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AUSTRALIAN FINANCE

TAXING AND BORROWING AVOIDING CREDIT EXPANSION Allocation of the cost of the war as between revenue and loans is a matter to which the Australian Federal Government is giving close attention. Broadly, it can be stated that the Government is anxious to provide as much as possible, commensurate with the encouragement of continued industrial and business activity, out of revenue, while at the same time asking the community to contribute liberally to war loans and savings. The main Australian objective, says a report issued in New Zealand by the Australian Trade Commissioner, is to avoid undue credit expansion and the dangers of inflation. “Recent taxation increase.-, together with Ministerial statements, serve to emphasise that the Government aims to provide a far greater share of the cost of the present war out of revenue than was done in 1914-19. “Expenditure on defence and war services during the past financial year totalled approximately £55,200,COO. Of this amount, about £24.300,000, or 44 per cent, came out of revenue, and the balance of £30,600,000, or 56 per cent, from loans and other sources, including trust funds. “Financial arrangements considered necessary during the last war do not afford an adequate guide as to possible developments under existing conditions, but reference to the figures is of interest:— “Cost nf war services, 1914-1919: Loans £219,213,000, revenue £46,335,000; total £265,548,000. “This shows that the proportion financed from revenue was only about 17 per cent. During those years Australia became indebted to the Imperial Government for £92,000,000 partly for services rendered and material supplied for Australian military forces abroad, and partly in respect of loans from the British Government. At the end of the war there was an outstanding liability in regard to War Certificates of £5,000,000. Heavy Expenditure Necessary “After the war, heavy expenditure was necessary for repatriation and other purposes and payment of soldiers’ gratuity. The latter amounted to £27,000,000, while other expenditure in the five years 1920-24 totalled £222,251,000, of which £77,374,000 came from loans and the balance from revenue. “Large internal borrowing during the last war was made possible only by inflationary methods. Greater reliance on tax revenue on this occasion will be necessary if stimulation of loan receipts by credit expansion of an inflationary nature is to be avoided. “Fortunately, Australia is in a substantially stronger position today to finance an increased proportion of war costs out of current production than she was during 1914-19. Thanks to the rapid growth of manufacturing the economic structure is now much better balanced as between primary and secondary industries. The Commonwealth Bank has developed greatly as a Central Bank; control of credit is more efficient and has been imposed at a much earlier date. “Vigorous measures for control of price, imports, overseas exchange transactions and local capital issues are also now in operation, while the Government’s steps for mobilisation of industry for war purposes have been carried to a far greater stage of efficiency than could be envisaged in the last war.”

Permanent link to this item
Hononga pūmau ki tēnei tūemi

https://paperspast.natlib.govt.nz/newspapers/WT19400919.2.123

Bibliographic details
Ngā taipitopito pukapuka

Waikato Times, Volume 127, Issue 21222, 19 September 1940, Page 14

Word count
Tapeke kupu
497

AUSTRALIAN FINANCE Waikato Times, Volume 127, Issue 21222, 19 September 1940, Page 14

AUSTRALIAN FINANCE Waikato Times, Volume 127, Issue 21222, 19 September 1940, Page 14

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