AUSTRALIA’S ECONOMIC ILLS ARE LESSON TO DOMINION

Star (Christchurch), Issue 19118, 10 July 1930, Page 6

AUSTRALIA’S ECONOMIC ILLS ARE LESSON TO DOMINION

Financial Men Assert We Must Tighten Our Belts And Live Within Income. Leading financial men in Christchurch see in Ausralia’s economic ills and the drastic remedies that have had to be applied by the Federal and State Governments an important lesson for New Zealand—that we must tighten our belts and live within our income. Over-borrowing and extravagant living, coupled with the se ious decline in the value of her exports were given as the reasons for the troubles of Australia. Added to these factors, according to one man whose views were sought, was a disposition on the part of employees not to work hard enough to enable their employers to make a profit.

New Zealand, it was asserted, stands in much the same position as Australia, although to a very much lesser extent, and therefore the Prime Minister had taken a wise step in practising economies. “On account of our smaller population we are not feeling the world-wide depression so much as other countries,” a bank manager stated. “But we must exercise every care that we do not get into a position similar to that of Australia when such drastic corrective measures become necessary. The one bright spot seems to be the low bank rate at Home, as it has the effect of loosening money and should enable more people to buy the products of this country. A Safe Limit. "With the lesson of Australia’s troubles in front of us it behoves the community to take stock and see that our liabilities do not get beyond a safe limit. To bring that position about everyone must economise, and if we do that I don’t think there will be any cause for alarm. Until Australia has turned the corner we must work harder and spend less.” Another financial authority said he understood that Australia had been paying part of her interest bill out of borrowed money, and that when she found the London money market closed against her the present crisis was precipitated. “There is no doubt, however,” he added, “that the enormous drop in the price of wool has very seriously affected Australia. In addition to that, the drought experienced last year was responsible for a reduction in the production of wheat as well as sheep. Recuperative Powers. “But against this it must be admitted that Australia’s recuperative powers are simply marvellous. Taka Queensland, for example. There might be years of drought, but as soon as copious rains come the whole face of @ g) S 3 S 3 HI M © @3 B 3 HI @ E§ S 3 SI S 3 EB HI EB S 3 E 3

tfre country changes. The only dis turbing feature that I can see iii New Zealand is the enormous amount of local body borrowing. Up to the present our exports have exceeded our imports in value, although this year, unfortunately, that will not be so, due to the falling value of our exportable products. But I don’t think New Zealand is in the same category as Australia as regards our spending proclivities.” An Optimistic View. A sharebroker who handles a large number of Australian securities took quite an optimistic view of the situation. “ The position is nothing like as bad as was anticipated,” he said. “ A deficit of £25,000,000 was expected but according to Mr Scullin it will not be more than £14,000,000. In my opinion the Federal Government is dealing with the situation in the right way. By cleaning up the deficit in one year it will soon put Australia on her feet again. “Of course there will be a fair amount of hardship this year, but the people will just have to economise. The 2i per cent sales tax will have to be passed on to the consumers, but the people should be prepared to cut out extravagant spending for one year. The same thing applies to New Zealand. Our national income is down and we must spend less, but the general outlook for the future is quite bright.

“ Australia,” he added, “is one of the greatest countries in the world, and she will scon recover from her present troubles. Nature is on her side, for this year there have been bounteous rains, and there should be a bumper harvest next season. If these financial troubles had not developed I fully believe that next } r ear would be one of the most prosperous in the history of Australia. I have unbounded confidence in the future of Australia because cf her rich natural resources and her wonderful recuperative powers.”