It is unfortunate that a primary producing country like Australia should be constrained to increase her real burden of taxation in a period of prosperity resulting from her arrival at the peak point of a trade cycle. In view of the extent to which her prosperity is bound up with fluctuations in the export price of certain staple commodities, her ideal financial policy would be to endeavour to smooth over the switch-back of price changes by some of long-term budgetary planning. Schemes of this nature, however, are difficult to carry out, and Australia is committed to a three-year defence programme costing an additional £24,850,000 and to a national insurance scheme, the estimated cost of which in the current year is £1,100,000, On the other hand, the rationalization of the country's finances that has been carried out since the early years of the thirties makes it unlikely that there will be any return to the conditions of 1931, even in the event of a further fall in commodity price. So far, export prices have declined by about 25 per cent. from the 1997 peak, and largely as a result, the export surplus is already considerably diminished. There are no immediate indications, however, of a further fall—in fact there has been a slight improvement in wool lately. Moreover, during the current year Australia may begin to reap some of the expected benefits from the trade agreement with Britai. It would appear, therefore, that while heavy expenditure by a country like Australia, during a period of prosperity, might ultimately have undesirable results, there is no indication of any serious reaction during the next year or two.
Text read from the printed page and cleaned; old type leaves the occasional error.