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Wednesday, 17 October 1984
Page: 1848

Senator JACK EVANS —My question is addressed to Senator Button the Minister representing the Treasurer. Following the statement from the chief general manager of the Westpac Banking Corporation that Westpac is 'hopeful that the Government will agree to the removal of remaining interest rate controls after the forthcoming election', is the Government seriously contemplating the removal of interest rate ceilings on small overdrafts and home loans? Given that Westpac believes a major reason for deregulation now is the Government's decision to admit foreign banks, does this not make a mockery of Mr Hawke's assurance to the Australian Labor Party Conference this year that-and I quote Mr Hawke-'The questions of foreign bank entry and interest rate deregulation are very much separate issues'? Has this Government, which has now been seized by a pseudo Fraserian-Friedmanite deregulatory fixation, considered what effects increased interest rates will have on small business and home buyers who currently have bank loans, on economic growth and unemployment, given the collapse of small business and the home building industry, and on Australia's inflation rate? Finally, has the Government considered the cost of reintroducing an interest subsidy scheme of the type that it abolished last year once home buyers begin to default on mortgage payments?

Senator BUTTON —I do not represent the Treasurer, but I think I can probably help . Senator Jack Evans referred to Mr Bob White's statement on behalf of Westpac about the removal of the remaining interest rate controls on home loans, and particularly small business loans. I am able to say that while no decision has been reached by the Government, those parts of the report of the Martin Review of the Australian Financial System dealing, for example, with small business finance, and particularly the role of the Commonwealth Development Bank and the general question of interest rates for small business, are under consideration by the Government, but no final decision has been made.

Senator Chaney —Do you have any preconceived ideas about it?

Senator BUTTON —I have some preconceived ideas, but Senator Chaney objects to preconceived ideas. His real problem is that, like the leader of his Party, he objects to ideas, preconceived or otherwise. As I said in answer to the question by Senator Jack Evans, that decision has not been made in respect of these matters. Senator Jack Evans also canvassed a number of pros and cons in the arguments about what would happen to interest rates in a deregulated environment . That is a matter for debate and argument. I concede that there are points that can be validly made on both sides, but it is a matter which the Government has to consider and decide in due course. I know of no proposal to reintroduce the scheme of interest rebates in respect of home loans to which Senator Jack Evans referred in the last part of his question. I deal finally with the rhetoric; this Government has not been seized by anything.