MORTGAGE BILL.

Auckland Star, Volume LXVI, Issue 51, 1 March 1935, Page 3

MORTGAGE BILL.

A VITAL DIVISION. MAJORITY OF FIVE. PRIVATE CAPITAL APPROVED. CI/OSXJRE USED IN DEBATE. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. A majority of only five votes was available to the Government in the House of Representatives last night for the endorsement of the private shareholder capital provision of the Mortgage Corporation Bill, which continues to have a difficult passage through the Committee. Mr. Coates witnessed the spectacle of no fewer than three of his supporters—Messrs. W. J. Poison, A. E. Jull and J. Connolly—entering the noes lobby to vote with Labour and the Independents in opposition to the principle. The strength of the opposition on this issue was greater than hid been anticipated, and was no source of satisfaction to the Minister in charge of the bill. Mr. Poison also vor.j I against his party on the constitution of the board of management.

To accelerate the passage of the bill tho Government l-"»o; urgency for the Committee stages, and considerable progress was made before the House rose this morning. The first part of the bill, embodying 11 clause;., dealing witli the establishment ot" the Mortgage Corporation, was disposed of by 10.45 p.m. Only two concessions were granted by the* Minister. One was the acceptance of an amendment from Mr. R. A. Wright (Independent, Wellington Suburbs) restricting the right to take up shares in the' corporation to New Zealand citizens and companies incorporated In the Dominion, and the other an undertaking to have drafted a provision to ensure thta the Crown would have the right to participate in the purchase cf any new share capital issued by the corporation. Many of the Amendments Sought. The debate at times bordered on the acrimonious, but it lacked sparkle, the main feature being the succession of divisions. Over a score of supplementary order papers are in circulation, containing Opposition and Independent amendments to different clauses of the bill. Notice has also been given of the Government's alterations, which are described elsewhere. Last night, for the first time since the 1933 session, the closure was used, the Minister seeking the aid of the guillotine to secure a division on the shareholder capital clause, after it had been discussed for three and a half hours. Sharp words were exchanged between Mr. Coates and the Leader of the Opposition, Mr. Savage, before the committee adopted, without alteration, the clause dealing with the rules of the corporation. Ironicallv enough, the Minister's attempt to amend the clause, although in a different direction, was as unsuccessful as were efforts of the Oppositionists to have it reworded. "Concession"—or "Humbug?" Offering what he termed a concession, and what his opponents branded as humbug, Mr. Coates found himself frustrated bv°a technicality, with the result that he will have to recommit the bill at a later stage. In simpler words, he "missed the bus" with his amendment, and members of the Opposition enjoyed his discomfiture. Under the clause the corporation s board of management, with the approval of the Government and the concurrence of shareholders, but not otherwise, may amend the rules, and the House agreed that this should be so by rejecting by 40 votes to 28 a proposal by Mr. Poison to prevent the shareholders having any say in the matter. Mr. Coates then indicated that in deference to the opinions expressed he would cut out from the clause the words, "But not otheiwise." He considered this was a concession, but he immediately drew the lire of Messrs. Poison, Savage and A. M. Samuel (Independent, Thames) who claimed that the elimination of the words made not the slightest difference and that the Minister knew it. "This looks like a crumb from the rich man's table,:' said Mr. Savage, but it s the biggest farce imaginable. The Minister is trying to make the .committee believe he is giving a concession. It is sheer humbug." , , , tn Mr. Coates: I am doing my best to meet the wishes of a section o the House. Mr. Samuel declared that far from being a concession the Minister s amendment would have the effect o placing the corporation more in the hands ot the shareholders than before. . On a technical point the Ministers amendment was ruled out of order. His request for the indulgence of the com mittee did not awaken enthusiasm. M £ Savage said questioned wgftjyt was permissible lor me request to be met. Mr. Coates: If Mr. Savage raises an objection I have nothing more to say. Mr. Savage: I am not raising an objection, but it should be done in a formal way, and I protest against rafferty rules" being employed. Mr. Coates: You are better versed in "rafferty rules" than I am. Mr. Savage: I do not know. I think you are fairly well versed.

Corporation's Capital. The committee next devoted its attention to an amendment by Mr. K. «• Keen (Labour, Wellington South) designed to take out of the hands of the shareholders the power to frame tne rules, but this went the way of its predecessors by 40 votes to 28, tne Government on this division securing its largest following on the bill up to that stage. There was considerable discussion on the clause dealing with the corporation's capital. With the object of preventing what he termed "any outside financial ring from securing control oi the corporation," Mr. Wright sought to establish that the shares of the corporation should not be held outside New Zealand. He said a similar provision had been included in the Reserve Bank Act. The answer of Mr. Coates was that the position was different. He saw in the amendment the possibility of companies being prevented from taking up shares. It would be unwise to eliminate companies from taking up holdings. Ultimately, however, the Minister accepted and the committee adopted a redrafted amendment from Mr. Wright which will have the effect of restricting the right to take up shares to New Zealand citizens and to companies or corporations incorporated in New Zealand or having a place ot business in the Dominion.

