BILL BEFORE HOUSE Extension Of S.A.C. Scheme

Press, Volume CIX, Issue 32274, 17 April 1970, Page 22

BILL BEFORE HOUSE Extension Of S.A.C. Scheme

(New Zealand Press Association)

WELLINGTON, April 16.

An extension to the State Advances Mortgage Guarantee Scheme is planned by the Government under legislation introduced in Parliament today.

The State Advances Amendment Bill was introduced by the Minister in charge of the State Advances Corporation (Mr Rae). Under existing legislation the corporation can guarantee loans by anyone for tourist accommodation, the fishing industry, or farming, and loans by approved lending institutions for housing.

Under provision of the new bill the corporation will be empowered to give guarantees or indemnities for loans by any person, including trust funds, for any purpose approved by the Minister of Finance.

Mr Rae told the House that the corporation did not have enough finance for all needy cases, and the extended guarantee scheme would allow private finance to be channelled into housing. Extension of the principle might be possible to stratatitles when legislation concerning this form of finance was introduced later in the session.

Mr Rae described the legislation proposed in the bill as of a general nature, rather than specific. But the safeguard was the approval of the Minister of Finance. The bill provides that the corporation can charge a rate of up to 2 per cent on the amount borrowed. Loans qualifying for the guarantee scheme would carry a maxi-

mum interest rate of 6j per cent, he said. Labour Concerned

The Labour Party debated with the Government the introduction of the bill for two hours. It opposed the bill, and took the question of its introduction to a division, which it lost 35 votes to 36.

Opposition members expressed concern that the Minister of Finance should have so much control over which loans were guaranteed and which were not.

They criticised the Government for not introducing legislation which would contribute to a lowering of interest rates, claiming the bill sanctioned the activities of money lenders. Mr J. A. Walding (Lab , Palmerston North) objected to giving the Minister of Finance—“particularly this Minister (Mr Muldoon) —a “blank cheque” to guarantee private loans.

The Opposition feared the extension of the guarantee scheme would reduce the number of low-interest loans available from the corporation. The Prime Minister (Mr

Holyoake) said the existing limited scheme had attracted s2om in loans.

The bill was given a first reading.