AN AUSTRALIAN CRITIC.

Auckland Star, Volume LXIV, Issue 283, 30 November 1933, Page 6

AN AUSTRALIAN CRITIC.

The sharpness of a special grievance is in the criticism of New Zealand finance that was uttered by the president of the Bank of New South Wales at the annual meeting of the Bank. The New Zealand Government's action in taking over the banks' reserves at mint par value is resented by these institutions, the Bank of New South Wales included, and Mr. Buekland was caustic in his comment. What he said, however, was xfurely from the banks' point of view. He did not refer —at least he is not reported as having done so—to the fact that the Government came to the rescue of the banks in the war, and to the embarrassing position the banks would be placed in now if the protection afforded their gold by law were removed. To regard this reserve as the sole property of the banks is a narrow view. It is really the currency reserve of the whole country, and the Government, by placing it under the control of the Reserve Bank, is treating it as such. Nevertheless, we are of opinion that the country's best interests would have been served by a compromise. On the other hand, Mr. Buckland's references to the danger of Government interference with the working of the Reserve Bank is thoroughly well justified, and is in line with what has been said by many responsible critics in New Zealand.

Mr. Buckland's criticism of our Budget is in some respects only too well founded. We have incurred deficits, we have pledged part of our reserves, and the deficit at the end of this year, as was remarked when the Budget was presented last year, may be very much larger than is provided for. It depends mainly on the cost of exchange, and the ink on the

Budget was hardly dry bpfore wool prices rose steeply, and thereby presented a fresh threat to Mr. Coates' nebulous castle of estimates. The position, however, is not so bad as Mr. Buekland makes out. All countries are in financial difficulties. We may bo living on our reserves, but are we not fortunate to have these reserves ? The / implication that Australia has managed better is not quite so sound as Mr. Buekland supposes. It is true that the Federal Government had a favourable balance for the past year, and that taxation has been remitted, but what of the floating debt? On June 30 last that floating debt amounted to £83,000,000, accumulated within a few years, and it increased after that date. Taking the population of New Zealand as one-quarter of Australia's, we would on lliis basis have a floating debt of over £.20,000,000. The Budget shows that on March 31 last our floating debt was £4,000,000, or, including the amount borrowed on security of soldier settlement lands, £6,250,000. Our position in this respect is therefore much more favourable than Australia's. The fact is that the two countries have adopted different methods of meeting the crisis. Mr. Coates has promptly replied to Mr.. Buckland's criticism of our credit, showing that this has been better than Australia's. Mr. Buekland, however, may reply that it remains to be seen how the banking legislation will affect our credit in London. It is perhaps fortunate for us that the rise in wool came when it did, for our prospects may balance any resentment felt about the Reserve Bank Bill and the question which currency interest is to be paid in.