“SERIOUS DOUBTS”

Dominion, Volume 29, Issue 303, 18 September 1936, Page 10

“SERIOUS DOUBTS”

Government and Paper Mills Company SUSPENSION URGED Early Investigation Into Forestry •'The Government has already drawn attention, and does so again, to the very serious doubts which exist in the minds of those best qualified to judge as to the general activities and proposals of the company,” said the Leader of the Legislative Council, Hon. M. Fagan, in a statement setting out the Government’s attitude to the proposition which the company which had promoted the Whakatane Paper Mills, Limited, Water-Supply Empowering Bill had in view, during the second reading debate on the Bill dn the Council yesterday. Such a view, Mr, Fagan said, was not arrived at lightly, and it was hoped, therefore, that the shareholders and directors would agree quite voluntarily to suspend operations until they had the benefits of the'proposed national investigation to guide their future operations. The Bill was read a second time, and referred, to a committee of selection to b e sent on to a select committee for a report back to the Council. Mr. Fagan outlined the reports which had been made by committees of the House of Representatives. The recommendation of the Industries and Commerce Committee that the Bill 'should not be allowed to proceed, coupled with the suggestion that a national investigation should be carried out immediately into the physical condition of the whole of the forests owned by the afforestation companies and into the economic possibilities of their utilisation, was an indication that the committee was not satisfied either with the general possibilities of pulp and paper manufacture in New Zealand at the present time or of the prospects of this particular company, Mr. Fagan said- „ „ “Far From Satisfied.”

“The Government likewise is far from satisfied on the same matter, so much so that it would prefer that further operations be stayed until the Government’s investigations into the utilisation of forest products have been completed,” Mr. Fagan proceeded. “The Government desires to stress that the national investigation will be of an entirely constructive character aimed at procuring the best available foresters and sawmill and pulp and paper industrialists to examine the forests and make specific recommendations both for their management and the economic utilisation of their grown products.

“It has been claimed that Parlianient cannot undertake the duty of sitting in judgment upon all company proposals. To a great extent this is correct, but the charge has also been made that both the previous Government and this Government, together with Government departments, have singled out Wfiakatane Pdper Mills, Ltd., for obstructive treatment. Such is entirely contrary to fact.

“Neither this nor any other company has been singled out for aggressive attack, but when a company ' commences negotiations with the Government and makes proposals which impinge upon the public illterest, it becomes the business of the Government snd its departments of State tn interest themselves in its activities. “It is not the desire or the intention of the Government to place any obstacles in the way of industrial enterprise; rather it is anxious to assist and encourage such enterprise, but it must be on sound lines, arid every action either taken or contemplated has been solely for the purpose of conserving shareholders’ rights and moneys.” Approval Not Implied. The Government proposed, however, to leave the question of suspension of operations entirely in the bands of the shareholders and directors, and to allow the Bill to proceed, but in doing this wished it to be clearly understood that so far were the company’s activities *and proposals thought to be removed from economic and technical possibilities that it emphasised the following :— (a) That the company must realise that the passing of the legislation did not imply Government approval of their activities and proposals. (b) That, pending the results of the national investigation, the company should refrain from asking its own shareholders or the investing public for further capital, but in the event of so doing it should include in all such requests in the form either of letters, sales literature, or prospectuses, a notice stating that no action of the Government, either in passing enabling legislation or in granting licences, etc., could be construed as implying Government approval of its activities and proposals. (c) That the company must dispose of its effluent to the satisfaction of the Health Department and avoid any atmospheric pollution. In this connection it was understood that the company had already agreed to that effect. (d) That the company could not expect financial assistance from the Government in the form of tariff protection, etc., claiming as it did that no protection was re. quired and that the industry could lie profitably operated. (e) That, seeing that it claimed to have adequate supplies of pulpwood in its own forests, it could not rely in any way upon pulpwood supplies from the State exotic forests, realising that these bud been established primarily for the supply of saw timber, that the demand for saw-logs would take precedence over that for pulpwood and that in no event would pulpwood be sold except at prices remunerative to the State aud by public competition. I‘hjHical State of Exotic Forests. "With those views on record, shareholders will embark ou uuy developments with a full knowledge of the Government’s views on the matter,” Mr. Fagan said. "The Whakatane Paiper Mills Lid. wlllyreceive no opposition from any State department, out. the Government is concerned a bout the physical stale of Ihe exotic forests of all companies, and it. regards it. as a duty to investigate their position from a utilisation point of view. It requires to have definite Information both as to rate <>f growth anil as to what extent local conditions will allow the establishment, of a successful pulp ami paper Industry. “I desire to emphasise that the Royal Commission on Company Promotion, presided over by Mr. J. s. Barton, investigated only the financial methods of forestry companies. ’The subsequent Bond holders’ Incorporation Act was confined likewise to the provision of financial ami legal mitvhinery for reorganising the eompatiles. In the ultimate analysis, however, the financial stability of the companies is directly dependent upon tho state of their

forests, their management and their utilisation, and it is this basic consideration which leads the Government to believe that a national investigation along these lines -is of fundamental importance." Prejudice Against Company. .Moving the second reading of the Bill, the Hou. B. C. Robbins (Auckland) said there were a large number of people inside Parliament and out of it who, he was afraid, were prejudiced against the company going into operation. The company was prepared to have the most thorough investigation this or any other Government might ask for. All its books for the whole of the time it had been in existence were open to the fullest inquiry. The Hou. R. Masters (Taranaki) welcomed the announcement of the Leader of the Council that there would be a commission of inquiry into all similar companies in New Zealand. Tie would support the second reading if the Bill were going Io a select committee. ••Whether this Bill becomes law l, r not If Is the intention of the Government to commence an adequate a, ’ (l Independent investigation into forestry in this country Mr. Fagan said in a further statement. "That investigation will be a thorough » no - It will bo set up at a very early date." The no'll. W. H. Mclntyre (Nelson) said it was extraordinary to Hilda Government investigating the stability of the proposals of any particular investment company. Tho Hon. T. I’’. Doyle (Southland) said the Government was to be commended for the thorough investigation Hint it had taken. 1'1,,. Hon. E. It. imvis (Auckland) -aid he trusted Hmi eventually the company would be allowed to start on the developing of what should bo a very prosperous industry.