WELLINGTON NEWS

Hokitika Guardian, 28 April 1931, Page 7

WELLINGTON NEWS

INSOLVENT AUSTRALIA. (Special Correspondent.) WE LUNG TON, April 24. It is not a libel to say that at the present moment the Commonwoniir, is practically insolvent, and all because the Labour Governments of Australia bare persisted in Homing economic laws. Ever since the beginning ot ls ; :i() things have been going from baa to worse, until now the climax, is about reached. At the beginning of last year 101. to 102 Australian pounds exchanged for 100 sterling, now the rate is 125 Australian pounds lor 100 sterling. On April sof last year the import tariff was mended adding 50 polecat to certain duties and prohibiting certain imports, and in July 1830 the Budget provided for £1,000,000 new taxation.

Sir Otto Neimeyer, who visited Australia in response to an invitation from the Federal Government, examined the economic conditions and made bis report. He pointed out that the internal costs of Australia were above the world parity and that they must lie reduced. On August 22 the Australian Premiers agreed to observe the Neimyer proposals but they were never observed. The Lang Government was returned on an anti-Neimeyer programme. The Federal Government ras deliberately evaded the Neimeyer proposals and has endeavoured to weather the economic storm by foolish methods

Inflation and the maintenance ot internal costs has been the objective of the Labour Government. Theodore’s fiduciary issue of £18,000,000 is simply inflation. When the Federal Arbitration Court reduced the basic wage the Federal Government did its utmost to prevent this taking effect. The Commonwealth has been living on 1.0. U. and has exceeded, or is very near to the generous limit allowed the Government against Treasury Pills. Australia is thus pratically bankrupt, indeed postponing the interest on War Debt payable to the British Government is obviously an admission of insolvon cy.

The latest sensation has been caused by the Commonwealth Bank notifying the Federal Teasurer that the limit of Treasury Bill issues had been reached, and on the London Stock Exchange Federal stocks have been marked down The Scullin-Theodore Government should have retired' some time ago, but the sweet of office and the high salaries are too attractive to let go. If Australia's errors of omission and commission recoiled some tifile ago,

commission recoiled on Australia amne, we in New Zealand could afford to look on with wonder, and perhaps with some pity, but the .sins of Australia will to some extent be visited on New Zealand, for it is useless expecting people at a distance discriminating between Australia and New Zealand, for wo are neighbours and come under the comprehensive and detestable t-crin “Australasia.”

The credit of Australia lias boon , ruined by the Labour Governments and that makes matters difficult loi Now Zealand. Our Government is m want of loan money, and in the ordinary course a loan would lie placed on the London market about the end ot the month or early next month. It was rumoured some time ago that the Government was feeling the pulse of London financiers. Our loans are invariably underwritten, and it is possible that a good deal of difficulty is being experienced in this direction. The underwriters would have taken up any portion of the loan not subscribed hv the public, and as investors have been made very nervous through Australia’s delinquencies, the underwriters are not likely to he very keen to sponsor a New Zealand loan. Uf course the Government could dispense with the services of underwriters and issue a tender loan, hut that would he risky. It should he explained that there is a big difference between an underwritten application loan a lid a tender loan. 111 the case of the former the fate of issue aiid the price of the loan are fixed, and applic*ations invited. Euc-h a loan could he issued without being underwritten but in such n case the borrower takes the risk of getting very little or perhaps no money at all. In the case of a tender loan the lender states the amount he is willing to advance and the rate of interest he requines. British Treasury Bills are put up to tender in this way. It is doubtful whether any Dominion Government would care to risk borrowing in this way. Our Government must have loan money and must get it fairly soon, otherwise the difficult conditions that are being experienced will be .made considerably worse.