AUSTRALIAN FINANCE.

Press, Volume LXVII, Issue 20272, 25 June 1931, Page 13

AUSTRALIAN FINANCE.

ECONOMISTS* PLAN. TJio Monthly Summary of the National Bank of Australia for May, discussing economic conditions in Australia, says that the continued and serious drift in national finances, growing Budget- deficits, and increasing unemployment have' at last made it clear to even the most prejudiced of our political leaders that wide adjustments must be made in Governmental expenditures, and tliat many cherished dogmas must be either east aside or greatly modified. It was with the object of ascertaining how shortages _in Government revenues and excessive use of bank credit by the Treasuries to meet current demands, and how the sacrifices, Which corrective action would entail, could be- spread ovor tlio community most equitably and with smallest unfavourable reactions, that a committee ot' economists and high Treasury officials was asked to investigate the position and indicate what, in their opinion, should be done to restore Budget equilibrium, and at the same time permit industry to commence absorbing some of its unemployed members. Their plan is based upon an all-round reduction of 20 per cent-, in all controllable expenditure. This reduction is already provided for in their Budget estimates of expenditure of Departments and Public Utilities for the coming year by South Australia and Western Australia, and if it is applied to the Commonwealth and the other four States a saving of £8,900,000 should be effected. Invalid, old-age, and war pensions for the coming financial year arc estimated at £21,000,000, and a 20 per cent, reduction in this item would save £4,200,000. Additional suggested economies in New South Wales, where expenditure has been on a higher basis per capita than in the other States, should yield over £2,000,000, and savings by all the States on road construction and maintenance should amount to £1,200,000. The increase in unemployment and the dr3'ing up of the stream of private benefactions may make it necessary to increase outgoings on relief, etc., by £3,000,000, making the amount to be provided for 1931-32 £15,000,000. The above proposals provided for savings of £13,000,000 during the coming financial year, leaving a shortage of £26,000,000 still to be provided for. The committee considers that revenue can be enlarged by adding to taxation in Victoria and Western Australia without making income tax more severe than in the other States. An increase of £1 per head would raise some £2,200,000. It advises that sales tax and primago duty could bo raised to six per cent, and ten per cent, respectively, with exemptions on basic foods, agricultural machinery, fertilisers, cornsacks, etc.; also it suggests alterations in the basis of valuing imports and collecting Customs duties, abolition of embargoes and rationing of imports and reduction in some of the excessive import duties' imposed during the last two yoars. By these measures an addition of £8,000,000 would, it is thought, accrue to the revenue. Additional direct taxation—income tax, land tax, and entertainment tax—should not exceed £2,000,000, which the committee thinks is about the limit of what can %visely be obtained in that way.

At this point the committee states that the gap between revenue and expenditure would be about £14,000,000, with regard to which it makes the following observations: —"But while it remains true that 'the gravest danger to confidence lies in the unbalanced condition ot Government Budgets,' the revenuo has fallen so much further below expenditure that 'reduction in Government expenditure,' though it is more imperative than ever, is no longer, as they found it, 'the key to the whole position.'" It points out that incomes from fixed money claims have not been reduced to the same degree as other income-ele-ments, and suggests an immediate conversion of Government internal loans at a low rate of interest, whereby interest payments would be reduced by £3,000,000. This, they say, could be achieved only by a great patriotic movement backed by a large volume of consent on the part of bondholders, and they consider that tho operation would need to be underwritten by the banks and insiiranco corporations. Also, as private debts are not included, an accompanying reduction of bank and mortgage interest rates is advised. The measures discussed above would reduce the deficit by £.28,000,000 in a full year's operation. The resultant deficit —£11,000,000 — the report states, is likely to be substantially reduced in subsequent years, and, under tho prevailing circumstances, this would be justifiably covered by borrowing—such borrowing to come from savings, not from increases in bank credit. > RUSSIAN DUMPING. DOMINION PRODUCE AFFECTED. (PRESS ASSOCIATION TKLEGSAii.) NEW PLYMOUTH, June 24. Of New Zealand's total production of butter and cheese, only 20 per cent, of tho butter and 4. per cent, ol the cheese was consumed in tho Dominion, and the remainder had to bo sold in the markets of tho rest oi tho world, said the Minister for Agriculture, the Hon. A. J. Murdoch, at the National Dairy Conference to-day The disturbing factor was the dumping on the British market of Russian butter at a low price. As a matter of fact Russian exports of butter to Great Britain dropped from 18,601tons ?n 1927-28 to 18,108 tons in 192829, and to 10,031 tons in 1929-30, but recently it seemed a determined effort was being made to flood tho Britisn market, and there was a fear that the exportations to Britain from Russia might increase. If this occurred and butter was put on the British market at a low price, the position would be serious for New Zealand. Tho Russian competition could be countered in only one way, by a British tariff against it. This tariff was not likelv to bo imposed at present, but it might come in the- near future. Britain was realising that if the entitv of the Empire was to be preserved, a tariff must be imposed against foreign competition. WORRIED INVESTORS. SAFE, GILT-EDGED PROPOSITION. Worried investors seeking a safe outlet for their capital are jubilantly applying for Christchurch Drainage Board Debentures', only a few of which now remain for disposal. Interest is payable at the rate of 5A per cent, per annum, and the security is so sound that the Debentures are classed as a Trustee Investment. Application forms are obtainable from the Board direct, .or from any shalrebroker or branch of the Bank of New Zealand. Debentures are issued in . denominations of £IOO each, and applications for same, together with cash, draft, or cheque, should be forwarded to tho Christchurch Drainage Board, IDB Hereford street, Christchurch, immediately. A brokerage of 1 per cent, will bo paid to sharebrokers, banks, and .solicitors doing business in ! the Dominion on sales aetualiy eomplet- | ed by them, —o