RIGOROUS ECONOMY

Taranaki Daily News, 1 September 1930, Page 12

RIGOROUS ECONOMY

- DETAILS OF COMAION PLAN. REDUCING ALL EXPENDITURE. A heavy diminution in expenditure of both current revenue and loan money is the basis of the “common plan for the rehabilitation of Australian finance” adopted by the conference of the Governments of the Commonwealth and the States in Melbourne on Thursday, August 21. The Sydney Morning Herald, states that when full effect is given to the plan at least £20,000,000 will represent the reduction in Governmental expenditure on loan and revenue accounts. The principal resolutions by the conference were as follows: —

(1) That:the several Governments represented at this conference declare their fixed determination to balance their respective Budgets for the financial year 1930-31 and to maintain a similar balanced Budget in future, years; this Budget equilibrium will be maintained on such a basis as is consistent with the repayment or conversion iu Australia of existing internal debts maturing in the next few years; further, if, during any financial year, there are indications of a failure of revenue to meet expenditure, immediate further steps will be taken during the year to ensure that the Budgets shall balance. ■ • (2) That the Loan Council raise no further loans overseas until after the existing oversea short-term indebtedness has been completely dealt with; this decision to apply to oversea borrowing by large public authorities in controlling the operations of which the State Treasurer concerned will act in agreement with his colleagues on the Loan Council. , (3) That it is resolved by the several Governments, as regards such public Works as it may be possible to finance by loans raised in the internal market, that approval will not be given to the undertaking of . any new works which are not reproductive in the sense of yielding to, the Treasury concerned within a reasonable period a revenue at least equal to the service of the debt (interest and sinking fund). (4) That, in order to secure the regular service of the. public debt from revenue, steps will be taken to provide that all interest payments shall be made to a special account in the Commonwealth Bank, to be used solely for the payment of interest.

(5) That the Commonwealth and State Treasuries will publish monthly in Australia and overseas a brief summary on uniform lines showing their Budget revenue and expenditure, the position of their short-term debt and the state of the loan account; such statements to be drawn up after a uniform model to be agreed upon. An official statement explained that it would, of course, be a matter for each Government to decide how the policy embodied in the resolutions was to be carried out in its own separate State. It was recognised that it was essential to the solution of the problem that the Commonwealth and all the States should be treated as a single entity and that the arrangements should be regarded aS having been mad© by the whole of the Governments (Commonwealth and State), acting as a single body. To give effect to those arrangements and to watch their operation in all the States, a committee consisting of the Treasurers of the Commonwealth, New South Wales, Victoria apd South Australia was appointed to represent the conference for the purposes of the agreement. This committee will have power to consult outside financial and economic authorities and will be in continuous touch with the directors of the Commonwealth Bank. TV|hen necessary, it will convene conferences of the Governments. The conference instructed this committee to examine the question of duplication of Commonwealth and State services with the object of eliminating such duplication where possible. ■■ “The members of the conference represent all the. Governments of Australia,” the official statement added. “Their decisions have been arrived at apart from party or political considerations, and with the desire to avert the danger which threatens Australia. Having heard Sir Otto Niemeyer and Sir Robert Gibson, they have no doubt that the present difficulties in Australia’s financial and economic situation will be gradually relieved if the arrangements outlined are faithfully carried out as they intend they shall be. This will unquestionably involve a heavy diminution in both revenue and loan expediture and will require substantial sacrifices on the part of all stictions of The community, but the voluntary acceptance of these sacrifices is, in the opinion of the members of the conference, the only possible way of avoiding the infinitely greater and more prolonged sacrifices that would be involved in any failure to meet our national obligations. Such a failure is, of course, not to be contemplated. It would involve not only national disgrace and dishonour, but would mean immediate financial disaster, which would be followed by unemployment on an unprecedented scale, with all its attendant human suffering.” Immediately after the conference, the Treasurers held a meeting of the Federal Loan Council, and reviewed the loan programme for the -current financial, year. The grand total, to be financed by- internal loans, which had already been curtailed twice previously, Was again reduced'from £24,000,000 to £15,000,000, the. lower amount to be apportioned among the seven Governments on the same basis as the original sum. The council decided to review the position in October. The proposals embodied in the resolutions were described by Sir Otto Niemeyer as “wise and necessary,” but he {jointed out that their application was only the first step. “Australia would then be able to turn to the question of gradually liquidating her outstanding, obligations in London, which, in itself in any circumstances, is not likely to be an easy operation, or one which could be carried out except by stages,” he said. “But there remains a more fundamental question on which I believe the above preliminary suggestions are ultimately conditioned. Australia cannot wish to remain for ever under a regime of emergency tariffs and rationed exchange. She has to emerge from that position and to show signs of progressing toward an emergence. To achieve this end she depends inevitably to a large extent on the primary producer, and the power of the primary producer, selling in the world market, to assist depends largely on the question of his costs, and those

in turn .depend very largely on general costs in Australia, which govern what he has to pay for.his supplies and services. I assume that everybody - is in agreement that costs must come down. “There may be room for increased efficiency, but there seems to me', little escape from concluding that Australian standards have been pushed too high relatively to Australian productivity and to general world conditions and tendencies. If Australia does not face that issue she will not be able to keep even those standards which she might hope to carry by taking timely action, and she will see an . inevitable increase in unemployment. ' “The situation is difficult, and calls for a considered programme arid united action; but I wish to make it quite clear that, given determined action, it is in no way beyond control. Tflp difficulties of Australia are not comparable with those from which many countries have successfully emerged, and have only to bo squarely faced to be capable of solution.”