FEDERAL MINISTRY

Manawatu Standard, Volume LII, Issue 2, 2 December 1931, Page 8

FEDERAL MINISTRY

TEMPORISING WITH CRISIS.

RIVAL FINANCIAL SCHEMES. The Australian Labour Ministry under the leadership of Mr J. H. Scullin has been in office for just over two years, the party having gained a clear majority in the general election of October 12, 1929. The dissolution which led to this result was precipitated by the defeat of the Bruce Government, within a year of a hard-fought election, upon the arbitration question, says the New Zealand Herald. This issue had been raised m the previous May, when Mr Bruce met the State Premiers at Canberra, and proposed that the existing dual control of industrial conditions should end. As the States declined to surrender any of their powers, Mr Bruce announced that he would ask the Federal Parliament _to hand over its power in connection with industrial arbitration to the State Parliaments, except in the case of seamen and waterside workers. ,

MR HUGHES LEADS REVOLT. Legislation along these lines was introduced in August, and encountered strong opposition from the Labour Party and a section of the Nationalist Party, led by Mr W. M. Hughes. The second reading of the bill was carried by four votes, but during the Committee stage, the Government was defeated by 35 votes to 34 on Mr Hughes’s motion that the bill should remain m abeyance until the electorate had been consulted. The 1928 election had resulted ra the return of 29 Nationalists and 13 members of the Country Party, giving the Government a voting strength of 42 against 31 Labour and two Independent members. The general election of 1929 gave Labour a clear majority of twelve, the state of the parties being:—Labour 43, Nationalist 17, Country Party 11. Independent 4 and Country Party Progressive 1, this being a vote upon which the Labour Party could relv. BEGINNINGS OF THE CRISIS.

Mr Scullin’s Ministry was formed on October 22, and its first task was to revise the Budget presented by Dr. Earle Page in July. Its proposals were announced by the Treasurer, Mr Theodore, on November 21, their principal features being heavy increases in income taxation and customs duties. The state of the Budget was not the only sign of the financial embarrassment that was already threatening Australia, for at the end of that month, Mr Theodore introduced legislation enabling the Commonwealth Bank to take possession of all gold reserves held by the banks in Australia. Although financial problems were accumulating, the Scullin Ministry prepared a programme of constitutional chan'ges entirely extraneous to the real character of the crisis, and the Federal Parliament was occupied in the early part of last year in debating several bills that were eventually rejected- by the Senate. Unprecedented Customs duties and absolute prohibitions were imposed with a view to curtailing imports to enable the Government to meet overseas obligations, for the supply of loan money had been absolutely stopped. Then came the blow to the Government of Mr Theodore’s resignation, following upon the report of the Royal Commission upon the Mungana mining leases, and Mr Scullin, assuming the office of Treasurer, delivered the Budget prepared by his colleague. ' This was immediately followed by. the historic series of conferences, at which Sir Otto Niemeyer, who had been specially invited by the Scullin Ministry to investigate the general financial situation, laid down the principles by which Australia must be guided to' balance her internal economy and to restore her credit. Resolutions pledging all the Governments to act upon his recommendations were passed at the Melbourne Conference and the subsequent history of Australia is largely a record of the conflict between the advocates and the opponents of the principles then expounded, of the desperate efforts of the Labour Party to implement their “theories” and of the gradual triumph of sound methods over revolutionary experiments.

The “battle of the plans” was however, so protracted that Australia drifted to the verge of national bankruptcy and disaster was averted only by resort to such drastic measures as the so-called conversion of all internal public debts, which, in effect, was partial repudiation. QUARREL WITH MR LYONS.

