REDUCTION OF RENTS

Poverty Bay Herald, Volume LIX, Issue 17946, 25 November 1932, Page 9

REDUCTION OF RENTS

LOCAL BODY POSITION REMOVAL OF EXEMPTION LABOR PARTY PROTEST (Per Proas Association.) WELLINGTON, this day. An appeal to the Prime Minister not to abolish the exemption granted to local bodies in respect to ground rents was made by Mr. It. McKeen (Labor, Wellington S.) when the National Expenditure Adjustment Amendment- Bill was under consideration in committee in the House to-day. He said, many local bodies would lie placed in a very serious position and the reduction of revenue could only be compensated for by an increase in rates. This would mean that the ratepayers generally would have to pay for the relief granted to people who in years gone ,by had made handsome profits by receiving high rents for accommodation in buildings erected on property which they had leased at a very low ground rent.

Mr. McKeen explained that ground rents charged by local bodies had always been very reasonable, and in the case of the Wellington City Council they varied in most cases from 4-j- to 4§ per cent. There were a. few cases where the rent was a little higher. The Rt. Hon. G. W. Forbes said the Select Committee had fully considered the representations from local bodies on this subject, and had come to the decision that an amendment abolising the exemption should stand as part of the bill.

Mr. J. A. Macpherson (Coal., Oamaru) said Oamaru local bodies would .be seriously affected, and ho emphasised that ground rents charged by these authorities had always been very low. _ No :applications for relief had been received. Mr. P. Fraser (Labor, Wellington C.) said the logic of the argument that there should be no differentiation between, the treatment of local bodies and private lessors had to bo admitted, but on the other- hand it must, also be realised that local bodies had previously been charging lower rentals than private lessors. He suggested that there should be a limit below which Local bodies should not be asked to reduce rents. He mentioned that- the average ground vents at ]iresent charged by the Wellington, Hospital Board amounted to 31 per cent, of the value of the land, and a 20 per cent, reduction- on this would mean that tenants would be receiving very generous .treatment. lie asked whether the Prime Minister would consider the setting up of a tribunal to decide what would be a fair thing in the Interests of all parties If this were not dono there would be instances where people who had' in the past been enjoying the advantage of low rents would be receiving a further reduction at the expense of the general community. Mr. R. A. Wright (Coal., Wellington Sub.) said the interest on local body debentures had : been reduced, but local bodies did. not seem inclined to pass this relief; on to their tenants. Continuing, he said that where any firm received a reduction in the rate of interest it had to pay on borrowed money, it should be made lo pass that relief on to the public. lie cited the case of a .Wellington firm which had failed to do this. , ~ Mr. Forbes: There is nothing to stop them reducing their prices. Mr. J. A. Nash (Coal., Palmerston): They will, not do that unless they have got to. ’ Mr. Fraser suggested that leases (should be-fixed on a 3£ per cent, basis. This would give relief to tenants who vero hard pressed, and would also afford ,omo protection for local bodies. , Mr. Forbes said the Government s whole concern was to bring about a re- . Auction., of rents in as equitable a manner as possible. He pointed out that local bodies had the right of appeal, and added that if a revaluation of , town md country land was made to-day the valuations of a few years ago would not be sustained. Mr. W. A. Veitch (Coal., Wanganui) said there was no doubt that local bodies had’ made a, greater saving as a result of the reduction of interest rates than they would lose in the decreased ground rentals. Mr. Walter Nash (Labor, Hutt) said 'ground rents were regarded as first nortgages, and there was a 5 per cent, minimum with respect to the latter. 'For this reason he considered that there should to a 5 per cent, minimum applied to ground rents. He was not supporting high rates of interest, but he considered that consistency should be ■maintained, Ho did not mind if there 'was a general reduction to 3J,- per cent, (so- long as it was applied throughout ' Mr McKeen called for a division on the ;clause relating to ground' rents, and the ;bells were set ringing. However, when the question was again put, he did not press the point, and the clause- was passed on the voices. ! The hill was then put through committee with minor amendments.