AMENDMENTS DEFEATED

Waikato Times, Volume 111, Issue 18623, 29 April 1932, Page 8

AMENDMENTS DEFEATED

WELLINGTON, Thursday. The House of Representatives met at 2.30 p.ra. to-day. The House went into Committee on the National Expenditure Adjustment Bill, and consideration was commenced on Hie third section of the bill, that relating to the reduction of interest and rent. The Leader of the Opposition (Mr 11. E. Holland) commented on the “most extraordinary” method the Government wa= following, bringing down pages of amendments after the bill had been introduced. He wanted to know who had 'been responsible for such bungling, and suggested that it must be Cabinet. The Prime Minister, the Right Hon. G. W. Forbes, said that the principle of the bill was so far-reaching that there was a great danger that there might be repercusions and anomalies, and after the measure had been introduced representations on the different points had been considered, and amendments which were deemed necessary were introduced. It was not the intention of the Government to indict hardship, and 'they had endeavoured to meet the position as fairly as possible. It was their aim to get as perfect a bill as possible. The Government wished to bring down legislation that would give effect to the object aimed at. It was easy to say interest and rent should be cut, but it was very difficult to bring it about. It was impossible to foresee objections until the bill was introduced.

Reduction for All Debtors.

Captain H. M. Rushworth (Country Party—Bay of Islands) moved an amendment that the reduction in interest should apply to all debtors. It was very difficult, he said, to provide for equality of sacrifice, but the Government had embarked on that task, and he intended to see that the purpose was carried out right through. Mr J. A. Lee (Labour— Grey Lynn) said it was difficult to deal with bank overdrafts, as they could 'be renewed at different rates. However, the moral effect of the resolution on banking institutions would be beneficial. The .Minister of Finance (the Hon. W. Downie Stewart) asked what groups the mover had in mind. What class, apart from mortgagors, paid interest? When he stipulated “all other debtors,” it was difficult to see what he had in view. Was it proposed to affect Hie interest payable by the State on overseas loans? Mr C. A. Wilkinson (Independent— Egmont) said it must.be obvious that the amendment was intended to give relief to the whole community, and that it wa« particularly directed at the banks. The banks were completely excluded from the bill. He maintained that a specific obligation should be imposed on the banks in the bih itself.

Forecast of Reduction.

The Prime Minister said that the banks had made a voluntary reduction of interest some time ago, and at present a further reduction was under consideration. Until the bill was passed they could not come to a decision. A great deal of the money lent by the banks was at call, and they had a right to charge a rate of interest they thought fit. Mr Forbes said that the banks were being criticised for not lending freely enough, but the amendment would have the effect of further restricting them. It was dangerous to interfere with money on demand. The amendment was lost by 49 votes to 25. Mr W. J. Poison (Independent— Stratford) submitted an amendment to the subsequent clause for the purpose of including under the term mortgage any moneys advanced by a bank, whether at call or on fixed deposit. Mr Poison «aid the acceptance of the amendment would place the Government in command of the situation. He had received numerous communications from farmers’ organisations throughout, the country demanding that something should be done to bring the banks into line, and stating that there was no equality of sacrifice when banks were allowed to charge up to 6J and 7 per cent., while other rates of interest were being reduced to 5 per cent. “I know the great difficulty of the Government in handling the situation with the banks on the box seat, as ■they are in this country," said Mr Poison.

Creating Undesirable Feeling

The Prime Minister Said the banks were at present carrying a great many farming institutions. To pass an ■amendment that would result in an arbitrary reduction in the rate of bank interest charges would have the effect of creating a feeling of instability. The Government's guiding principle was the reduction of fixed chrages in order to meet the fall in the price leVel. Very many contracts wer.c entered into up to 1930 in the full belief that the high prices then ruling would continue, but the Government had to legislate to adjust fixed charges with changed conditions. Mr Holland asked what objection there could 'be to the acceptance of the amendment If the banks were making a general reduction in their rates. The Prime Minister replied that it was very much better to deal with the banks on a voluntary basis 'than to introduce a measure of compulsion. He was fully satisfied that the banks were doing their best to co-operate in meeting the present position, and it would be unwise to force them into taking action which they were prepared to take of their own accord.

