STATE AND NATION

Evening Post, Volume CXXXII, Issue 38, 13 August 1941, Page 6

STATE AND NATION

BORROWING SCHEMES

.AN AUSTRALIAN PROBLEM

I (Rec. 10 a.m.) SYDNEY, August 12. The fact tha^ the Commonwealth has taken far-reaching powers since the outbreak of war* has set a large section of the community wondering whether, when the war is finished, agitation should be revived for complete abolition of the Australian States and their Parliaments. " The latest rinstance of clashing Federal and State political interests is provided by New South Wales, where the leader of the Labour Government, Mr. J. McKell, has been compelled to admit his inability, to carry out his election programme because the Federal Loan Council, at its recent meeting, curtailed his borrowings by £3,000,000. One of- Mr. McKell's most attractive election promises was the abolition of the wages tax, from which previous State Governments had netted a sum in the vicinity of £4,000,000 yearly. Mr. McKell, who now finds himself in an embarrassing position, confessed tonight that his Budget proposals would have to be recast, involving the abandonment of contemplated public works plans. Mr. McKell complains that the dice were loaded against New South Wales at the Loan Council owing to the inequality of the voting power of the States and the Commonwealth. The Federal Treasurer, Mr. A. W. Fadden, while sympathising with Mr. McKell, said that if the Loan Council had fully acceded to all requests made by State Governments, then the borrowings would have been roughly £40,000,000 instead of £20,000,000, which could only have been raised by the expansion of credit. Such a sum would have been spent in direct competition with the Commonwealth Government at a time when the Federal Administration needed resources of men and material urgently for war purposes.