LOANS FOR HOUSES & INDUSTRIES

Dominion, Volume 29, Issue 206, 28 May 1936, Page 10

LOANS FOR HOUSES & INDUSTRIES

Government’s Policy Regarding Mortgages A STATE ADVANCES CORPORATION Private Shareholders in Existing Institution to be Bought Out A State Advances Corporation is to take the place of the Mortea?c Corporation of New Zealand, and exercise power to issue' loans to local bodies for housing and also loans to industry after examination bv the new Bureau of Industry. Private shares in the existing corporation are to be cancelled, with one vear’s dividend added to repayment of the sum of investment Shareholders will be paid either in stock or cash. Legislation providing for the reconstitution of the Mortgage Corporation was introduced by Governor-General s Message in the House of Representatives at a late hour last night. 1 here immediately was a clamant demand by the Opposition for information about the vital change.

"The new inline of the corporation will be the State Advances Corporation of New Zealand,” said the Minister of Finance, Hon. W. Nash, when introducing Hie Bill. "That name will bring back associations of the splendid work of the pioneers who endeavoured to make money available at reasonable cost.”

The private shares in the corporation were cancelled, the Minister said, and there was provision for repayment to those who had subscribed money in shares. One year’s dividend would be paid in addition. The capital remained as under the Mortgage Corporation Act. The Board of Management was entirely reconstituted, but the two managing directors remained, one as chairman of the board and the other as deputy-chairman. "The State Advances Corporation takes over the administration of housing,” the Minister continued. With regard to the raising of money, the corporation still has the right to issue bonds, and these will be guaranteed by the Government, which means that the money will probably be raised at a lower rate of interest.

There is power for tlie issuing of loans to local authorities for housing purposes, and there will be loans to industry after the project concerned has been examined by the Bureau of Industry. Tlie Minister of Industries and Commerce will be engaged in finding industries that need and deserve help, and if Cabinet approval is given the Minister of Finance will be empowered to make advances. Mr. C. A. Wilkinson (Independent, Egmont) : Is there any limit? The Minister: There is no limit. Mr. W. A. Bodkin (Opposition, Central Otago) : Where will the corporation borrow money? The Minister: It will be borrowed in several ways. Referring again to the cancellation of shares in the corporation as at present constituted, Mr. Nash said the share capital would be purchased and a price would be paid in proportion to the amount paid in. Shareholders would get either stock or cash. The corporation proposed to issue 4 per cent, stock and investors would get their money back plus a return on it at 4 per cent, equal to what they would have got at 4i per cent., the rate at which they had invested. Margin on Loans Extended. “The Bill will extend the margin on loans,” Hie Minister continued. ‘‘At present 66 2-3 is the maximum the corporation can advance without the guarantee of the Minister of I inance and the Government. Under the Bill 66 2-3 remains tlie maximum for commercial propositions, but it is to be expended for housing.” Mr. Wilkinson': What will be the rate of interest? ' The Minister: That has yet to be determined. Mr. W. J. Broadfoot (Opposition, Waitomo) : What will be the margin for housing? Mr. Nash: We are not concerned with margins, but with the building of houses. The Government will fix the margin. The board of management will''manage and the Government will determine the policy. There were two forms of loans, the Minister added. One was commercial and the other was tlie extended form provided in the old State advances loans. If advances to 100 per cent, were necessary they would be made. The money necessary for the building of houses would be provided to those who were ready to give the necessary security to the Government. Tlie Minister added that the corporation would take power to inspect, through its field staff, the securities of other Government departments for economy purposes, if asked to do so. Board of Management. In reply to the Hr. Hon. J. G. Coates (Opposition, Kaipara), the Minister said that in addition to the chairman mid the vice-chairman of the board, there would be one or more other directors. There might be a board of five or seven managing Hie corporation under the direction, if necessary, of the Minister of Finance. If Hie bonds issued by tlie corporation were not taken up by the public the Government would purchase them through the public accounts. “Is the responsibility for losses on advances to b e that of Hie Government in the future?” asked Mr. Coates. “The corporation is a commercial concern to the extent of 66 2-3 per

cent,.” replied tlie Minister, “and to the extent that the Government feels it wants to advance more money the Government accepts the responsibility.”