CONVERSION OF MATURING LOANS

Manawatu Times, Volume LIV, Issue 7018, 18 September 1929, Page 5

CONVERSION OF MATURING LOANS

DOMINION’S GREATEST FINANCIAL OPERATION

Per Press Association. WELLINGTON, Last Night,

The Houso of Representatives met at 2.30 to-day. In replying to Mr R. A. Wright, the Hon. W. B. Taverner stated that the railway classification list was in the hands of the printer and -would be available in a few days’ time. Sir Joseph Ward made a statement on the subject of loan conversion. He said tho conversion and redemption of four per cent, stock maturing on November 1 next was now practically completed and was the largest and most important financial operation in the Dominion’s experience. Stock outstanding amounted to £29,490,852. Of this sum, £5,000,000 was converted in May 1928, on a basis of £lO4 10s new H per cent stock for evory £IOO of four per cent stock, maturing 1929. The interest cost of this conversion to the State, taking into consideration the exponses of conversion and the redemption of premium over the period of the new loan, worked out at £4 18s 3d per cent. Following on conversion of May, 1925, further stock was purchased from the proceeds of additional sales or 4i per cent. 1947 stock, amounting to the nominal value of £572,000 of 4 per cent. 1929 stock. These private sales were made at different prices, tho interest cost to the State in respeot of sales working out at approximately £4 18s per cent. In January, 1929, the sum of £12,000,000 was converted on a basis of £lO4 5s new 4} per cent stock for each £IOO of maturing four per cent stock. The interest costs to the State in this ease amounted to £4 16s lid per cent. Conversion or Cash.

Expansion of Industry.

The Prime Minister stated further: “In addition to these transactions, public debt repayments moneys were used to the extent of £502,500. During the financial year 1928-29, moneys raised in New Zealand amounting to £1,923,500 at rates not exceeding. 5 1-8 per cent have also been utilised in tho further redemption of maturing stock. Purchases of this stock on the London market have been made from thdse sources from time to time as opportunity offered and .stock so purchased, amountaing to £1,925,000, was bought at an average of £99 10s per cont." Sir Joseph, added that tho amount of stock outstanding was therefore approximately £9,700,000. A further conversion, to the extent of £5,000,000 was at present under consideration and under the terms proposed, tho cost to the State would be £5 7s 8d per cent over a period of 16 years, this being five per cent stock to mature in 1945. Including figures. relating to the conversion offer now being made, the annual interest cost to the State ou the total stock issued in conversion or redemption, worked out at an average of less than five per cent. In regard to the balance of approximately £4,700,000 it was proposed to pay off the holders at maturity in cash. The Finance Minister read a cable from tho High Commissioner stating: “Once again the English press is very favourable towards : New Zealand’s credit in London and the present conversion offer," and quoting several comments by leading papers.

Tariff Against TJ.S.A.

Land Tax Bill

The Land and Income Tax Amendment Bill was introduced by GovernorGeneral’s message. In replying to points raised by Messrs J. G. Coates and W. D. Stewart, Sir Joseph Ward stated that the Bill embodied tho proposals outlined in the Budget, with certain variations. It provided that in cases where it was claimed hardship was involved and a dispute existed between the Commissioner of Taxes and the landowner, a special commission, consisting of three members, should consider the case. The Bill further varied the amount above which land taxation was to be charged. Tho limit, instead of being £12,500, would be £14,000. Another amendment to the original proposals related to mortgage exemption. The total amount on which it was proposed the exemption should be granted had been increased from £5,000 to £7,500. In replying to an interjection, Sir Josoph stated that the principle of “whichever tho greater" in relation to the payment of land or income tax was retained in tho Bill.

Mr H. E. Holland (Bullor) asked when the Prime Minister proposed to take the second reading of the Bill. Sir Joseph Ward: “To-morrow.” Mr Holland then suggested that the Prime Minister should give the Bill time to go out to the country, so that members could obtain the views of their constituents on the subject.

Tho Prime Minister replied that the request was reasonable. Time would be left for the purpose that Mr Holland had suggested and tho second reading would be taken at an early date.

Mr Coates suggested that the Bill should be referred to a select committee, in order that those people who were likely to be adversely affected, should be given an opportunity to record their objections. Farmers’ Wishes Met.

Sir Joseph Ward said this practice had never been followed and ho could not agree .to the request. He pointed out he had amended the proposals as the result of communications from farmers who were not “wool kings" and iu -submitting this Bill, he was meeting the wishes of tho majority of the farmers of the country.

Land Tax Amendment Bill Introduced in House

The Bill was read a first time. The Land and Income Tax (annual) Bill was also introduced by GovernorGeneral’s message and read, a first time.

Consideration of the estimates was resumed in Committee of Supply. The Department of Industries and Commerce estimate (£8,301) was taken first. , . The Hon. J. G. Oobbe, in replying to Mr Coates, stated it was the Government ’s policy to uso New Zealand tim; bor on all public works wherever possible. Mr "Stewart stated .that if the Minister of Industries and Commerce or the Minister of Customs,' were able to arrange to visit Canada or Fiji, it would probably be found possible greatly to increase the Dominion's trade with these countries.

Mr A. Hamilton referred to the United States Government’s increased tariff proposals and asked whether this country had made any protest against raising trade barriers against it. . Ho thought this step should bo taken if it woro intended to arrange a new steamship service to the United States and Canada.

