“TAIL TO WAG DOG"

Evening Star, Issue 21966, 28 February 1935, Page 15

“TAIL TO WAG DOG"

SHAREHOLDER CAPITAL IN MORTGAGE CORPORATION ARE THEY HAND-PICKED PHILANTHROPISTS 7 DUEL BETWEEN MINISTER AND OPPONENTS [From Orn Parliamentary Reporter.] WELLINGTON’, February 27. The Mortgage Corporation Bill has commenced to make progress through committee in the House of Representatives, and as clause 6, specifying the capital, is approached, the difficulties of the Minister of Finance in piloting the measure through rough waters are becoming more evident. The whole of to-night’s discussion, except for one intervention by the Prime Minister on the subject of the State Advances Office, was a duel between Mr Coates and critics from the Labour and the cross benches, Government members remaining silent, with the exception of Mr Poison, whose criticisms were so strong that at one stage he was rebuked by Mr Coates for being offensive, and apologised, explaining the slip as due to his earnestness. The issue of the State Advances Office was quickly decided. The Leader of the Opposition, who challenged the clause constituting the Mortgage Corporation, declared that he did not wish to waste time in discussion. Ho mustered twenty-seven votes against a steady thirty-six secured throughout the evening for the Bill. The private shareholding principle was attacked at the first reference to it, though Mr Poison failed to carry an amendment on this issue, the voting being; For 25, against 36. The Leader of the Opposition found an opportunity in the same clause of moving to delete the words which had the effect of preventing the corporation’s rules being altered by Order in Council except at the request of the board. Again 36 votes maintained the danse, against 25 opponents, but it is evident from to-night’s experience that the real heavy weather arrives on the next clause providing for one million of capital, of which £500,000 is to be held by the State, and the remainder offered to the public, at par, subject to an individual limitation of 5,000 shares. The private shareholder issue was raised by Mr Poison moving to eliminate the reference to the first general meeting of shareholders. He would not waste time discussing the matter, as his views were well known, he said, but lie wished to eliminate any reference to shareholders. Mr Samuel declared that the farmers’ reason for objecting to the Bill was the private capital involved, which meant that shareholders who would be in it only for (profit would control every State lending department. He did not wish to see the Reserve Bank mistake repeated, when private shareholders were presented with 26s or 27s premium on their shares. There was strong opposition to private capital in that bank, and he maintained that members were let down on that occasion. Therefore, it was all the more important that they should get a fair deal with the Mortgage Corporation. Mr Poison’s amendment was defeated by 36 votes to 25, but he .found another advocate for his principle m the Leader of the Opposition, who moved to eliminate the words “ at the request of the board ” from the clause providing that the Governor-General may amend any of the seventy-one rules governing the conduct of the corporation. Mr Savage contended that if the rules could only be amended at the request of the board, it meant that control over the vast quantity of State securities handed l to it would be exercised by a board where private shareholders had a large proportion of representation. The Minister of Finance declared that the responsibility for its rules must rest .with the board if the corporation was to achieve the objective ho hoped to see it accomplish. Mr Poison; But it puts into the power of the shareholders the right to veto anything the Governor-General wishes. Mr Coates replied that he would deal with this question of shareholders. Members would see that there was a tremendous advantage in having the affairs of this corporation placed befort a public meeting of shareholders. It meant that at the annual meetings the whole business , of the corporation was publicly revealed, and shareholders could discuss it from the viewpoint of the mortgagor or'anyone else. Mr W. Nash pointed out that the clause referred to powers exercisable before the first annual meeting. Mr Coates: There has been criticism of shareholders, but nothing is said about the advantages of the shareholders meeting, inasmuch as it definitely gives the public—whether mortgagors, bondholders, or shareholders, or the Government —the opportunity to present facts and discuss matters affecting the corporation. While there may be opposition to shareholders, 1 say again that the interests of the country and the corporation will be best served by having an influence of this kind. Tho annual reports would be presented to Parliament, added Mr Coates, but more interest would be taken in the matter if it could be discussed at a public meeting, and Parliament had the advantage that, if, as a result, it was found that mistakes had been made, he was sure Parliament would take its cue from the shareholders’ annual meetings. “ My point,” persisted Mr Poison, “ is that control of the institution has been placed in tho hands of shareholders, though the corporation looks after sixty millions of State securities, and the shareholders only look after their dividends.” Mr Coates: Just what business will they do if they only look after dividends ? Mr Poison: May I answer that with another question P What shareholders will go into it for any other purpose, except profit P Mr Coates; Is the Government going into it for profit? Mr Poison : The Government is going into it in the interests of unfortunate farmers, hut the shareholders are not, ami they are in this ludicrous position that they will decide what goes into the schedule, and the Government, with its sixty millons, is precluded. Mr Coates; Will you tell us how the shareholders are going to get an Order in Connci? Mr Poison retorted that the Bill said an Order in Council was only possible with the concurrence of the hoard, but not otherwise. “ That’s the plain English,” he continued, “ and no amount of side-stepping can get away

with it. I am not saying this to be rude to the lion, gentleman.” Mr Coates: You are. You are very offensive. , , , , T Mr Poison; I regret that, but I am in earnest, though not desirous of being offensive. Perhaps the Minister mistakes my earnestness for offensiveness. He pointed out that it might be desirable to alter, through the schedule, the terms and conditions of amortisation or anything else. Mr Coates: None of these things are in the schedule. Mr Poison read out a long list ot subjects dealt with in the schedule, adding that it was absolutely t set out that the shareholders, with their £ooo,000 of capital, could decide, while the State, with its tremendous amount of securities and share capital, had to he governed und controlled by these sliaieholders. , . “ What a lot of bunkum the Minister is trying to put over this House when he says the affairs of the corporation will be ventilated publicly,” said Mr Stallworthy, who declared that under the. Bill mortgagors, bondholders, and the State would have no right to attend or vote at the annual meeting of shareholders. All the machinery existed in the measure to cover up tho operations of the corporation and keep it in tho dark, Mr Lee said Mr Savage’s amendment sought to ensure to the State the same right the House ensured to the bondholders of the M'Arthur businesses. “ Unless the amendment is carried,” he added, “we are endorsing the M'Arthur principle that control of the bondholders’ money shall be vested in a group of people interested in making profits for themselves. But wo are led to believe by the Minister that these will he different shareholders—tamed shareholders —a new brand —half a million pounds’ worth of hand-picked philanthropists whose hearts are bleeding for the common people, and who are not concerned about earning interest on their capital. Is not the real proposal to wrest control from Parliament and vest it in the hands of those whose only interest is to make profit for themselves ?” On a division the amendment was negatived by 36 to 27.' 1 At the 10.30 n.m. adjournment the House was still discussing ; another amendment moved by Mr Poison with the object of confining to the Government the right to amend the corporation’s rides. It was emphasised by Mr Wilkinson that under the Bill no alterations could be made, without the sanction of the shareholders, who had absolute control. The Minister: Clearly the State has the control. Mr Wilkinson; It has not. The Minister: The clause is so worded as to ensure that the shareholders are consulted. Mr Wilkinson : I don’t object to that, but I do to the proposal to give the shareholders tho final determination.