INTEREST CHARGES

Hawke's Bay Tribune, Volume XXII, Issue 89, 30 March 1932, Page 8

INTEREST CHARGES

PLAN FOR REDUCTION / CABINET CONSIDERATION. BELIEF OF ALL TENANTS. Wellington, Marek 29. (By Telegraph—Special to "Tribune”) Faced with the necessity of adjusting *ll fixed charges, Cabinet will this week consider proposals for the aibitrary reduction of interest and house rents by varying amounts up to 20 per cent.

Because of the delicacy of the task and the recognised principle of the sanctity of contract, these commodities are usually among the last to be touched when legislative action is being taken to force down costs, and so far no compulsion has been exercised upon the money lender and the landlord in this country.

When handling interest charges Cabinet will face the problem of all Government bonds and also interest on private loans, and as the State h the largest money lender in the Dominion the Consolidated Fund will necessarily be affected by any specific reduction. The purpose of the proposed legislation, however, will be not to impose hardship upon the lender but to give relief to the borrower. Tenants of the State and of private landlords already suffering from wage cuts and general heavy taxation are recognised as worthy of some relief and machinery to make this possible will almost assuredly be submitted for the approval of Parliament before the present sessions ends. 10 PER CENT. NOT TOO GREAT. Although the intricacies of the task are not overlooked, several members of the Ministry believe that a 20 per cent reduction is not too great and that steps ean be taken, either by heavy stamp taxation on interests receipts or other means, to make it unprofitable for a lender to refuse to reduce interest on his loans.

If a plan is adopted by Cabinet for handling this problem a minimum will probably be stipulated, as many loans have been made at exceedingly low figures and even at the present depressed prices no reduction could be made without inflicting hardship upon the lender. \

Those who are interested in this question had the assnrance of Mr Stewart, given last week in the House, that should the Government decide that interest reductions were necessary machinery for the relief of hardship would be established. EQUITABLE ADJUSTMENT. In dealing with possible reductions In honse rents, for which there has been a clamour from many quarters, the Government will probably make specific demands, here again setting 20 per cent as the figure. The greatest care must and will be exercised to provide an equitable adjustment. A flat rate would appear at the outset to be quite impracticable, for, as the Prime Minister stated at the week-end, consideration must be given to those whose rents and interest have already been adjusted voluntarily to some extent. The object of any legislation enacted, it is believed, will be to ensure that a 20 per cent reduction in all will be made as from a given date. If, for example, a landlord has lately granted his tenant a ten per eent concession he will be called upon to give a further ten per eent cut.

As in the case of interest, hardship will be adjusted by a special provision setting up a court of adjustment or effective tribunal to deal with individual eases, or it may be left to existing courts to dispose of appeals.