PARLIAMENT COMPENSATION ON COTTON MILL

Press, Volume CI, Issue 29871, 11 July 1962, Page 14

PARLIAMENT COMPENSATION ON COTTON MILL

Labour Opposition To Validating Bill

(New Zealand Press Association)

WELLINGTON, July 10.

The Opposition today launched a heated six-hour debate to stall the introduction of legislation authorising the payment of compensation on the stillborn Nelson cotton mill project.

Minutes before the House of Representatives rose at 1030 p.m. the Government Whip (Mr W. J. Scott) moved the closure and the bill was introduced after a 38-28 division —one of the first divisions of the present session.

The terms of the bill enable the Government to acquire the shares of the Commonwealth Fabric Corporation and to pay compensation.

The Minister of Industries and Commerce (Mr Marshall) said the amount of compensation was not yet known. The cost to the Government could be from £250,000 to £500,000.

Opposition speakers alleged abrogation of the agreement. They called for the bill to go before' a select committee, or for a public inquiry into the termination of the agreements. This, they said, would enable representatives of tlie corporation’s parent company, Smith and Nephew, to give their version.

The Leader of the Opposition (Mr Nash) said the bill was “an iniquitous proposal” which never should have been introduced to the House. “If ibis principle is to continue to operate we can never get a safeguard for companies to come into New’ Zealand,” he said. The mill would have provided work ultimately for 1500 persons. Employment was needed to keep young people in their homes and not go to other towns. “The agreement to cancel the project should never have been made, and should never have been approved," said Mr Nash. Mr S. A. Whitehead (Opposition, Nelson) asked w’hy the Government had changed its mind. “The agreement was made after the corporation consulted with Ihe National Party. It was assured the agreement would be honoured. Even after the Opposition became the Government it looked as if the agreement would be honoured.” Mr W. A. Fox (Opposition, Miramar) demanded to know “why it took the Prime Minister so long to change bis mind after making a statement in favour of the mill.” Differing Estimates Mr H. Watt (Opposition. Onehunga) asked why the legislation should be brought dowm, and what was the cost of acquiring shares and paying compensation? Mr Marshall had said compensation might be £500,000, said Mr Watt. but. later, the Prime Minister (Mr Holyoake) said the sum would be about £250,000. Mr Marshall said the assets taken over from the company tinder the agreement would be in the hands of the Government for disposal and they would greatly reduce the amount of compensation. “At this stage it is impossible to say what would be received for them,” he said. “The building is the main asset, and we are also disposing of the machinery and equipment that has been constructed or is in the course of being constructed. That is in the process of being done at the present time As much information as pnssble will be given to the House. “We hope to dispose of the land and buildings at a reasonable figure.” Comrensation could be £500.000 or it could be in the vicinity of £250.000. He could not say until the assets bad been sold. "Resisted Pressure” “If the Government had been influenced by pressure, the agreement would have been cancelled six months before." said Mr Marshall. "The Government did not g.ve way to pressure groups at the time that the pressure was on. The company wrote to the Prime Minister and said that because of the pressure it appeared that the agreement should be terminated. It was not in reaction to pressure. It was after a thorough examination with the directors of the company, and for reasons that were fully publicised, that the Government came to its decision.” said Mr Marshall. “The Government was most reluctant to take this course We spent six weeks in the most thorough examina'ion of this project.” Mr W A Hudson (Opposition. Mrmington): The Minister will convince himself next Mr Marshall: The Opposition will keep saying that the Government broke the agreement. That is just not a fact What the Government did was by agreement with the company Mr A J Faulkner (Opposition. Roskil!): A bit of a shotgun wedding. Mr Marshall said that there] was no provision in the! agreement for payment of I damages and if the agree-1 m«nt had been broken, dam-i ages would have been payable The public should know that the Opposition's] interpretation was purely a < political one "The agreement wasi rescinded by mutual agree-! ment.” he said.