Mr Poison was granted permission to recast his amendment so that the term mortgage should include any moneys advanced by any bank, whether on demand or on fixed loan. Mr Forbes said that fixed loans at present came under the operation of the bill. There was nothing exempting a bank on account of it being a bank. Moneys on demand were exempted. Mr Poison would see the mischief which would be wrought by trying to apply fixed conditions to money advanced as a temporary measure.' The financial stability of the country was entirely dependent on the financial stability of the hanks. If it. was thought that political interference with the 'banks was taking place, nothing would undermine confidence so much. Mr Forbes deprecated any ill-advised aitempls to force the banks to do Dungs opposed to sound banking practice. Mr Poison's amendment was defeated by 4 4 votes to 29. Messrs If. Atmorc, J. G. Black. H. G. Dickie, F.

Lye, W. J. Poison, H. M. Rushworth, A. J. Stallworthy, C. A. Wilkinson, and R. A. Wr'ght, together with Labour members, voted for the amendment. Mr Forbes moved to amend the subclause giving the Government power by Order-in-Council to exclude any specified mortgage from the operations of the Act.. The amendment sought to extend this power of exemption to any other contract. The Leader of the Opposition said the amendment illustrated the hopeless muddle Into which the Government was getting. It was now asking for power to exempt by Order-ln-Council any mortgage or contract after the House had spent an evening deciding where the reductions should apply. Mr Forbes said it was customary to take this power in cases where legislation broke new ground. It was necessary to make provision for anomalies. The amendment was adopted. Part three of the bill dealing with reduction in interest rates and rent was passed by the Committee at 11.40 p.m.

CALL MONEYS. QUESTION OF REDUCTION. VERY DIFFICULT MATTER. WELLINGTON, Thursday. The Minister of Finance, the Hon. W. Downie Stewart, in the House of Representatives this evening, when replying to comment that the banks were excluded from the operations of the Bill as far as call money was concerned, stated: “ The question whether banks should be brought under the Bill on call moneys involves a very wide question. At the very foundation of this Bill we had to consider what it was practicable to do and what could not be done. It was agreed.on all sides that if. you seek to say that Parliament is going to make a statutory reduction in fixed mortgages, that was feasible enough, because the mortgagee is unable to escape. He must submit to it as long as his mortgage runs. “ The same applies to landlords ■with fixed tenancies, but when you come to money at call, no one has suggested any way by which Parliament can hold money payable at call, reduce the rate of interest by Statute, and insist that it remain in that position, except, by proclaiming a general moratorium. If Parliament wants to debate the merits and demerits of a general moratorium, that is another question, but to assume this is a question only affecting the banks is an erroneous idea.” The Minister added that the Government was faced with the fact when it set out to make- a- general interest cut, that as far as - long-term mortgages were concerned, it was feasible enough to make a.cut of 20 per cem,. with a reasonable minimum, which was fixed at 5 per cent. However, the Government had been assailed from all sides, not by the banks, but by small investment companies, finance companies, building societies and all sorts of organisations which were anxious to know what effect the cut would have on their operations. Farmers’ finance corporations, particularly in the Waikato, said they were helping thousands of farmers who had been financed to the extent of hundreds of thousands of pounds. It was stated that these organisations were borrowing from the banks, and if their interest rales were cut by 20 per cent, without a chance of letting the rates fluctuate with the bank rates, they would have to call up their advances. The companies said they could not rely on being able to maintain their mortgages out on interest for which they received less than they were charged by the banks for borrowing. Some of those organisations were operating at a rate up to 6J per cent.

STAMP DUTIES. AND INTEREST RATES. BASIS OF PAYMENT OUTLINED. OTHER PROVISIONS. WELLINGTON, Thursday. . In the House of Representatives important amendments to part four of the National Expenditure Adjustment Bill, which deals with the imposition of the 10 per cent, stamp duty on receipts of interest from Government and local body securities and company and corporation debentures, were introduced. In accordance with amendments 'ntroduced last evening, company debentures and debentures issued by other corporate bodies are to be included in the term mortgage as far as the interest reductions are concerned. Tins means they will be subject to the 20 per cent, interest rates reduction, and not to the 10 per cent, stamp duty. Consequential amendments are provided to change the basis of the reduction.

