Lands Board role under scrutiny

Press, 24 December 1980, Page 3

Lands Board role under scrutiny

Parliamentary reporter

The Commission of Inquiry into the Marginal Lands Board loan affair has cleared the board of any error of judgment, but has raised questions about its role and future existence.

Findings on part two of the commission’s brief — whether there was any error of jurisdiction by the board in its approval of an application for $106,000 by James and Audrey Fitzgerald; and whether any amendments are warranted to the Marginal Lands Act — were released yesterday. The commission has also recommended four changes to the act; tighter confidentiality of proceedings; clarification of the “clumsy” term, “personal interest,” definition of the board as a lender of last resort; and clarification of the board’s powers of “final” decision.

The commission favours in place of the term “personal interest” the words “disclosure of interest” as used in the Rural Banking and Finance Corporation Act. The section requires a director of the corporation either “directly or indirectly interested in any arrangement or agreement” to disclose the nature of his interest as soon as possible and to take no part in subsequent deliberations, except by corporation resolution.

The commission wants any breach o f confidentiality — unless bv express permission of the board, and with good reason — made a criminal offence. This would prevent disclosure of applicant’s loan proposals to the news media in contravention of the act, which says that the affairs of any applicant should be kept confidential by members of the board and staff. It wants inserted into the act a clause defining the board "as a lender of last resort” subject to its “being satisfied that adequate finance (is) not available to the applicant on reasonable terms from any other source.”

The question of possible

breach of jurisdiction turned on a section of the act with contradictory sub-sections, from which it was “difficult indeed to. extract any clear or comprehensible meaning,” the commission said. One sub-section said the decision of the board on any application, or rehearing, or review was final; the other said that any aggrieved applicant might “at any time” after a decision by the board apply for a rehearing or a review, and that the board itself “of its own motion” could rehear any application or review any decision.

The commission took the view that Parliament intended the section to bar any appeal to a court against a board decision, and, generally, to keep any questioning of the Board’s decisions within the administrative framework of the board itself.

A contrary view would mean that the board would be unable to review an. earlier decision based on a rehearing, if it discovered that it had been fraudulently misled by an applicant.

The Board declined a loan application by the Fitzgeralds on November 19, 1979, and declined it again on a rehearing on April 1, 1980. On May 6 the Fitzgeralds submitted that budget figures on which the board had based its two decisions, were inaccurate.

It was this approval, granted by the board after a third approach by the Fitzgeralds, that was argued to be in breach of the definition of “final” decision, under the act.

However, given the least favourable interpretation (that the board could not reconsider an application that it had declined on review) the board was still not in breach of the act, the commission said.

This was because the third approach (questioning budget figures) was a different application from the previous two. As a result of the budget exercise by the board’s sub-committee, “the whole character” of the bud-

get proposal was changed, and the application effectively became a fresh one. “However it (the section) is interpreted, it is impossible to regard it as prohibthe board, after it has reviewed or reheard an original application, from entertaining a fresh or different application by the same applicants,” the commission said.

Commenting on the role of the Marginal Lands Board, the commission observed that “a case could certainly be made, in principle at lease, for the absorption of the board’s functions by the Rural Bank — simply on the logical grounds of rationalising administrative overheads, and with some expectation of economic advantage.” ( However, any firm recommendations on this from the commission would be premature. Its impressions would need to be subject to “highly detailed analysis of economic, organisational, and staffing factors.” The commission urged that an officials’ committee set up to advise the Government on the future of highrisk lending should proceed with minimum delay, and also consider the commisson’s findings. If the board was to continue in existence, there was no need for the Minister of Lands to continue to be designated charman, the commission said.

“We can forsee no problem in the chairmanship’s being allocated either to the Director-General of Lands or to an independent appointee,” it said. A more formal liaison “at higher levels”, between the board, the Lands and Survey Department, and the Rural Bank would be beneficial, the commission noted. Although practical measures had been developed at a working level to co-ordinate the functions of the board and the Rural Bank, and to preclude an applicant’s playing one lending authority off against the other, these were not entirely adequate in the Fitzgerald case.