THE BANK OF NEW ZEALAND.

Taranaki Daily News, 15 November 1921, Page 7

THE BANK OF NEW ZEALAND.

AND THE N.Z. GOVERNMENT. THE RELATIONS DEFINED. (From Our Parliamentary Reporter.) Wellington, Nov. 12. The relations between the Government and the Bank of New Zealand were discussed by Mr. C. E. Statham (Dunedin Central) during the financial debate in the House of Representatives yesterday. Mr. Statham suggested that the Government had not secured the advantages that it had been led to expect under the new arrangement of the shares. The profit of the bank last year, after paying income tax, had amounted to £777,000, and of thi £150,000 had been added to the reserve, £412,000 had been paid away in dividends, and £214,000 had been carried forward. It appeared that the Government had been almost afraid to disclose its profits for the year. The dividend paid to the shareholders had been at the rate of about 20 per cent, on the original capital. But the nanx eould have paid 30 or 35 per cent, instead of 20, and he thought the Government ought to inquire why this sum of £214,000 had been carried forward. One-third of this undivided profit belonged to the Government, and would have been of material assistance in recent months. Mr. Statham proceeded to say that instead of assisting the Bank of New Zealand to make enormous profits for shareholders, the Government ought to take over the bank and run it as a State institution in the interests of the country. The Prime Minister had admitted the success of the Commonwealth Bank and had congratulated that “bank upon its management. A State bank in this country could be as well managed as the Commonwealth Bank. Mr. Massey: The Bank of New Zealand does more for us than the Commonwealth Bank does for the Australian Government, by a very long way. Air. Statham: It is able to do more for us because it has the Government behind it. By why should the Government have to go almost hat in hand to the bank to ask for assistance? If the Government owned the bank they could either reduce the charges or add materially to the State revenue.

Air. Massey: We have four directors representing the Government out of six on the directorate of the Bank of New Zealand. Mr. Statham: Exactly. Why, then, do we carry forward £214,000 of our profit when one-third of that profit belongs to the Government? Air. Massey: It is ours now. Air. Statham: It is buried away. Air. Massey: It is bearing interest. Air. Statham: You will get it perhaps when the Bank of New Zealand is wound up. You will not get it before. Air. Massey: The auditor is our officer, too. Mr. Statham: I know that. Why is it not a State bank altogether? Why should the Government have -four directors out of six, with an auditor and an assistant-auditor, and yet see the bank run in the interests of the ordinary shareholders ? Air. Alassey drew attention to the fact that in addition to its dividends, the Government obtained from the Bank of New Zealand £356,000 in income tax, £1'52,000 in note tax, and £17,500 in land tax, a total of £476,000. Was not that a very good dividend? Air. Statham: That is not a dividend in the ordinary sense of the word. I insist that the Dominion would be better off if it owned the Bank of New Zealand altogether. Air. Alassey: I do not think so. Air. Statham: If you were offered a freehold property, would you say that you would rather leave it to somebody else and collect land tax upon it? Air. Alassey: If we got the bank we would have to pay for it. We own one-third of it, and we own one-third of the profit carried forward. Mr. Statham: Then why do you not get it now when you are hard up? Air. Massey: We will get the interest on it, and in the next division we will, get the capital. Air. Statham: There is no arrangement of that kind. We are entirely in the hands of the Bank of New Zealand. They can carry forward their profits and keep down their dividends to a low point, with the result that the Government will sufier. Yet the bank would not have been in the position that it occupies to-day but for the Government.