“Lt was a secret agreement —no-one knew the terms. Ontaking office we were too late to change the terms. We say that they were the kind of terms that should never have been agreed to,” said Mr Marshall. Mr A. J. Faulkner (Opposition, Roskill) read from a notice which, he said, Smith and Nephew had issued to its shareholders. The notice said the New Zealand Government had broken the agreement. He asked whether Mr Marshall and Mr Holyoake in stating that the company wanted to cancel the agreement, were suggesting the company’s statement was not correct. Mr Holyoake replied that the company had acted properly throughout, but the statement was not correct. Trade with Japan Mr H. L. J. May (Opposition, Onslow) said Mr Marshall had said he was prepared ' to pay £1 million so that New Zealand would be able to trade with Japan. The company had reported to its shareholders that the Government had decided to terminate the agreement. Mr May suggested the Prime Minister would take an early opportunity to repudiate the statement. Mr Holyoake: The Government made the final decision at the invitation of the company. Mr May: Under duress. Mr M. A. Connelly (Opposition, Riccarton) said the Government had "torpedoed” the industry because it thought that such action would foster trade with Japan, but Japan had now shut out New Zealand mutton. Mr N. V. Douglas (Opposition, Auckland Central) said the Government had given every reason but the real one for ending the agreement. It had never said it was concerned with the vested interest of a few, plus their associates in Japan. Parliament should have been called together before the agreement was broken. Restricted Choice The Minister of Defence (Mr Eyre) said there would have been a lesser choice of lines and some would have cost 45 per cent more. T?ie company would have had protection not for five or 10 years, but "for ever and a day.” Mr N. E. Kirk (Opposition, Lyttelton) said the Government. quite falsely, said the directors ended the agreement. “The Government’s memory is not cohabiting with its tongue today,” he said. After having said that it would honour the spirit and the letter of the agreement, the Government now denied that it had approved of the agreement. “It's just idle to pretend that the Government did not stop the cotton mill project.” said Mr Kirk. Mr Kirk said the bill should go before the committee. There had been many conflicting statements about the attitude of Smith and Nephew. In this way the company could give its own version. “Is there any provision for i compensating the Nelson City Council for expenses it has incurred?” Mr Kirk asked "Which fund will the compensation money be drawn from? Has any compensation already been paid?” Mr Holyoake said the Government had "never liked the industry ” But the agreement : was binding and was thus l “honoured in letter and I spirit" ! As a result of public con-: i troversy the chairman of' ; Smith and Nephew wrote, 1 saying his firm would be 1 I willing to withdraw, said Mr; ] Holyoake ' “He wrote of his own volition. I had nothing to do : with it.” Mr P. B Allen (Government, Bay of Plenty) asked why the Labour Government had not brought the agreement before Hie House and asked the National Party to study it To cries of “gag" and “no answers” the Government Whip <Mr W J Scott) moved the closure, and the House approved introduction of the bill after a 35-27 division—l

the first division of the month-old session.

The debate wa s sparked off again when the motion was referred back to the House. “I don't think the resolution should be agreed to,” said Mr Nash. “It is not fair and just as the integrity of the country is concerned. “The National Government fostered antagonism towards the company by the chambers of commerce and the importers of cotton goods,” he said. New Zealand imported roughly £2O million worth of cotton goods a year. In the first period of its operations the cotton mill would have produced £ 1,250,000 million worth of goods rising to £4 million in 1969—about per cent, on New Zealand’s requirements rising to about 20 per cent. Saving of Exchange The mill would have saved £675,000 a year in overseas exchange and £500,000 worth of medical bandages now made in Birmingham and sold in Australia could have been made in New Zealand and exported across the Tasman.

Mr Nash pointed out that the Government had pro, vided £500.000 for the purchase of 500.000 shares in the Commonwealth Fabric Corporation and £448,000 in compensation to the company. Mr Nash: £500,000 —that sum has been paid. • Mr Marshall: Yes, for the shares.

Mr Nash: And £448,000 paid in compensation?

Mr Marshall said that the assets of the company had been acquired and would be realised.

Mr Holyoake said the Government had bought all the company’s assets. “A considerable amount” would be realised on them. The cost to the Government would be nearer £250,000 than £500.000. Mr J. Mathison (Opposition, Avon) said that £447.956 was listed as compensation paid under unauthorised expenditure in the Public Accounts. Was this in addition to £500,000 for shares? Mr Marshall: No.

Mr Mathison: Then we are getting £500.000 worth of shares for £447.956. I just don’t believe it. Money In London

Mr W. A. Sheat (Government, Egmont) said the company’s assets included £195.000 in its London bank account in sterling, and that the balance had been paid for the assets of the company. * “The £448.000 is clearly not in addition to the £500.000 paid for the shares. These are just two sides of the one operation,” he said.

Mr P. B. Allen said hundreds of cotton mills had closed down in Britain and the United States in the last 10 years. Mr Faulkner said the Opposition was not unduly worried about what went on under other Conservative governments. It was concerned about young people and that job possibilities be increased.

The Attorney-General (Mr Hanan) said the agreement had been too vague. It gave protection “for ever and a day." "We said this monopoly clause would have to be amended. They said ‘never’,” said Mr Hanan. “It it any wonder we accepted their offer to withdraw ”

Mr Kirk said the Opposition was not holding up anyi thing—the bill was trying to validate compensation already paid. "The bill is legalising illegal action " The Government wanted :he matter dealt with before the report of the AuditorGeneral came before the House in a few days. Mr Douglas said Mr Mul- | lins. of the Commonwealth Faßric Corporation, had said that the decision to end the agreement was the Government’s. "Either he is lying or we have not got the truth from the Government side.” he said.

Rugby In Japan.—The “Mainichi Shimbun.” a leading Japanese national daily, announced today a 24member French Rugby team would visit Japan in September for a series of goodwill matches with Japanese teams —Tokyo. July 10.