PRODUCTION DRIVE

Evening Post, Volume CXXX, Issue 6, 6 July 1940, Page 8

PRODUCTION DRIVE

FINANCIAL PLANS

LOANS BY GOVERNMENT

OUTLINE OF SCHEME

Where finance for the expansion of production in New Zealand is not available through private channels the State Advances: Corporation will in future have authority to make loans. These loans are to be made for the purpose of increasing the output of goods most needed 'jy the United Kingdom at the present time. The plan on which the advances will be made was outlined by the Prime Minister (the Rt. Hon. P. Fraser) last night. "The purpose of this arrangement," said Mr. Fraser, "is to enable, farm production generally .to be maintained •at the highest possible level, and in particular- to ensure that as far as it is within our power to do so, increased supplies of those products urgently required by the United Kingdom are brought into being without delay. "In cases where it is established that finance for the undermentioned purposes is not procurable through normal channels advances are to be made available out of the funds provided by the •Government through the State Advances Corporation. These advances will be of many types, but may be broadly summarised under the following headings:— • TYPES OF ADVANCES. (a) To dairy companies for capital works such as alterations or extensions to premises or plant, etc.; interest to" be at £3 per cent, per annum. (b) To dairy factories for the purpose of financing the purchase by suppliers of additional fertilisers or stock, companies to be responsible"for v repayment of such loans; ■ interest ;to be £3 12s 6d per cent, per annum to factories; suppliers to ■be charged not more than £4 ,2s 6d per cent, per ■annum; • . ■ \ t ~. - (c) To farmer? for any legitimate enterprise involving increased ■ production; interest rate to be £4 ,2s, 6d per cent, per annum. ■ >.-:. , -_. . (d) To contractors.. for additional piant, etc.; interest to be £4 2s 6d per annum. / .-V >•... ; ..: : . , '/■ (c) Other classes cf loans required, 'from time to time; interest to be fixed hay reference to the;. Minister of Finance. . v, * "With a view to securing; the best possible results in the•,. shape of creased production, it is proposed that the State Advances Corporation should act in close co-operation with the National Council of Primary Production and with the District Primary Production Councils," Mr. Fraser said. "To ensure co-ordination, two officers of the State Advances Corporation will be nominated to act on the National Council and on an executive committee thereof,: in addition to Which1 an officer of the Corporation wiU be appointed to each district council '^and Its; executive committee. The • district councils will be respon- *$? national council for the of tne national effort in the field, and small executive committees of both the national and district councils will be set up for this purpose. FRIMARY PRODUCTION COUNCILS. "I want to make it clear," continued Mr. Fraser, "that these various primary production councils have an important part to play. In the matter of providing additional finance, they will act in an advisory "and consultative capacity, though the final responsibility of deciding what advance will be made, and to whom, must necessarily be left to the board of the Corporation. In addition to the Corporation's staff and facilities, it is proposed to utilise the field organisation of the Lands, Valuation, and Agriculture Departments in connection with this scheme. "Under the - scheme outlined, any loans which can be secured by way of first mortgage of land, stock, plant, and crops will be so secured, but of course this presupposes that the assets of the applicant will be free from existing encumbrances. In the great majority of cases the farmer's assets will already be mortgaged and in these cases it will be necessary for the Crown to get reasonable security for any money that is advanced for the definite purpose of bringing about increased production, and is certified in this regard by the District Primary Production Council. "It is accordingly proposed to take special power under the Emergency Regulations to enable the Government to make advances in these cases and to take security by way of a. charge on the property :of the farmer, under which the Government will share rateably with, existing mortgagees in the farming proceeds, either as regards interest or repayment 'of principal. SECURITY FOR LOANS. "In respect, of any advances which may be made to dairy companies either for the purpose of extending buildings or plant in connection with the company's own business, or for the purpose of relending operations by the company to its suppliers, the Corporation will, take security by way of a second or subsequent charge over the assets of the company after safeguarding the normal trading operations of the company through existing channels. "Other™ types of security will no doubt be taken, but it is not possible to visualise at. this stage the varied requirements which will have to be met. I can say, however, that the administration will be flexible enough to enable the Corporation to deal with applications in the best possible way, having regard to the urgent needs of the moment. "These advances to which I have been referring will be made out of special funds provided by the Government for the purpose. In addition, the State Advances Corporation will within the limits of its own funds, and within the statutory limits under which it operates, continue to make finance available to farmers for the economic development of their farms, and the board of management of the Corporation is now in a position1 to consider applications from farmers to a greater extent than it has been able to do in the immediate past. "Wherever possible, the Corporation will continue to meet the needs of its mortgagors for finance for development purposes, in addition to which it is prepared to consider applications from farmers for the further development of their properties and for the repayment of mortgages provided that an agreed proportion of the total amount required for both purposes will be used for increased production." In conclusion, Mr. Fraser said that the need for speed in the administration of the plan outlined was fully appreciated, and he gave an assurance that the administrative details would be worked out in the shortest possible" time in order that the Corporation might be in a position to make an immediate start on the important work entrusted to it.