ECONOMIC CRISIS IN AUSTRALIA

Hokitika Guardian, 12 August 1931, Page 2

ECONOMIC CRISIS IN AUSTRALIA

MEETING THE POSITION

COMMONWEALTH ON ROAD TO REOONSTRIT CTION.

WELLINGTON, August 10

A review of Australia’s economic position was made by Professor D. B. Copland,, Dean of the Faculty of Ecor.o mics in Melbourne, in an interview. Professor Copland arrived by the Makura 011 a short visit to New Zealand.

“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,” he said. “Three commodities, wool, wheat and metals, make up nearly three-quarters of Australia’s export trade. They have all suffered severely in the price collapse. They have fallen from over £140,000,000' to £80,000,000 in spite of the greatly increased quantity of wheat and butter production. Unsound financial irtethods and extravagant borrowing are, in part, responsible for the present depression, which has been deepened by the unwillingness of some political parties to face the situation. Blit Australia is not the only country suffering from these difficulties.

NOT MERE TRADE DEPRESSION. “It is always necessary to emphasise that the present economic crisis is not a mere trade depression from which recovery will automatically flow. It is a larger economic adjustment to an en_ tirely ncW set of conditions, and a lower price level. Ordinary methods are of little avail and drastic reconstruction is the only way of bringing about recovery. No one can question that Australia is on the road to such drastic reconstruction. The burdens she is assuming are not always appreciated, but they are very real, probably as heavy as those of any country. For instance, all Government expenditure is to be cut 20 per cent, wages and saiaries/of the Public Service are to be cut 20 per cent., new taxation to the extent of no less than £7,500,000 is to be levied on a falling national income, and interest on the public debt, through the conversion loan will, it is hoped, be by 22$ per cent. COSTS COMING DOWN. ■ “Similarly cuts are being made in private wages; in fact, the basic wage under the Commonwealth Arbitration Court has fallen in the past eighteen months by no less than 23 per ccni.. The cost of living is falling, and costs in industry are also coming dtMVtl; Unemployment is still high find profits are low, but this, unfortunately, is one of the conditions of reconstruction. When costs have fallen it is to be hoped that industry will expand and the unemployed be absorbed. Costs have fallen through the overhauling of management and overhead costs in industry, the drop in wages and the fall in the price of certain materials, due to a general fall in world prices. “Australian reconstruction is proceeding on the plan of every class in the community making its contribution. This is the only equitable solution, atid it is being accomplished in spite of the high exchange rate of 30 per cent; indeed, one might say that the process of readjustment is being expedited by the exchange rate, which is approximately the natural rate.

MR LANG IN CLASS APART. “Australian politics are a, favourite theme of criticism,” said Professor Copland, “but they are by no means always understood. At the present time, excluding New South Wales, there are three Labour Governments andi three Nationalist Governments. They 'are all working solidly for the financial reconstruction plan, and the Labour Government have had to incur considerabe hostility from certain sections of their followers. Mr Lang, in New South Wales, is in a class apart. He has an extraordinary ascendancy over a big party and is supported bv ihe extreme fection of the industrial movement in New South Wales, hut lie does not represent the majority view of Labour in politics in Australia. ' The fairness of the present plan of reconstruction and the stand being taken by other sections of the Labour movement. will ultimately lead to the defeat of extremism. Meanwhile, tnere will be political difficulties, especially in New South Wales, but Australia will overcome these difficulties when the people begin to obtain the full benefits of the present sacrifices they are making.” Professor Copland will visit his home town, Timaru.