WAR FINANCE

Wairarapa Times-Age, 13 August 1941, Page 5

WAR FINANCE

CONFLICT OF AUTHORITIES IN AUSTRALIA COMMONWEALTH & STATES. NEW SOUTH WALES BUDGET TO BE RECAST. (By Telegraph—Press Association—Copyright) (Received This Day, 9.40 a.m.) SYDNEY, This Day. The fact that the Commonwealth Government has taken far-reaching powers since the outbreak of war has set a large section of the community wondering whether, when the war is finished, the agitation should be revived for a complete abolition of the Australian States and their Parliaments. The' latest instance of the clashing of Federal and State political interests is provided in New South Wales, where the leader of the Labour Government, Mr McKell, has been compelled to admit his inability to carry out his election programme because the Federal Loan Council, at its recent meeting, curtailed his borrowings by £3,000,000. One of Mr McKell's most attractive election promises was the abolition of the wages tax, from which previous State Governments had netted in the vicinity of £4,000,000 yearly. Mr McKell, who now finds himself in an embarrassing position, confessed tonight that his Budget proposals would have to be recast, involving the abandonment of contemplated public works.

Mr McKell complains that the dice were loaded against New South Wales at the Loan Council, owing to the inequality of the voting power of the States and the Commonwealth. The Federal Treasurer. Mr A. W. Fadden, while sympathising with Mr McKell, said that, if the Loan Council had fully acceded to all the State Governments’ requests, then the borrowings would have required, roughly, £40,000,000, instead of £20,000,000, which could only have been raised by an expansion of credit and such a sum would have been spent in direct competition with the Commonwealth, whose resources of men and material were urgently required for war.