MR. LANG'S BIG TASK.

New Zealand Herald, Volume LXIX, Issue 21086, 21 January 1932, Page 6

MR. LANG'S BIG TASK.

LOAN COUNCIL'S PROBLEM. NEW SOUTH WALES FINANCES. CRITICAL PERIOD AT HAND* [from our OWN- correspondent. ] SYDNEY, Jan. 14. January 27 or thereabouts is likely to be a fateful period for the New South Wales Labour Government, for on that date the first meeting of the Australian Loan Council since the last Federal, elections will be held. The new Prime Minister, Mr. Lyons, is a firm believer that it is the duty of the council to police the Premiers' Plan, under which a check is kept on the finances of the various States, and he has more than once expressed his determination that the plan shall be adhered to strictly. The position of New South Wales, therefore, is likely to keep the council very busy for some time. Mr. Lang's deficit for the first six months of the current financial year was £8,279,763, which exceeds his estimate of the shortage for the whole year. It is a fact that ths greater part of the revenue, in the form of income tax,' will not reach the Treasury until the last three months of the year, but it is also certain that the total tax will fall far short of the estimate. No matter what happens now Mr. Lang cannot avoid a deficit far greater than that permitted under the famous Premiers' Plan. Federal Ministers Alarmed. Federal Ministers are alarmed at the drift of finances in New' South Wales. They are concerned at the great increase in the expenditure on social services, which, they say, is jumping ahead of the unemployment increase in a phenomenal way, indicating lax control on the part of the State authorities. The new Cabinet has already considered the position, and each member has been given a special statement of the position, so that the whole question may be considered from every point of view before the Loan Council meets on January 27. It is notable that Mr. Lang has already indicated his intention of attending the Loan Council meeting and placing before it the case for New South Wales. With Mr. Scullin out of power he will not have such a sympathetic audience as he, has been accustomed to. Promises Must be Honoured. Mr. Lyons has refused to 'comment specifically on the serious state of affairs in New South Wales, as he does not desire to discriminate between the States, but he has emphasised that it would be the duty of the Loan Council to make a searching review of the, efforts of all the Governments to honour their obligations under the Premiers' Plan,, to ascertain the extent of any financial drift, and to devise means, where necessary, to stem the drift. It can be definitely stated that the Federal Government will not subscribe to a policy of starving Mr. Lang out of office, but will insist that he should honour his promises under the Melbourne agreement. The view is general among the Ministers that all the other States are honestly trying to fulfil their obligations, but that the New South Wales Government is " deliberately flouting the rest of Australia," What Mr. Lang May Do. , : The question arises, what action would Mr. Lang take to recoup his Treasury if Loan. Council assistance is reduced to a minimum. It has been suggested that his Government would retaliate by introducing legislation to invade Federal fields of taxation. The highest Constitutional opinion agrees that a State Government is entitled to invade any field of taxation now occupied by the Commonwealth except that of customs and excise. It is even held that the sales tax is not duty or excise. Unless Mr. Lang could devise other means of raising funds it is certain he could not retain office for many months without the assistance of the Loan Council, which guarantees all bank overdrafts. Without that guarantee bank advances would cease. It has been suggested that if he disagreed with the Loan Council Mr. Lang might proclaim a state of national emergency and attempt to rule by proclamation. Constitutional lawyers are emphatic that such a course would be impossible. The Constitution makes the way of a wouldbe dictator hard. Of course there are many who would say that already Mr. Lang is a dictator, but the fact remains that when he does dictate, except to his own Ministry and the Labour movement generally, he is always careful to keep within the Constitution. And his greatest obstacle is still the Legislative Council.