Mr Langstone urged that a Parliamentary committee should set up to investigate the possibilities of all our industries . He suggested that the timber industry, in particular was capable of groat expansion and ho thought the employment of units of labour and tiff) development of our industries should go hand in hand. Mr F. Waite asked what was the amount which the Union. Steamship Company Was to receive from the Government as subsidy for a steamship service between the South Island and Australia. There was a suggestion that the Government had "fallen into a hole" in its negotiations with the company. 1 Mr Cobbe stated in reply to Mr Hamilton that the United States protective tariffs did not apply to all goods imported from New Zealand. Seventy-four per cent, of'those goods wont into the United States duty free. Mr D. Jones: "That is because the duties on other goods are too high to let them in at all." Mr Cobbe agreed that the duties on some goods including meat and wool, were high but he repeated that thero was not a tariff at all on other items. In replying to Mr Langstone, the Minister said it waa the policy of the Government to encourage all secondary industries and to aid the production of Nbw Zealand goods. The amount of money invested in secondary industries in the Dominion was £62,000,000. With reference to the point raised by Mr Waite, Mr Oobbe stated that the Government would not fall Into any hole.

Mr C. A. Wilkinson suggested that this country should increase the tariff on United States goods and reduce the tariff to an equivalent extent on imports from Britain, so that the taxpayer would not have to bear any added burden. He added: “In my opinion, we should discriminate against the United States, as that country has discriminated against us. ” The House adjourned at 6.50 p.m. The House continued the Rebate on the Industries and Commerce estimate at 7.30 p.m. Mr Fletcher asked whether the supplementary estimates would include a sum for the purpose of assisting secondary industries. Mr R. Semple urged that the timber industry should be reorganised and that scientific methods should be employed. He complained that owing to cumbersome methods in the past, many young trees had been destroyed in the course of removing larger timber. Some Labour members criticised the Chambers of Commerce, which they described as party political organisations. Mr W. E. Barnard, however, disagreed with this view, stating that at the time when he was contesting the election as a Labour candidate, ho was chairmaox of a Chamber of Com* merce and he did not find the position at all embarrassing. Large Chambers and Politics.

The Minister (Mr Cobbe) stated that in his opinion there was no party element in the Chambers of Commerce and Mr Stewart supported this view. Mr P. Fraser said he could accept the statement that Chambers of Commerce in the smaller towns were nonparty but in the larger towns, as resolutions adopted hy the chambers would show, those bodies were opposed to the interests of the mass of 'the working people. The estimates contained £ls for membership subscription!} to Chambers of Commerce but Mr Fraser asked what were the powers of the Department’s representatives on those bodies? Did they vote? Mr F. Lye urged that a better trade understanding should be sought between New Zealand and Australia and Mr W. J. Poison suggested that Australia and New Zealand should combino to gain a more satisfactory trade relationship with the United States. Mr Poison also referred to the urgency of i tho dairymen’s need for bran and suggested that the Minister should endeavour to import a large quantity from Australia. The Minister, in replying, said the Department’s representatives on Chambers of Commerce acted purely in an advisory capacity. They did not take part in the discussions. Mr Oobbe said he would make inquiries in regard to

Timber Methods.

the importation of bran from Austro- 1 lia but as there was a shortage in. the Commonwealth, he doubted that it would be possible to seoure a large quantity. The Government had not lost sight of the need for developing secondary industries and probably a small parliamentary committee would be appointed to deal with the subject. He added that he did not think there was much prospect in influencing the United States in the matter of tariff barriers.

Mr C. H. Clinkard said fcriticlsm of methods in the New Zealand timber industry was unjustified. Conditions in this were entirely different from those in Canada and it would be impossible for the same methods to be employed. Mr A. W. Hall asked what was the subsidy paid by the Government for the South Island-Ausftralia ©hipping service

Mr Barnard urged that steps should taken to prevent a large outside firm blotting out local tobacco firms. He asked the Minister to inquire into the whole tobacco industry before the problem of outside influence became a serious one.

Mr Oobbe, in replying, stated that this appealed to be a matter in which the Department could hardly interfere. .Mr Fletcher asked whether he was to take it from the Minister’s reply that the Government had decided to set up a small Parliamentary committee to consider, during the re cefes, the whole position of secondary industries. Mr Cobbe: "That is so." Mr Fletcher: "That' is very satisfactory." ' Mr Cobbe stated that the subsidy for the South Island steamer service to Australia was a matter for the Post-master-General. He assured mombtf's that the Government had not lost sight pf the importance of the timber industry to New Zealand. Mr Poison advocated the extension of trade with the East by moans of direct shipping. Mr Cobbe said the Prime Minister had stated that when the finances of the country had improved, consideration would be givon to the possibilities of developing trade with the East. At 10.20 p.m., Sir Joseph moved that urgency be accorded this estimate. Ho pointed out that the House had spent the whole day on the subject and there did not appear-to be a. desire to proceed with the estimates. He added that if the passage of the estimates continued to occupy so much time, ffie question of the wisdom of the new Standing Orders would arise. • Members indicated that if the estimate were put, it,would be passed forthwith. The chairman of Committees, (Mr 8. G. Bmith) then, put the motion and the vote was passed. The House rose at 10.30 p.m.