70 MILLIONS LOAN

Taranaki Daily News, 24 July 1929, Page 9

70 MILLIONS LOAN

WHAT HAS BECOME OF IT?

SIR JOSEPH WARD’S ANSWER

DOMINION FINANCE REVIEW

COMPLETION OF RAILWAYS

By Telegraph.—Press Association.

Wellington, Last Night. All the Opposition speakers in the Address-in-Rcply debate had asked' what had become of the £70,000,000 loan, said Sir Joseph'Ward in the House ■of Representatives to-day, when replying to the debate. It had been stated the programme of raising £70,000,000 in eight to ten years had not materialised. From December 10, 1928, to July 15,

1929, continued Sir Joseph, the State Advances Department had handled applications from 1927 settlers and 2604 "workers for loans totalling nearly £4,500,000. The actual loans advanced

were 1256 to settlers and 1598 to workers, the amounts totalling over £3,006,000. When the Government took office the amount at credit of the State Advances Department was £450,000, and there were applications for 3971 loans totalling over £4,000,000. The Government had handled nearly £4,500,000. Funds that had been added to the State Advances capital totalled over £3,500,000, and funds in hand and available for investment amounted to nearly £2,000,000. In addition, it had provided over £1,000,000 for rural advances. That, he claimed, had fairly fulfilled his election pledges.

The Premier said he. had been twitted with having been unable to obtain money at 4f per cent. He had an explanation to make on that subject. He had been in negotiation for the renewal of a loan when he found it had been agreed that New Zealand should not go on to the London market for two years. That was one of the first things ho learnt when he took over the Treasury. That had altered his whole course. That was the reason which he could not give out some time ago when he was criticised on the subject of finance, because there was a danger of injuring the prospects he had of floating a loan. He had floated a loan for £7,00,000 and had arranged for the conversion of loans due for £28,000,000, of which £5,000,000 was in the course of conversion. When he took charge he was prohibited from going on to the London money market —

Mr. W. D. Stewart (cx-Finance Minister) : Do you suggest it was through Any action of mine? Sir Joseph Ward: Yes! Mr. Stewart disagreed. KEPT OFF LONDON MARKET. Sir Joseph said he had to elect whether he would subscribe to what had been done before he took charge or embark on a fresh undertaking. He had- kept oh’ the London market for advances to settlers and workers, and he intended to keep oil. In the meantime he had been oll'ered £2,000,000 from another country, but he had refused it. All the money that had been raised had been obtained in New Zealand. That was his answer to those who asked why he was not lending it at 4? per cent. The money was not available in New Zealand at that rate.

The Government had dealt with the advances to which he had referred and had made hundreds and hundreds of settlers and workers happy and contented. Furthermore, it had not touched a shilling •of the £7,000,000 loan, which had been invested temporarily in London till it was required to maintain the public expenditure of the country. From figures he had quoted it was obvious he was carrying out his election pledges. It had been promised, said Sir Josepn, that £70,000,000 would be raised in eight to ten years, and of this £10,000,000 was to be for railways and £60,000,000 for workers and settlers. He maintained that the money provided so far had •kept well up to the average. lie would deal further with the subject when he presented the Budget, which would be next week, if possible. Dealing with railways, Sir Joseph said the report of the commission that had investigated the matter of the Taupo railway had indicated there was no 'likelihood of its returning revenue to meet the expenditure, and he personally estimated no timber would be available for transport on the line for fifteen years. The Palmerston North deviation had been fully considered by Cabinet and it had been decided that the expenditure was not justified.

SOUTH ISLAND RAILWAY.

Referring to the South Island main trunk extension lie said there were 1790 route miles or 2278 track miles of railways connecting with the 76 miles’ gap which it was intended to fill. It had never been intended by the originator of New Zealand’s railway system that there should be this gap in the South Island. It was the Government’s intention to complete all main lines and not ■waste money on small lines which it had been proved were invariably failures. There was at present £4,400,000 of public money expended on railways that were not being used. The Government’s proposed expenditure on main line railways was £10,000,000, and this would complete the works and bring into use nearly £4,500,000 at present lying idle. The cost of the South Jsland extension bad been estimated at £27,000 per mile. The cost of other South Island lines had been £12,000 per mile. This would give an average of about £16,000 per mile for the whole of the South Island. Sir Joseph said he could understand the Opposition to the railway if the country it was to traverse was a wilderness. but there were a million acres of cood farm land surrounding the route. Further, it was to be the connecting link between Wellington and Christchurch and, in his opinion, it should have been completed 40 years ago. It would bring the railway system into one compact whole. Mr. W. Downie Stewart said he wished to reply to the statement that there had been ’financial difficulty due to the action of the previous Government or himself. He had been surprised to read that speaker at a banquet had conipared the Minister of Lands with Abraham Lincoln. Personally he had not noticed the resemblance, but when he had seen this statement and had re- | xnembered that the Minister .of Health

had claimed that he had had his commission from a very high source he felt that his party had a difficult task before it in facing such a combination. MR. STEWART’S REPLY. In reference to Sir Joseph Ward’s remarks, Mr. Stewart said the position in w' ich Sir Joseph had found himself was no more due to ny action of his than of the present Finance Minister’s. Mr. Stewart said it had been known that £29,000,000 on London was falling due for conversion this year, and it was obvioug to everybody that it might be difficult to renew such a large sum. Consequently, when he went on the London market for the usual loan for Public Works he included the sum for conversion, the question of further conversion being left in abeyance. Then information came from London advisers that there was a likelihood of a hardening in the money market. The question arose whether to arrange a further conversion or borrow in anticipation of next vear’s requirements. As the election was so close at hand he cabled to London asking when a decision was necessary, and the reply was that it would be required before the end of January. Mr. Stewart said his tongue was tied during the election, just as Sir Joseph Ward’s was at a later stage. He could not prejudice New Zealand’s position financially by referring openly to the subject, and the only hint he could give Sir Joseph Ward was to draw his attention to the large sum due for conversion. Sir Joseph had been faced with the problem to decide whether he would arrange for conversion or borrow more monev before he normally would have done so, and in his (Mr. Stewart’s) opinion the Prime Minister had made the right decision. Owing to the interpretation that had been placed on Sir Joseph Ward’s earlier remarks it had been assumed that the speaker had held back something and had therefore acted prejudicially to New Zealand’s financial position. That was not so; it was clear that no publicity could be given to the subject till a decision was reached, and he considered he had acted in fairness to Sir Joseph "Ward in waiting until after the election, thereby giving the new Finance Minister a free hand in the matter. It was true that the circumstances had altered Sir Joseph Ward’s plans, hut the position had not been caused by any action of the late Government.

Mr. Stewart eaid nobody had ever doubted that the money could be borrowed for the State Advances Department. It had been the desire to regulate the finances and keep down public debt that had caused the hesitancy of the Reform Government to borrow for this purpose. It had also been going cautiously in regard to advances to workers, because there was a growing feeling that the cities were being overbuilt. It was ' that reason that the rural advances scheme had been given such encouragement.