Criticism of Bill.

Star (Christchurch), Volume LXVI, Issue 20540, 15 February 1935, Page 6

Criticism of Bill.

Lines of Establishment Not Favoured. Per Press Association. WELLINGTON, February 14. r T‘HE committee of financial and commer* ejal interests set up under the auspices ol the Associated Chambers of Commerce cf New Zealand, which recently published a criticism of the Government's proposals regarding mortgage finance, issued a statement following a meeting to-day comment ing on the Mortgage Corporation Bill introduced into Parliament. The committee says certain of its recovn mendations have been incorporated in the Bill, but some of the features of the proposals to which the committee took the greatest exception appear in the Bill unchanged. The committee regrets to see that the State is to become not merely a bondholder but also a shareholder in the corporation, w hen the primary object of the corporation is realisation of the Crown’s present mortgage investments. Dividends. The Bill does not provide for a fixed dividend on shares, and the committee says it may be in future years that the statutory dividend rate will be i > low that the mrrket value of shares will be less than par. The use of the term “ cumulative ” does not mean that shareholders will in any way be guaranteed their dividends or receive any preference over other classes ot the corporation’s creditors. The committee considers that adequate provision should be made for representation upon the board of management of individual bondholders if and when they come into existence.

If it is intended to allow the corporation to make advances otherwise than against mortgages of freeholds, then the committee considers the Bill should state so specifically, and name the permissible proportion of such advances so that intending investors in the corporation can know where they stand. The committee says that so long as the Bill contains the right to advance on stock and chattel securities it must persist in its objection to the corporation’s bonds being given statutory recognition as trustee securities. The committee regards as unsatisfactory the clause providing that the fixing of consideration for mortgages taken over from the Crown is to be a matter of mutual agreement between the corporation and the Minister. The committee repeats that the so-called reserve fund is more apparent than real and should not be taken into account in calculating the maximum bond issue. Basis of Valuation. Regarding the productivity of rural land being used as the basis of valuation, the committee says this would result in there being in force contemporaneously two entirely distinct systems of valuing rural land, the other system being under the Rating Act. Concerning 80 per cent loans, the committee says the Minister of Finance may in future be inundated with requests by prospective borrowers, who cannot obtain their full wants from the corporation, to guarantee the difference between the loans the corporation is prepared to make and the amounts they wish to borrow. The committee repeats that it is not convinced of the necessity for the establishment of a semi-State national corporation, and is not sanguine of its success if established on the lines proposed.