POSITION IN AUSTRALIA.

Otago Witness, Issue 4031, 16 June 1931, Page 23

POSITION IN AUSTRALIA.

NATIONAL ECONOMIES. VOLUNTARY CONVERSION. MELBOURNE, June 9. After conferring with the Federal Opposition leaders to-day, the Prime Minister (Mr J. H. Scullin) proposed to the Premiers’ Conference the appointment of a national appeal executive consisting of himself, Mr Lyons, and the chairman of the Commonwealth Bank Board (Sir Robert Gibson) to direct a campaign for the voluntary conversion of the internal debt. Mr Scullin’s resolution on the subject emphasised the danger of default and the need for drastic retrenchment, and concluded with an earnest appeal to all sections of the people, in the interests of the nation, to accept the sacrifice involved. Mr Lang was the only representative at the conference to sound a discordant note. He declared it was nothing more than a pious resolution which provided Ho means whatever of compelling bondholders who did not convert to share in the general sacrifice. He strongly opposed the resolution, and asked what had brought about the sudden change of front. He expressed the opinion that Air Lyons was at the bottom of the change, and he declared that Air Lyons had broken up every party and every Government and every Cabinet with ■which he had been associated. DRAFT SCHEME PREPARED. MELBOURNE, June 9. The Prime Alinister announced tonight that complete agreement had been reached on his proposal for a national appeal executive, and a draft scheme had been prepared embodying a 20 per cent, all-round cut in public expenditure and voluntary loan conversion at 4 per cent. Air Lang had agreed, but with the reservation that unless the loan conversion was entirely successful he, on behalf of New South Wales, would not undertake to cut public expenditure or recommend any form of wages reduction.

LONDON lAIPRESSED. LONDON, June 8. The Alelbourne conference report was most favourably received in London. City and Stock Exchange men express the opinion that if the drastic cuts in Government expenditure are accompanied by voluntary (not compulsory) conversion the moral effect will be tremendous. It is recalled that Australians subscribed £30,000,000 in December when they knew that the stock would immediately be marked down. Further sacrifice would compel words of admiration.

NEW SOUTH WALES INTEREST. SYDNEY, June 10. The New South Wales Government having again defaulted, a further writ was to-day issued on behalf of the Commonwealth and the other States claiming £221,000, “ moneys due pursuant to the financial agreement of 1927.” It is unlikely that the original claims against the New South Wales Government for unpaid interest to London bondholders will be heard before August. OPINION OF BANKERS. SYDNEY, June 10. Financial institutions in ' Sydney unanimously favour the big conversion loan, and bankers express the opinion that it should prove successful. It is estimated that approximately £480,000,000 of the £556,000,000 internal national debt will be needed to ensure success. A fairly considerable proportion of the outstanding securities comprises stocks which carry a relatively low rate of interest, the conversion of which is not expected to prove difficult. Life insurance offices, which are heavily interested, have already expressed approval of the conference plan, provided it goes through in its entirety. AN lAIMEDIATE CAAIPAIGN. AIELBOURNE, June 10. Following the decision of the Premiers’ Conference yesterday an immediate campaign will be set on foot on behalf of the huge Conversion loan of £556,000,000 on a voluntary basis. An important principle is that holders who are not prepared to accept the new stock must give notice with 14 days after the launching of the campaign. The conference to-day appointed a subcommittee consisting of the Prime Alinister (Air J. H. Scullin), Air Lang, and the Premier of South Australia (Air L. L. Hill) to discuss overseas debts, the withdrawal of the Commonwealth legal action against New South Wales for failure to meet her interest charges, and the question of re-opening the Government Savings Bank in New South Wales.

THE SITTING CONCLUDED. AIELBOURNE, June 11. The Premiers’ Conference, the most momentous in Australian history, ended after a sitting which lasted 13 days. It was decided to approach the banks to underwrite a temporary advance of £8,500,000, to be made available at a rate of £1,000,000 a month to assist necessitous wheat farmers and to relieve unemployment. Mr Lang again declared his intention to limit public servants’ salaries to £5OO a year.

PROGRESS TOWARDS RECOVERY. LONDON, June 10. The Financial Times says that the Alelbourne Conference decision has created a steadier sentiment and the financial position of Australia is now shaping surely if slowly toward improve ment. “ In a word, it seems as if at last Australia is making tangible progress towards financial recovery.” ALL-ROUND SACRIFICES. AIELBOURNE, June 11. The Prime Alinister (Air J. H. Scullin), in summarising the conclusions reached at the Premiers’ Conference, declared that as the whole plan of rehabilitation had been adopted, all-round sacrifices would have to be made. The saving of interest by the conversion loan should yield £6,500,000. The deficits for the seven Australian Governments for the present financial year would be £31,000,000. This would be reduced to £15,000,000 by various means, chiefly cuts in Government employees’ salaries, war, old age, and other pensions, and adjustments in taxation. He appealed to all sections to reconcile themselves to the situation, pointing out that unless the drift was stopped the Governments, early in July, would be unable to meet their obligations, which would result in the breakdown of public utilities and business chaos, as the result of which no wages or pensions would be available for anybody. On the other hand, whatever reductions were made in private incomes would be largely counter-balanced by the fall in the cost of living, the restoration of employment, and the maintenance of sustenance relief.

