PAPER MILLS AT WHAKATANE

Southland Times, Issue 22998, 18 September 1936, Page 8

PAPER MILLS AT WHAKATANE

PROSPECTS of PULP INDUSTRY

GOVERNMENT DESIRES INVESTIGATION THE BILL ALLOWED TO PROCEED (United Press Association.) Wellington, September 17. “I desire, on behalf of the Government, to make a statement setting out clearly its attitude towards the proposition which the company which has promoted the Whakatane Paper Mills Limited Water Supply Empowering Bill, now before the Council, has in view,” said the Leader of the Legislative Council (the Hon. M. Fagan) in the Council to-day. “At the outset,” said Mr Fagan, I would like to point out that the company is entirely free to begin its operations'without the consent of Parliament, and regardless of whether or not.this Bill becomes law, provided, of course, that it obtains a permit under that portion of the Health Act relating to offensive trades. At first sight, the measure appears to be concerned solely with the granting of permission to a public company for the’ taking of a relatively small quantity of water from the Whakatane River for its manufacturing purposes, end it was on this basis that the Bill was first dealt with by a committee of selection in the House of Representatives which was assisted by representatives of the Departments of Lands and Survey and Internal Affairs and so on. When this committee reported back, however, the general operations and proposals of the company were subjected to searching criticism, so much so, that the Bill was referred further to the Industries and Commerce Committee. In these circumstances, it was entirely logical that this committee should investigate the economic and industrial features of the company’s activities and proposals. Committee Not Satisfied. “Its recommendation that the Bill should not be allowed to proceed, coupled with a suggestion that a national investigation should be carried out immediately into the physical condition of the whole of the forests owned by afforestation companies and into the economic possibilities of their utilization, is an indication that the committee was not satisfied, either with the general possibilities of pulp and paper manufacture in New Zealand at the present time or or the prospects of this particular company,” continued Mr Fagan. “The Government likewise is far from satisfied on the same matter, so much so that it would prefer that further operations be stayed until the Government’s investigations into the utilization of forest products have been completed. The Government desires to stress that a national investigation will be of an entirely constructive character, aimed at procuring the best available foresters and sawmill and pulp and paper industrialists to examine the forests and to make specific recommendations, both for their management and the economic utilization of their grown products. “It has been claimed that Parliament cannot undertake the duty of sitting in judgment upon all company proposals,” Mr Fagan went on. “To a great extent this is correct, but a charge has also been made that both the previous Government and this Government together with the Government Departments, have singled out the Whakatane Paper Mills Ltd. for obstructive treatment. Such is entirely contrary to fact. Neither this nor any other company has been singled out for an aggressive attack, but when a company begins negotiations with the Government and makes proposals which impinge upon the public interest, it becomes the business of the Government and its Departments of State to interest themselves in its activities.

Anxiety to Assist.

“It is not the desire or intention of the Government to place any obstacles in the way of industrial enterprise,” said Mr Fagan. “Rather it is anxious to assist and encourage such enterprise, but it must be on sound lines, and every action, either taken or contemplated, has been solely for the purpose of conserving the shareholder’s rights and monies. The question now arises whether or not the Government should further interfere in this matter. It has already drawn attention, and does so again, to very serious doubts which exist in the minds of those best qualified to judge as to the general activities and proposals of the company. Such a view is not arrived at lightly, and it is hoped, therefore, that the shareholders and directors will agree, quite voluntarily, to suspend operations until they have the benefits of a national investigation to guide their future activities. “The Government proposes, however, to leave this entirely in the hands of the shareholders and directors,” said Mr Fagan, “and to allow the Bill to proceed, but in doing this, it wishes it to be clearly understood that so far are the company’s activities and proposals thoughts to be removed from economic and technical possibilities that it emphasizes the following points: (a) That the company must realize that the passing of the legislation does not imply Government approval of their activities and proposals. (b) That pending the results of a national investigation, the company should refrain from asking its town shareholders or the investing public for further capital, but in the event of so doing it should include in all such requests, m the form either of letters, sales literature of prospectuses, a notice stating that no action of the Government, either passing the enabling legislation or in granting licenses, etc., can be construed as implying Government approval of its activities and proposals. ’ (c) That the company must dispose of its effluent to the satisfaction of the Health Department and avoid any atmospheric pollution. It is Understood that the company has already agreed to this. (d) That the company cannot expect financial assistance from the Government in the form of tariff protection, etc., claiming as it does that no protection is required and that the industry can be profitably operated. (e) That, seeing that it claims to have adequate supplies of pulpwood in its own forests, it cannot rely in any way upon pulpwood supplies from the State exotic forests, realizing that these have been established primarily for the supply of saw timber, that the demand for saw logs will take precedence over, that for pulpwood and that, in no event, will pulpwood be sold except at prices remunerative to the State and by public competition.”

“With these views on record, the shareholders will embark on any developments with a full knowledge of the Government’s views on the matter,” concluded Mr Fagan. “Whakatane Paper Mills, Ltd., will receive no opposition from any State

but the Government is concerned about the physical state of the exotic forests of all companies, and it regards it as a duty to investigate their position from the utilization point of view. It requires to have definite information, both as to the rate of growth and as to what extent local conditions will allow the establishment of a successful pulp and paper industry. I desire to emphasize that the Royal Commission on Company Promotion presided over by Mr J. S. Barton, S.M., investigated only the financial methods of forestry companies. The subsequent Bondholders Incorporation Act was confined likewise to the provision of financial and legal machinery for reorganizing companies. In the ultimate analysis, however, the financial stability of the companies is directly dependent upon the State of their forests, their management and their utilization, and it is this basic consideration which leads the Government to believe that a national investigation along these lines is of fundamental importance.” The Bill was read a second time.