The purpose of this Bill is to give me powers to deal with outstanding arrears of fishery loans made by the Congested Districts Board, the Department of Agriculture and the Department of Fisheries during a period dating back to pre-European War days, and to write off such of these arrears as are, in fairness and justice in the circumstances, irrecoverable, and to adjust the burden in other cases to what the borrower can reasonably and fairly be expected to pay.
The conditions with which I have to deal are largely the aftermath of the European War, and, to a lesser extent, of our own internal troubles. The scarcity of food supplies in Great Britain during the years 1914 to 1918 had two effects in this country. It created greatly inflated values for all foodstuffs, and the trawler fleet of Great Britain being at the time engaged in mine-sweeping and other war services, it gave a great impetus to the fishing industry here. In this way people were attracted to the industry who had no previous practical experience of it, and who, under normal conditions, could not hope to make fishing a success. Some of those people, by employing other persons more experienced in fishing, did in fact make some money during that period. The second effect was that the authorities in charge of the giving of loans at that period departed from the usual precautions they took in regard to giving loans, keeping in mind that the matter of paramount importance was the supply of food.
In giving the loans the general system observed was that they would be given for a term in relation to the life of the boats. In the case of some of the big boats the ordinary life would be about twenty years and they acted on that principle when dealing with the loans at that time. Subsequently they tried to get the loans repaid at a quicker rate out of the rather abnormal earnings that the boats were making; that is, by giving a considerable discount if loans were repaid before the time stipulated in the agreement, but this failed to have any substantial effect. While the war lasted and up to 1919 and 1920 the repayments were made regularly, but in that year and in the following years there followed an event with the results of which we have now to deal.
The British trawler fleet normally supplied about 90 per cent. of the fish for Great Britain. They came back from war service and they started fishing again, and the supplies of fish were greatly increased in the English market, with the result that the prices fell. Large fishing boats in this country which, during the war years, made a considerable amount of money, failed to pay their expenses. Many of the boats, therefore, were laid up; they ceased to fish. Following that there was a period when the transport in this country was seriously affected by our own troubles. These troubles also affected many of the owners of the boats, borrowers from the Congested Districts Board and the Department.
The herring, for some unexplained reason, deserted portions of our coast, and the market for herring and mackerel fell abnormally. The market for herring fell, and I think that fall was due to the fact that Russia was out of count as a buyer. Russia used to be the country that bought largely from us in the matter of herrings. The fall in mackerel was brought about by the fact that the United States went in for mackerel fishing after the war.
In the writing-off with which I am now dealing I propose to include 752 cases. The total sum originally advanced was £164,634 2s. 3d. Of this total, a sum of £113,020 18s. 10d. remained unrepaid on 1st June last. Approximately only one-third of the total sum had then been repaid. In 449 cases in which the sum outstanding on 1st June last was £67,850 10s. 5d. the borrowers are either dead or have left the country, or have ceased to be fishermen, and the boats, engines or gear, for the purchase of which the advances were made, no longer exist.
There is no asset which could be recovered in these cases, and I propose to write off the whole amount of £67,850 10s. 5d. outstanding. There are in some of these cases persons who became sureties for the borrowers at the time the loans were made. These persons might be proceeded against for the recovery of the sums due, but on consideration of all the circumstances I do not think it would be equitable to take that step. In very many cases they are people of no great financial standing themselves. While the undertakings into which they entered were something more than a mere matter of form, they intended to do no more than guarantee the integrity and industry of the borrower, and it would be unjust to seek to put on their shoulders the liability for losses resulting from causes beyond the control of either the borrower or themselves.
In 23 cases on which a total sum of £15,799 14s. 8d. was outstanding on the 1st June last, there are 21 boats which are laid up, or which if still put to some use are not in the hands of men who, in my opinion, are ever likely to make proper use of them. The total sum originally advanced was £19,448 19s. 9d., and only £3,649 5s. 1d. has so far been repaid. I propose in these cases to write off the whole remaining amount on condition that the boats and gear are handed over to me, when I shall transfer them to the Sea Fisheries Association.