By 37 votes to 27 the committee rejected an amendment by Mr. F. Langstone (Labour, Waiinarino) designed to prevent the Minister from reoffering shares not taken up in the first instance. ■By a similar margin Mr. W. Nash 4 Labour, Hutt) lost an amendment which sought to invest the Finance Minister with voting rights at meetings of shareholders. . "A Pebble in the Ocean."

Inviting the House to reject this clause, Mr. Savage described the £1,000,000 which was to be put into the corporation as "a pebble in the ocean." It would simply provide an excuse for private individuals to draw a dividend from the profits of the corporation. Mr. Coates retorted that the corporation could advance up to fifteen times that amount. "It is a fairly hefty pebble which this bill is dropping into the ocean," he added.

A Member: Is there not a danger of private companies who take up shares controlling this organisation? Mr. Coates: I don't believe there is; but, assuming that is so, the moment there is danger of the organisation being dominated by other than internal interests action will be taken. .

He said the allotment of shares would be on the 1-2-3-4 basis, in order that all subscribers would get an allotment. Mr. Poison asked who were the peopla in whom it was necessary to inspire confidence. Was it the Bank of New Zealand ?

Mr. Coates: This matter has never been discussed with any bank. Mr. Poison recalled what had happened when the rural advances system came into operation. When the bonds went on the market the interest rose immediately.

Mr. Coates: You were solely respon sible for that.

Mr. Poison: I was not. The committee which sat here refused to hear my evidence. I was not even called before the committee, and the Minister knows that very well. Mr. Coates: I don't know. Mr. Poison: Well, it is a fact. It was a most extraordinary position, seeing that I was one of the commissioners. "Riding the Worst Horse." According to Mr. Samuel, the Minister had decided, against the best possible advice, to introduce shareholder capital. His action would absolutely throttle the Coalition. Labour Members: That will be pleasant. Mr. Samuel: I believe most members of the Coalition party know it, with the exception of the Minister. The Minister is riding the worst horse he has ever ridden in his life, and he has ridden some bad ones. He said the other night he was able to ride bareback, but he is better at riding rough shod than bareback. I have a great deal of sympathy for the Minister. We have been connected politically in many pieces of legislation, but when I saw he was becoming reactionary and travelling the wrong road I had to sever my connection with

The Division List. Applied for by Mr. Coates at 9.10 p.m., the closure motion was carried by 33 votes to 26, and on a further division the shareholder capital clause was retained by 32 votes to 27. The division list follows: — Ayes (32). —Ansell. Bitchener, Bodkin, Broadfoot, Coates, Cobbe, Dickie, Endean, Field, Forbes, Hargest, Hawke, Healy, Holland, Kyle, Liiiklater, Lye. McLeod, McSkirammg, Macpberson W. W. Massey, Murdoch, Ransom, Eeid, Smith, Stuart, Hon. W. D. Stewart, A. Sykes, Te Tomo, Williams, Wright, Young. Noes (27). —Armstrong, Atmore, Carr, Chapman, Coleman, Connolly, Fraser, Jones, Jondan, Jull. Langstone, McKeen, Mason, Munro, W. Nash, O'Brien, Parry, Poison, Richards, Rushworth, Samuel, Savage, Schramm, Scmplc, Stallworthy, Veitch, Wilkinson. Pairs.—For: Henarc, Burnett, Macmillan, Hamilton, Ngata, Harris, J. N. Massey. Against: TirikatJiic, Howard, Webb, Mrs. McCombs, Suilivan, Lee... Barnard. After this division progress was more rapid, Mr. Savage setting a good lead by speaking briefly on subsequent clauses, touching share capital and contenting himself with dividing the House on them. "If capital is to give service to the people of New Zealand, he said, "it is entitled to be paid for that service, but we are not prepared to pay for something that is not required. claim this capital should not be m tie institution, and that it should net be allowed to draw dividends.' On a division the clause providing for dividends on shares was adopted by 34 votes to 25, Mr. Tolson again voting with the Opposition. Increase of Capital. The clause empowering the Minister to borrow for the purchase of shares was approved by the Committee by 30 votes to 24. The next division was on an amendment by Mr. W. A. Veitch (Independent, Wangamii) to the clause relating to the corporation increasing its capital. tie souUt to have any decision to increase the D capital dependent upon confirmation by a resolution of Parliament. this was rejected by 31 votes to 25. A vote was not taken on the clause itself, which was held over at the instigation of Mr, Coates, who promised to have a proviso drafted enabling the Crown to participate in the purchase of any new share capital issued. This concluded consideration of the first part of the bill.

Second Part of Bill. In the second part of the bill, eight clauses relating to the management of the corporation were still under consideration at 1 o'clock. The constitution of the directorate gave great scope for amendments, which were lost with the regularity with which they were moved. These included a proposal to have four State directors only, and to prohibit the appointment of stock and station agents. The House adjourned at 1 a.m. until 10.30 a.m., after adoptthe clause providing for the constitution of the board of management.