SEEKING A PLAN

Hawera Star, Volume LI, 25 August 1931, Page 4

SEEKING A PLAN

COMMITTEE OF PARTIES

MAY FOLLOW AUSTRALIAN LEAD

POSSIBILITY OF NATIONAL GOVERNMENT.

PATEiA MEMBER INTERVIEWED.

• ‘ The formation, of a National Government to overcome the present acute situation is a distinct possibility, if not a probability. In that event the General Election would be certainly postponed for the tenure of such a Government,” said Mr H. Cr. Dickie, M.P., in the course of an interview with a representative of the ‘‘Hawera Star” this morning.

‘ ‘lt will be remembered, that Mi Coates offered a committee from his party to assist Mr Forbes several months ago, therefore the statement by some of the. United papers that the present move is belated is entirely unwarranted,” continued Mr Dickie. “The plan to be produced by the committee, which reports- to the House to-morrow, will probably be on the lines of the Australian plan, which is now being put into operation. The chief features of the plan are: A conversion loan covering the internal debt at 4 per cent; a reduction of the Bank interest rate of 1 per cent-; and a. reduction of interest on mortgages by 22J- per cent. Mortgagees may appeal to the court if they claim hardship, but- a general scaling down of interest rates is the main features and the wages are to be reduced by 20 per cent, and primage, duty and sales tax applied. “We failed to balance our Budget last year by £1,600,000 and every effort should be made to( make ends meet during the ensuing year, as deficit finance cannot be indulged in for two years in succession. “A reduction of interest rates will help fo stabilise land values, and will also assist in bringing some of our frozen capital into circulation, as by easing the burdens of mortgagors, their spending power will be increased. Our internal debt is £117,000,000 and a drop of 1 per cent, in interest will save the State £1,117,000, less a certain amount of income tax. Opinions in Labour circles seem to favour a plan involving currency inflation', but it is significant that a plan of this nature proposed by Mr Theodor© has been turned down in Australia. The objection to any scheme involving inflation of the currency is the temptation to further inflate when fresh difficulties arise, and prudent people hesitate in placing this power in the hands of any Government,

“Our present position is largely due to the falling of imports and the consequent drop in the estimated Customs revenue. Australia experienced a drop of about £70,000,000 in her imports and in consequence her revenue from Customs dropped about £14,000,000. We are faced with a falling-off in revenue here for similar reasons, and it was the realisation of the position that brought forth the formation of this special committee of the parties on the lines of Mr. Coates’ earlier suggestion. BENEFIT TO STATE MORTGAGOR.

“The scaling down of interest rates by means of conversion would be of great practical benefit to the farmer holding land under a State Advances mortgage,” said Mr. Dickie. “At present if a man falls in arrears with his interest on a State mortgage his interest automatically goes up from 6 per cent, to 6-1 per cent. There is no statutory authority for meeting the State mortgagor by reducing interest or principal. A scaling down of interest rates, as in Australia, would immediately relieve the State Advances Department of some of its interest- hill and the Department would in its turn ho able to grant relief to the mortgagor.” In reply to a question Mr. Dickie said that ho did not think that- any conversion scheme would affect Government free-of-income-tax bonds. It was difficult to tell how much of this class of security was still held in the country, as a sood deal of it had been converted from 44 per cent, bonds to 5i per cent, bearing tax, but there was probably not more than £20,000,000 tied up in free-of-income-tax securities. ..

Asked hLs opinion regarding the probability of an adjournment of the House during the sitting of the special committee, Mr. Dickie said that he did not know what the probabilities were, but he personally saw no need for an adjournment. There were twenty-one Select Committees of the House which were all in arrears with their work, and these could make up their leeway .if the House remained in session. More, however, would be known on that score after the-Special Committee had reported to the House to-morrow.