AUSTRALIAN LOANS

Evening Post, Volume CXXX, Issue 91, 14 October 1940, Page 9

AUSTRALIAN LOANS

FINANCE FOR WAR

HEAVIER TAXATION

Heavier taxation for war purposes has been forecast in Australia, but the community must also be ready to subscribe to further war loans. That summary of the Australian financial outlook is contained in a Commonwealth Department of Information bulletin, issued in New Zealand by the Australian Trade Commissioner (Mr. C. E. Critchley).

"The Federal Government," says the bulletin, "was able to postpone its first war loan appeal to the public until six months after the war began, due largely to the action of the Commonwealth and trading banks in making available £12,000,000 as a private loan, in November last.

"Actually, since the outbreak of war, only two public loans for war purposes have been floated in Australia. The first was in March last, when £18,000,000 was offered for public subscription. Of this loan, however, only approximately £8,000,000 was for Commonwealth defence, the balance being for public works of the Commonwealth and States. The second loan was floated in May-June of this year, and was for £20,000,000, the whole of the proceeds being for war purposes. "Both issues were made at par, but whereas the interest rate on the first was 3 3-8 per cent, for five years, or 3 5-8 per cent, for a term of ten to sixteen years, the second carried 23 per cent, for five years or 3£ per cent, for ten to sixteen years.

"Both these loans were oversubscribed before the dates provided for closing in the prospectuses, having met with enthusiastic public response. It was particularly noteworthy that in spite of the reduction in the rates of interest offered the number of individual applicants increased from about 14,200 for the first loan to 32.600 for the second.

"So that people of smaller incomes could help to finance Australia's defence, War Savings Certificates were introduced in March last. These have proved extraordinarily popular. Up to the middle of September more than £13,500,000 had been made available to the Government through individual and group scheme purchases. "Since the war started public subscriptions to war loans and purchases of War Savings Certificates -have aggregated about £41,500,000. "It is interesting to compare this voluntary contribution from savings with the estimates contained in the preliminary Budget statement of May last. This showed that, on the basis of the then existing taxation, £16,000,000 would be received in 1940----41 financial year, and that new taxation was expected to yield an additional £20,000,000. It was then estimated also that in oj-der to meet war expenditure in Australia borrowing from the public would have to amount to at least £50,000,000 in 1940-41.'