TROUBLE AHEAD.

Press, Volume LXVI, Issue 20037, 19 September 1930, Page 14

TROUBLE AHEAD.

FEDERAL CABINET. PLANS FOR ECONOMY. (tbom qua owv cokmspokdxst.) SYDNEY, September 11. Although the Federal Cabinet was united in the adoption of a echeme of nation-wide equality of sacrifice to meet the present economic position it does not mean that its troubles have ended. Far from it. It has still to convince the members of the Party that what it plans is right. And as the Cabinet policy includes an allround reduction in wages, this is., not going to be an easy task. There are still many die-hards in the movement, and there always will be. Still, it was, something of an achievement to secure unanimity within the Cabinet, which a week ago showed grave signs of crumbling. The depression may break down a great number of traditions, but most likely of all it will break the Labour Party. Cabinet has progressed so far that it will not be necessary for Ministers to meet again until a special sub-com-mittee is ready to submit its report, aticr having conferred with both the omployers' and the representatives. Ministers hope that the measures contemplated will at once reduce the cost of industry throughout the country, and bring about increased omployment and production. The programme that is being evolved actually falls under two heads:— (1) The securing of equality or sacrifice throughout the community in the monetary adjustment, and, (2) Finding work for tho unemployed. ♦ On the first point Ministers feel with the Trade Unions that cuts., m wages without equal cuts in other incomes would be unjust to the working classes. Therefore they are prepared to explore the possibility of bringing sheltered private incomes—interest from bonds, debentures, mortgages, and so on—into the deflation net through an increase in the rate of tax on income from property. Cabinet is prepared to ask all salary and wage-earners to accept, in the national interest, and for the restoration of employment, a cut, provided equality can be achieved in this direction. This cut may bo from 10 to. 15 per cent, in nominal income. Ministers also have in mind a reduction in the bank rate of interest. They accept the view that Australian trading banks do not exist primarily for profit, but are in the nature of national institutions, and that their rates of interest are governed by the money that is available. Some bankers have already exr ptessed the view that any decrease in the rate for deposits, which would follow a decrease in the rates for overdrafts, might lead to a withdrawal oi deposits, and therefore a further restriction of overdrafts. Sir Otto Niomeyer and Sir Robert Gibson, chairman of the Commonwealth Bank Board, have both expressed tlie view that with the restoration of confidence nil rates would come down automatically. Sir Robert Gibson has estimated that a reduction of 1 per cent, would relieve industry of £3,000,000 a year. FiVfn thw fijntro !r nf minor importance in the rehabilitation of industry, but the psychological effoct would be enor--! tnous.