BUDGETARY CONTROL

Taranaki Daily News, 20 February 1935, Page 7

BUDGETARY CONTROL

FINANCING OF FARMERS

SOUTH TARANAKI EXPERIENCES.

MR. H. G. DICKIE SPEAKS IN HOUSE

HIS OPINION OF CORPORATION.

(By Wire—Parliamentary Reporter.) Wellington, Last Night.

Defence of the system of budgetary control of farmers’ finance was made by Mr. H. G. Dickie (Co., Patea) in the House of Representatives to-night during the second reading debate on the Mortgage Corporation Bill, the provisions of which were surveyed at length by the member. Mr. Dickie said budgetary control involved concessions by every party and a certain amount of control of the farmer. lln his district there were considerable j numbers of dairy farmers who were controlled. They were probably getting £3 or £4 a week to live on, plus in many cases their butter, meat, firewood and house rent, and now were making a profit on their farms. He could cite dozens of cases in which men who had drifted to the bad to the extent of thousands pounds were now showing a substantial profit in this bad year for farmers. What, therefore, was the matter with budgetary control of that kind when everybody was prepared to make concessions and even the banks had come down to 2 or 3 per cent, in some instances? Those who talked about budgetary control and the farmer going down to’ peonage and serfdom were simply handing out hot air. The position to-day was paradoxical in that there was a considerable amount of land hunger but no land obtainable. Any land agent would say he had plenty of inquiries for land but no land to sell. Was that not an indication that a position of stalemate had been reached? Other people wanted to buy but the farmers were so tied up with their liabilities that they could not sell their land. “TIED UP WITH MORATORIUM.” “We are. tied up with the moratorium and suchlike,” said Mr. Dickie, “and it it is with the idea of loosening this state of affairs that the present Bill was introduced.” Mr. Dickie said he would like to reduce interest rates and give the farmer the benefit of the capitalisation of interest almost right up to the present day.; Another 20 per cent, cut in interest rates would bring interest down to 4 per cent. He had no objection to the mortgagee having to meet the mortgagor, but where writing off had to take place the mortgagee should be given the right to ■ take over his asset and should relieve the mortgagor of his personal covenant in the mortgage. That should be final settlement of the transaction. Fairness must be shown to all parties. Most were inclined to regard a mortgagee as prosperous, but many were poor people. The cut in interest alone had brought many of them down below the bread and butter level. He knew many distressing cases in his district of people who thought they had made enough to live on but who now found the best thing to do was to spend their principal and live on the old age pension. That was a very serious step for anyone to take. It killed thrift at the very root. A member: What about the mortgagor? Mr. Dickie: He was in an unfortunate position before the commissions were appointed. A small body of us at Hawera acted as intermediaries between mortgagors and mortgagees, and a great number of private settlements were made. Mr. Dickie said that as to efficiency New Zealand was farming as well as any other country in the world. Mr. Samuel: How has efficiency affected discharged soldiers settiers under that scheme? EFFECT OF EFFICIENCY. “Efficiency,” replied Mr. Dickie, “affects them in this way: The efficient soldier settler who improved his holding and spent every penny he had on improvements was granted no relief simply because the revaluation board when it inspected the property said ‘this property will stand the advance on it,’ and therefore granted no relief. That is applying to-day. The farmer who has allowed: 1118 equity to recede is bound to get more relief than the man who has not. The same thing applies in all walks of life. It is all very well to talk about no cutting down of principal, but we know that in many cases this has to be done. The mortgagee, too, if he has any intelligence, knows that in many cases it will not pay him to take over the property because he has to pay stamp duty and find someone else to run the place n»re efficiently than the last man. It would pay him to make a big concession rather than take that course. Unless a man can farm the holding more efficiently himself it will not pay him to take over his assets. I do not deny his right to take over his assets at a reduced valuation and release the mortgagor from his liabilities. I think that position should obtain under the relief legislation. Mr. Dickie said he considered one or two clauses in the Bill could be improved. He saw no reason why the number of shareholder directors should not be reduced by one, and he held also that the tenure of office of each director was too long.

With regard to the 2 per cent, reserve liability Mr. Dickie said it looked like an extortionate procuration fee to pay £lO2 for every £lOO borrowed, but it was a necessary provision. He had received several communications from local bodies protesting against the clause dealing with the corporations immunity from local body rates. The idea that properties which fell back on the corporation should be free of rates was wrong., The clause should be amended so that apart from exceptional cases rates should be met by the corporation. Another important matter was the payung of one per cent, dividend above the price of bonds. He thought the rate should be 4J percent, and that it should be the minimum. It was calculated there would be an incentive to increase the amount of interest on bonds in order to increase the dividend, but that was a fallacious argument. To guard against that sort of thing he considered the rates should be 4J per cent.