THE ‘USEHOLD’ EXPOSED

Northland Age, Volume 25, Issue 27, 22 October 1925, Page 2

THE ‘USEHOLD’ EXPOSED

[By Kerikeri]

The “Usehold” is the title of a new tenure to be introduced by the Labour Party when opportunity serves. A valuation will be made when Labour gets - into office. After that no private sales of land will be allowed, though all other private sales will continue unfettered. Any land-owner who wishes to dispose of his land may do so to the State, which will revalue. Correct valuation is not practicable, and farmers will not consent to submit their life’s work to the vagaries of a valuation-board. That is the weakest thing about leaseholds, and that is why farmers generally, and the Farmers’ Union in particular, are freeholders. Nobody can walk over a farm and assess the amount of work that has been put into it. A vast amount of work on very many farms is never paid for. If the “Usehold” is going to better things, there is no doubt the farmers can do with it. If it is merely a chase after that will-o-the-wisp, the “unearned increment,” it can be easily shown that the community gets this unearned increment and that the farmers, as a whole, are not the principal beneficiaries. The farmers are merely the channels of benefit for the rest of the people. An examination of farmers’ income-tax returns will soon convince the most sceptical that any “unearned” incre-

ment whicfPbne farmer receives must have been well earned if farmers are considered as a class and not as individuals. We ai'e told on all hands that the farmers are the principal producers of wealtli and this fact is too self-evident to require emphasis. If there were a huge “steal” of unearned increment by the farmers, their taxable balance would show it. Their taxable balance last returns was £904,000, or 4.6 per cent, of New Zealands total, a disgrace to New Zealand. Every year farmers do, or have done for them a vast amount of improvement to land and property. This should be an addition to the capital value and should be putting farming year by year into a safer position. This is farming’s “Reserve Fund” ; but it is a “Reserve Fund” tint cannot fail to pay interest to someone. Who gets it ? Any rise in the general values should be reflected in farming values, or, rather, the reverse should be the case in this country, where all exports and almost all local comsumpI Hon are from the land. I How, although we cannot examine apy particular farmer without being challenged as to his suitability to represent the average, we can examine farming as a whole, see what

interest it pays, and see the effect of the introduction of the “Usehold” as a universal measure. The advocates of the “Usehold” tell us that it will give security of tenure. They say that the freehold is really a “mortgage hold.” Now it is a mortgage-hold to the extent of what the land has to pay the mortgagees of this country. The “Usehold” will be a “rent-hold to the extent of what it has to pay the State. Both interest and rent are Raid in the same coin of the realm, pounds sterling, and are quite comparable. According to the Year Book, outstanding mortgages (1923), were £250 millions of which 51 per cent., or say £l3O millions, are on rural land. The interest on £l3O millions has to be found before the farmers can get anything for themselves. That is the “mortgage-hold” and it is quite enough. The Labour Party proposes to buy out the land-owners and charge the new “use-holders” about five per cent, on the capital value. The Labour Party will pay for the farms on the basis of “productive value,” which itis generally conceded is greater than the general Government value. New Zealand's exports of farming produce are worth over £SO million annually. Her total farming produce is worth quite £BO millions. Her farmers do for themselves a great deal that others have done for them, and effect great improvements, all of which any attempt at socialisation should

equitably recognise. Taking, however, £BO millions, that represents a capital value of £I6OO millions, allowing only five per cent. Now the total cash value of New Zealand is only £7OO millions, so there must be an error somewhere. The £BO millions is produced and produced mainly by the capital and labour of the farmer. Even if we capitalise the wages of all concerned, and deduct from the £I6OO millions, we shall stiS- get an impossible sum. We shall have to try again. It is quite dear that farmers are not paid on “productive” value ! The Government County Valuation is £338 millions (1923). If the Labour party pays no more than £338 millions, it will have to pay interest on the bonds fer £338 millions, and the rent will be at least 5 per cent, on £338 millions. The rent-hold will be about three times as heavy as the mortgage-hold. It is not to be supposed, hot 'ever, that all the landowners in New Zealand will be immediately converted and it is equally absurd to suppose that the strong men who are holding .well v.’ill take Government Bonds, payable in 20 years’" time, fur their farms Only 18$ millions of the 66 millions of land in New Zealand are cultivated or in grass. There are

15 millions of Tussock, or 25 millions of unimproved occupied land. This is paying rates ru.d taxes and has done so for many a year. It is not improved because of difficulty of access, poor nature of soil, etc., but it has a value, and the State could hardly refuse to relieve the owners. In fact, as the labour Party is after the large holdings, and this sort of country accounts for most of the large holdings, it is what they would get. Good-bye, Revenue ! Few, if any, of the large city landowners would hand over to the Government. Yet their values have gone up 400 per cent., whilst rural values have gone up only about 35 per cent., the latter rise being roughly justified on the face of things by increased value of products. The extreme seriousness of this is not grasped because the very importance of the country forces the mind to assume that that importance is registered in the valuations. This is not so. The Government Capital Value of the counties is £338 millions, that of the boroughs and towns is over £215 millions. These valuations have to bear interest if they are equitable. In the case of city values, the interest is “passed on,” and becomes one of the factors which make it increasingly difficult to find interest on the land values of the country. That these increasing city values are rapidly becoming the greatest deadweight that the land has to carry may be easily shown. In 1916 the value of town and suburban lands placed under mortgage was £2i million, in 1919 a little over 31 million, in 1921 over £l6 million, and in 1924 £lsl million (the latter, however, representing much higher average prices than the 1921 figure). In spite of the forced activity in farming lands ! due to foreclosures, the fresh mortj gages executed in town and suburban properties in 1924 were £15,5-11,664, as against £15,930,463 in the country. Just remember that the burden of all these values rests on the land—on the farmer—and you will see at once that a voluntary “Usehold,” which will hand over weak properties to the State, must necessarily impose a much greater burden on those remaining, must restrict production tremendously, must rob the farming community of even the little that universal exploitation leaves them today, and must, if persisted in, bring New Zealand to the same chaotic condition as Russia. Indeed the scheme has been originated without the slightest consideration of the limitations of finance, for it should be apparent that any bond issue to | obtain consideration must provide a margin. The land is the only real i security this country has to offer and I it is proposed in the “Usehold” to i borrow on the whole capital value. Even in the Agricultural B ulking proposals the margin proposed is 30 per cent, and to initiate the scheme it is considered essential that a further 25 per cent, should be a State guarantee, that is to say should receive the collective backing of ihose other properties not specifically mortgaged. About 51 per cent, of the mortgages are stated to be rural and 49 per cent, borough mortgages. As the County indebtedness is shown in the Local Bodies .statistics at about £3l millions out of about £4O millions, it is plain that the city valuations have a ‘mort-gage-hold” that requires the first aid of the new State Quacks. The farmer will be quite content with a reduction in the general price-lc. ;1 of commodities and interest, which will enable him to carry the load lie has carried since Adam first delved.