TROUBLE AHEAD

Hokitika Guardian, 23 September 1930, Page 8

TROUBLE AHEAD

FEDERAL CABINET

PLANS FOR ECONOMY

SYDNEY, September 11. Although the Federal Cabinet was united in the adoptiori v of a scheme of nation-wide equality of sacrifice to meet the present economic position it does not mean that its troubles have 'nded. Far from it. It has still w •onvince the members of the Party that ivliat it plans is right. And as the Cabinet policy includes an allround reduction in wages, this is not going to be an easy task. There are still many die-hards in the movement, and theVe always will be. Still, it. was something of an achievement to secure unanimity within the Cabinet, which a week ago showed grave signs of "rumbling. ' The depression may break down a great number of traditions, but most likely . of all- it will break he Labour Party.

Cabinet has progressed so far that it will fiot he necessary for Ministers to meet again until a special sub-com-mittee is ready to submit its report, after having conferred with both the employers’ and the employees’ representatives. Ministers hope that the measures contemplated will at once reduce the cost of industry .throughout the country, and bring about increased employment and production. The programme that is being evolved actually falls under two heads:—

(1) The securing of equality of sacrifice throughout the community in the monetary adjustment, and, (2) Finding work for the unemployed.

On the first point Ministers feel with tile Trade Unions that cuts in wages without equal cuts In other incomes would be unjust to the working classes. Therefore they arc prepared to explore the possibility of bringing sheltered private incomes—interest from bonds, debentures, mortgages, and so. on—into the deflation net through an increase in the rate of tax on income from, property. Cabinet is prepared to ask all salary and wage-earners to accept, in the national interest, and for the restoration of employment, a cut, provided equality can he achieved in this direction. This cut may he from 10 to 15 per cent, in normal income. Ministers also have in mind a reduction in the bank rate of interest. They accept the view that Australian trading banks do not exist primarily for profit, but are in the nature of national institutions, and that their rates of interest are, governed by the money that is available. Some bankers have- already expressed the view that any decrease in the rate for deposits, which would follow a decrease in the rates for overdrafts, might lead to a withdrawal of deposits, and therefore a further restriction of overrdafts. Sir Otto Niemeyer and Sir Robert Gibson, chairman of the Commonwealth Bank Board, have both expressed the view that with the restoration of confidence all rates would come down automatically. Sir Robert Gibson has estimated that a reduction of 1 per cent, would relieve industry of £!1,000,000 a year. Even this figure is of minor importance in the rehabilitation of industry, but the psychological effect would he enormous.