HOUSING SHORTAGE

Greymouth Evening Star, 29 May 1936, Page 7

HOUSING SHORTAGE

GOVT.’S LOAN PROPOSALS

OUTLINED BY MINISTER

[per press association.]

WELLINGTON, May 28. In the House, Mr Nash moved the second reading of the State Advances Corporation Bill. He said it was proposed to allow

exactly one year to elapse so far as closing down private shares were concerned. and the shares would be cancelled from June 15, though a new corporation would take over as from June 1. Shareholders would receive

£ll2/10/- for every £lOO invested to compensate for the reduction of interest from 4?. to four. The cost to the Government would be roughly £281,000. The stock would have currency of ten years and could be re-

leemed earlier if the stockholder de sired. He thought the treatment by

the Government was generous, but the object was to place the shareholder in the same position as if the Government had not taken over the shares.

Referring to Sir William Hunt. Mr Nash said that so far as he could gather. Sir William had given nothing but excellent service to- the Corporation since he had been Chairman, but it was thought seeing the private positions Sir William held, he should not retain the position with the Corporation. There was no question regarding his integrity or his skill or ability. Mr Nash also paid tributes to the two managing directors and members of the Board. Employees who were previously with the State Advances Department would go back under the old terms.

Mr Nash said there would be a de-

parture from the old procedure regarding loans in that the borrower could have half on table mortgage, and half on a flat basis. They could also cover themselves with life insurance policy, so that if a man died within the currency of the loan, the insurance policy would free it for his widow and family.

Regarding interest rates, Mr Nash said the endeavour of the Government would be to find ways and means to have the interest rate con-

trolled. He could not say what the rate of interest would be, but it would not be higher than that at present charged, 4 1-8 per cent. The rural intermediate credit mortgages would

be transferred to the Corporation. Later, the Government’s idea was to give the same advantages to farmers as to those in urban areas. He thought that many people did not realise the seriousness of the housing shortage. The recent years’ construction of

houses had been 75 per cent, below what it should have been. New Zea-

land required five thousand houses, or more like six thousand new houses every year to house the people properly. ' The Government was taking the steps proposed in the Bill because it believed the Government could do the work better than any private or semi-private or semi-public organisation. He referred to the early history of the State Advances Department, and the benefit it had conferred on the people. He paid a tribute to Sir Joseph Ward for his part in establishing the Department, and he also paid tribute to Hon. W. F. Massey for increasing the margin to 95 per cent, as that action had meant the building of thousands of homes, and it was worth while doing again, if it meant building homes. Mr Nash said the purposes of the Bill was to provide homes and enable farmers to develop land. He claimed that the farmers were looking to that and subsequent legislation to free them from the bill they had suffered in recent years. The principles of the Corporation would be generous, but they would be conservative. Money to be advanced would be to enable people to build homes or improve land for themselves, not to sell. OPPOSITION OPINION. Mr Hamilton complimented Mr Nash on the moderate tone of his speech. That the Government could, do the work proposed better than private organisations was debatable, and there was the question whether the Government was not going too far in what was not a State function. The Minister had referred to the establishment of the State Advances Department. but there could be no comparison between the position to-day, and the position in the nineties. The Bill, though making far-reaching and drastic alterations in the Mortgage Corporation. did not go right back to the old State Advances Department, but went half-way. It was a coalition. Mr Hamilton thought it quite a pity to see the Mortgage Corporation go out so soon. He thought it should have been left for a few years. It was managing its business quite well. The State Advances Department, no doubt, had been very successful, but it was most successful as a lender for development purposes. It was not so successful when it was handling large sums of money at high rates of interest. The development idea had been lost, and the Department became a huge lending institution which was not the State’s function. He would not say lie opposed the Bill, as the new system was not far astray, and he believed going back half-way was better than going right back to the State Advances Department. He thought that every encouragement should be given to a borrower to repay monev and the Bill should entice them to do that. He thought it was better for the State to assist in building a home than to assist industry or the investor, or even to assist . the farmer. He considered the provision to lend up to one hundred per cent, should be confined to housing, and not made general, but to let industry and farming find their own equity. He contended it would be better that the State should give the industries a hand to start rather than enter into partnership with them. He thought the Government would be well advised to keep clear of the stock and chattel business, which was a risky, moveable business. He did not altogether hold with a life insurance policy being given as collateral security. Surely those who had first claim to a life insurance policy were the widow and family. Mt Atmore thought that if the criticism offered by Mr Hamilton was all the Opposition had to say, the Government could take it as an endorsement of the Bill. He thought the taking away of twenty-five million from , the people by the last Government was largely responsible for the decrease in house building. Providing

