: I regret that, but I am in earnest, though not desirous of being offensive. Perhaps the Minister mistakes my earnestness for offensiveness. He pointed out that it might be desirable to alter, through the schedule, the terms and conditions of amortisation, or anything else. Mr. Coates: None of these things are in the schedule. Mr. Poison read out a long list of subjects. dealt with in the schedule, adding that it was absolutely set out that tho shareholders, with their £500,000 of capital, coulcl decide, while the State, with a tremendous amount of securities and share capital, had to bo governed and controlled by these shareholders.

"What a lot of bunkum the Minister is trying to put over this House when ho says the affairs of the corporation will be ventilated publicly," said Mr. A. J.'Stallworthy (Independent, Eden). He declared that under the bill the mortgagors, bondholders and the State would have no right to attend or vote at annual meetings of shareholders. All the machinery existed in the measure to cover up the operations of tho corporation and keep them in tho dark.

"Endorsing McArthur Principle."

Mr. J. A. Lee (Labour, Grey Lynn) said Mr. Savage's amendment sought to ensure to the State the same right that the House ensured to the bondholders of the McArthur businesses. "Unless the amendment is carried," he added, "we are endorsing the McArthur principle, that the control of bondholders' money shall be vested in a group of people interested in making profits for themselves; but wo are led to believe by the Minister that these will be different shareholders, tamed shareholders, a new brand —half a million pounds' worth of handpicked philanthropists, whose hearts are bleeding for the common people, and who are not concerned about earning interest on their capital. Is not the real proposal to wrest control from Parliament and vest it in the hands of those whose only interest is to make a profit for themselves ?"

On a division the amendment was negatived by 3G votes to 27.

At tho 10.30 p.m. adjournment the House was still discussing another amendment, moved by Sir. Poison, with the object of confining to the Government tho right to amend the corporation's rules. It was emphasised by Mr. C. A. Wilkinson (Independent, Egmont) that under the bill no alterations could be made without the sanction of the shareholders, who had absolute control. The Minister: Clearly the State has control. Mr. Wilkinson: It has not. The Minister: Tho clause is so worded to ensure that the shareholders are consulted. Mr. Wilkinson: T don't object to that, but I do to the proposal to give shareholders the final determination.