SUMMARY OF VIEWS

Evening Post, Issue 29, 4 February 1935, Page 13

SUMMARY OF VIEWS

ALTERNATIVE WAY

STATE MORTGAGES

"It will be seen from the above that the committee is not convinced of the necessity for the establishment ' of a semi-State Mortgage Corporation, and that it is not sanguine of its success if it be established on the lines proposed.

"Indeed,, the committee .regards the proposals not onjy as unnecessary, but as unsound, arid dangerous. It submits the following alternative suggestions:—

"The committee is of opinion that i under existing legislation the' difficul-j ties between private feiortgagees and! their mortgagors are in course of settlement.. Although in many cases these settlements are stated to be. temporary, only, the committee believes that final settlement will in due course eventuate on the lines of,, and as an outcome of, temporary settlement. "The position between the State and its mortgagors is entirely different, and the committee therefore thinks that private mortgages and State mortgages should be dealt with separately. STATE ADMINISTRATION. "To secure uniformity of administration, eliminate inter-departmental competition j and also to eliminate political interference, if that be possible, the committee suggests the amalgamation of the mortgage lending activities of the various departments, and the control of those activities by ah independent board. "In view of.the.largesums involved, the committee is of the .that the best results would be obtained if more than one board were created. For this purpose' the Dominion might be divided into districts, each with its own board, the districts being so arranged that each board would have approximately the same amount of mortgages under its control.

"To secure uniformity, the chairmen of all the boards should form an advisory committee for the whole scheme. If the principle of this suggestion be accepted, there will be no necessity for. the elaborate process of the new board .talcing over mortgages and issuing debentures. The boards should administer the existing inert? gages, .answering to the respective de-1 partments in the same way as the Public Trustee handles, his mortgage investments which are outside the Common Fund.'

."With regard to new business, the committee contemplates that a department having funds for investment on mortgage would invest through the boards—the department not coming into contact'in any way with any prospective borrower.

- "The foregoing suggestions are in such form that all departmental mortgages can be taken over.

"The beards should be given full powers (comparable with those possessed -by individual, mortgagees) of varying mortgage contracts by mutual arrangement with the respective mortgagors. •-.■■■•

• "In these proposals the committee contemplates achieving the same result as is mentioned in Mr. Coates's pamphlet. The Minister's proposal was that the bonds allotted to the State would be sold, and the proceeds used to repay- the loans raised,, for instance, by the State Advances Department. The committee contemplates that the repayments of principal received by the boards in respect of State. Advances mortgages would-be applied in repaying the loans raised by that Depart ment, so that eventually this liability would be extinguished. On the other hand, other departments are, and will be, continuing concerns, and will have from time to time further funds for investment. ■ OTHER MORTGAGES. "The committee has already expressed the opinion that necessary adjustments between private mortgagees and their mortgagors are pro-1 ceeding satisfactorily, under existing machinery. All that is necessary to complete the programme of adjustment is some modification. of the existing machinery. The committee sets

this out later in dealing with the rehabilitation proposals.

"The committee is satisfied that there is ample finance available, at cheap rates to effect the refinancing of existing mortgages as and when this becomes necessary and advisable. If it should be found that there are, insufficient' facilities at preser.it . for. longterm lending on a table bagis, the committee considers the proper course is to encourage the ' formation of new pri-. vate institutions of modest size on a district basis and free of Governmental control.

"The committee will be' glad, if the Government so wishes, to submit proposals in detail for legislation having as its object the encouragement of such institutions. The committee appreciates the fact that there are certain disadvantages attaching to the formation, under the Companies Act, 1933, of institutions such as it contemplates, and that some enabling legislation will be necessary in this connection.