THE FINANCIAL DEBATE

New Zealand Herald, Volume LXIV, Issue 19719, 19 August 1927, Page 13

THE FINANCIAL DEBATE

SPEECHES BY MINISTERS. AGRICULTURAL EDUCATION. PUBLIC DEBT REDEMPTION. EXPLANATION OF METHODS. / - ' | [BY TELEGRAPH. —PRESS ASSOCIATION.] WELLINGTON. Thursday. Tlio debate on the Financial Statement was resumed when Hie House met this afternoon. The Prime Minister, Mr. Coates, said he was very pleased with the tone of the debate. Members had not; been extravagant in their demands, notwithstanding the pressure which ho knew was behind them in matters of district requirements. It wgs evident the feeling of the House was that the Budget' was a clear, concise statement of tho country's finance, and the Minister of Finance well deserved the many commendations he had received. Mr. Coates defended the Government's railway policy in subsidising non-paying branch railways, because that was putting them on _ a commercial basis. This expenditure was most critically scrutinised by fTie Treasury. There was no waste under this system and the Government was going on with the policy because it. believed it was sound and that it would come out all .right. v Spending Public Moneys. With regard to the administration ol loan moneys, he would never consent' to a board'supervising public works expenditure, but he did not object to criticism. There might bo as much examination as they liked, but the allocation of the public works fund was purely a> matter of Government policy. The case was different with local bodies, and it would have been better if they had had a Local Bodies' Loans Control Board 20 years ago, for .there had been much local body expenditure which had been unwise. Coming to agricultural education, Mr. Coates said the GovernmenFs idea in setting up the agricultural colleges was to enable farmers to get the best possible results at .the least possible cost. At the Massey College they had commenced on new lines and were calling to their aid the best' in science and in practical knowledge to manage the college. He asked farmers and the public to exercise patience and not to expect extensive results all at once, but as the foundations had been laid he was confident the college would be of great benefit to the country. Sinking Funds Provided. The Minister of Finance, Hon. W. Downie Stewart, traversed the criticism levelled against the Government by Mr. J. McCombs, contending that his statements were wide of the mark and were calculated to disparage the position of the Dominion. Instead of doing that he would have thought Mr. McCombs would have felt pride in the fact that New Zealand's position on the British money market was so good. The Government had been blamed for raising the rate of interest under the Advances Department, but the fact had been overlooked that, together with the increase in the rate of interest, the term of the loan had been extended, so that under this arrangement many of the borrowers were benefiting. It was absurd to say the Government had raised the rate of interest at the dictation of the large financial institutions. Reviewing the provisions for the redemption of the public debt, Sir. Stewart explained that the Public Debt Extinction Act, 1910, established a scheme of sinking fund which had to accumulate at compound interest for 75 years. That scheme meant that a huge sinking fund was accumulating which would all fall due at a specified date and involve a vast scheme of realisation. Moreover, apart from surplus revenue, there was no money available to redeem loans that matured in the interim, so that loans had to be renewed, although there were sinking funds in existence to redeem them. Ihe Repavment of the Public Debt Act, 1925, was designed to overcome those dimculties and to obviate the weaknesses ot tiie 1910 Act. Effect ol New System. Under this scheme the sinking fund is used to repurchase loans on the market and the stock is then cancelled, but interest On the cancelled stock was continued at fixed rates and paid into the sinking fund to represent the interest that would have accrued had no reduction taken place. Under the present system, debt would be redeemed in 60 years from its inception instead of at the expiry of 75 years under the old system. In effect, the new svstem meant that do,bt would be repaid 'under the annuity plan, atter the manner of the table mortgage. Jhe annual charges would be practically the same, but there would be less interest and more principal paid or repaid each The motion moved by the Minister of Finance at the opening of the deb-do, "That the House do go into Committee ot Supplv." was then put and earned. In the absence of the Chairman of Committees through indisposition, . ..ir George Hunter was voted to the chan. When the first item of the Estimates was brought under review the Prime said if was not proposed to go on with the Estimates that night, but they would be taken to-morrow afternoon. J lie House then adjourned. GOAL Foil KAIL WAYS. USE OF LOCAL PRODUCT. OILS FROM BROWN COALS. [BY TELEGRAPH. —SPECIAL REPORTER.] WELLINGTON. Thursday. " Experiments in the distillation of oils from New Zealand brown coals have been entirelv successful, and it is only a matter 5 ,rice." said (1,0 Prime Mi.mler, Nr. Coates, in the House to-day when replying to criticisms of the Government with regard to the use of Dominion coals. He said 50 per cent, of the coal used on the railways was produced in New Zealand mines, while 70 per cent, of the Dominion's total requirements was locally supPl The official secretary of the Railway Department, on his visit abroad, had obt lined a good deal of information about ,hc distillation of oils from coal under low temperatures, the idea being that New Zealand brown coals could bo converted for use in the railway engines It would be a fatal mistake to depend entirely on the bituminous coal from the West Coast, which was limited in quantity New Zealand ought to make the best use of the brown coals under the carbonisation scheme because the result so far was most satisfactory. H was onlv a question of getting a price that would suit; there was no question about the coal itself. . Mr. Coates assured the House that every effort would be made to obtain the best'result. Scientists had been engaged upon the problem and also representatives of the Railway Department and the Mines Department. " If those interested in the process could get sufficient capital and their price was right the Government would give them a contract. There was no doubt about the results of the tests, and it was now only a question about the economic value to the department.