AUSTRALIAN FINANCES.

New Zealand Herald, Volume LXIX, Issue 21111, 19 February 1932, Page 9

AUSTRALIAN FINANCES.

THORNY PATH AHEAD.

PROBLEMS FOR GOVERNMENTS.

NEW SOUTH WALES' DEBTS.

[FROM OUR OWN CORRESPONDENT. ] SYDNEY, Feb. 11. Another session of the Loan Council and another conference of the Premiers and Treasurers of Australia have concluded, and the mess of public finance is still a mess. After a week of discussion Australia cannot see the way out, buf ( instead feels si»e that there are worse days ahead as far a s Government finance is concerned, at any rate. On the commercial horizon there are bright spots encouraging hope for the immediate futurebetter prices and a greater demand for the things that are produced on this great continent.

Momentarily there comes to the mind a picture of prosperity returning, but this is soon clouded out by the ever-present prospect of higher taxation in order to enable the Governments to balance their Budgets. All this gives' rise to uncertainty —a lack of confidence which must delay the ultimate recovery of the Commonwealth a s a whole. Australia is certainly paying dearly for the spendthrift habits of former Governments, and if normal conditions ever prevail again surely the country will have learned it* lesson and strive to live within its means.

New South Wales Position

The decision to make New South Wales an outlaw as far ns finances are concerned seems to have been the main decision 'of Ihe Loan Council, and how this is going to operate remains a mystery. All credit and loan money has been cut off from the parent State, and the Commonwealth has threatened to utilise the New South Wales shares of the loan money to recompense it for meeting the State's debts overseas. How this can be legalised is yet to be explained, for the plan, if there is one, is being kept a dark secret. New South Wales will bo without funds for public works, and ouc result may be the imposition of more taxation for that object. If he decides to pile on the taxation, Mr. will still have to face the hurdle of the Legislative Council. Apart from the New South Wales quota of loan money which the Commonwealth, proposes to divert to the bondholders, Mr. Lang's Treasury is to be deprived of the monthly payment of £243,000 due under the financial agreement. This will amount to £2.916.000 a year, but Mr. Lang's London interest bill alone in 12 months'is £7,197,854, without allowing for exchange. Clearly the Federal Government anticipates that legal proceedings or political developments, or both, will effect a change in the. New South Wales position hefore file defaults accumulate. But if Mr? 7 Laiig were to go out of office next month there would be a heavy leeway to up. Hardest Times Ahead. The hardest part of financial rehabilitation in Australia still lies ahead. All th« Governments are faced with the 1932-33 Budgets, and according to the Premiers' Plan should aim at reducing the combined deficits by a further £8,000,000. In the light of the savings so far effected this seems to be impossible. Tasmania views with misgiving the prospect of saving £BO,OOO during the last few months of the current financial year, which is the understanding on which the bankers are financing the remainder of the deficit.

The opinion has also been expressed that unless the Western Australian Government agreed to impose further taxation that State could not" comply with the Plan. The South Australian and the Victorian Governments claim that they have cut salaries and expenses to the bone, and they are naturally anxious that all the other States as well as the Commonwealth should follow suit.

It is regrettable that party politics should have such an important influence on the operation of the Plan, which, after all, has been devised for tHe common good, but such a thing was inescapable. Within a few months an election will be held in Queensland, and the fact that further economies are necessary will not make it easier for the National Government now in power.