The remaining loans number 280, on which £29,370 13s. 5d. was outstanding on the 1st June. In these cases the borrowers are still engaged in the fishing industry. The total originally advanced was £41,033 19s. 8d., and of this £11,663 6s. 5d. has been repaid. I propose to write down the balance from £29,370 13s. 5d. to £11,469 19s. 8d. on certain conditions, to which I shall refer later.
In reviewing this outstanding balance I have been guided generally by the consideration that the debt should be reduced to a sum which the borrower can reasonably be expected to pay from his earnings in the industry. I have measured this sum by the present value of the boats, which is, I think, a fair criterion. I propose to make it a condition of the reduction that the borrower shall become a member of the Sea Fisheries Association, and shall repay the reduced debt in the way that repayments would ordinarily be made to the Association for boats supplied in future. If the borrower has no more to pay than the present value of his boat then I anticipate that the Association will have no hesitation in consenting to that arrangement for the payment of the remainder of the debt. The general principle is therefore to write down to the present value of the boat, but there are some exceptions to that.
Under an earlier proposal in 1927 it had been intended to reduce the original debt for boats obtained between 1917 and 1923, when the boats were purchased at abnormal prices as compared with the normal cost of the boats. I propose that every person who would have been affected by that scheme shall have at least an equal benefit. There were certain fixed lines on which these reductions would be made, and certain persons would have gained more under that arrangement than they would gain under the present arrangement—that is, writing down to the present value of the boat. We give the persons who came under the 1917 to 1923 promise the full benefit of that promise. They would have been written down under those proposals had those proposals been carried through by legislation. They will now be given the benefit as if they had been written down.
There are a few cases in which borrowers had the benefit of the high earnings in the war years, and invested those earnings in other property when they might well have made larger repayments of these loans. In one very flagrant case of this sort I do not propose to bring the loan within the scope of the Bill at all. In other cases I do propose to give the full benefit of the general principle which I have stated, and I intend to make it a condition of the reduction that the difference between the reduced sum and the present value of the boat shall be paid down in a lump sum at once. Those are persons who made a good deal of money, and who could reasonably be expected to have repaid a certain amount of their liabilities to the State, but instead they bought other property—in other words, they stuck to the money. Some of them bought very valuable farms for the money earned by those boats instead of repaying any of the sums due to the Congested Districts Board, the Department of Agriculture, or the Department of Fisheries.
The large sum of £101,550 18s. 10d. which it is proposed to be written off these debts will indicate that I do not propose to deal with the matter in any niggardly fashion or in any cheeseparing spirit. I am satisfied that, in the interests of the industry and in the public interest, a courageous measure of this sort is amply justified, but I do not think that those few who could well have done more to meet their obligations should be relieved of those obligations at the public expense to a larger extent than is reasonably necessary. Senators will appreciate that it would be inappropriate to attach a schedule of the dimensions which would be necessary to give particulars of each of those loans, involving as they do 752 separate cases. The figures are settled. If there is any Senator who is anxious to see the list I can make it available for him. While, as I said, it is not proposed to proceed against the sureties, Senators will see by Section 3 of the Bill that it is not proposed to relieve them of their liabilities in respect of the amount to which the loans may be written down. Section 3 is considered necessary because we are interfering with the original contract as between the borrower and the State. As we were changing the amount which borrowers originally got, it was thought that if this provision was not made the sureties might be relieved entirely of any responsibility for the reduced amount. That is why Section 3 is there. But, in fact, because of the conditions on which we are writing down the loans the position of the sureties will, in future, be nominal.
Senators will understand that from now on sureties will disappear. There will be no more sureties for loans, because in future loans will be given through the Association. The members of the Association will handle the catches. They will have security for the loans in that way, because they can deduct from the catches an amount sufficient to repay the loan and the interest on it.
Section 4 is designed to give the Minister for Finance power to write off in future any sum which he may be satisfied is irrecoverable in respect of loans of this sort. There is some doubt as to whether he has that power at present until every available legal remedy has been exercised to recover the debt. The power now asked for will obviate the infliction of unnecessary hardship on fishermen who, through some misfortune, may be unable to meet their liabilities. It will at the same time save the State incurring needless expense in taking legal proceedings from which there could not possibly be any result.