ADVANCES TO SETTLERS

Lake County Press, Issue 977, 29 August 1901, Page 2

ADVANCES TO SETTLERS

REDUCTION IN THE LOAN. THE PREMIER MODIFIES HIS DEMAND. [From the Evening Star’s Correspondent.] WELLINGTON, August 21. It will be recollected that when the se-cond-reading debate on the Advances to Settlers Extension Amendment Bill was engaging the attention of the House a couple of weeks ago several members protested against the proposal to borrow two millions for the purposes of the Act. Commenting on the discussion, I ventured to express the opinion that the tone of the debate would be taken by the Premier as an indication of the necessity for reducing his proposal to half the amount for which authority was being asked. As soon as the measure got into committee yesterday afternoon the Premier moved to reduce the amount to be borrowed from £2.000.000 to £1,000,000, mentioning that since the second reading had passed the Agent-General had advised him of the difficulty of raising a large loan at Home at present. Mr T. Mackenzie asked if the necessities of the department demanded the borrowing of a million just now, when the Government would have to pay an extra 1 per cent, interest. The Premier replied in the affirmative. He could not do with less. If he did not get the money he would have to put up the shutters.

Captain Russell: And I should be glad to help you to put the shutters up. It is apparent to me that for some time a big pawnshop has been growing up under the .State, and it is time it was stopped. Mr G. W. Russell said the Government were only asking for half a million of money to be placed in their hands so that they could chop and change it about for the general finance of the colony. The Government had also invested £219,000 of the Advances to Settlers Department in the Land for Settlements Department. Captain Russell said the loan was not wanted for advances to settlers, but to finance some other account which members could not discover. He believed that a loan of £500.000 would be amply sufficient for all requirements. The Premier's backing down to a million was probably due to the fact that he knew the money-lending people at Home were aghast at the enormous amount of money that the New Zealand Government wanted to borrow. The Premier said he would lay on the shoulders of those opnosed to the Bill the responsibilities of their action, winch might be very grave. At the end of the current year the whole of the fund for advances to settlers would be exhausted, and when he said that unless authority to raise a million were given they would have to put up the shutters he meant that it might be necessary to close the office. Mr R. M’Kenzie said there were large amounts of capital laying in the banks of the colony, which would not be the case if the money were available for investment. Mr Massey thought it would be unwise to go on the London market at present to raise a million for the purposes of this Bill. He would support a straight-out loan for public works, but he disapproved of resorting to round-about methods. Mr Herries said the Treasurer would have at his disposal at the end of March next £156.000, so that the proposed million ought not to be required. The Commissioner of Customs accused the Opposition of desiring to bring the Public Works policy to a sudden stop. The superintendent of the department estimated that even with £150.000 payments he would only have £40,000 available on March 51 next. Mr James Allen said the actual amount available for the purposes of advances was now £740,000, and extracting half a million from that for the current year there would be a balance of £240,000 on the 51st March, J902. The Treasurer would have at his disposal, supposing no loan were raised. £150,000, which, added to the balance of £240,000. would make a total of £390,000, without resorting to borrowing. He contended that the million loan was intended to aid another branch of the public finances. The Premier said he might as well state at once that he could not see his way to accept any sum less than one million. If Parliament desired to maintain the Advances to Settlers Fund in working order they must treat it like a bank, and have something in reserve. If the Government borrowed at 4 per cent, and lent at 4£ per cent, their action would break down private institutions. He was inclined to think that there would be a plethora of money in the London money market at the beginning of next year, and he desired to be in a position to take advantage of it. The Advances to Settlers Department was one of the best-managed of all the public departments. Why. then, interfere with its finances ? It was always well to have power to raise money for a definite purpose, if only to enable the Government to take advantage of a favorable juncture in the money market. He could not understand any supporter of the advances to settlers system voting for a reduction of the sum below one million. The department could not do with less than that amount. In the evening the House resumed in committee on the Bill, and shortly afterwards members unexpectedly found themselves treated with a no-confidence motion.

The Premier (continuing his remarks) said if it were stated that the coffers of the Advances to Settlers Department were empty they would soon see the extortionate money-lender in the field. The Government* had promised to maintain a strong finance, and would adhere to that policy. If the other side of the House thought £500,000 sufficient, let them come on the Ministerial benches and administer the department. Capitalists had endeavored to make use of the department by advancing large sums, but it was not intended for that purpose, and that was why the Government did not avail themselves of the offers of large amounts. If the Government did not provide further advances the Crown tenants would be placed in a serious position. To reduce the amount of the loan to £500,000 would be almost disastrous, and to go on the market for less than a million would produce a detrimental effect. Had anything transpired, he asked, to lower the public confidence in the department? The outlook M-as bright in the extreme, but, owing to no fault of theirs, there had been an enormous drain of money from the Old Country, and this had to some extent made the money market stringent. This was chiefly owing to the South African War. He ridiculed the idea that the monev was required to strengthen the Public Works Fund. 'The conclusion was either that the Controller-General had falsified his returns, or that the statements of kon. members on the other side were erroneous. As to the alleged balance of £760,000, he said that the amount available on March 31 was not £760.000. but £550,000. If the Government were to accept half a million it would mean that they would start the financial year from March 31 next with £40,000. What could the country do under such circumstances until the House met in June? And until July no loan could be proposed. 'The issue was that reducing the loan would endanger the stability of the department, and that th*

Government would not accept any smaller sum than one million. Mr G. J. Smith inquired whether that meant that the Government would treat the amendment proposed by Captain Russell to reduce the amount to £500,000 as one of want of confidence. The Premier: Yes. Mr Smith regretted that the Treasurer had introduced the political element into the question. When, the time presented itself he would move to reduce the million proposal bv £IOO,OOO. Mr G. W. Russell said the Government would have available this year in repayments the sum of £735,000 without further borrowing, and on March 31 they would hare a balance of £250,000. The department would, as shown by the figures, be able to lend £600,000 for the two years ending 51st March, 1903.

The Commissioner of Customs said the amounts accruing from repayments did not pass into the hands of the Government, but were reinvested by the Public Trustee, who enjoyed the complete confidence of many members of Parliament and the general public. On March 31 next the department would have in hand about £600.000. The Premier: No, no. —(Laughter.) Captain Russell ridiculed the idea of the Premier threatening to make a no-confi-dence motion of a proposal to reduce an amount which he himself had already proposed to reduce by one-half. Mr G. W. Russell, referring to the noconfidence threat, said he objected to be placed in a position of voting against a. policy which lie had always supported because he was opposed to giving unnecessary powers of borrowing to the Government. He objected to the flick of the Seddonian whip being laid over his shoulders. Mr Hornsby said he would vote for the million, not because he thought it was altogether required, but to enunciate the principle tint the Advances to Settlers Office was the most important office in the whole government of the country. Mr Collins said that the feeling was prevalent among members that this money was wanted, not for the Advances to Settlers Department, but for some other department. Mr Monk objected to these proposals because they enabled the Government to borrow at a higher rate of interest than they could lend to settlers, except at a loss. This was not sound finance. If the Government desired to help the farmers they could do so by removing the mortgage tax. The Chairman (Mr Guinness) intimated that the remarks of the hon. member for Waitemata were not relevant to the subject of debate.

Mr Monk insinuated that the Chairman did not quite understand the relevancy of his remark, and went on to argue that ’he Government should lend at 4 per cent, instead of 6 per cent. The Premier, replying to Mr G. W. Pussell, said the actual balance on March .>1 would be £40,000 only, and hon. members ought to respect this statement rather than the unsupported assertions of irresponsible persons. He would lay down as a political principle of the Government that they would maintain a strong finance ; that they would take the whole responsibility of that on their shoulders, and would not tolerate any interference from outside.

Mr Ell said the colony had been rapidly drifting into the clutches of the foreign bondholders. He desired to see cheap money for the farmers as well as town residents'. He saw no reason why the State should not advance money to local bodies at a lower rate of interest than was now charged on bank advances. Mr James Allen challenged tire Premier to produce any statement by the Government Advances to Settlers Department that a million loan was necessary. In his opinion, the time was not opportune to go upon the London money market for a million, nor could the colony afford to pay 4 per cent, interest. The Minister of Railways said the Premier had reduced the amount to £1,000,000 by the advice of the departmental officers. It was nearly two months since the proposal to borrow £2,000,000 was foreshadowed in the Governor’s Speech. de declared that the real object of the Opposition was to embarrass the department and destrov its usefulness. The amount of the balance on March 31 next was a mere matter of speculation, and was dependent on the amount of advance made during the current year. Who could form a more reliable opinion of the conditions and needs of the department than the official who controlled it? Was it to be the statement of the responsible officer nr the irresponsible ipse dixit of a. member of the House on which the question at issue should be decided ? On the motion of the Premier the word “two” was excised and the word “one inserted, making the loan one million. Captain Russell moved, as an amendment, that the amount be reduced to £500,000. The Premier said the issue was now plain -—namely, whether the House should accept the advice of responsible Ministers or that of private members. He repeated that nothing short of a million would put the department in a safe position. The committee at 11.15 p.m. divided on the amendment, which was negatived by 45 to 14. The noes were: Messrs J. Allen, Atkinson. Bollard, Hardy, Haselden, Herries, Lang, Lethbridge, Massey, Monk, Rhodes. W. R. Russell, G. W. Russell, ft. Thompson, and J. W. Thomson. On the Premier’s motion one million was then inserted. Mr G. W. Russell moved to limit the raising of £500.000 of the loan to any one financial year, but this was rejected without debate by 42 to 14. The clause as amended was then passed, and the Bill reported us amended.