AUSTRALIA’S CRISIS.

Waikato Times, Volume 110, Issue 18406, 13 August 1931, Page 3

AUSTRALIA’S CRISIS.

INCOMES DEEPLY CUT. PLAN OF ECONOMISTS. Describing the financial reconstruction plan In Australia, Dr D. B. Copland, Ph.D., Professor of Commerce at Melbourne University, who arrived at Wellington by the Makura, said that one of the effects of the plan was to cut deeply the Income of every class in the community. It

was a great effort on the part of Australia to emancipate herself from her difficulties. The plan was formulated by a committee of which Professor Copland was chairman. “In every State except New South Wales," Professor Copland said "the representatives of the Labour Party are carrying out their obligations under the financial reconstruction scheme to the letter. Apart from New South Wales, there are three Labour Governments—the Commonwealth Government and the Governments of Victoria and South Australia. New South Wales has been driven to take the necessary steps because she had an empty treasury. “Pending adherence to the financial reconstruction plan New South Wales was denied the necessary credit, but .there was never any question that she would get all the credit she required if she adhered to this plan.

"The plan, too, is much more drastic than most people realise," Profsssor Copland continued. “It Involves

< reduction of government expendl- 1 by 20 per cent., including a cut r In all salaries and wages of 20 per cent, on the average. This has been graded so that smaller incomes are cut from 12J to 15 per cent., while the larger incomes are cut as much as 30 per cent in some cases. The plan involves new and very heavy taxation by the Commonwealth amounting to £7,500,000, and including heavier income-tax, additional customs and the sales tax. For instance, the primage Is 10 per cent, and the sales tax 5 per cent. The sales tax Is applied on all goods except some of the basic commodities. Finally, under the plan there will be a reduction of Interest on the public debt of 22 i per cent. Plan Will Qo Ahead. “The plan will not be held up by opposition from the New South Wales Government, which does not represent the opinions of even the dominant members of the Labour Party. The absurdity of the position can be realised when I relate what happened a few weeks ago in the Labour Party’s ranks. The Legislative Council refused to pass a Bill imposing very severe taxation upon Incomes of £5OO a year. There were many Labour nominees who voted against this proposal, Including Mr Grayndler, secretary of the Australian Workers’ Union, and one of the finest men in the Australian Labour movement. The New South Wales executive promptly expelled him, with others, from the party in New' South Wales. If the party’s policy in New' South Wales were not so damaging to the country's reputation abroad, you could look upon the position as being Gllbertian. "People overseas should not judge Australia from what Mr Lang is doing or threatening to do." Professor , Copland said. “He has already had to f agree to proposals that he formerly rejected, and the end of this sort of thing Is not in sight. What I mean is that Lang will agree to a good deal more before he is finished. Victoria In Bettor Position. “Victoria’s position is on the whole pretty sound," he continued. "She has never gone in for an extravagant ..pending scheme, although her loan expenditure has been somewhat heavy in recent years, and she has acquired some of the bad habits of borrowing count’des. Consequently, her finances were getting out of order before the depression, but not seriously so. She has, moreover, a considerable taxable surplus left for an emergency', and if a slight recovery In trade does not enable her to balance her Budget under the plan, he wild be able to do so by Imposing some additional taxation. "The financial reconstruction plan about which I have been speaking was formulated by a committee of economists and under-treasurers in May, of which. I was the chairman. The plan was" recommended to the Premiers’ Conference by the Loan Council. It had a remarkable reception, both in official circles and with the public generally. Indeed, It is not too much to say it created a new psychology, under which it was possible to marshall all the forces of modera-, tion Into a great effort In reconstruction. The economists’ proposals at first were not understood, and were scorned, but gradually the whole country has come to accept them as the only solution. Part of the attention devoted to economics is due to the success of the Economies Society, of which New Zealand has branches. "Larger Eoonomlo Adjustment.” “Australia’s position Is no different from that of any other primary producing country, except in respect of the severity of the loss of national income," Professor Copland said. "Unsound financial methods and extravagant borrowing are in part responsible for the present depression, . which has been deepened by the un- ’ willingness of some political parties to face the situation. Australia, however, is not the only country suffering from these very same difficulties. It is always necessary to emphasise that the present economic, crisis Is not mere trade depression from which recovery will automatically flow. It is a larger economic adjustment to an entirely new set or conditions and a lower price-level. Ordinary methods are of little avail. Drastic reconstruction is the only wav of bringing about recovery."