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Thursday, 19 March 1987
Page: 985

Senator HILL —My question is to the Minister representing the Treasurer. We have not heard enough from the Minister. I draw the Minister's attention to the lowering of the statutory reserve deposit requirement of trading banks recently canvassed in the Press. What are the Government's intentions on this issue, bearing in mind that the 1985-86 annual report of the Reserve Bank of Australia admitted that `the SRD mechanism is not now actively used as an instrument of monetary policy', and further, that `the Bank will be ready to take opportunities to reduce the ratio'? Is the Minister aware that the report of the Campbell Committee of Inquiry into the Australian Financial System also concluded that SRD would be little warranted in a deregulated financial environment and further that some $3.5 billion, or some 7 per cent, of trading bank deposits deposited with the Reserve Bank attract only 5 per cent interest? Is the Government prepared to allow the Reserve Bank to release these funds to assist individuals and businesses in dire financial circumstances?

Senator WALSH —I have seen Press reports of the type referred to by Senator Hill. I do not know whether the Treasurer envisages making any changes in the SRD ratio. I will refer that part of the question to the Treasurer. As to the second part of the question, however-the idea that since the Reserve Bank pays a rate of about 5 per cent on the statutory reserve deposits, that money ought to be made available at 5 per cent to some group or other which is deemed by some body or other to be a worthy person-it is just another brand of snake oil to peddle that sort of policy in the context that this is something that can be done painlessly, effortlessly and costlessly. The plain fact is that somebody else will suffer if some privileged group or people deemed by somebody or other to be worthy get credit at 5 per cent while everybody else pays something more than that. It is not costless. The rest of the community will ultimately pay the cost of that cheap credit provided to a particular group.

If the Government does make changes, or if the Treasurer contemplates changes to the SRD, it will not be for that sort of purpose because this Government is not into the merchandising of snake oil, unlike either of the pretenders, although I should say `any' rather than `either' because there are at least three pretenders to the Prime Ministership. We have the Queensland Premier, Mr Howard and Mr Peacock, all of whom are merchandising snake oil. This Government is not in the business of merchandising snake oil.