brines for the people was the greatest work in which the Government could engage. Mr- Savage said that for Mr Hamilton to say the new Corporation fell short of the old State Advances Department was misrepresentation. Mr Hamilton had also mentioned the difficulty of controlling rising prices, but the Government was going to keep prices from rising. They had the power, and were going to exercise it. The Government was going to its task with its eyes open, and realised its responsibilities. The State Advances Department had got into difficulties because the last Government had weakened the foundations upon which it rested; the power of the people to pay rents. The people had said that State enterprise had failed, but the Government -was there to show that State enterprise had not failed. He believed that mortgagors and mortgagees would bless the day when the Labour Government was established, because they would find their equities had been restored. There weie people perambulating the country, saying the Government was going to destroy it, but he did not mind them. He would meet them any tin;e on the public platform and let the people be the jury. He had given his word to the people and would not. break it. That legislation was being introduced because there was need for it. He asked the people not to worry about, the speculator. People would have nothing to lose by the passage of that legislation. The debate was adjourned.

MR FORBES’ CRITICISM

WELLINGTON. May 29

The House met at 10.30 a.m.

The second reading debate on the State Advances Corporation Bill was resumed by Mr Forbes, who referred to the establishment of the Mortgage Corporation. He said that, after all, it was not the legislation that mattered, but the spirit in which it was administered, and he considered that the Mortgage Corporation had meant a forward step, and that more effective work could have been achieved by it than under the State Advances Department. The Prime Minister had set out his ideals, and not much difference could be found with them, but it was the duty of the Opposition to point out the difficulties that would arise, in trying to put them into operation. He mentioned the difficulties of speculation. He said that the farmer would be penalised by the provision that no goodwill would be allowed. He said that prices must rise, despite the assurances given by the Prime Minister. An attempt to stop prices rising had been made in the past, but had failed. Mr Savage had said that the Government intended to reform the monetary system, and he pointed out the difficulties that had been encountered in Alberta, when that was tried. He agreed tnat the system might be improved, but if they could scrap the present one and establish a new one, then he would say that the age of miracles was not past. If it were not for the risk that would follow, the attempt would be most interesting. Mr. Forbes suggested that a research department should be set up, to go into the question of housingconstruction, in an endeavour to get the costs down. He urged the Government to be very careful in embarking on the principle of taking shares in industries, but thought that if it was done after proper investigation, it might be an economic proposition. He hoped the new Corporation would be a success, as he wanted to see the present difficulties overcome.

Mr. Wmiams said that the machine they were building in that Bill would bring great blessings to the people. The Leader of the Opposition had been unable- to find any flaws in the measure, and had contented himself with criticising the spirit behind it. The housing of the people was a national nee«. and it was only right that the people should pay soinetning towards a national housing scheme. He would not suggest that the advance should be given at a very low rate, but said that the interest rate would be varied, according to public utility. At present, the interest rates varied according to the value of the security. That was a new principle. The Bill gave the Government power to direct. capital where it was most necessary, and where it would give the greatest benefit to the public. Sir. A. Ransom said that the Bill was a re-enactment of the past legislation, and was A RETROGRADE MOVEMENT. It would not operate in the interests of the country, and placed the business of the Department directly under political control. He thought it was a wise provision, that the Government should guarantee the bonds, but he considered that the Bill was of a less generous character than the Mortgage Corporation Act. It was conservative, rather than liberal. It was regrettable that any weaknesses that might have been apparent under the last Act were not likely to be removed by the present Bill, because it was more conservative. He thought that the provisions of the Bill were based on sound finance, and there was no great variation from the conduct of the Mortgage Corporation. He took it that when the Prime Minister said the Government was going to keep pricesT'rom rising, he referred to interest. He said that jt would have been better had the Prime Minister said interest, instead of prices, as interest was more applicable to the Bill. , ,

.Mr. Barclay said tnat the Bill before the House would assist the farmers to obtain money at a reasonable cost, and it would assist the workers in the towns to obtain money to build homes. Mr. Polson was perambulating the country, saying that the Government was going to nationalise land, but the Bili showed that the Government was not going to nationalise land. He did not agree with members of the Opposition, that costs ■would rise. He thought that the Mortgage Corporation did more than anything else to put the last Government out of office. Mr. Barclay said that the Bills brought before the House had done away with the smug complacency met with a year ago, and he said that during the coming recess, Government members would go out into the country to discuss that and other measures that had been passed, with the electors. Mr. Hamilton: So will we. Mr. Barclay said that the Mortgage Corporation had been lending on a conservative basis. He said that he knew of cases where an application was made for 33 1-3 per cent, of the value of land, but the applicant could not get it. He thought that the Bill would be accepted by the farming population, who would look into it in future, and with sympathetic administration, there was no limit to its possibilities.

.Mr. Broadfoot claimed that the Mortgage Corporation had been responsible for the lowering of inter-

est to a level it had not been down to for very many years. The main framework of the Mortgage Corporation han been adopted by the Government, and that was a compliment to the past Government. The luncheon adjournment was taken.