LOW PRICE POUNDS

Evening Post, Volume CXIV, Issue 130, 29 November 1932, Page 7

LOW PRICE POUNDS

AUSTRALIAN STUDY;

* FARM SUBSIDIES ALSO

'ARGUING IN A CIRCLE

New Zealand has lately been discussing the question whether the farmer should be helped indirectly by lowering the value of the New Zealand pound, or directly by Government money (possibly in the form of a bounty).

These two tilings have been discussed 'as alternative, and Australian, policy has been quoted. But Australian policy has leased to be devalued pound br rural snbsidy. It is devalued pound plus rural subsidy. Alongside the high Australian exchange rate the Common.wealth Government places a Bill which, 'among other things, authorises two million pounds for aid to wheatgrowers, and a quarter of a million pounds to assist primary producers (other than Wheatgrowers) in, the purchase of fertiliser. . ' , . ■ ■" For one hundred New Zealand pounds placed in the bank here the bank will provide (or did recently) 113 pounds in [Australia, but whether this will continue to be so if New Zealand follows Australia's example is another question. FOR HARDSHIP FARMERS ONLY. The advantage to the Australian, farmer of the low-price Australian pound is, of course, an indirect advantage. It Jias been criticised, there as here, on the ground that it falls alike on the just and the unjust. It has been criticised as, being an- aid to mortgagees rather than an. aid to farmers. But, in authorising the two million pounds. of Federal, money for the wheatgrowers, the Commonwealth Government is seeking to set- up machinery that will enable the rain to fallin right place. No ono seems to be positive as to wiere the right place is, but Mr. Lyons, in support of his Bill, {told the Federal House of Representatives: MThe Bill provides i that the States snail not distribute this money jon the basis of production, but subject' to this, the States will be free to pssist wheatgrowers who are suffering •the greatest hardship.- An additional sum of* £250,000. is to be made available for distribution through the States to assist primary producers other than Tvheatgrowers in the purchase of artificial fertilisers. It is intended that this assistance shall take the form of a flat rate- of 15s for. each ton of fertiliser, the amount to be paid direct to the user. The amount of 15s a ton has ibeen decided upon so that the sum of [£250,000 shall not be exceeded." He Srlso said:' "There are vit&l objections !to the general bounty system." Thia guided rainfall is appreciated by the Country Party, but that party apparently would prefer, a straight-out jbounty (in addition, of course, to the •low-price pound), for Mr. Paterson, (of Paterson Plan fame) spoke as deputy . leader of tlie Country Party, and gave Mr. Lyons's Bill this qualified blessing: "The Government refused to ,pay a bounty on wheat, yet it gave 'jecoiidary industries either direct bounties, or high tariff duties,-behind which the manuifacturers could increase, their prices. However, the Country Party felt some satisfaction in the fact that the Government had modelled its original proposals, and was giving the wheatgrowers assistance to the extent of £2,000,000 instead of £1,250,000. He thought the Government should leave the States to decide how the money should be distributed, and not impose conditions." .INTER-ACTION OF TAX AND ; • ■ INTEREST. This Federal Parliament debate also touched at times on the juggle between interest, taxation, and financial aid. There are plenty of plans for the Government to borrow money that may be paid to 'the farmer in order that the farmer may pay the mortgagee interests. And the. Government apparently ■would be willing to borrow from mortgagee interests in order to enable the iarmer to pay Ms debts to mortgagee interests—if only the mortgagee interests would lend the money to the-Gov-ernment. at a sufficiently cheap rate. "But there's the rub!" TL'ero are lending interests which say that the laxit-cv could" obtain cheap money—not througL. the Government, either —if only the Government, instead of. levying interest-raising taxes, would sweep those taxes away and "cut down the cost of government-." Mr. Paterson got neaj;- to this point Jwhen he. urged discriminative taxation (mora interference with the rain!) on the following plan:—"lf ! the Government would, lift the super-tax on income from mortgages on land used for pastoral or agricultural purposes on condition that a certain rate of interest was not exceeded, there would be an immediate incentive for the provision of cheap:money for the farmers." Mr.. Lyons himself admitted the influence of Government taxes in keeping internalinterest high. He said:— "The Government believes that the policy which will best conduce to prosperity is one directed toward lightening the burden of taxation, which is not only hampering industry, but is a drag on progress and a potent factor in aeceniuating unemployment. High taxation keeps' up costs and interest rates. Low interest rates are the greatest encouragement to enterprise and development; but we cannot get fixed charges as low as they ought to be while taxation remains as high as it is." Mr. Lyons also said that the 10 per cent, special tax on property incomes should; be removed at the first opportunity, because it was ' ' one of the taxes that were tending to keep the interest rates." But how can taxes be reduced if Government expenditure keeps up? He therefore made "the strongest appeal" to members to cooperate in keeping down demands upon the Treasury. RIGID EXTERNAL CHARGES. , The member of Parliament who asks for farm-help money from the Government, and who at the same time demands less tax and less interest, and who will not hear of adding public servants to^tho unemployed, may one day see Mr. Lyons's point. But it is different in the case of the oversea bondholder. And as a large section of the charges on the Budget consists of rigid (non-convertible) oversea interest, and as the low-price pound increases that already serious external charge upon the Budget, a great deal of the burden lies beyond the r control of economising governmental departments or even of repentant logrolling M.P.'s. "Worse still, there are people in "Washington who may ruthlessly increase the volume of oversea payments. "If the United Eingdom is called upon to resume the payments to the United States," said Mr. Lyons, "Australia cannot expect complete freedom from her obligations to the United Kingdom. . . . Unless it is found possible to adjust reparations and debt payments in such a way that no additional burden will fall upon the British taxpayer, then the Australian taxpayer must at an early date be prepared to share the burdens arising out of international war obligations."

