AUSTRALIAN FINANCES.

Press, Volume LXVI, Issue 20021, 1 September 1930, Page 12

AUSTRALIAN FINANCES.

RIGOROUS ECONOMY.

DETAILS OF COMMON PLAN

A heavy diminution in expenditure of both current revenue and loan money is the basis of the "common plan for the rehabilitation of Australian finance" adopted by the conference of the Governments of the Commonwealth and the States in Melbourne. The "Sydney Morning Herald" states that when full effect is given to the plan at least £20,000,000 will represent the reduction in Governmental expenditure on loan and revenue accounts. The principal resolutions by the conference were as follows: — (1) That the several Governments represented at this conference declare their fixed determination to . balance their respective Budgets for tbo financial year 1930-31, and to maintain a similar balanced Budget in future years; this Budget equilibrium will bo maintained on sucli a basis as is consistent with the repayment or conversion in Australia of existing internal debts maturing in the next few years; further, if, during any financial year, there are indications of a failure of revenue to meet expenditure, immediate further steps will be taken during the year to ensure that the Budgets shall balance. Overseas Borrowing Stopped. (2) That the Loan Council raise no further loans overseas until after the existing overseas short-term indebtedness has beeu completely dealt with; this decision to apply to overseas borrowing by large public authorities in controlling the operations of which the State Treasurer concerned will act in agreement with his colleagues on the Loan Council.

(3) That it is resolved by the several Governments, as regards such public works as it may be possible to finance by loans raised in the internal market, that approval will not be given to tho undertaking of any new works which are not reproductive in the sense of yielding to the Treasury concerned within a reasonable period a revenue at least equal to the service of the debt (interest and sinking fund).

Special Account for Interest. (4) That, in order to secure the regular service of the public debt from revenue, steps will be taken to provide that all interest payments shall be made to a special account in the Commonwealth Bank, to be used solely for the payment of interest, (5) That the Commonwealth and State Treasurers will publish monthly in Australia and overseas a brief summary on uniform lines showing their Budget revenue and expenditure, the position of their short-term debt aud the state of the loan account; such statements to be drawn up after a uniform model to be agreed upon. An official statement explained that it would, of course, be a matter for each Government to decide how the policy embodied in the resolutions was to be carried out in its own separato State. It was recognised Jbat it was essential to the solution of the problem that the Commonwealth and all the States should be treated as a single entity aud that the arrangements should bo regarded as having been made by the whole of the Governments (Commonwealth and State), acting as a single body. To give effect to those arrangements, anrl to watch their operation in all the States, a committee consisting of the Treasurers of the Commonwealth, New South Wales, Victoria, and South Australia was appointed to represent the conference for the purposes of the agreement. This Committee will have power to consult outside financial and economic authorities and will be in continuous touch with the directors of the Commonwealth Bank. When necessary it will convene conferences of the Governments.

The conference instructed this committee to examine the question of duplication of Commonwealth and State services with the object of eliminating such duplication "where possible. Sacrifices to Avert Disaster. "The members of the conference represent all the Governments of Australia," the official statement added. "Their decisions have been arrived at apart from Party or political considerations, and with the desire to avert the danger which threatens Australia. Having heard Sir Otto Niemeyer and Sir Robert Gibson, they have no doubt that the present difficulties in Australia's financial and economic situation will be gradually relieved if the arrangements outlined are faithfully carried out as they intend they shall be. This will unquestionably involve a heavy diminution in both revenue and loan expenditure, and will require substantial sacrifices on the part of all sections of the community, but the voluntary aceptance of these sacrifices is, in the opinion of the members of tho conference, the only possible way of avoiding the infinitely greater and more prolonged sacrifices that would be involved in any failure to meet our national obligations. Such a failure is, of course, not to bo contemplated. It would involve not only national disgrace and dishonour, but would mean immediate financial disaster, which would be followed by unemployment on an unprecedented scale, with all its attendant human suffering." Immediately after the conference, the Treasurers held a meeting of the Federal Loan Council, and reviewed the loan programme for tho current financial year. The grand total, to' be financed by internal loans, which had already been curtailed twice previously, was again reduced from £24,000,000 to £15,000,000, the lower amount to be apportioned among the seven Governments on the same basis as the original sum. The Council decided to review the position in October.

Only the First Step. The proposals embodied in the resolutions were described by Sir Otto Niemeyer as "wise and necessary," but ho pointed out that their application was only the first step. "Australia would then be able to turn to the question of gradually liquidating her outoutstanding obligations in London, which, in itself in any circumstances, is not likely to be an easy operation, or one which could be carried out except by stages," he said. "But there remains a more fundamental question on. which I believe the above preliminary suggestions arc ultimately conditioned. Australia caunot wish to 'remain for over UDder a regime of emergency tariffs aDd rationed exchange. She has to emerge from that position and to show signs of progressing toward an emergence. To achieve this end she depends inevitably to a large extent on the primary producer, and the power of the primary producer, selling in the world market, to assist depends largely on the question of his costs, and those in turn depend very largely on general costs in Australia, which govern what he has to pay for his supplies and services. I assume that everybody is in agreement that costs must come down. "There may be room for increased efficiency, but there seems to me little escape from concluding that Australian standards have been pushed too high relatively to Australian productivity

and to general world conditions and tendencies. If Australia does not faee that issue she will not be able to keep even those standards which she might hope to carry by taking timely action, and she will see an inevitable increase in unemployment. _ "The situation is difficult, and calls for a considered programme and united action; but I wish to make it quite clear that given determined action, it is in no way beyond control. The difficulties of Australia are not comparable with those from which many countries have successfully emerged, and have only to be squarely faced to be capable of solution."

LORD LUKE ON ADVERTISING.

"If we are to recover our trade I view vrith alarm the number of industrialists who, at this special time, are dropping out of the habit of putting their products before the public. It is absolutely necessary that advertising should continue, and for two reasons." Lord Luke of Pavenham, chairman of Bovril, Ltd., who gave the opening address at the recent Advertising Convention, held at Hastings, England, gave his two reasons to a reporter:"In the first place," lie said, "it must be realised that there is another •feneration coming on. The young men and women of to-day will presently be setting up house for themselves. That means they will be buying furniture, starting to housekecp, launching out into a hundred and one forms of expenditure. At present, because they are not old enough, they have little notion of how to make a beginning. "For their own profit and for the profit of the coming,, generation the industrialists must teach them—by advertising. "In the second place, they must.keep the goodwill of their businesses intact by continually . advertising against better times. For when better times come people will begin to buy again the things they found they could not afford in the time of depression—but only if they are reminded of them by advertisements. "If the manufacturers cease to advertise their goods now the public will forget about them whe;i prosperous times in the staple industries return, and they will be no better off. "The "trouble with many industrialists to-day is that they remember the success advertising brought them three or four years ago. Now that a depression is with us they become fainthearted. "Tlicy will bo well advised to see that their goods arc continually in the eye of the public."