COMMONWEALTH FINANCE.

Otago Daily Times, Issue 20963, 28 February 1930, Page 8

COMMONWEALTH FINANCE.

The people of Australia have received in recent months many severe reminders that the economic position of the Commonwealth is seriously unsatisfactory. Among them has been a coolness on the part of investors towards Australian loans, and as a result the Federal and State Governments have been exercised about their ability to borrow the moneys that are desired by them for expenditure on,public undertakings. The decision of the Federal Loan Council, reported last week, to reduce by one-half the normal loan expenditure of Australia, indicates that the gravity of the position is being recognised in the Commonwealth. Australian citizens, as well as Governments, are being required to realise the need# for a curtailment of their expenditure, as a cable message which we printed yesterday stated that Australian banking houses in London are placing an almost complete ban on the granting of letters of credit. The problem which faces Australia to-day is, as a writer in the Sydney Morning Herald remarks, a redistribution of the national income consequent upon its reduction by between £37,000,000 and £.38,000,000 owing to the fall in the world prices of wool and wheat. These are factors beyond political or commercial control, but other causes have contributed to the presenf monetary stringency winch this wiv. • docs not take into account. These include the paralysing effects upon production that flow from industrial strife and from (he wasteful

and extravagant expenditure by Governments of borrowed moneys during a long period of prosperity. Much of the money raised by them has been spent by the Federal and States Governments in work that is not directly reproductive. Further, the trade position is distinctly unsatisfactory for a borrowing country. The statistics relating to Australian overseas trade show that the total trade was lower in 1928 and 1929 than for any year since 1923, and—more significant that, with the exception of one year when the figures scarcely more than balanced, imports to the Commonwealth have exceeded exports in every year for the past six years. When to this are added the ti’eraendous lossesjto the country caused through the dislocation of the shipping trade and through strikes, of which the most disastrous manifestation, the New South Wales colliery dispute, still remains unsettled, it will be perceived that Australia is facing what amounts to a financial crisis. The country is now being forced to the realisation, temporarily at least, of - the necessity for the exercise of prudence in expenditure not only in periods of stress, but also in times of plenty. .. And the remedy is not, perhaps, difficult to find. It is suggested by the Sydney Morning Herald in forcible language: “ The people of this country must be called upon forthwith to put their backs into the work of righting the position, and sacrifices mil have to be made in our hitherto easy-going style of living expensively on borrowed money.” There is no reason for doubting that, endowed as Australia is with large resources, actual and potential, she will be able to overcome her _ present difficulties, but in the meantime the people of the Commonwealth have .every reason for placing the brake upon expenditure, both public and private, and for working together more closely than they have done in the past to increase the production of the country.