A STATE ADVANCES LOAN.

New Zealand Herald, Volume LXII, Issue 19142, 7 October 1925, Page 10

A STATE ADVANCES LOAN.

Official confirmation has been given by the Minister for Finance of the Government's decision to issue a loan in New Zealand for the needs of the State Advances Office. The terms offered are unquestionably attractive. Interest is to be at bh per cent., subject to taxation, for an investment with a currency of ten years in a department of State enterprise which is not only conducted on thoroughly sound principles, but is by its operations directly contributing to the development of national prosperity. The rate of interest is higher than the Government has previously given for inscribed stock, and is probably slightly above the market rate, for not only have first-class local authorities been able to sell considerable blocks of debentures on similar terms, but the comparable securities of the Soldiers' Settlement Loan were quoted at a premium until the new loan was forecasted. The Minister's statement does not specify the amount of the loan, but in a recent speech in the House of Representatives, to which he refers, he estimated that four or live millions would be required. Under the Government's policy of financing settlement and housing on easy terms, the operations of the State Advances Office have greatly expanded. During the last two financial years the amounts advanced totalled £11,444,000, as compared with £6,470,000 in the three preceding years. The overwhelming pressure of applications has subsided, and it is expected that by the end of the current financial year the department will have disposed of all arrears. Additional resources are required to enable it to do this. It has already received £2,000,000 of the last London loan; repayments to the amount of over £1,250,000 are available for new advances; the balance is to be obtained by the local loan. It is perhaps surprising that the loan should have been opened amid the distractions of the election campaign, but probably nothing would be gained by delay. During the next month these attractive securities will be available for investors, and whenever political issues have been decided the Government and the Treasury will be free to conduct a campaign to ensure the complete success of the loan. The public response to this offer will have an important influence on financial policy. It will demonstrate whether the country has reached such a stage of development that it can become to some extent independent of external borrowing, and by financing its development out of its own savings set a limit on the amount that has to be exported in payment of interest. Nearly half the national debt is now held in the Dominion, and it is sound policy to increase the proportion as rapidly as possible.