MORTGAGE BILL

Press, Volume LXXI, Issue 21399, 15 February 1935, Page 12

MORTGAGE BILL

Plan for National Corporation ~, YALUE OF PRIMARY INDUSTRIES MEASURE INTRODUCED IN PARLIAMENT [From Our Parliamentary Reporter.] WELLINGTON, February 14. Emphasising the Govenmenfs belief that the prosperity of the Dominion rests to a very large extent on tlw position of the primary producer, the Minister for Finance (the Rt. Hon. J. G Coates), who moved the second reading of the Mortgage Corporation of New Zealand Bill in the Houss cf Representatives to-night, claimed that the bill's proposals would go far toward placing farming on a firmer basis. The bill broke new ground in Dominion finance;, but the proposed Mortgage Corporation was not without forerunners. Similar .organisations were flourishing in Scotland and in England. The English Agricultural Corporation lent money to farmers at from 4J to 4?* per cent, for periods up to 60 * years. Farmers were able to secure sufficient money at a satisfactory rate, and the basis of the lending system fitted in well with the requirements of the agricultural industry. Mr Coates said he hoped that the New Zealand Mortgage Corporation would be sufficiently stable to attract investors. The bond system of finance had peculiar advantages in providing money for primary industry; but the Government did not intend to mak e the organisation apply only to agricultural interests. It would offer its advantages t" ?.n" industry or person which cared to ofter the necessary security. . But the bfsis of the new system of amortised mortgages over a long period would undoubtedly suit some better than others.

Importance c£ Agriculture "This country cannot afford to do other than assist in every reasonable ■way its basic industry," said Mr Coates. "I and this Government have said that before, and we will say it again. I shall continue to emphasise that the agricultural industry is far and away the most important for us, snd that it is necessary for the people to. realise that they depend tremendously on farming exports. Some say that it would be better for us to foster local industry to the exclusion of exports; but I say that if we cannot find markets for our exports we will automatically lower the standard of living.-to the detriment of everybody in the Dominion. The Government believes that the Mortgage Corporation will be the means of finding cheaper money than would be pos£ible under any other system." Mr Coates said he did not agree •with those who said that the tion would be-a monopoly. It would be a healthy competitor in legitimate business. It was often said that money could be easily borrowed at 4 per cent, to-day, but it must be remembered that such money was advanced on a very conservative basis. This system of finance in no way suited the farmer. The bill provided for loans for 50 year's. In Great Britain, the basis •was 60 years for land and 40 years ior improvements. New Zealanders were accustomed to 36J year loans, but the extended period would make payment easier, and more secure. It was essential that the Pcminion should redupe interest rates to the lowest possible level, and the Mortgage Corporation would accomplish what the Government wanted to do. Mr \V. E. Parry tLab., Auckland Central): And put all other lending businesses out of operation? Mr Coates: They will be in competition. Mr A. M. Samuel (Ind., Thames): Will the bill apply to all securities advanced by the Government under the Discharged Soldiers' Settlement Act? Mr Coates: Oh, yev.

Rural and Urban Property Continuing, Mr Coates sajd that business people, workers, and others in the cities would have the opportunity of seeking loans if the system suited them. He believed that the proposals contained in the bill had all the'tried and bast elements of private enterprise and of State enterprise. The corporation would be free to take up any first-class security in rural or urban property." It should be able to lend, at a low rate because "it should be able to borrow at a low rate. The reason why' the Government considered the corporation would be a sound organisation was because the risk would be spread over a large volume of mortgages. Mr Langstone: The State Advances Office spread theirs. Mr Coates: This envisages something very much wider. The lending margins should be safe and the risk well spread. Adequate reserves will be built up. Any losses on mortgages taken over will be guaranteed by the Crown. It is proposed to establish an organisation that will be sound, and at the same time meet the requirements cf those it is urgently necessary to assist. We will call this measure A bill, and the one dealing with rehabilitation to come next week the B bill. Mr H. T. Armstrong (Lab., Christchurch East): Call them both B bills. Mr Coates explained that it was proposed to put £2,500,000 of local body reserves in the reserve fund, and this would be repaid from the profits of the corporation over a long period of years. 'Reserves would also accrue by way of repayments. If further reserves were necessary, then the Crown would provide them. Criticism had been made of the intention to include private capital; but the idea of that was to give a sense of security to the lender. The dividend would be 1 per cent, above the bond rate. If bonds were . brought on the market at 3 per cent., then the dividend would be 4 per cent. Mr A, J. Stallwprthy (Ind., Eden): The bonds will vary on the exchange. Will you fake the average over the year? Mr Coates: Yes. i Table Mortgage System jyir Coates said the table mortgage system gave a greater measure of security than obtained under the flat mortgage system. Dealing with the transfer of State advances and Department mort- j gages, Mr Coates said that each case

would be dealt with on its merits, since it should be possible during revaluation (p reach a point where the true valuation could be definitely established.' No man would be put out of his house without the expressed consent of the Minister. A harsh policy would not be adooted, and he did not think that harshness had marked the policy of the State Advances Department in the past. Mr W. J. Jordan (Lab.. Manukau): Will the corporation pay local body ral."s? Mr Coates: The corporation will be liable for rates in respect of new mortgages; but in the case of existing State mortgages it will not pay the rates until these are taken over. It will not be liable for arrears of rates pr anything like that. RESOLUTION BY CHAMBER OF COMMERCE (PRESS ASSOCIATION T«:LEQRAM.) AUCKLAND, FebruFry 14. The Chamber of Commerce decided to ask the Associated Chambers to impress on the Government the, desirability of not passing the mortgage legislation through all its stages until the farming rehabilitation proposals had been introduced.