BIG DEFICITS.

Press, Volume LXVII, Issue 20414, 8 December 1931, Page 10

BIG DEFICITS.

CONDITIONS IN AUSTRALIA. UNEMPLOYMENT IS GRAVE , PROBLEM. The following statement on financial and trading conditions in Australia is bv a competent observer: — As reported in the Australian Press a few days ago, the combined deficits for both Federal and State Governments for the four months of the current financial year approximate £15,000,000. Of this total deficit, New South Wales is responsible for approximately one half. Although it is not always the case, in this instance the statistics quoted accurately represent the economic conditions in Australia. The success of the Premier's Plan and the rehabilitation of Australia therefore rest wholly in thd hands of the people of New South 'Wales who "will either malce or mar that success. The statement by the Federal Treasurer issued on No vember 2oth is therefore not without justification. Eeferring to the Premier of New South Wales, the statement proceeds:— "Lang has disrupted the Labour movement. If lie is allowed to continue his reckless career, New South Wales will end in an orgy of Communis m or an equally fatal Fascism. The Lang Plan is not a policy—it is a blight. It makes a pretence of protecting conditions of the workers, but business is being driven from New South Wales and the workers hero are suffering more acutely from unemployment, destitution, and grinding poverty than ever before in the history of the country. Lang's policy is landing his State in a financial morass. lie is heading for a deficit of eight or nine millions this year. For the being he ignores the impending disaster, but when the deluge comes it will not be Lang who will suffer, but the poor dupes whom he has fooled." Optimism on Stock Exchange. It is therefore somewhat difficult for observers outside Australia to assimilate these statistics and statements with the remarkable activity and optimism displayed on the Australian Stock Exchanges. Contradiction, jn fact, is somewhat startliug. It may be that the -Australian Stock Exchanges generally balance against the depressed condition of New South Wales the improving conditions in. other States and are prepared to discount the dangers inherent in the Lang Government's policies in view of the rather more promising outlook elsewhere. , is a fact that the underlying economic conditions in New South Wales have not yet been fully analysed. Partly prosperity of a country depends on psychological factors, partly on the trend or prices, and partly on general productivity, including especially the output of basic products, such as wool, wheat and metals. - Psychologically it is clear that the Australian public are inured to shocks, and prepared to make Ihe best of a bad job: As Sir Otto Xeimeyer remarks: "The greatest difficulty with which the Australians win have to contend is their unbounded optimism." Primary Products. In respect to the outlook for primary products, wool prices in local' currency have been steadily rising. The weighted average price per lb has risen from Gid in September to 9Jd during the current week. On the other hand, the present figure of 9Jd, calculated at to-day's rate of exchange, Australia on London, and London on New York, only indicates a gold price for wool around 6d per lb, which indicates a disastrous fall in the external purchasing power so far as weel exports are concerned. Fortunately, the British price of wool has risen to some extent, and means that our credits in that market will enable us to. secure slightly better terms of exchange for commodities.- -

The wheat situation, however, ia distinctly, more promising. Wheat is priced locally at an average of 3s 2d at country sidings, whereas the average price for wheat last year at country sidings was Is Bd. The gold price of wheat or dollar price, has, of course, shown-definite signs of reviving.

High Wages. The general productivity in New South Wales industry, however, is not 1 yet promising. Progress is undoubt-. odly impeded by the- rigidity of the State basic wage, which was fixed at £4 2s 6d for a man, wife, and one child, . in December, 192!), and has not changed Binee then, although prices have fallen very substantially. In addition, New South "Wales employees whose wages are , governed by Federal award are eligible ' to apply for child endowment in this State immediately their wages fall below the State basic wage when regulated by the Federal Arbitration Court. The effect of the rigid wage rates ruling in New South Wales is shown very markedly in price levels. The index of the cost of living in 1911 base equnlling 1000 for tho capital cities during the quarter ending September 30th, were as follows: — .?; ■ ' ' New South Wales .. .. 1571 Victoria .. .. 1411 ' South Australia .., .. 1286 Western Australia .. 1379 Queensland .. .. 1293 ' Tasmania .. 1431 (The "base includes rent for all types of houses.) The excessive wage rates ruling in this State have had a disastrous in- ■= fluence on employment. Figures of unemployment for Australia average 5 - about 30 per cent., based on unemployed h j, members in unions reporting to the ' Commonwealth Statistician. There are ' good grounds, however> for believing that in New South Wales these'figures ' are under-stated. Including rationed Workers who are temporarily un'eme; ployed, the total idle breadwinners in , New South Wales are probably in excess 1 . of 200,000. r Obstacle to Revival. Under these circumstances it is clearly hopeless to expect permanent revival prosperity, at any rate in that State, _ until some means are found for absorb- . ing workers in industry," and increasing output of goodß. The: unions who I wield very considerable influence hava actively opposed any wage fojfg. and refused to acknowledge the possibility that, industry in this country is at present definitely unable to pay the wage rates delnajided. ■ The worker is always ready to define his ■; limitations when it, comes to a question of how many bricks he can lay an hour cr much coal he should hew, but he appears to recognise no limitations as to the capacity of industry to pay high wage rates. The workers' belief in the miraculous and impossible only whqn he is making demands on

his employer, and in, that case, as is happily expressed by the French, "il fait prendre la lune avec les dents.'' He is quite ready, in other wordß, to force his employer to catch the moon with his teeth. must be an end to the political stupidity and irresponsibility we are witnessing in New South Wales, and that end may come suddenly and unexpectedly.