LENGTHY DEBATE

Hawke's Bay Tribune, Volume XXVI, Issue 146, 5 June 1936, Page 7

LENGTHY DEBATE

State Corporation as a Shareholder

SPEAKER TAKES PART

By Telegraph—Press Association WELLINGTON, June 4. Coming to clause 28 of the State Advances Corporation Bill, dealing with loans to develop or establish Industries. Mr W. A. Bodkin (Nat., Central Otago) moved an amendment to delete the sub-clause providing that where a loan was made to * company the Corporation might hold shares in the company. He thought that if assistance were given to a company the State should be secured by a mortgage or mortgage debenture.

Mr W. P. Endean (Nat., Parnell) said that if the Government was going to assist housing and farmers it was only right that it should assist secondary industries, but he disagreed with the clause, as it was a direct attack upon the scope and functions of banking institutions. The principle involved was a departure from banking practice, and if the Government assisted a company it should be kept au fait with the progress of the company. The Hon. R. Semple said that the Opposition had no objections to assisting freezing companies, but when the Government was suggesting assisting industries that would be a benefit to the country the Opposition said it was dangerous. He asked what was wrong with public ownership. He said that when member® walked down the street they walked on a municipally-owned footpath. When they went to bedthey turned on light supplied by municipal authorities. When they had a bath they used water which the municipality owned. If they wished to have a bath away from home they went to municipal baths.

The Bt. Hon. G. W. Forbes said that if the Government would only read and study what had happened in Australia it would be very cautious in embarking on such an enterprise as that at present before the House. Unless the Minister of Finance exercised the greatest caution the Government would have some great duds landed on to itTHE LAST GOVERNMENT. Mr Nash said that he would lay on the table of the House a return to show the amounts of money that were given to industry by the last Government trom the Unemployment Fund. And that money was all gone. He claimed that the proposals of the present Gov ernmeut were much more sound. He outlined the investigations that would be made before a grant was given to any industry; then, if the company was successful, the Government shared in the profits; if it was not a success, then the money was lost. He declared that no better service could be rendered New Zealand at the present time than to find new industries in which to place the young life of the Dominion. Mr W. J. Polson (Nat., Stratford) said that all municipalities had to supply certain services, but that was a different thing from entering into coinpetition with private enterprise.

The Hon. W. E. Barnard, speaking for the first time since he was appointed to the Speakership, said it seemed to him that the sunclause enabling the State Advances Corporation to acquire shares m a company was almost a natural corollary to the sub-clause giving the corporation power to lend money to a company. It was mere ly safeguarding the interests of the corporation. It was the sort of action that any corporation or person or body might be expected to take in certain circumstances.

Frequently a company raised Its loan money by the issue of preference snares, and th:\t might be a suitable way in which the corporation would make its loan to a company. NO COMPULSION. There was one other point that seemed to him to be of importance: the House ueed not assume, if there was a considerable amount of private money available for the development of industry in New Zealand, that there would be any wild rush to the corporation for the purpose of obtaining loans. No firm or concern was compelled to apply to the corporation for its assistance. It was a matter of common knowledge that there were various Industries that were knocking at the doors of the Government asking for financial assistance.

Mr Barnard added; “Surely, in looking at it from the ordinary business point of view r , the provision under which the corporation may protect its loan through accepting shares, which may possibly be preference shares, is a reasonable power to give and is entirely in line with the ordinary orthodox rules of business.” Mr Bodkin reminded Mr Barnard that while there was a great deal ot money open for investment in New Zealand there was not a great deal aavilable for investment in doubtful concerns. It was quite apparent tuat the capital the Government would be asked for wo-uld bo for propositions that were not acceptable to the private investor—in other words, doubtful propositions. Mr Coates said he knew that there were some industries that needed some assistance, and he considered it better to give it that way than by raising tariffs.

Mr A. 8. Richards (Govt., Roskill) said that the whole gravamen of the Opposition’s objection to the clause was that the Government might lose some money, but he wondered how much the last Government had lost in the past four or five years. At 9 o’clock, when the amendment had been under discussion for about three hours, Mr Savage moved the closure, which was carried by 45 votes to 17, and the amendment was lost by 45 votes to 17. The clause was passed.