NATIONAL CREDIT.

Auckland Star, Volume LXIII, Issue 122, 25 May 1932, Page 6

NATIONAL CREDIT.

Australia's credit has recovered to such an extent- during 1 the past week that holders of New Zealand stocks have been advised by a London financial critic to make a partial change to Commonwealth securities. Two factors have contributed to this; one is the recent dismissal of the Lang Government in New South Wales, and the other the improvement in Australia's trade position. It is also suggested that the report of the Economic Committee on the condition of New Zealand has had a tendency to weaken the credit of this Dominion. The report was released at the beginning of March, and copies of it must have reached London early last month. Six weeks have, therefore, elapsed before this suggestion is made that it has caused uneasiness among investors. Such a silence should really be taken as evidence of the soundness of New Zealand's credit and a general endorsement of the recommendations in the report. Since t?ie experts made their investigation the Government has passed legislation giving effect to some of the main recommendations, and it is evident that the trend of events in New Zealand has a close resemblance to that in Australia. Every phase of the trouble experienced here appears to have been experienced earlier and more acutely over there. Budgetary deficits, falling export prices, an unfavourable trade balance, adverse exchange rates, lack of London funds, a slump in the value of Government securities abroad, an increasing disparity between farm costs and incomes, growing unemployment, wage "cuts" and taxes —these features have been apparent in both countries. Export prices, however, have fallen later, and to a less extent, for the commodities on which New Zealand mainly relies. The marketing conditions for dairy products, and most of the other pastoral products, have been more favourable than for Australia. In the past export season wool and wheat have so far represented two-thirds of the total Australian returns, while in the case of New Zealand they are less than a fifth. Butter, cheese and meat, on the other hand, have a value of over two-thirds of the exports from New Zealand, and it must be borne in mind that the sheep of the Dominion have a dual purpose —for their wool and meat. The Australian Merino is, on the other hand, primarily a wool animal. These facts explain the better trade position of New Zealand in comparison with Australia during the past two or three years. To-day the price of daiiy products is one per cent above the average for the five years before the war, and that of wheat is 33 per cent lower. The latest export returns show a substantial impiovement in New Zealand's overseas trade, and the excess I of exports over imports is the largest for the January-April period since 1929. This has been entirely brought about by increased production, as the price of butter, the principal item, has been even lower than last year. While thf •■toaime of exports has been increased that of- ihtports has been drastically curtailed, and this has had an important effect on the trade balance. New Zealand has thus been better able to bear h"r burden of indebtedness. The latest figures show that State and municipal taxation is the same, .£l7 per head of population, but Australian taxation, is higher in relation to her loan indebtedness than that of New Zealand. Generally speaking, our position appears to be better than that of Australia.