The Dominion THURSDAY, SEPTEMBER 23, 1920. MAKING ENDS MEET IN AUSTRALIA

Dominion, Volume 13, Issue 309, 23 September 1920, Page 4

The Dominion THURSDAY, SEPTEMBER 23, 1920. MAKING ENDS MEET IN AUSTRALIA

The financial problems confronting this country _ are illustrated on a bigger scale in tho Australian Federal Budget recently laid before the Commonwealth Houso of Representatives by Sir Joseph Cook. At an immediate view the Federal finances are in particularly good shape. More than 18 per cent, of the war expenditure of £381,149,019 has been paid out of revenue, and on top of this the operations of 'the fiscal year which closed on June 30 left in hand a revenue surplus of £5,747,423. Although expenditure is mounting apace in the Commonwealth, revenue also has shown a phenomenal increase of late, partly as a., result of the expanding returns from Customs taxation. The revenue of £52,782,748 for 1919-20 exceeded tho Treasurer's estimate by £6,436,113. In these conditions some optimists had predicted that no new taxation would be imposed for' the current year, but in his Budget Sir Joseph Cook demonstrates that these hopes were based upon an imperfect examination of the facts. A small concession, evidently a bid for popularity, is made in the abolition of the amusements tax on pictureshow and theatre tickets of small ambunts, but the Budget, besides earmarking the revenue surplus for expenditure during the current year, proposes new taxation, direct and indirect, and extra postal and telephono charges which aro estimated to produce in tho aggregate £3,766,000 of new revenue. Sin Joseph Cook justified tho imposition of these additional burdens with arguments of undeniable weight. Tho he pointed out, now looking the full financial effccts of the war in tho face. Tho total interest and sinking fund charge for tho current year (chiefly on war loans) is £20,712,100—that is to say close on two-fifths of last year's total revenue. Under tho new arrangement by which the sinking fund has been, increased to one per cent., the rev-' enuo of the Commonwealth will havo to meet this enormous charge of over twenty millions annually for the next thirty-seven years. At the sain<; time tho Federal Treasurer maintained that it was now absolutely necessary to provide out of revenue for some classes of expenditure that formerly, would havo been Siot by loan-raising. It was clear, ho observed, that tho borrowing of new money abroad was practically out of the question, and almost as clear that the calls for loans from Australian resources must be reduced to tho smallest sum possible.

The first of JjJiese contentions is borne out by the failure of some of the Australian States to raise loans in London and by the rates others have had to pay. A late example is a New South Wales Government loan of £2,500,000 at a rate of six and a hall per cent. Xtio dennitely limited pdssibilitics of internal borrowing havo been made fairly plain of late in connection with the raising of the Second Peace Loan of £25,000,000. Nearly the whole of this amount is to be spent on soldier land settlement and "war service homes, and tho rate of interest is six per cent, free of State income tax, though not of Commonwealth, taxation. 'The loan has a strong patriotic appeal, which was emphasised in , an elaborately organised publicity campaign throughout the Commonwealth, the terms offered aro reasonably attractive, and tho stock is redeemable ten years hence. Nevertheless tho full amount of the loan was not raised until the time originally set had been extended. These and other examples show that Sir Joseph Cook has good grounds for,urging that as compared with pre-war days it is necessary now to rely more on revenue and less on loans. Tho estimated expenditure of the Commonwealth for the current year is £68,872,578, an increase of £18,314,195 on the expenditure of 1918-19. The increase includes a sum ot over seven millions previously chargeable to loan. Looking at all the facts, it is obvious that the Federal Treasurer, in spite of tho substantial revenue surplus in- hand, is faced by circumstances of extraordinary difficulty, which demand the utmost care and forethought in financial administration. The war lias imposed enormous burdens, and as in most other countries ordinary expenditure lends to increase rapidly. At tho same time there is an absolute necessity of meeting conditions /in which loan-raising is difficult, and an increased reliance on annual revenue is inevitable. Although it is claimed that Australian taxation (that of the Commonwealth and States combined) is lighter per eapita' than in New Zealand, the opinion has been freely, expressed that in the island oontinent the practicable limits of taxation havo heen very closely approached. This opinion carries the more weight since tho current, volume of production in tho Commonwealth, as is mentioned in one of to-day s cablegrams, is appreciably less than it was in 1913. It is of interest in this coniysction that Sir 'Joseph Cook's to increase tho Commonwealth income tax by five per cent, ia tentative "in view of the investigation to bo made by a Royal Commission into the incidence of Commonwealth and Stato taxation.'' The need of instituting such an inquiry is not less apparent in this country than in Australia. As a whole, the problems of Commonwealth finance call for all the wisdom and forethought that financial administrators can exercise in fairly 'distributing hftfdens and in

apportioning and using resources to the best advantage. With some variations in detail, substantially the same problems and _ conditions present themselves in this country, and they, make, of course, precisely similar demands upon those who aro entrusted with the administration of the national finances.