EARTHQUAKE FINANCE.

New Zealand Herald, Volume LXVIII, Issue 20819, 11 March 1931, Page 10

EARTHQUAKE FINANCE.

FUND OP £1,500,000.

USE OF LONDON RESERVE.

SPECIAL LEVY PROPOSED.

SURTAX ON INSURANCE.

LOAN PROPOSAL LATER.

PROTECTION OF DEBTORS.

[BY TELEGRAPH. —rnERS ASSOCIATION.] WELLIN T GTON. Tuesday.

Proposals fnr financing tho rehabilitation o/ the carthqunke area, for which legislative authority will be sought during the special session, were outlined by the Prime Minister, Rt. Hon. G. W. Forbes, this evening. The sum of £1,500,000 will be made available for private and local body needs. Of this amount £1,250,000 will be devoted to giving assistance by way of grants or of loans to persons or firms for the reconstruction of buildings destroyed, or damaged. The remaining £250,000 will be available by way of loans to local authorities for the restoration of essential services. Realisation of Securities. The reserve fund held in London by New Zealand will be utilised temporarily. The fund is largely invested in securities of tho British Government and it is proposed to realise theso to the. extent df £1.500,000. In order to reinstate the fund the Government proposes to levy a surtax of Is 6d per cent, on (he value of all insurable property in the Dominion. The levy will be mado on all insurance companies doing business in the Dominion on tho basis of insurances effected. In respect of those who carry their own risks, provision will be made for the collection of tho tax on the insurable value of their property. It is proposed that the proceeds of the surtax shall be used first for recouping the revenue lost through the sale of £1,500,000 of investments; secondly, for reinstating the reserve fund. Terms of Assistance. Local authorities who receivo loans will be exempt from principal and interest payments for tho first five years, after which the loans will be repayable over a period of 30 years at 4 per cent. The Prime Minister said it was recognised that the amount possiblo to provide now was insufficient for full restoration. The Government would have to make provision for additional finance in connection with the earthquake in next year's ordinary loan programme now being considered. A committee is to be set up to investigate applications for assistance. The final decision will rest with tho Minister of Finance. The aim will be to assist those unable to help themselves. To aid everybody up to 100 per cent, of loss is beyond the resources of the Government. Advances will be a first charge on all property. It is intended to mako the surtax a permanent charge in order to build up a fund for use in any future national disaster.

Mr. Forbes added that the Government proposes to appoint adjustment commissioners, who will be authorised to prevent any person talcing steps to foreclose on a debtor pending full inquiry by the commissioners.

The reserve fund in London amounts to £2,000,000, the interest earned in 192930 and credited to the Consolidated Fund having been £89,665. The fund was created in 1907 when £BOO,OOO was borrowed from the Post Office and remitted to London for the purchase of gilt-edged securities to be held in reserve for the purpose of hypothecation should occasion arise. In 1920-21 the fund was increased to £2,000,000 by the investment of £1,200,000 from the accumulated Budget surpluses—which amounted at March 31, 1920, to £17,538,^76 —and two years later a further sum of £BOO,OOO was provided from the same source to redeem the debt to the Post Office. The reserve fund has since been maintained at £2,000,000, clear of all liability.

The gross amount of insurance cover in force in New Zealand on December 31, 1928, the date of the latest return, was £409,742,653 and the total of net premiums was £1,951,069. On this basis the proposed levy of Is 6d per cent, would exceed £300,000 per annum.