It was originally intended to exempt from stamp duty debentures or other securities issued in respect of investments of money belonging to any superannuation fund or the National Provident Fund. It is now proposed to exempt debentures, or other securities in which are invested any moneys belonging to the Public Service Superannuation Fund, Teachers’ Superannuation Fund, or the Government Railways Superannuation Fund, as well as the' National Provident Fund. The stamp duty will not apply to securities held by the State Advances Superintendent or in respect to the investment of moneys belonging to the Post Oce Account. Originally only securities held by the Treasury were specified for exemption. The stamp duty was originally intended to operate at the fiat rate of sixpence for every five shillings or part, as from April 10, 1932, or the date of the passing of die Bill, whichever was later. It will now operate at threepence for every 2s Od or part, not, earlier than seven days after the passing of the Bill.

Preventing Hardships. The alteration in rates is for the purpose of avoiding minor hardships. A proviso is added enabling the stamp duty to be assessed on the total amount of interest paid at one time. This will prevent hardships that would arise if each interest coupon were separately assessed. A new sub-clause provides for the assessment of stamp duty on interest only when debentures are redeemed by payments consisting partly of interest amt partly of principal. If rate cr (Continued in next column.)

amount of interest is not specified, payment shall be apportioned between principal and interest in accordance with regulations which may be made. An additional sub-clause has been inserted to enable the Minister of Finance to refund the duty on securities held by people whose total annual income does not exceed £IOO. Where the amount so refunded is in respect of interest derived from local body securities, the amount shall be deductible from any moneys which might be payable out of the Public Account to that local body. Another sub-clause gives the taxpayer the right to have deducted from his assessable income for income tax purposes any amount paid by him as stamp duty. Refunds of stamp duty made to a rating authority must be applied to reduction of rates. The amendments were read into the y Bill. / Labour members urged there should be a hardship clause attached to the section. The Minister of Finance, the Hon. W. Downie Stewart, drew attention to the exemption granted to persona whose annual income was not in excess of £IOO. He realised that people whose income was round about £l2O per annum would still have to pay the duty. The position was a difficult one to overcome. The stamp duty section of the Bill was then passed and the remaining sections were rapidly disposed of. The whole Bill having been passed through Committee, the House adjourned until to-morrow afternoon, when the third reading speeches will be taken. „ .

FINANCE COMPANIES. AMENDMENTS INTRODUCED. FIXING THE MAXIMUM. WELLINGTON. Thursday. In the House of Representatives amendments to the sections of the National Expenditure Adjustment Bill relating to the rates of interest on deposits payable by savings banks and building or investment societies were introduced to-night. The original draft of the Bill provided that the Governor-General could, by Order-in-Council, fix the maximum rates of interest that could be paid by building or investment societies, but it is now provided that no Order-in-Council shall apply after March 31, 1935. This proviso corresponds to those relating to the fixing of maximum rates of interest that may paid by savings banks and trading companies. > Investment societies are required by another new clause to make quarterly returns of their deposits, interest rates, assets and liabilities. Tilts brings investment societies into lias with the obligations placed on trading companies. A penalty of £IOO is provided for failure to make returns or making false returns. The definition of the term “ trading company ” is extended to ensure that all persons or associations accepting money on deposit will furnish the required returns. In addition, both investment societies and trading companies must furnish a statement or assets and liabilities annually, within one month of the close of the flnan« cial year.

LEGISLATIVE COUNCIL. QUESTION OF APPOINTMENTS, (Special to Times.) WELLINGTON, Thursday. In view of the impending reductioy of the strength of the Legislative Council by the retirement in a few days of nine members, the Prime Minister, the Rt. Hon. 0. W. Forbes, was asked this afternoon if the Government proposes to make any re-ap-pointments or to fill any of the vacan-* cies created.