COAIAIERCIAL CIRCLES PLEASED. SYDNEY, June 11. Commercial circles are pleased with the outcome of the Premiers’ Conference and they express the opinion that it should give an immediate impetus to business as well as stabilise Australian securities. So far no protest against the plan had been heard from official Labour, and assurances are not lacking of a popular response to the conversion loan. CONDITIONS OF CONVERSION. AIELBOURNE, June 11. The general conditions of the conversion loan have been approved by the Loan Council and holders will be invited to convert their holdings into new stock, and upon conversion all the existing securities will be subject to a general reduction of 224 per cent, in the interest yield, excepting in the case of holders of 3, 3|, and 34 per cent stocks who acquired these before August, 1915. The new securities are to be restricted to three flat rates of interest —4 per cent., 3f, and 3 —and are to be spread over ten fixed maturity dates, subject to the Government having the right to redeem them after December, 1950. Existing securities amounting to £450,000,000 and bearing interest at 5} per cent, and over are to be converted into 4 per cent., at a premium. As a general rule each holding is to be spread equally over the ten maturity dates. Conditions are also laid down dealing with existing securities amounting to £45,000,000 and £61,000,000 respectively. The interest on the new securities will be exempt from the Commonwealth super tax of 7J per cent., but will be subject to other existing Commonwealth and State taxation. Provision is alsp made for the conversion of tax-free securities on a voluntary basis.

FEDERAL HOUSE ADJOURNS. CANBERRA, June 11. In order to enable members of the Federal Labour Party to consider the decision of the Premiers’ Conference the Federal Parliament adjourned until next Wednesday. THE FEDERAL BUDGET. AIELBOURNE, June 11. The proposals of the various Governments submitted to the conference in regard to budgeting for a reduction of 20 per cent are made available. Air Theodore’s Budget for next year anticipates a deficit of £4,380,000. The Budget provides for the doubling of the sales tax to raise an additional £4,000,000, and £2,400,000 in revenue is estimated to result from the increase in the primage duty by 6 per cent. A sum of £2,470,000 will be saved by debt conversion and £3,350,000 in reductions in invalid, old age, and war pensions and maternity allowances; £1,700,000 in salary cuts, £1,000,000 in other adjustable expenditure, and £1,500,000 is expected to be obtained in increased income tax.

The most interesting of the States’ Budgets outlined was that submitted by Air Lang, who anticipates at the end of the year that the operations of New South Wales will show a deficit of £5,410,000, after allowing for a stiving of £1,300,000 in interest, £1,300,000 by salary reductions and £2,000,000 by other adjustable expenditure, and the anticipated additional revenue of £1,500,000 under the proposed Transport Bill.

Mr Lang stated that his Government proposed to reduce the salary of every person in its employ to a maximum limit of £5OO a year. This includes the Governor, the judges, members of Parliament, and people holding statutory appointments. ' “ It is not proposed, of course, to bring in legislation directly cutting the salaries of those people to

£500,” he said. “ We will deal with them as we deal with the bondholders. We will point out the position in which the country finds itself and make a strong appeal to their patriotism and ask them to return to the State all the money they receive in excess of £5OO a year. Should they fail to respond we will then have to introduce legislation similar to that which the conference proposes should be brought in to compel tax-free bondholders to convert.” The Victorian Treasurer’s Budget estimate anticipates a deficit next year of £1,310,000; South Australia anticipates a deficit of £1,500,000, and Queensland sees a deficit of £761,000. The Western Australian deficit will be £1.200,000, and that of Tasmania £90,000.

ENDORSED BY LABOUR CAUCUS. CANBERRA, June 12. The Federal Labour caucus, by 26 votes to 13, endorsed the economy plan of the Premiers’ Conference, and immediate steps will be taken by the Government to enact legislation giving effect to its part of the plan. ASSISTANT AIINISTER RESIGNS. AIELBOURNE, June 14. Air E. J. Holloway, assistant Alinister of Industry in the Federal Alinistry, has resigned, being strongly opposed the Premiers’ Conference economy plan. He has written a letter to the Prime Alinister saying that he has no sympathy with the reduction in pensions, and he believes the only way to revive the Australian position is by the issue of fresh credit through the National Bank. Air Holloway defeated Air Stanley Bruce, the former Prime Alinister, at the last election in Flinders, but he has indicated that he intends to contest the Alelbourne Ports electorate, which is an industrial constituency, at the next election.