So serious is'this contingency that Mr. Lyons, far from extending the taxreductions in his Bill, may actually have to recall them. He said that whftnhe announced the tax-reductions in this Bill, he gave no guarantee of thttr continuance (much less their ex-

tension) next yoar. ""When I announced the intentions of the Government now incorporated in this measure, I warned the House and the country that the remissions of taxation contemplated would only be made in respect of this financial year. We could not then, and still less can wo now, givo any guarantee that these remissions will stretch into the future." LAND TAX—TWO VIEWS. The reduced taxes include Federal land tax, which is reduced (for this year) by a third, as. a help to the farmer and as removing a bar to interest-reduction. Land tax, said Mr. Lyons, is being paid out of capital. But Mr. Seullin (Labour Leader) threw a bomb at that concession when he declared that it benefited the big man only. The average farmer with a wheat-holding of 000 acres paid no Federal land tax. Less than one-third of the Federal land tax was paid by country lands. Less than . one-half of all land tax in Australia was paid by country lands.

Mr. Paterson said that land tax amounted to as much as 2s 6d a sheep a year on the stock-carrying capacity of a property.

On the whole it would seem that by the time the Federal Government has taken off the taxes that inflate Australian interest, and by the-'time that oversea interest charges have put those taxes on again, and by the' time the Australian pound (that ideal shockabsorber!) has'taken the recoil of all the ebbs and all the flows, the gospel of applied economics will be duo to be completely rewritten. Its monogram may be a kitten in hot pursuit of its tail. '..--,

DEMAND FOR BOUNTY

WHEATGROWERS' THREAT

MINISTRY CONCERNED

United Press • Association —By Electric Tele-

graph—Copyright.

SYDNEY, 2Sth November.

■Wheatgrowers in Western Australia and Victoria are demanding a bounty of 6d a bushel and-4d a bushel respectively from the Federal Government under a threat of withholding this year's harvest from sale and- delivery.

Tho growers in Western Australia are demanding not only the 6d a bushel, but also insist that their own Government provide security of tenure for five years and a./preferential claim of not iess than £.150 a year on crop proceeds for sustenance and farm development. This is causing the Federal Ministry the deepest concern, and it is anticipated that tho bounty problem will bo a burning question when the Financial Relief Bill comes before the House of Representatives on Tuesday. The Prime* Minister, Mr. J. A. Lyons, introduced the Financial Belief Bill in the Federal House last week. It provides £1,700,000 in taxation relief, £2,000,000 in aid for wheatgrowers £250,000 for other farmers, and £400,000 in pension relief. . UNCONDITIONAL .GRANT (Received 29th November, 11 a.m.) CANBERRA, This Day. AnefCort will be made in the House of Representatives to make the £2,000,000 which is to be devoted to assisting wheatgrowers an unconditional grant to be distributed by the States. The Government is rtot expected to op.pose the proposal. In the Senate a proposal will be submitted for a straightout bounty. .-.-....- .-,....: