PARLIAMENT

Manawatu Standard, Volume LV, Issue 68, 16 February 1935, Page 8

PARLIAMENT

MORTGAGE BILL DEBATE. THE LABOUR OPPOSITION. Per Press Association. WELLINGTON, Feb. 15. The debate on the Mortgage Corporation Bill was continued in the House of. Representatives to-day by the Leader of the Opposition (Mr M. J. Savage). Summarising his remarks, Mr Savage said that: — (1) The proposals involved will turn farmer mortgagors into serfs and will take the full-time attention of an army of inspectors, valuers and other State officers in their administration. (2) The State lending institutions are to be superseded by a semi-private lending institution which, without authority to issue money, must continue to rely on borrowing. (3) For the purpose of the Bill money must he raised upon securities of second-class importance and, as a consequence, will carry higher rates of interest, which will be passed on to the borrowers. (4) Money for the purpose of State advances has always been raised on the first-class security of the State revenues and the benefit has been passed on to the borrowers. (5) The weakness of the present system is duo to the inability of the State lending institutions to utilise by direct means the credit of the State. This is also the mam fundamental weakness of the proposed National Mortgage Corporation. (6) Reduced interest charges, though desirable, will not bridge the gap between the purchasing power of the people and production, and is therefore not a solution of the problems due to falling prices. (7) The solution of the problems arising out of the present mortgage system can be solved by the readjustment of mortgages under State control and guaranteed prices for products and services which will enable the producers to meet their obligations on a new basis. (8) The Government’s proposals mean in effect that after the period of deflation, which was deliberately undertaken, a substantial portion of the equities of all parties of mortgage contracts is to he destroyed, that is, unless something turns up to raise prices. The Minister says this is not likely to happen. The aim should he to re-establish the equities of all concerned, including home builders. MINISTERIAL REPLY. Hon. E. A. Ransom, replying, said some of the points raised were weak in the extreme and said the creation of credit by using the printing press would not solve the country’s problems. The Government would not give the corporation power to issue money. The matter would get entirely out of hand in times of stress if that power were given. The Labour Pa.rty wanted political control of the currency, but that was not the opinion of the Government and it was not provided in the Bill. The two Bills formulated by the Minister of Finance would go a long way towards rehabilitating the primary producers of the Dominion. The Minister of Lands quoted figures dealing with his own department to show how the position of the country had improved in the present year. He denied that the State Advances Department was short of money for lending. Mr Savage’s speech was one of theory opposed to practice, and while the Government had something practical to put before the House Labour did not seem inclined to give support to it. He denied that money would have to he raised on second class securities and said he thought Mr Savage must have prepared his speech before he- saw the Bill. If the Government took over all the mortgages in the country the Dominion's credit overseas would be damaged. He had been asked why the lands of the Dominion had not been revalued ; but what was the use of revaluing land if.it was not possible also to deal with mortgages on land. He thought the way many mortgagees had treated mortgagors was a matter for congratulation and should be placed on record.

Tt had been said that if the Bill became law there would be a flight of capital from the Dominion, but that, he thought, was an extraordinary statement when it was remembered that a large amount of money had been lying in tho banks in recent years. Now, when a sound investment was offered, why should that money fly overseas? If better investments were available overseas why had that money not gone years ago? , . ' Mr \V. Nash asked what the Minister of Finance meant when he said that if the corporation was short of lending money the State would supply it with securities, and asked what was the difference between that - and creating credit by means of the minting press.