AUSTRALIAN FINANCES

New Zealand Herald, Volume LXXI, Issue 21855, 18 July 1934, Page 7

AUSTRALIAN FINANCES

RURAL INDUSTRIES REHABILITATION PLAN MINISTER'S PROPOSALS [FROM OUR OWN correspondent] SYDNEY, July 11 When the Prime Minister, Mr. Lyons, makes his policy speech in the coming Federal election campaign, his Government's plan for the rehabilitation of tho rural industries is bound to play a most important part. Rural debt'adjustment has been an important subject in tho negotiations that have been carried on by him with tho United Country Party, but tho actual policy has not yet taken shape.

Tho Government expresses the belief that the burden of debt on primary producers has increased so much that, without adjustment, it will be impossible for them to carry on. The main causes of this burden are the drought losses of earlier years, the collapse of prices of wheat and other products during tho depression, the accumulations of unpaid interest on mortgages and hire-purchase machinery, the inflated prices at which farmers' capital liabilities were incurred, and accumulated liabilities for rents, rates, taxes and so on.

While the farmers' liabilities have increased to an alarming extent, their assets and land values have decreased. Machinery has worn out and thero is no money for replacement. The load of debt on wheat farmers is said to be so great that no probable recovery of wheat prices would enable them to clear themselves in a reasonable number of years. If the farmer had only one creditor, adjustment, it is considered, might bo left to the common sense of the parties concerned. With the multiplicity of creditors, some plan of settlement and writing-down is considered essential.

The Ministry's plan appears to be on the following lines:—lf the total debts of primary producers were set down at £500,000,000, £200,000,000 might represent debts of woolgrowers who are not regarded as being in need of special assistance. Of the balance of £300,000,000, £100,000,000 might be regarded as hopeless. Primary producers included in the latter section have no hope of re-establishing themselves without direct Governmental assistance. In their case machinery would be provided through the States for the meeting of all their creditors, and an arrangement would be entered into for the writingdown of the debtors' liabilities. "When this arrangement had been entered into, the Commonwealth Government, through the States, would provide portion of the amount necessary to wipe off the debts as written down.

It is certain that great complications will arise in the carrying out of any plan, and the details will call for very special consideration. The Canadian plan will most likely be followed, with modifications to suit Australia. The Government has yet to explain how it will do all the things it wants to do in order to help, the impoverished farmer, and when it is able to do so, the city man, and the city workers, are bound to ask where they come in. They say they are already paying enhanced prices for primary products—prices greatly in advance of world parity—and they will want to know when this sort of thing is going to stop.