BANK'S TERMS.

Auckland Star, Volume LXIV, Issue 42, 20 February 1933, Page 5

BANK'S TERMS.

FINANCING THE STATES NO MORE TREASURY BILLS. PROVISION OF £4,000,000. (From Our Own Correspondent.) SYDNEY, iwJi 10. During the past week the Loan Council has met at Melbourne, and has agreed to complete the financial arrangements with the various State Governments last year. The original pro- ■ gramme then adopted involved the raising and spending of £20.000,0u0. Of this £14,000,000 has already been raised, leaving £0.000,000 to complete the total. The State Premiers and the Prime Minister went to Melbourne prepared to ask for only £4,000,000, and it is an interesting fact that New South Wales had reduced its requirements by over I £1,000,000 for the current year. But the conference between the Premiers and the Bank Board, which holds the keys of the financial situation, was not by any means plain sailing, and it was marked by several "incidents" of a more or less personal nature. First, Mr. Forgan Smith, of Queensland, caused something of a sensation by refusing to meet his colleagues at a pre-confer-ence luncheon, fearing apparently that he might compromise himself with his. Labour adherents by associating with "high finance" in a convivial way. Then when the Premiers had to discuss the position with the Commonwealth Bank, the old personal animosity between the chairman and certain members of the Loan Council flamed up anew. An attempt to arrange an interview between Sir Robert Gibson and Mr. | Lyons, the Prime Minister, broke down. Satisfactory Terms. As a matter of fact, when the Premiers presented their modest demand for £4,000,000, Sir Robert Gibson inti-,

mated that the bank did not feel inclined to go beyond £2,000,000, and then only under stringent conditions in regard to the raising of the money. The Premiers discussed the situation, and returned to the attack; and Sir Robert—■ who seems to make a point of adopting a forbidding attitude and then showing himself amenable to argument—eventually gave way. The Premiers got their £4,000,000 on terms which Senator Massey Greene, Mr. Lyons' chief financial adviser, has described as quite satisfactory. The £4,000,000 required to complete the works already arranged up to the end of June will be provided at once by Treasury bills. But this is to be the last issue for such purposes, and, as the "Sydney Morning Herald" has said, if the Governments desire, after this sum has been expended, to construct public works from loans, they will have to face the market for themselves. Deficits, however, may still be financed by Treasury bills; and it is noteworthy that though the deficit of New South Wales is now about £2,500,000 for the current year, this represents an immense improvement on the huge deficit of £14,000,000 which was Mr. Lang's most important legacy to Mr. Stevens. The Future. The financial requirements of the States for the year have thus been fairly covered, as regards public works. As to the future, the conference discussed plans for borrowing £12,000,000 to finance next year's programme. But this was left over for the time, and the terms finally conceded by Sir Robert Gibson represent a great advance on his original proposal. These included his last year's suggestion for the raising of a loan to liquidate a large amount of Treasury bills, but he is now prepared to let these stand over, even in the case of future loans and deficits, till the more immediate requirements of the States are satisfied. One can hardly be surprised that the Commonwealth Bank is anxious to keep a tight ho'.d on public expenditure, especially vhere public works are being financed out of loans. But for the present New South Wales has the satisfaction of knowing that her share in the advances now guaranteed comes to over £2.000,000, and that a total sum of £7,000,000 for public works will be expended here this year, giving additional employment to many thousands of workers.