NO LIMIT

Poverty Bay Herald, Volume LXIII, Issue 19026, 28 May 1936, Page 5

NO LIMIT

HOUSING LOANS CABINET’S NEW POLICY * f _ CORPORATION TAKEN OVER PURELY STATE CONCERN MANAGERS RETAINED (Parliamentary Reporter.) WELLINGTON, this day. • The Mortgage Corporation of New Zealand, in future to be known as the State Advances Corporation, is being reconstituted'with greatly extended powers under the terms of the Government s H.ew measure* which was introduced by Governor's Message in the House of Representatives last night. ! The Hon. W. Nash, Minister of Finance, explained, not only the terms of the bill, but much of the policy it represents.

1- The change of name was, he declared, of. some . value, as ...it brought, back the association ‘with the 'splendid work done by the pioneers who decided that money should be provided for .people'at reasonable rates. The shares of the corporation would be cancelled, and there was provision for the return of the money subscribed, and one dividend would be also paid. The board would be entirely reconstituted except for the fact that the two managers remained as managing directors to carry on the work and carry the extended responsibilities. v-Mr. H. S. S. Kyle (Nat., Riccarton): The same old board under a different name?

Mr. -Nash: No, a different board. STATE-GUARANTEED LOANS He explained that it would take over the administration of the Housing Act and would undertake important functions in connection with the raising of money, with the right to issue bonds which would be guaranteed by the Government and therefore be raised at a lower rate of interest thiin usually was paid by the corporation. There was provision for loans to local authorities for housing, and also extra provision for Idans to industries. The origin of tr.e latter was that the Minister of Industries and Commerce would be enraged With others to determine whether help Would be required in the establishment off-' new industries, and on his recommendation to the Cabinet, following its approval, the Minister of Finance would be required to make advances for the purpose.

Mr. G. A. Wilkinson (Ind., Eginont) No limit ?

The Minister replied that the Cabinet would consider what was needed, and the Minister of Finance would authorise the corporation to issue the money and supervise expenditure and the recoveiy of the advance. The money would be borrowed in several ways in whatever way was necessary to achieve the purpose of providing money at the lowest rate of interest. The corporation would have power to issue bonds to the public. Sir Alfred Ransom (Nat-, Pahiatua): Will the share capital be called up?

INTEREST NOT FIXED The Minister replied that the shares ■would be purchased at the proportion paid up, and a person who had paid 10s would get cash or stock which would return the same interest he would have received on a 4£ per eent basis under the old issue. The Government was proposing to issue 4 per cent stock, the shares being cancelled in their entirety, and those who had paid a proportion would receive either money or stock with a 'premium which would give them a return of. 4£ per cent on their original investment.

The Rt. Hon. .T. G. Coates (Nat., Kaipara): What will happen to those who have paid a premium? Mr. Nash: They will still get stock equal in return to the price paid on shares. If they paid even 12s for the purpose of getting 4* per cent on 10s, and they get stock of a certain value which will give them the same return as they would have got, they cannot grumble, because their interest return is exactly the same as on the old basis. The Minister went on to explain that there was to be an extended margin in connection with loans. Under the existing basis, 66§ per cent was the maximum the corporation could advance without the guarantee of the Government. It was proposed to retain this limit on commercial loans, but in making provision for housing there would be a greater proportion advanced. Mr. Wilkinson: What is the rate of interest?

'The Minister: That has to be determined. It is not in the bill.

“UP TO 100 PER CENT" Whatever provision was necessary to carry out the housing policy would, he said, be made to ensure that the houses required would be made available. Mr. W. A. Bodkin (Nat., Otago C.): Who will fix the margin? \ The Minister: The Government will fix the margin. If it finds it necessary to advance 95 per cent, it will be advanced in the interests of the country. He repeated that there were two classes of loans, one the commercial form with the limits indicated, and the other an extended advance with no limitation. The Government would lay down the limits in its own housing policy, and as ■ soon as this policy was properly implemented the corporation would take control. If a worker wished to build a hpuse and the Government was able to prevent an appreciation in land values it would , not mind what proportion he rereceived of the value of the land and the house. Many countries were making grants for building houses without taking anything back.

Mi 1 . W. P. Endean (Nat., Parnell) You would grant up to 100 per cent?

The Minister: Yes, I’d give 100 per cent if necessary, and if it ensured that we had the houses required it would be worth while. We would not give a subsidy as well as an advance. The Minister also explained that the bill would empower the corporation to inspect properties through its field staff ana supervise the securities of other ■Government departments if they deaired.

*9 Replying to a question of whether returned - soldiers’ securities would oome under the corporation, the Minister said ‘ the Returned Soldiers’ Association would be consulted, and he expected that these securities be taken over. They were going ito completely co-ordinate the lending departments, of the State,, to get the piost efficient management and the best possible return to those who borrowed money. Replying to Mr. Coates, the Minister emphasised that the corporation was a

commercial concern and would advance up to per eent. If the Government felt that it needed to advance more money than that for houses or land development then the Government would accept the responsibility for the amount over and above 66§ per cent.

Replying tc Mr. Bodkin, who wanted to know the position of local bodies in respect to unpaid rates on properties taken over by the Crown, the Minister said that the present procedure under the Mortgage Corporation Act was not altered, except that the Government was taking the necessary steps to ensure that where the corporation had jurisdiction over properties mortgaged to the corporation and rentals were being collected over those properties, then the rates- would be paid to local bodies.