AUSTRALIA'S TROUBLES

Sun (Auckland), Volume IV, Issue 1062, 28 August 1930, Page 6

AUSTRALIA'S TROUBLES

“CHAMPAGNE TASTE, BUT BEER INCOME” KEEPING UP APPEARANCES “The main trouble about Australia is that for a good many years she has acquired a champagne taste on a beer income. So long as the Old Country lent the money to cover up the deficiency it was all right, but now that the flow of easy money has dried up it is found that the beer income has become insufficient for even a moderate diet.”

In this metaphoric vein Mr. Will Appleton, governing- director of the Charles Haines Advertising Agency, opened iiis luncheon address, “Lessons from Australia,” to the members of the Auckland Chamber of Commerce today.

Mr. Appleton returned recently from a world tour. He was introduced to a large audience by the president of the chamber, Mr. M. Stewart. Anyone who had visited Australia during the last year or two must have been impressed by the fact that the desire for keeping up appearances had blinded too many to the most obvious facts of their economic existence, he said. Labour conditions and wages obtaining at periods of abnormal prosperity had been declared pai*t and parcel of the standard of living. Government interference and artificial control over wages, together with countless strikes on the part of the workers, had resulted in the crippling of the industry. A flourishing export trade had almost disappeared, while local consumption has been reduced to a minimum. CHECK TO INVESTORS " “Perhaps the most serious consequence of the industrial unrest,” he continued, “is the check that has been given to outside investors. For some time past the enormous value of Australian undeveloped resources has failed to induce British and American capital to risk the maelstrom of industrial discontent. “Money borrowed by Governments for public expenditure can never create the volume of permanent employment which is brought about by a much smaller amount of private money invested in productive industry.

“Today Australia Is waiting for the nourishing injection of foreign enterprise and capital into the unwieldy bulk of her unexploited resources.” The most obvious fact of the economic policy was the swollen unemployment figures existing in Australia today. Something like 6 per cent, of the people were out of work, while the bulk of the other bread-winners had either to accept reduction in wages or were on a rationing system, which was equivalent to the same thing. INCREASING OVERDRAFT

“The condition of Australia at the present time,” said Mr. Appleton, ‘‘might be likened to a 'business man who, for years, has been losing money in liis business, but has managed to present a good front by constantly increasing his overdraft with his bankers. Had it not been for the incessant borrowing of fresh funds on the London money market, the proceeds of which were really used to meet interest charges overseas, there would have had to have been a halt before this. “While it is idle to put all the blame on the shoulders of the Australian Government, it has to be admitted that Government finance, plus Government policy, have undoubtedly been the most important factors at work. From about the time when Mr. W. M. Hughes began the scattering of public money 14 years ago, the public expenditure of the Commonwealth has advanced with tremendous rapidity.

“The public itself has always been keen to profit by the successive importations of loan money. Increased comforts and luxuries were desired by all classes and, of course, the time has now come to pay the piper. WAGES AND COSTS “Tho main complaint business men in Australia today have to make is that, while private employers have had to face the situation and curtail expenditure in every possible direction, there has not been evidenced by either the State or Federal Governments any real signs of economy. But as a result of Sir Otto Niemeyer’s advice, it is nowobvious that, contrary to Mr. Scullin’s expressed determination recently, the Federal Civil Service will have to undergo retrenchment. If Australia is to weather the storm-rand I have no doubt she will—every cost of administration must be subjected to careful review to eliminate extravagance and to bring tho expenditure within the compass of the Government’s greatly curtailed revenue collecting powers. ULTIMATE RECOVERY

“For many years what might be termed the sheltered industries have been carried on the shoulders of the primary producer. Organised labout has received far more than its fair share of the results of labour. An early change to sound finance can only come about by substantial declines in the cost of living, and these in turn cannot operate without a fall in wages, and a consequent reduction in nlll operating expenses.

I have no doubt whatever about the ultimate financial recovery of our sister Dominion, said Mr. Appleton. Probably no country has greater recuperative powers than the Commonwealth. but the present depressed state of trade is world-wide, and it is not merely a question of getting over a drought or something of that kind on this occasion. I have but li*.tle fear that within the next three years businesss in Australia will get back to normal.