AUSTRALIAN CRISIS.

New Zealand Herald, Volume LXVII, Issue 20690, 9 October 1930, Page 13

AUSTRALIAN CRISIS.

BALANCING THE BUDGET\ PROPOSED RETRENCHMENT*' ABOUT FOUR MILLIONS YEARLY* • The cabled announcement that tha Australian Federal Cabinet had last woek agreed to retrenchment schemes involving a reduction in expenditure of approxi* mately £4,000,000 a year was the sub- 1 , ject of a subsequent statement by tha acting-Prime Minister, Mr. Fenton. Tha schemes include reductions of Ministers* and members' and civil servants' salar- ' ies. The scheme has yet to be submitted to the Labour caucus.

Mr. Fenton said:—"The recent decline ' in market prices of Government stocks shows that nervous holders are selling i securities through fears that aro quite unwarranted and the Government fully recognises that these fears must be removed at once. Some increase in taxation on income from property, may be necessary, but there will be no proposal for a special tax on interest as such. ' Interest will be taxed in the future as in the past on the same basis as other income from property." Division of Opinion. It was stated by the Sydney Mornipg Herald that figures submitted by the acting-Treasurer, Mr. Lyons, showed that the balancing of the Budget would be impossible unless salary reductions were decided upon. A section of the Cabinet, headed by Mr. Lyons and Mr, Fenton, advocated the reduction of salaries. The other section of the Cabinet took tha view that in no circumstances whatever should a Labour Government agree to any reduction of salaries, which, they contended, would be tantamount to lowering the standard of living and be a direct violation of one of the main points in V the policy of the Labour Party. Rather than agree to any such proposals it was contended by this section that the balancing of the Budget should be postponed until the next financial year. Several Ministers, it is understood, expressed the view that if the Cabinet agreed to salary reductions it would be committing political suicide, as they regarded it as certain that the majority of the Parliamentary Labour Party would refuse to agree to any sucb. proposals and would even demand the resignation of Ministers who favoured reductions. Ultimately, the proposal was agreed to by a majority of one. Relief ol Unemployment. Apart from the savings to be effected by salary redactions, and the additional revenue to be derived from extra taxation, Ministers are depending upon general economies in the administration of departments and the curtailing of new v works for the saving of expenditure that will be necessary to balance the Budget* Mr. Fenton, in his official statement* said that it had been agreed that expenditure must be reduced "at the rate of" approximately £4,000,000 a year. As three months of the present year hava already passed, it is anticipated that tha actual reduction in expenditure befor® June 30, 1931, will be approximately, £3,000,000. Prior to the Cabinet reaching its decision it was reported that the Federal Cabinet had received from the Commonwealth Bank an intimation that the bank could not give unlimited assistance to* enable the Government to meet its com4 mitments and that the position musfebo faced immediately. After the adopjjf tion of the retrenchment schemes Man-', isters were particular in stating that was only after the Cabinet had come to a decision on the main points, including the reduction of expenditure,? that the officials of the Commonwealth' Bank conferred with , them. The consultation had reference only to the Cab-< inet's scheme for .promoting employment* It is believed that the acting-Treasure® emphasised the fact that the country had reached a critical stage and urged that no measures that would help tha Commonwealth to balance its Budget and meet its commitments should _be considered too drastic. Other Ministers e*« pressed concern at the growing unemployment. - ; i;

Opposition Leader's Prior Proposal. Speaking in the debate on the Budget on July 22 last, the Leader of the Federal Opposition, Mr. Latham, urged that the Federal Government's proposed expends ture should be reduced by £3,999,000, itemised as follows Public service, Post Office and Parliament, £1,000,000; maternity bonus, £200,000; bounties, £146,000; roads. £1,500,000; unemployment grant, £1,000,000; coal subsidy, £150.000; indus. trial peace tribunals, £3000; total, £3,999,000.