OVER-BORROWING.

Evening Star, Issue 20312, 22 October 1929, Page 8

OVER-BORROWING.

When the Labour Government came into power in Britain one of the matters remarked on by financial writers in the Press was tho steadiness of giltedged securities on tho London Stock Exchange. A rather marked contrast is presented movement of Australian Government stocks since Labour prevailed at the recent Federal elections Commonwealth Government stock has shown a drop of from 2 to 2J per cent , while the credit of some of the States —chiefly those on which Labour administration has left its mark —has fallen by 3i per cent. This may be construed as adding emphasis to previous hints to Australian Governments no* to approach the London market for a while for loans. If Mr Sculliai finds it possible to act up to his election pledges he will abstain from borrowing in London. One of his planks was that the Commonwealth Government should seek any money it might need on the local market. But some of Ins other planks, involving both Socialistic schemes and what is termed “social legislation,” seem to involve more money than the Australian investor may have at his command. First of all, there is the unemployment insurance scheme. Then there is tho re-en-try of tho Government into the shipowning business. The beginning is to be modest enough—the inauguration of Commonwealth steamer services between the mainland and Tasmania. This would be mere justice to the Cinderella of Federation, because it was largely through the Navigation Act and Labour’s general connection with maritime disputes that Tasmania’s isolation and consequent stagnation and impoverishment have come about. Many people also are convinced that the establishment ot a State-owned Tasmanian service would be a stepping stone to a revival of the State-owned overseas linos which made so large a hole in the Federal Treasury that Mr Bruce sold off the vessels for what they would bring rather than continue tho heavy losses resulting from Mr Hughes’s ambitious experiment. Furthermore, Mr Scnllin has promised financial help to those States disabled by the introduction and now long-tried experience of Federation. Tasmania is not the only State making this appeal. Both South and West Australia complain of the same handicap, and have backed their view’s on occasion by hints of secession. There is also another expensive item in Mr Scullin’s programme, and that is the unification of tho Australian railway gauges, which comprise Victoria’s and par °of South Australia’s sft 3in gauge, New South Wales’s 4ft B|in gauge, Queensland’s, West Australia’s, and part of South Australia’s 3ft 6in gauge, besides some Cockspnr lines’ 2it Gin gauge. There have been various estimates ot the cost of unification, and these have been so staggering that tho subject has been pushed into the background. Whether Mr Scullin can stop borrowing abroad and yet carry on responsible government, or whether he can find enough loan money locally at a time when the state of the wool market is affecting Australian finances so radically, are questions equally difficult to answer. Tho point seems to have been readied when Australia must ask herself wTicther it is not time to reconsider her borrowing policy altogether. Fifteen months ago tho combined Commonwealth and State indebtedness reached £1,094,974,058, involving annual interest payments of £61,349,022. For a population of about six millions this is a huge amount. It means that the indebtedness per head is over £174. Australia needs a Government that will eithei reduce the debt or bring about conditions that will enable the people to meet its annual charges with far less strain. The first requisite for that is industrial peace and co-operation. That this is not exactly expected from the Scullin Government is deducible from the speech of the chairman of tho Broken Hill Proprietary Company, which has been a heavy sufferer at different times from industrial disputes. He says that “it is the trend of industrial legislation, with its nevitable effect upon the country’s finances, which has disturbed the minds of investors.”