The Dominion. FRIDAY, MAY 29, 1936. STATE ADVANCES

Dominion, Volume 29, Issue 207, 29 May 1936, Page 10

The Dominion. FRIDAY, MAY 29, 1936. STATE ADVANCES

The history of State advances in New Zealand is one of progressive liberalising. Down the years it has been made easier and easier to borrow more and more. With mixed results, although over all the benefits have far outweighed the losses. The State Advances Corporation Bill now before Parliament continues the process. The organisation which it proposes to set up will be a composite of the old State Advances Department and the newer Mortgage Corporation, but more far-reaching in its effects than either. For in future borrowing and lending both are to be governed, not by statute, but by the will of the Government from time to time. As Mr. Nash puts it, “The corporation will manage; the Minister will control.” And as the Bill itself lays down: “The business of the Corporation shall be managed by the Board of Management. . . . Every direction in writing given by the Minister [of Finance] shall be binding on the Board.” Apparently no direction which the Minister may give will be u/tra vires the Act. It will be enacted in detail what the Corporation shall, may and shall not do; but sub-clause (2) of clause 23 seems to give the Minister supreme power to over-ride statute law if he feels so inclined. His “directions” need not even be gazetted, let alone brought before Parliament for subsequent ratification. Surely the Government does not really mean to be taking such absolute powers as these? In some respects the Bill is an improvement on earlier legislation, especially where it prohibits (except with the written authority of the Board) subsequent mortgaging of property upon which State advances have been made. By this means the Government will be enabled to hold a restraining hand on rural land values in the event of another boom, although the restriction no doubt will be used as a lever to force from the corporation larger first mortgages, with a consequent shortening of its safety margins. . Mr. Nash’s second reading speech was a clear indication of intention to advance more than two-thirds of valuation, and the Government.is assuming direct responsibility for any losses arising from such higher loans. This makes it doubly important that the country should be kept acquainted with what is being done, and the principle of Parliamentary responsibility should be insisted upon. Everyone wishes to help the farmer and the urban worker to help themselves to help the community—that has been a principle of our legislation for more than forty years—but it will be as well to keep the helping on a business footing if we wish to escape unpleasant financial consequences. The advances policies of past Governments have cost the country a pretty penny, and our democracy is old enough now io be able to learn from past mistakes. .