TEMPORARY RELIEF

Evening Post, Volume CXI, Issue 107, 8 May 1931, Page 8

TEMPORARY RELIEF

AUSTRALIA'S WAR BURDEN

RESULT OF NEGOTIATION

(From "The Post's" Representative.) :. SYDNEY,; 23rd April. . It has at last been revealed that the negotiations with the British Government for a revision of the. terms on which Australia's war debt to Britain was funded in' 1921 were begun when the Prime Minister attended the Imperial Conference' last year/ Their success has caused any surprise, but there were many who, because of the delayin the official announcement, were beginning to wonder whether the frequent hints that had been dropped were well founded. The relief has come; at an opportune time for those who have been defending British interests—those who have'all along contended that the British financier was not the black Shylock he had been painted. It is a timely antidoto to: the propaganda that has been so widely circulated by the anti-British Premier of New South Wales (Mr. Lang) and will have a serious, effect on his campaign which .ho is doing his best to spread to other States. At tho same time it is doubtful whether it will enhance \the prestige of Mr. Scullin, for there are still many,thousands who contend that Australia should keep her contracts and accept no favours. One speaker, in Melbourne the other night said that he was sure that New Zealand would not be a party to a similar agreement, but would prefer to pay her way. ' FUNDED INDEBTEDNESS. The Australian' indebtedness* funded under the 1921 agreement represented the advances made to the Soinmonwcalth by the British Government for war expenditure and totalled £92,480,----157. At tlie time arrangements were made for theso advances,, the Commonwealth Government expressed a desire that Australia-should, bear the whole cost of her war effort. Accordingly, it was agreted that the money should be lent to Australia at the rate which the British Government itself, borrowed it. That' principlo was embodied in the funding agreement .which provided for a flat .ra,te--of interest at £4. 18s 4d per cent. In addition, it was provided that the Commonwealth: Government should make sinking fund payments sufficient to bring , the total: annual payments up to 6 per cent.,- thus providing for the repayment of the total indebtedness during a period of 35"years. In the recent negotiations the Commonwealth asked that the rate of interest be reduced, and that the term" for the repayment of the principal bo extended, and that the half-yearly instalment of £2,774,404, due on 31st March last-I' be funded. . . In support of its claim the Commonwealth Government represented that, while tho. heavy annual payments under the present agreement had been made within Australia's capacity during the years of buoyant revenue, the serious fall in national incomp had entirely altered tlie position. _ ; The British Government replied"that, in its view, the 1931 agreement represented a fair and generous interpretation of the desire expressed by the Commonwealth to bear the whole cost of its war effort. The annuities represented only the actual cost of the advances to Australia, and the reduction of pay : ments by Australia meant throwing an additional .burden, during an exceedingly difficult period, on tho taxpayers of tho United Kingdom, who had also to face very great difficulties in respect of debt, taxation, and unemployment. At the same time-the British Government said that it fully sympathised with the Commonwealth Government's difficulties, and in spite of Great . Britain's grave , problems, both' financial and economic, was ready to respond, to tho appeal for substantial, temporary relief. The British Government made it clear that it would not increase the amount of subsequent annuities but would agree to an extension by two years of tho term allowed for the repayment of tho whole debt. The Prime Minister of Australia has stated that his Government still holds the view that there arc good grounds for an extension of the'period for the repayment of the debt beyond the concession already granted. Tho British Government, on tho other hand, considers that, as repayments of capital will be entirely suspended for two years, and further revision of the period oi' repayment would not afford any immediate relief, the consideration "of the question is at present neither necessary nor desirable. The British Government, in its last communication, expressed the hope that by 1933 the economic situation in Australia will havo so greatly improved 'that the need for any further revision will not arise. Whatever may be thought of Australia for • seeking the agreement ■ which has been entered into, there is nothing but praise for Britain's "splendid gesture."