Long before this stage was reached the conflict with the advocates of inflation, “nationalising credits” and similar theories had reached a crisis. During the absence of Mr Scullin at the Imperial Conference, Mr Lyons, the acting-Treasurer, and Mr Fenton, the acting-Prime Minister, refused to submit to the dictation of the Labour Caucus and Mr Lyons, having put forward his own Budget proposals, launched a £28,000,000 loan to meet maturing internal debt. The success of this operation was a personal triumph for Mr Lyons and his actions and attitude further antagonised the militant section of the Labour Party. The return of Mr Sculling from London was followed by his surrender to the group of which Mr Theodore had assumed the leadership and at a Caucus meeting on January 26 he moved fpr the reinstatement of Mr Theodore in the Treasurership. The motion was carried by only 24 votes to 19. Mr Fenton and Mr Lyons resigned from the Government. The Theodore financial policy was formally approved by the caucus and at the beginning of March the Ministry was reconstructed, Mr Anstey, Mr Beasley and Senator Daly being excluded. The Ministry faced a test division in the House of Representatives on March 14, when Mr Lyons and Mr Fenton and three other Labour members voted with the Opposition. The Government was saved by a majority of five, being supported by the group of five members led by Mr Beasley, who had undertaken the advocacy of Mr Lang’s financial plan in the Federal SP Fcn’some months the Government pinned its faith to Mr Theodore’s plan of “controlled inflation, but the course of events and the evidence of public disfavour led to its gradual submergence. For instance,. wlien the Senate rejected the Fiduciary Notes Bill Mr Scullin announced that it would be introduced again after the statutory interval of three months, and that if the Senate again rejected it, he would seek a double dissolution. That threat has not been fulfilled. However, under the dire necessity of maturing liabilities in London, the Government succeeded in persuading Parliament to agree to a reduction of the gold reserve against the note issue, though it had to accept proposals by the opposition to safeguard the position. BALANCING THE BUDGETS. Since then the energies of the Federal Government have been mainly engaged in the formulation of the scheme of economies, to which all the Australian Governments eventually agreed, and in the prosecution of measures to give effect to them. The central feature was the reduction of interest on Government loans, a proposal originally based upon voluntary acceptance by the bondholders. The

campaign to secure popular agreement to this sacrifice was remarkably successful, but it was immediately marred by the introduction and passage of legislation compelling the dissentients to accept the reduction. It has since been suggested that the Government had no other alternative, as the bondswithheld from the, conversion scheme included securities with early maturities, and the Government could not command the funds necessary to redeem them on the duo dates.

The history of the Scullin Ministry has been a long conflict with adverse conditions-, of difficulties inherently grave aggravated by procrastination and public advocacy of theories and measures calculated to create public alarm and to alienate the sympathy of those upon whom the Govermnent had to rely for' assistance. Throughout the long contest, members of the Government as well as its militant supporters constantly assailed the Australian banks, pretending that they were deliberately refusing to help the nation out of its difficulties. Yet throughout the period of stress and danger, the Governments of Australia, and, not least, the Labour Government qf the Commonwealth, have been saved from the recurrent perils of disaster by the actions of the banks. UNITED AUSTRALIA PARTY. . ANTI-EXTREMIST MOVEMENT. Definite proposals in regard to unity at the forthcoming Federal elections were discussed at a conference in Sydney recently of the anti-extremist movements of New South Wales. The organisations represented were the National Party, the United Country movement, the All for Australia League, and the- Producers’ Advisory Council.

The points upon which finality were reached include the following:— (1) Establishment of a council representative of rural, industrial, commercial and political interests. (2) The council to conduct tile forthcoming Federal elections/ (3) City and country wings of the organisation to be created. (4) A systematic revision of the tariff, i

(5) Improvements in the existing arbitration system. (6) Creation of new States, after referendums in the various districts.

(7) State leadership to be settled subsequently by members of political parties in Parliament. Other matters on which the various movements are divided will form the basis of further deliberation, but it is expected that complete agreement will be reached.

BANKING CONTROL.

“GOVERNMENT’S DANGEROUS POLICY.”

“Such information as has been permitted to emerge from the conference of the Federal Labour Party, which was held in Sydney, confirms the impression that Mr Scullin and Mr Theodore propose to attempt to stampede the people at the next elections into a belief that banking policy is the cause of our present troubles, and that if only the Government is given control of the Commonwealth Bank our difficulties will be ended,” said the leader of the Federal Opposition (Mr Lyons) in the course of a speech. “The British Labour Party,” continued Mr Lyons, “tried the same tactics in the recent elections, with results that almost annihilated them. Nationalisation of banking is, of course, the policy of the Australian Party, but as I have always interpreted Labour policy this was never intended to mean that members of the board of the bank should be mere henchmen of the Government. Labour stood for a Stateowned bank, but as I understand the matter the administration of the bank was to be free from political control. Recent events, combined with the utterances of some members of the Labour Party, force the conclusionthat the real aim m the proposed banking reconstruction is to appoint to positions of control mon who will be amenable to the wishes of the Labour Government. This view is strengthened by the doctrine now enunciated that it is the obligation of the Commonwealth Bank to find money for whatever schemes are decided upon by the Federal Government. The Central Reserve Banking Bill makes it possible for the central bank to make unsecured advances without limit of time or amount to the Governments. This is a provision without precedent in any other central banking institution in the world. In the light of the present doctrines of the Treasurer, it is positively dangerous, and I shall oppose any attempt to enforce it. Mr Scullin has spoken of the work of the Government in clearing away the debris of the last administration. Those who were members of that administration can, of course, 6peak for themselves. All I would point out is that Mr Scullin will probably have a much more intimate acquaintance with debris when he examines the wreckage of his own party after the next elections.”