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Wednesday, 26 November 1986
Page: 3817

(Question No. 3837)

Mr Tickner asked the Treasurer, upon notice, on 1 May 1986:

(1) Has his attention been drawn to a letter circulated to members of the Government by the Australian Association of Permanent Building Societies, dated 14 April 1986, alleging at least 6 errors of misrepresentations in a document entitled `Explanatory Notes to Constituent Queries' relating to the Governments housing package and, in particular to the Government's decision to lift the charges on savings bank home loans.

(2) Which department was responsible for the preparation of the document referred to in the letter.

(3) Which allegations of incorrect or misleading statements referred to in the letter are correct.

(4) What action has been taken to correct any errors in the document.

Mr Keating —The answer to the honourable member's question is as follows:

(1) Yes.

(2) The document was prepared by staff in my office, with advice on some factual aspects provided by the Treasury.

(3) The references in the original document upon which the AAPBS commented were:

(a) `Savings banks are also subject to Commonwealth taxation, building societies are not.'

(b) `No building society is stuck with a portfolio of 13.5% regulated loans.'

(c) `Many building societies now only have to lend 60% of their deposits for housing. In New South Wales building societies may now only hold 60% of deposits in housing.'

(d) `Building societies have not been affected by the collapse in deposits to the same extent as savings banks. In the three months to January savings banks deposits fell at an annual rate of 10.7% bringing the rate of growth over the year to January to 2.3% and falling. By contrast building society funds rose by 11%.'

(e) `The Commonwealth subsidy only restores the normal competitive position of savings banks. It does not put building societies at a relative disadvantage.'

(f) `The Commonwealth subsidy merely enables the banks to preserve their deposits to finance the existing portfolio of regulated loans and the subsidy only restores the normal competitive position of savings banks. The Commonwealth is not subsidising deregulated lending by any institutions. For instance, it will not be subsidising the housing lending of trading banks.'

(4) A revised document was issued under the title `The Government's Housing Decision, Explanatory Notes for Constituent Queries'. The references shown in 3 above were retained in the revised document with the exception of (a) and (c) which were omitted and there was a minor amendment in the reference in (d) from `10.7%' to `around 11.0%'.