THE H.B. TRIBUNE FRIDAY. JUNE 27, 1930 DEBT REDEMPTION

Hawke's Bay Tribune, Volume XX, Issue 161, 27 June 1930, Page 4

THE H.B. TRIBUNE FRIDAY. JUNE 27, 1930 DEBT REDEMPTION

Probably very few who read it would take much note of one of our London cable messages last week which told us that a representative of the Bank of England was, at the instance of the Federal Prime Minister, coming to Australia to consult with and advise the Commonwealth Government on matters of finance, and with special reference to the question of bank exchange. This visit is, of course, the outcome of the crisis that has befallen our neighbours across the Tasman Sea, but, at the same time, it may be just as well for our own Government to bethink themselves as to whether we are not almost equally in need of some like counsel on subjects of national finance. We have certainly not fallen to the depths of difficulty in which Australia now finds itself, but, at the same time, conditions are nearly enough alike to keep us from pointing the finger of scorn. Beyond this is the fact that, as we all now realise only too surely, conditions in the Commonwealth react very quickly and very materially on those in the Dominion. Thus Australia and ourselves are, in this respect, very much in the same boat, and so what would be sound guidance for it would almost certainly be applicable here. While these suggestions have reference to the conduct of our national finance in general, what is more especially in mind at the present moment is the chaotic position in which we stand with respect to our external loan commitments. This is a subject which, during the last decade, has been touched upon more than once in this column, and what we have had to say is unfortunately none the less pertinent at the present time. In the past the fixing of the maturity dates of these loans would seem to have been undertaken in the most haphazard way. Evidence of this is to be found in the marked variation in the amounts —running from a few thousands up to as big a sum as 29 million — falling due from year to year. Possibly in later years some regard may have been had to this feature of the case, but on that point we have no published data to help us. maturity dates so disclosed ending with the financial year 1935-36. In any event, the matter is one that would bear investigation, for, so far as can be seen, it is quite a matter of chance whcti er we hate big or little eonimitnif'rils t-> meet at a time when - as '-as the case

last year with an immense conversion of an old loan—conditions on the London money market may be anything but favourable. This leads us up to a broader consideration of tne position and to ask again the question whether it is not more than high time that we set about some scheme of consolidation of our Public Debt, both external and internal. That debt at 31st- March of last year stood at 264 million, and has since been materially increased. Of this amount somewhere about 160 million is owing to outside lenders, all but some 4 million placed in Australia being domiciled in London. Despite this big liability, we are still continuing to borrow abroad and must continue to do so for years to come, so that it will be a long time yet before we have any relief from the sinking-fund scheme that is supposed to set us free within sixty years after we stop so borrowing. With these figures and prospects in view can it possibly be said that' it is too soon, for us to think of following the example of the Old Country in the way of gradually consolidating this huge indebtedness upon a permanent footing 'I As it is, year after year we go on in the same old slipshod way, renewing loans as they fall due and each time incurring expenses that add very substantially to the capital liability, to say nothing of the much higher rates of interest at which recent conversions have had to be made. At Home a process is in almost continual operation whereby the outstanding National Debt is being converted into annuity stock redeemable only at the Treasury’s option, and some such plan might easily be adapted to our own circumstances.

It cannot, of course, be said that the present is an opportune time to put any such proposal into practice—fortunately London obligations for the next five years are small. But it certainly seems to be a time when a scheme might be formulated and legislatively authorised for initiation when the financial barometer once more seta fair. All this prompts, too, the further suggestion that it would probably be a fine thing for the country could our Government seize the opportunity for consultation on this and other financial topics with the eminent financial expert, Sir Otto Niemeyer, a director of the Bank of England, who is already a week or more on his way to Australia. In this country, as in the Commonwealth, we are, and always have been, sadly lacking in men who could by any stretch be called financiers in the London acceptation of tho term. The opportunity should not be missed of seeking the advice of a man of such widely established reputation as the gentleman who is coming to the aid of our badly beset Australian friends. If he cannot spare time to extend his visit to New Zealand, then we should certainly send some capable and responsible emissary over to meet him on the other side of the water and secure his views.