ECONOMIC PROBLEMS

Hokitika Guardian, 18 July 1931, Page 2

ECONOMIC PROBLEMS

LESSON FROM AUSTRALIA

ADVICE TO NEW ZEALAND

Concluding an address to Auckland (Rotarians to-day on economic conditions in the Commonwealth, Sir W. Lennan -Raws, managing director of Imperial Chemical Industries of Australia and New Zealand, gave three hints which he said should be taken by New Zealanders if they were to emerge successfully from the present depression. We should avoid overseas borrowing, and stop it altogether, if possible l , but, failing that, limit loans -to works that were likely to prove reproductive in .a short space of time. iSeeondly, we should guard against nonproductive expenditure in our business, in our homes and in public affairs. Thirdly, we ' should remember that in the case of debtor countries like Australia and New Zealand, , the overseas markets.were all important. It- must not be forgotten that -it was the buyer who made the price, and he based it upon general market supplies, not upon our costs of production.

-SYDNEY NOT AUSTRALIA

In his discourse on Australian conditions ‘ the speaker said that many people in New Zealand looked upon Sydney as synonymous with Australia; many people in Sydney, he added with ft smile, did likewise, Many New Zealanders, following this line of thought, had the idea that Mr Lang, who was bestriding New -South Wales like a Colossus, bestrode Australia. Re emphasised that of six States in the Commonwealth five had turned down the repudiation proposals of Mr Lang, as well as Mr Theodore’s inflation scheme. It was a great pity that personal prejudice and political antagonisms acted as a bar to a closely reasoned consideration of the economic problems which had arisen.

A point made by the speaker was thata government did not create income, all it did was to distribute the income created by private people. There had been a reduction in,the national income of Australia approaching £200,000,000, due phrtly to unfavourable climatic conditions over part of the country, partly to price declines and partly to the cessation of overseas borrowing.

In late years Australia had borrowed at the rate of £50,000,000 a year. That expenditure had resulted in creating employment, and in increasing the price level. Now that borrowing had stopped the problem was how to get those people back to productive employment.

The attempt to assist the primary producer, who had been hard hit by the fall in prices, by bounty schemes, had proved ineffective. It was found that u-ltimately the farmer had to pay his own bounty, In Government expenditure, social services such as health, education and pensions, which took £9,590,000 in 1911, accounted in 1929 for £37,730,000. To help to keep these and other public services going a certain amount of inflation had been indulged in by the Government, but that had to stop. In trading circles there had been deflation; in public matters, inflation, The o-njy solution for •Australia was to increase employment of men in industries that had a chance to export profitably, namely primary products. That meant reduced costs, but -it should be remembered that even if the standard of living were reduced in Australia and in New Zealand it .would .still rank high with that existent- in other parts of the world.

•In connection with the- arrangements that had been made for the conversion at lower rates of -interest of Australia’s 550 millions of -internal debt, Sir Lennan said it was not reasonable to expect a 100 per cent, acceptance of the scheme. It would probably be accepted by 80 per cent, and the other 20 per cent, would probably follow. Then, with improved prices for exports, and a few good seasons, Australia would get through her troubles and in a few years these bonds would be worth face value.