STATE HOUSES.

Auckland Star, Volume LXVIII, Issue 48, 26 February 1937, Page 10

STATE HOUSES.

LOW RENT PROMISE.

QUESTION OF SUBSIDY. FINANCIAL BASIS EXAMINED. (From Our Own Correspondent.) WELLINGTON, this day. One of the contractors for the large number of State houses to be built in Wellington district made a start this week, and the contract period is ten months. The Government has been reticent regarding the contract prices, but there is good reason for believing that they will average about £900 per dwelling, excluding land. It is therefore evident that the Ministry of Housing is committed this year to the expenditure of well over a quarter of a million in the Wellington district. Although critical building interests have endeavoured to "draw" the Government regarding the financial basis of the scheme, they have not been very successful in direct results. However, the publication in great detail of the results of an investigation of the Glasgow Corporation housing scheme by the Minister of Finance (Hon. Walter Nash) is undoubtedly significant of a desire to educate the New Zealand public regarding the financial basis of these schemes. Example of Glasgow. Glasgow Corporation has built over 40,000 workers' houses and has also carried out extensive slum clcarance schemes. According to the report furnished by the Minister of Finance, the expenditure on capital account for the year ended May 31, 1936, was £1,549,868, and the resources from which this sum had to be made up were as follows: £ Rents 048,833 House purchase (interest •and principal) 93,991 Government subsidy 431,674 Consolidated rate 75.370 Under the English system the Government contributes half a minion to each one and a-half millions of economic rent. The interest rate on British housing schemes, it is important to note, is an over-all charge of 2 per cent. Will the New Zealand scheme, with its promise of low rents, include a subsidy from the consolidated revenue? On present indications this appears unlikely, because the all-important element of interest on the capital cost, which is the first thing the private house-builder has to consider, is practically the last to receive attention in the Government scheme, where any allowance for interest can be anything of the annual revenue on the low rental basis which happens to be left over. " Costless Credit." Support for this view is available in ample quantity if various statements regarding the Government's financial policy are examined. The first announcement of the details of the big housing scheme by Mr. Nash in September last indicated that the necessary arrangements had been made with the Reserve Bank, now wholly a State-managed institution. The Minister a few weeks later told the House frankly that three 1 of the five millions to be raised for housing would be provided by means of what its critics called "costless credit." "The Government,'' he said on October 1 "8, "is positively of the opinion that some '■ new money for the expansion of produc- > tion is needed for the benefit of the ' Dominion."

Mr. Poison interjected: "That ia created money," and Mr. C. A. Wilkinson, from the Opposition benches, satirically suggested, "Why not make some more at the same price?"

"That's what the hon. gentleman wants—to spoil the whole thing," retorted Mr. Nash.