AUSTRALIAN FINANCE

Hokitika Guardian, 25 February 1933, Page 6

AUSTRALIAN FINANCE

AGREEMENT WITH BANK

£4,000,000 FOR WORKS. SYDNEY, February 9. The extent to. which the , Governments 0 f Australia are dependent upon the Commonwealth- Bank has again been emphasised at a meeting of the Loan Council The collective Governments asked for a loan of £6,090,000 for works, but had to be content with £4,000,000, which is barely sufficient to carry them to the end cf the current financial year. For a long time it appeared as though the Commonwealth Bank would not grant more than £2,000,000 and tho prospect of a serious deadlock on this issue must have caused tliq Premiers many anxious moments.

In agreeing to a compromise, the hank made it clear that beginning with the next financial year no further money for loan work would be raised by means of Treasury bills. This means that in the near future the Governments will have to go on the open market for any money they require, and if they are to he successful in this direction a great change in public opinion is necessary. The last loan opened by the Commonwealth was a. failure, the banks being left with the major portion of the amount required. PROPOSED WIDER SCOPE,

Throughout the negotiations the members of the Plank Board, led by Sir Robert Gibson, have displayed a feeling that it was highly undesirable to continue dealing with tho general financial postion in a piecemeal manner. They desired to widen the scope of the negotiations by giving consideration to the loan requirements ler next yean as well as this, the Loan Council welcomed the information that the board would prefer to discuss the position on such a wide basis, and gladly extended the yimo for negotiations. In,order to appease the boa:!, the Governments have undertaken to raise their own funds for loan works required after June. 30. It is nj& however, contemplated that there shall be any approach to the market for some months, and then only whin conditions' appear to be favoursbC, The basis cf the arrangements with the hank i t that Lie Loan Council will have first call on moneys raised to the extent of the works programme agreed to.. If it is found that conditions are favourable to the raising of further money, such additional money will he devoted to the funding) of some portion of -the floating debt. It has also been arranged that in the event of the necessity arising for the financing of further revenue deficits during the coming financial year, these will be met by the is'-uo cf Treasury bills in accordance wi.l: the practice which has been followed during the previous financial years. As the negotiations have led to a thorough understanding be two >n tho Bank Board and the Loan Council as to next year s nr/inces, uhe/ ‘■re regarded as very vt refactor,- and of the greatest po-rehL value. KEEPING WITHIN ESnMATES.

Perhaps the most satis! icuo y feu ture of the last meeting of the Loan Council is the revelation that all the Governments are now living within the estimates presented at the beginning of the year and that the arranged deficits 1 will not be exceeded. The whole position will be reviewed again in May next, when the Loan Council will resume’ to consider the finances for the financial year 1933-34. The new agreement implies an intention on the part of the combined Government:; to reduce the floating debt, which lias now grown to the huge figure of .€86,000,000 .

A comparison of the increase in the floating debt- last year with the increase for tb- previous year furnishes the best evidence that the Governments are relying on resources of income and a curbing of expenditure. Whereas in the calendar year 1931, the floating debt in Australia increased by £30,500,000," in 1932 it increased by only £17,212,000, an amount wine-b----in December was diminished to £13.217,000 by. funding from the proceeds of the hist loan.