DOUBTFUL.

Auckland Star, Volume LXVII, Issue 272, 16 November 1936, Page 12

DOUBTFUL.

POLITICAL OUTLOOK. 1 AUSTRALIA'S POSITION. RESTRICTIONS OF CREDIT. S That the political outlook in Australia appears to be somewhat doubtful tl is the view expressed by Mr. H. J. Kelli- tl her, a director of the Bank of New Zea- c< land, who returned at the week-end ai from a visit to Sydney and Melbourne. C "On the surface, at least, things are d; booming," said Mr. Kelliher. "Mel- 111 bourne during Cup week is the Mecca ? c of sporting Australians and practically 11 the whole population comos under this category, more or less. Delving a little °' below the surface, however, one gets a w glimpse at the other side of the picture. 11 Recent statements made by prominent ° political leaders indicate that there are ' definite signs of a period of credit restrictions. The comparatively short c< duration of acute depression in Aus- m tralia and the rapid recovery were tl undoubtedly due to a liberal financial fi policy and a generous supply of cheap u money and credit. From statements C( made by several State Premiers, this ti policy is about to be reversed, which n: must have the effect of slowing down h national works and react unfavourably w on industrial shares and even gilt- tl edged securities. Australia's Debt. di "Official figures just issued from Can- r< berra give the public national debt as si with an annual interest a bill of £44,693,465. Although oil a population basis we are probably not much „ better off in New Zealand, the Austra- jj lian public debt charges afford even a j { more impressive example than ours of the tremendous difficulties confronting y Governments in their endeavours to do anything like justice to the national J r progress and development of a whole continent under the existing system. e ' "During my stay I was greatly interested in what newspapers termed 'A Fight for Financial Control,' between r the Loan Council and the Commonwealth o Bank. A position arose where the t various States asked for a loan of p £10,000,000 in order - to carry through d their loan works programme j the Com- e monwealth Bank Board decreed that the n loan was to be limited to £7,500,000 and n that the effective interest rate was to be s £3 19/4 per cent, as against £3 0/4 n ■per cent for a former loan. Needless to say, strong resentment was expressed i at what was described as the 'deflation- C ary attitude' of the Bank Board and t the lack of freedom on the part of State a Governments in deciding what money y they shall raise for governmental pur- f poses. Controlled Policy. "The general feeling appears to be that ' Australia still requires a controlled - i policy of credit expansion and that a * "restriction of credit at the present juncture may have serious effects on employment and trade and industry generally. 'A reasonable policy of public ■ woTka is an essential part of our I economic structure,' said the Premier t of New South Wales (Mr. Stevens), who i was particularly outspoken in his t criticism. 'It has been so for years past and it is—in some form or other — in every country which is making its way out of the depression.' " Mr. Stevens 5 attributed the unsatisfactory financial s * situation to the Commonwealth Bjink ; t policy, which, he said, was exercising a > very effective control over the operations of the money market. He said that 1 s there was obviously something wrong 1 with the Central Bank policy when Aus- . 3 tralian interest rates were, rising out of , J line with world interest rates, j ' • Control of Credit. "The Premier of Tasmania went even * as far as to say that he would never , be satisfied until 'the.Federal Govern- , a ment took from the Bank Board the . ' control of the credit of the community , ~ and returned it to the people to whom it , rightly belonged.' The Premiers of Vic- , , toria, South Australia and West Aus- ( ' tralia were equally outspoken ill their ( „ criticism. The unqualified condemnation , of the Commonwealth Bank policy caused | widespread amazement in State Govern- , 1 ment circles, and .it is generally feared B that' it may have a detrimental effect ' on the success of the new loan i.jsue. B "The political outlook in Australia '] appears to be somewhat doubtful, and ; , a number of business men with whom I . discussed matters expressed the opinion * that tliere are prospects of a f Labour Government being returned at p the next general election."