FINANCIAL AID TO INDUSTRY

Press, Volume CIII, Issue 30580, 24 October 1964, Page 3

FINANCIAL AID TO INDUSTRY

Govt. Introduces Bill After Labour Notice (New Zealand Press Association) WELLINGTON, October 23. Shortly after the deputy-Leader of the Opposition (Mr Watt) announced in Parliament today that he would introduce a private member’s bill next Tuesday to establish an industrial finance corporation, the Minister of Industries and Commerce (Mr Marshall) introduced its long-awaited legislation on the same matter. The bill authorises the State to establish the Development Finance Corporation with an initial capital of £2 million, all of it subscribed locally.

The Government has doubled the amount of capital proposed last year by the Tariff and Development Board and rejected its further proposal that up to 30 per cent be subscribed by overseas institutions, such as the International Finance Corporation and the Commonwealth Development Finance Company.

Capital, which may be increased by order-in-council, is to be divided into 10s shares, for convenience when that unit becomes a dollar. The Reserve Bank will be offered a holding of up to 30 per cent. The balance will be raised by public subscription. Banks, insurance companies and other institutional investors have already promised substantial contributions. The corporation will legally become a body corporate once £1 million has been subscribed.

The corporation will lend money for the establishment of new industry or the development of existing industry, particularly small and medi-um-sized enterprises, where finance is not readily and reasonably available from other normal sources. It will favour plants based on the extraction or processing of raw materials or those which will otherwise benefit the balance of payments. In special circumstances, It may lend money for aiding

agricultural and pastoral production. The Government may advance the corporation, on the security of debentures, up to £2 million. Any such advance will be free of interest until the corporation has established a reserve of £500,000 or for the first 10 years, whichever is the earlier. The advance will then be subject to whatever terms, conditions and interest rates the Government may fix. For the first two years, all profits must be paid into a reserve fund. Dividends may after that time be declared, but as long as reserves are lower than £500,000, a quarter of yearly surpluses must be put to reserve and dividends will be limited to 6 per cent yearly.