AUSTRALIA’S FINANCES

Press, Volume LXXXIV, Issue 25580, 23 August 1948, Page 8

AUSTRALIA’S FINANCES

“ WINDFALLS AND DOWNFALLS ” Most of the Australian Federal Government’s £60,000,000 of revenue in excess of estimates has been devoted to checking inflation by a process known as disinflation. Pointing this out in a comprehensive analysis of the Government accounts, headed “Windfalls and Downfalls,” the National Bank crticises the Treasury’s policy in several directions. There is much in favour of a policy of dis-inflation when money in total quantity is too plentiful and goods are too few, says the bank, in its monthly summary of business conditions. But if disinflation is to prove even a partial remedy, and it can never be more, it must be accompanied by consistent and positive Government policy in other fields. It must be pursued with careful regard to its effects on the other side of the balance—the production of goods. Over the last year a consistent policy would have required not only the use of windfall surpluses towards contracting the money supply, but the achievement of surpluses by economies which, as well as lessening the total of government expenditure, would also have released labour and resources for the production of goods. A positive policy would have required an attitude towards industrial problems far more firmly directed towards prevention of delays and restrictions in production and far more widely and less tardily supported by persistent emphasis and publicity towards the need for raising output. Middle Income Hit Another major downfall in Treasury policy is that tax rates have been held at levels Which have constituted an unnecessary check against incentive—so essential for real effort. Although the tax reductions planned for 1948-49 are a move in the right direction, they represent no more than a hesitant Mtep when a purposeful forward stride is needed. Even with the additional social services proposed it should be possible with reasonable economy to make a better showing. To attain a better balance of iponey and goods there is need for greater reduction in the tax rates on middle incomes. No nation, especially a young country, can afford to burden too heavily its middle income earners, because many of them set the pace of production. #