Victorian Cabinet’s Financial Crisis

Manawatu Times, Volume 64, Issue 145, 22 June 1939, Page 5

Victorian Cabinet’s Financial Crisis

DIFFICULTIES AHEAD MELBOURNE, June 9. Because of growing demands for social services, the reduction of private incomes by drought and bush-fires and the drift in railway finances, the Victorian Government will be faced with a most difficult financial position in 1939-40. Preliminary Budget plans are being made, although the Budge? will not be presented before August. Already, however, it is plain that, unless the State accepts a substantial deficit as the alternative to increased taxation, the Estimates for departmental works will have to be reduced drastically. Taxation will be increased in any event to meet the cost of hospital maintenance. Other causes of anxiety to the Ministry are demands for greater opportunities for promotion in the teaching service and in other branches of the public service, and proposals for the extension of widows’ pensions and the introduction of child endowment. Ministers are resisting demands for further concessions to certain sections of primary producers, although they are alarmed at the extent to which wheat-growers are giving up their farms because of the low ruling price for wheat. Drift in Railway Finances The Ministry is in a peculiar position. It is composed entirely of Country Party members, but that party holds only one-third of the scats in the Legislative Assembly and is dependent upon the Labour Party for con tinuance in office. The Premier, Mr A. A. Dunstan, gave a hint this week that a reversion to Parliament of complete control of railway finances might be sought by the Ministry during the session which will open toward the end of this month. It is believed that the Ministry will propose the retention of the system of management by three Commissioners, but will ask Parliament to direct that the finances of the service should be brought under the same Parliamentary control as that exercised over ordinary Government departments.

Serious concern about the future of the railways has been caused by the information supplied to the Government for the Budget. The estimated State deficit for the year, which will end on June 30, is £825,000, and the drift in railways finances is largely blamed for that prospect. It is believed that the Commissioners have been unable to satisfy the Government that there will not be a similar drift next year. Reasons for the Deficit

Eleven months ago, when the railways were relieved of responsibility for interest and other charges on £30,000,000 head of “dead” capital, it was thought that the service would be able to balance its budget. But it is known that another big deficit is inevitable in the service this year.

The Commissioners have attributed the drift to loss of freights because of the drought, but, in the absence of an assurance that there will not bo another substantial loss next year, the Government is now disinclined to accept that explanation. One Minister said that representatives of the Railways Department had previously stated that wheat freights were unprofitable to the department. If that were so, the Minister argued, the loss of those freights because of the drought should have resulted in an improvement in finances. The railway finances are now being investigated by the State Economic Committee, a body which was set up last year. The committee is being assisted by two accountants, but its report is not expected for several months.

Speaking generally, Mr Dunstan said there had been a tendency for many years for Governments to appoint independent boards and commissions with far-reaching powers. The plea advanced to justify those appointments was that political control or Parliamentary interference of any kind was undesir-' able. The results of the activities of those boards and commissions, however, had fallen below expectations. “I feel sure that our democratic system will be endangered unless Governments and Parliaments retain complete control of fi.Yince,” added the Premier. “To give complete power in finance and all other matters to boards may be the line of least resistance as far as the Government is concerned, but an element of very grave danger exists that, unless Parliament controls the finances, the whole democratic system must break down.”