WATERSIDE WORKERS. CANBERRA, June 10. The Governor-General’s reply to the Senate’s petition was announced in the Senate to-day. The reply states: “ With deep respect I find it is impossible to comply with the requests in the petition.” His Excellency made it clear that if he were to bow to the wishes of the Senate he would be in conflict with the House of Representatives. Aloreover, according to constitufional practice, he was bound to act upon the advice of his Alinisters. June 12 For the fifth time the Senate disallowed the regulations under the Transport Workers Act designed to give preference of employment to members of the Waterside Workers’ Federation. COAIAIONWEALTH DEFICIT. CANBERRA, June 11. The monthly balance sheet issued under the Alelbourne agreement shows that the Commonwealth deficit increased in May by £1,647,000 to £17,554,000. BRITISH PRESS COMMENT. RUGBY, June 10. The newspapers comment favourably on the decision taken by the Australian Premiers’ conference, by the Federal and State Governments, and by the leaders of the Federal Opposition. The Times says: ** Nothing would contribute more powerfully to restore the credit of Australia than the success of the appeal which is now to be launched. It is a great sacrifice to ask, but Australians have never yet failed to respond to an appeal to their patriotism.” The News says: “ They are practical steps, and both the economies themselves and the spirit which inspires them should do much to revive confidence in Australia’s future and relieve speedily the worst features of the situation.” The Daily Telegraph, in an editorial, says: “The Australian Premiers’ Conference has made financial history, and it represents a supreme effort of statesI manship to overcome desperate difficul- | ties by a wise decision to appeal for voluntary conversion. The credit of Australia has been placed directly in the hands of a large section of the public, upon whose response the whole financial outlook in great degree depends, and no doubt they will realise that much more than their own immediate interests hangs upon the success of this great gesture of confidence in. Australian patriotism.”

AIR LANG’S PROPOSAL APPROVED. SYDNEY, June 11. The New South Wales Cabinet has approved the proposal to limit public servants’ salaries to £5OO a year. “DOWN WITH LANG GOVERNMENT. SYDNEY, June 11. Two policemen held at Bay 300 unemployed men who tried to storm Parliament House this afternoon. The constables used their batons and one man received a severe head injury. The others were driven outside the gates, which were barred against them. The rioters shouted “ Down with the Lang Government,” and abused the police. The mob finally marched to the Trades Hall, where they held a meeting, and inflammatory pamphlets were distributed, attacking the Premier, the Labour daily newspaper, and Air “ Jock ” Garden, secretary of the Labour Council.

EFFECT ON STOCK EXCHANGE. LONDON, June 10. The Stock Exchange immediately responded to the news of the voluntary conversion plan. Practically all Australian stocks were marked up five points. Actual dealings were recorded in Commonwealth s’s at £O5 to £6B and 6’s at £77 to £80; Victorian s’s at £56, 4} at £55 to £5B; New South Wales 4’s at £6l to £6l 10s, 3’s at £5O to £5l, 5") at £72 to £75, 6’s at £6O; Queensland s’s at £53 to £6O, 3’s at £4O to £45; Tasmanian 3J at £i>~>, 64 at £B2. SYDNEY STOCK EXCHANGE. SYDNEY, June 11. The Stock Exchange is far from active owing to the uncertainty about the exact terms on which the existing loans are to be brought within the internal conversion scheme. Thus an attitude of caution is being displayed. However, the general economy plan evolved by the Premiers’ Conference is regarded hopefully. DEALINGS IN NEW YORK. NEW YORK, June 11. Responding actively to the favourable news that an agreement had been reached by the Premiers’ Conference on the reduction of interest, Australian stocks showed large gains on Exchange to-day.

“ REVOLUTIONARY IDEA.” SYDNEY, June 12. The State Cabinet Alinisters unanimously agreed to Air Lang’s salary reduction plan. The Public Service Association Executive, however, says the idea is “ revolutionary and preposterous.” It would place the Chief Justice and his court reporter on the same' rate of pay. STATE’S EXPENDITURE. SYDNEY, June 12. The State expenditure for the 11 months of the financial year exceeds the revenue by £8,897,241. The revenue totalled £35,063,294 and the expenditure £43,960,535. SALARIES OF MINISTERS. SYDNEY, June 12. The Labour caucus adopted Air Lang’s report on the financial plan which was evolved at the Premiers’ Conference. Air Lang assured his Ministers that their salaries would not be cut until the success of the Federal conversion loan had been achieved. VICTORIAN TAXATION. AIELBOURNE, June 14. The Victorian Government has submitted proposals to (Parliament, for raising an additional £1,796,000 by increased taxation on incomes and increased stamp duties on wages and salaries.

COMMONWEALTH BONDS. SYDNEY, June 13. Commonwealth bonds are declining heavily, pending the announcement regarding the incidence of the conversion loan on individual issues. Prices fell as much as 70s. DEALINGS IN LONDON. LONDON, June 12. Australian stocks hardened further, notably Victorian 5 per cent., in which dealings were recorded at £65. New South Wales 34 per cent, were sold at £45.