THE PRESS THURSDAY, DECEMBER 9, 1982. Rural Bank loans

Press, 9 December 1982, Page 20

THE PRESS THURSDAY, DECEMBER 9, 1982. Rural Bank loans

Advances of taxpayers’ money to farmers are regarded with suspicion by many urban taxpayers. The feeling that farmers are necessarily rich people is a strong one, if not entirely accurate. When a large, interest-free loan is made by a Government agency to a businessman who also farms, and who certainly has considerable wealth, some heat is sure to be generated. When the businessman- ' farmer is also a supporter of the Government in power and a substantial contributor to its campaign coffers, and the loan is disclosed during controversy over a Government proposal to sell him Crown land adjacent to his farm property, the Opposition parties in Parliament start looking for political scandal. Events took this turn in Parliamentary debate on the proposed sale to Mr John Spencer, of Auckland, of land surrounding a former gun emplacement on Waiheke Island known as Stony Batter. The Minister of Lands, Mr Elworthy, had proposed that the defence works themselves be retained as public reserve and that the rest of the 20-hectare Crown block be sold to Mr Spencer, who owns 1800 hectares of adjoining land. Opposition to the sale from 42 local authorities, community organisations, and special interest groups, as well as from 117 families and individuals, helped persuade the Lands Settlement Board to decide against the sale. On the same day that the Lands Settlement Board recommended that the whole of the Crown block be retained as public reserve, two Labour members of Parliament called for an inquiry into how the Rural Bank had advanced money to Mr Spencer — an interest-free loan of $60,744 and a loan of $6580 at 9 per cent interest. The concessionary loans were for the development of the 1800-hectare farm and are covered by mortgages on that property. The members of Parliament who first raised the issue of the loans to Mr Spencer were perhaps mindful of the Marginal Lands Board affair, in which unwise actions by a Cabinet Minister were associated with a Marginal Lands Board loan being made, a vailable to a relative of his. The members objecting to the Rural Bank loans to Mr Spencer acknowledge that the loans are legal and properly within the bank’s power to grant. They do riot suggest any impropriety in the granting of the loans; rather they object in principle to a man of means receiving loans when the Rural Bank has insufficient funds to meet the demands being made on it.

Their point of view will find a sympathetic hearing among those who are already suspicious of loans to farmers, but designing a scheme to meet their

objections would be impractical. The larger of the two loans to Mr Spencer is a livestock suspensory loan, made under a scheme that has been in operation for six years. It provides an incentive to farmers with either unused carrying capacity or land for development to increase production by developing the land and increasing the number of livestock carried. It is an interest-free suspensory loan of $l2 for each additional qualifying stock unit carried. Mr Spencer received the loan on the strength of his proposal to increase his sheep numbers by 5000. Only when the flock is increased by that' amount will the loan be written off. In common with all other farmers seeking a loan under this scheme, Mr Spencer was not required to establish his personal assets, but had to show that the programme to increase stock numbers on the farm by that amount was practical. At the time applications for loans under the scheme closed on March 31, this year, Mr Spencer was one of 12,635 farmers to have received livestock incentive loans. In the six years of its operation, the scheme provided $111.62 million in loans for projected stock increases of 9.3 million. Applications for loans amounting to $l9 million still have to be evaluated for their practicability. The smaller loan, on which 9 per cent interest was payable, was made under the terms of the Rural Bank’s land development programme which ran from 1978 to 1981. The point of the figures is that Mr Spencer is just one of thousands of farmers being assisted in the way the bank was designed to do when set up by the last Labour Government. He has been required to meet the same standards as other applicants and, like them, has been required to mortgage his property to the bank as surety for the loans. An extra 5000 sheep on Mr Spencer’s property are as much to the benefit of the country as an extra 5000 sheep on any other farm, and the ability to provide them, not personal wealth, is the measure that applies to all applicants for loans. Labour opposition to the loans to Mr Spencer is based on an argument that says Mr Spencer does not need the money as he has sufficient of his own. Means-testing as a method of qualifying for assistance from the public purse has long been anathema to the Labour Party. If it is to be the party’s official policy to seek its introduction to determine who qualifies for loans to develop farm land and increase production, the party will also have to be prepared to accept its reintroduction to determine who qualifies for social welfare benefits. Some might imagine the loans to Mr Spencer to be an abuse of a system of aiding farmers. Means-testing, which is messy and discriminatory, is open to greater abuses.