STATE LOANS

Evening Star, Issue 19319, 4 August 1926, Page 5

STATE LOANS

SEVEN MOUTHS’ APPLICATIONS WAITING WHY INTEREST WAS RAISED [From Our Parliamentary Reporter] WELLINGTON, August 3. The presentation of the annual report of the State Advances Department led to a two-hour bombardment of the Minister of Finance in tlio House of Representatives to-day regarding the loan applications, which are in arrear. 'The Minister secured only a few minutes for his reply, as the questions continued till the dinner adjournment was near. „ Mr Stewart said that approximately there were 4,000 loan applications in hand involving £3,500,000, and the department was seven months in arrear in catching up on the applications. A very special effort was made by granting increased loans to the department, and it had made progress in wiping up tho arrears. When ho was asked the question whether tho time between the receipt of an application and the. payment of the loan could lie shortened, the only reply Hie Minister could make was that it meant increasing the loan authorities. Last year the Government had authorised £5,000,000 under the settlers and workers branches, and actually paid over £5,750,000. Answering a question from Sir Joseph Ward as to whether tho report of the Rural Credit Commission would have a bearing on tho department’s operations, Mr Stewart stated that he had ■seen tho report, which would he tabled in Parliament when it had been considered by Cabinet. It would have a very important bearing on tho State Advances Department’s work. RAISED RATES OF INTEREST.

The Labor Oppositionists had, during tho discussion, made a strong point ot tho raised rates o! interest, the Minister particularly noting a suggestion from Mr M‘Combs that it would cause private lenders to increase their rates and mean an additional burden of about £3,000,990 to private borrowers. “The answer to this.” declared Air Stewart, “ is that it. reed not happen, and has not happened. The Government is borrowing more cheaply and lending more, cheaply than private persons are. The department has made things easier for the borrower when increasing the interest rates by extending the term oi repayment, so that the additional payment on a loan of £I,OOO at 51 per cent, amounts to 2s Id per week.” Tho Minister explained how the department, prior to raising the interest, had been running at a loss. Between 1924 and 1920 it loaned at 41 per cent. £1.000.000, which cost 5 1 , per cent, or more, and £1,500,000, which cost £5 3s (id per cent., and £500,000, which cost £5 10s 9d, so that tho department lost £25,000 in interest. He could not, sec how returned soldiers could be priority when the loans to ordinary citizens were so much in arrear.