COMMENT ON THE BILL

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

COMMENT ON THE BILL

FURTHER STATEMENT BY COMMITTEE PROPOSALS CRITICISED (PRESS ASSOCIATION TELEGBAM.) WELLINGTON. February 14. Th-? committee of financial and commercial interests set up under the auspices of the Associated Chambers of Commerce of New Zealand, which recently published a criticism of the Government's proposals as to mortgage finance, issued a statement after a meeting to-day commenting on the Mortgage Corporation Ei'l, which was introduced in Parliament yesterday. The committee says certain of its recommendations have be-n incorporated in the bill; but some of the features of the proposals to which the committee took the greatest exception apear in the bill unchanged. The committee regrets to S2e that the State is to become not merely a bondholder but also a shareholder in the corporation when the primary object of the corporation is realisation of the Crown's present mortgage investments. The bill doss not provide for a fixed dividend on shares, and the committee says it may be that in future years the statutory dividend rate will be so low that the market value of the shares will be less than par. The use of the term "cumulative" does not mean that the shareholders will in any way be guaranteed their dividends or receive sny preference over other classes of the corporation's ceditors. The committee considers that adequate provision should be made for representation upon the board cf management of individual bondholders, if and when they come into existence.

Question of Advances If it is intended to allow the corporation to make advances otherwise than against mortgages of freeholds, then the committee considers the bill' should state so foecincally, and name the permissible proportion of such advances, so Ihat intending investors in the corporation can know where they stand. The committee says that so long as the bill contains the right to advance on stock and chattel securities, the committee must persist in its objection to the corporation's bonds being given statutory recognition as trustee securities. The. committee regards as unsatisfactory the clause providing that the fixing of Ihe consideration for mortgages taken over from the Crown is to be a matter of mutual agreement between the corporation and the Minister. The committee repeats that the so-called reserve fund is more apparent than real, and should not be taken into account in calculating the maximum bond issue. It takes great exception to the proposal allowing the first mortgagee and his mortgagor to modify a mortgage contract without obtaining the concurrence of subsequent mortgagees. Basis of Valuation As to the productivity of rural land being ussd *as a basis of valuation, the committee says this would result in there beins in force contemporaneously two entirely distinct systems of valuing rural land, the other system being under the Rating Act. The committee says the- Minister for Finance may in future be inundated with requests by prospective borrowers who cannot obtain their full wants from the corporation to guarantee the difference belween the leans the corporation is prepared to make and the amounts they wish to borrow. The committee repeats that jt is not convinced of the necessity for the establishment of a semi-State national corporation, and is not sanguine about its success if it is established on the lines proposed.