AUSTRALIA'S POSITION

Evening Post, Volume CX, Issue 49, 26 August 1930, Page 9

AUSTRALIA'S POSITION

UNPALATABLE TRUTH

OBLIGATIONS IN LONDON

(From "The Post's" Representative.) SYDNEY, 21st August. The gravity of the position which the Premiers and Treasurers of the Commonwealth and the States had to face when they met in Melbourne od Monday last can best be conveyed by the statement, made on the authority of a high financial man, that throe big banks in London, apart from the Bank of England, could, by calling up the overdrafts of the Federal Government, or the State Governments, make Australia bankrupt. Politicians have flinched from acknowledging the desperate position into which the finances have drifted, but it is useless to deny the fact that if Australia was called upon to-morrow to meet its obligations in London it could not do so. Let it bo said at once that Australia has not' yet committed an act of bankruptcy, and according to the very definite statement made by Mr. Seullin, the Prime Minister, at the week-end, it will not do so. But as yet no pressure has been put on Australia. English investors, however, to whom Australia owes more than £600,000,000—apart from municipal loans —want an assurance'that everything is in order, and that is why Sir Otto Niemeyor is hero.

He is also licre to affirm, according to the same authority, that English bunks can no longer carry the overdrafts which tho several Governments have built up in London. The credits which tho Australian banks have been able to command in London by virtue of tho cash accruing' from the export of primary produce is on the point oii exhaustion. The Confmonwealth Bank, v/hieh has been the mainstay of the Oommomvealtli, can do no more, and tho trading banks cannot give any furtner assistance. The uredits of the various banks in London have been massed, but they are not sufficient for current requirements. Gold has been shipped to London to the amount of £20,000,----000, but there is still about £37,000,000 to be met. And if all tho gold in Australia were to bo shipped to London to-morrow there would still bo a deficit of several millions. Everything, therefore, abslutely depends upon bebig able to satisfy tho Bank of England and other English banks that Australians, as a nation, are determined to pay their way and discharge their debts. CALL FOR COMMON POLICY. In an appeal which the Premier oil New South Wales (Mr. T. B. Bavin) mado before he went to the Melbourne conference, he said: "Failure to meet! our obligations in London would involve not only national disgrace and degradation, but would cause widespread financial disaster and tmeuiploy nient. At present no arrangements have been, mado for meeting those obligations." It "was imperative, therefore (he said), if the present crisis was to

be mot, that a definite and binding agreement should be arrived at by the Governments of the Commonwealth and the States for the adoption of a common policy. Thcro was no need for panic, and no need to doubt that Aus--tralia's difficulties would be overcome. If Australians wero pi-cparcd to face the situation and accept tho inconveniences and deprivations which wero inseparable from a period of financial readjustment, there was every possibility that within a year or two, given reasonably good seasons, Australia would begin to regain sound and lasting prosperity. ■ ASSURANCES SOUGHT. Although politicians have not been frank with the public, it is known that when the conference met in Melbourne it was faced with tho necessity of giving tho following assurancos to the Bank of England delegation:— (1) That the money owing in Loudon, £36,000,000, should be funded, and the liquidation spread ovor a short period of years. (2) That no loan should bo sought in London until this debt is cleared. (3) That Australia must in future' pay interest due out of revenue, and not by raising loans for this purpose. (-1) That tho Commonwealth and States should balance their Budgets. (5) That if the action taken for this purpose proved unequal to the situation further and immediate taxation or rptrenehinent should bo undertaken to oiisure that there should be no deficiency. - ■ (6) That for the future loan moneys expended upon public works should be confined to undertakings which within a reasonable pediod would bo sure to return interest and sinking fund on the amount borrowed and expended. To conditions (1) and (2) the members of the Federal Loan Council wero able to assent when first they met Sir Otto Niemeyor, and to (3) they could not offer any serious objection. When, they came to (4), while easy promise was made of "balancing Budgets, it was palpable that none of the States could, without Federal co-operation, guavantee this. Mr. Scuilin was optimistic about his sensational Federal Budget, but a probing of his figures has sinco revealed that at the end of the year he will bo between £5,000,000 and £6,000,0000 out. When the Foderal Government could not too . the line, neither could the States. ME. SCULLIN'S STAND. It was in those grave circumstances that the Prime Minister made a rather remarkable utteranco on Saturday, and it was generally regretted that no could not be present at the financial conference when it was resumed in Melbourne on Saturday last. "We aro cutting down expenditure as fast as we can," said Mr. Scuilin, "and we will eliminate every bit of waste. We have already, iv our eight months in office, loppod £.1,000,000 off tho expenditure, but to ask us to redueo wages or cut down old-age pensions—well, we will bo driven to the last ditch before we. do so." No one has seriously suggested that Mr. "Sculliii should redueo oldage pensions, but it has been seriously proposed that Parliamentary salaries and the salaries of Civil Servants should be reduced. Maybe he will soon realise that the last ditch has already been entered. All the aanie it was gratifying to hoar Mr. Seullin say that ho would not go oversea for anothor £1 of Joan-money. If tho Government requirements could not bo raised in Australia he would do without them.

From these facts it is easy to imagine the atmosphere in which tho Melbourne conference opened. The public of Australia scorns at last to have awakened to the gravity of tho position, and came to learn that, whatever decisions were reached, they would be of vital importance to the future of Australia —to the future of every individual citizen.