BALANCING THE BUDGET

Taranaki Daily News, 13 October 1930, Page 9

BALANCING THE BUDGET

' PROPOSED RRTRENCHMENB, ' v FOUR MILLIONS ggA-Rbl, J , ' ' The cabled announcement' fSutt fM Australian. Federal Cabinet- had last week agreed in retrenchment schemes involving a reduction in expenditure of approximately ,'£4,000,000 a year jwa* the subject of a subsequent statenwefi by the acting-Prime Minister, Mr. Banton. The schemes include reductions of Ministers’ and members’ and civil servants’ salaries. The scheme has yet to be submitted to the Labour caucus. Mr. Fenton said; “The recent decline in market prices of Government stocks shows that nervous holders are' selling 'securities through fears that are- quite unwarranted and the Government fully recognises that these fears must be removed at once. Some increase in taxation on income from. property may be . necessary, biit there will be no proposal for a special tax on interest as suchinterest will be taxed .in the ■ future as in the past on the same basis as other income from property.” It was stated by the Sydney Morning Herald that figures submitted; by the acting-Treasurer, Mn. .Lyons,,, showed that the balancing of the Budget would be impossible unless salary reductions were decided upon. A section of . the Cabinet,, headed by Mr. Lyons and Mr. Fenton,'advocated the* reduction of salaries. The other , section of , the ' Cabinet took the view that in no circumstances whatever, should a l Labour Government agree to any reduction of salaries, which, they contended;' would be tantamount to lowering the standard of living and be a direct violation of one of the main points in the policy of " ' the Labour Party. Rather ~than agree to any such propo.sals it was contended by this section, that the balancing of the Budget should' be postponed until the next financial year. ' ' Several Ministers, it is understood, expressed the view that'if the Cabinet" agreed to salary reductions it would be committing political suicide, as they re- f garded it. as certain that the majority of the Parliamentary Labour Party would refuse to agree to any such proposals and would even demand the resignation df Ministers who favoured reductions. Ultimately, the proposal was agreed to by a majority of one. Apart from the savings to 'be effected by salary reductions, and the additional revenue .to be derived from, extra taxajtion, Ministers are depending upon general economies in the administration of departments and the curtailing of new works for the saving of expenditure that will be necessary to balance the Budget. Mr. Fenton, in his official ‘ statement, said that it had been, agreed that expenditure must be reduced “at the rate of” approximately £4,000,000 a year. As three months of the present; year have already passed, it is anticipated that the actual reduction in expenditure before June 30, 1931, will be » approximately £3,000,000. Prior to the Cabinet reaching its decision it was reported that the Federal Cabinet had received from the Common- i wealth Bank an intimation that, the bank could not give unlimited assistance to enable the Government to meet its commitments and that the position must be faced immediately. After the adoption of the retrenchment schemes Ministers were particular in stating that it was only after the Cabinet had come to a decision on the main points, including the reduction of expenditure, that the officials of the Commonwealth Bank conferred with them. The consultation had reference only to the Cabinet’s scheme for promoting employment.

It is believed that the actlngTreasurer emphasised the fact that the country had reached a critical stage and urged that no measures that would help the Commonwealth to balance its Budget and meet its commitments should be considered too drastic. Other Ministers expressed concern at the growing unemployment. Speaking in the debate on the Budget on July 22 last,’the Leader of file Federal Opposition, Mr. Latham, urged that the Federal Government’s proposed expenditure should be reduced by £3,999,000, itemised as follows:—Public service, Post Office and Parliament, £1,000,000; maternity bonus, £200,000; bounties, £146,000; roads, £1,500,000; unemployment grant, £1,000,000; coal subsidy, £150,000; industrial peace tribunals, £3000; total, £3,999,000.