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Wednesday, 29 September 1971
Page: 1621


Mr HAYDEN (OXLEY, QUEENSLAND) - 1 ask the Prime Minister a question in the absence overseas of the Treasurer. Is the profitability of trading banks declining while that of financial institutions is rising? Does the non-official money market now control a larger - and growing - volume of money than the banking system? Does this mean that a major portion of the total money market is outside the direct control of monetary policies and would this lead to an uneven and sometimes dangerous impact on the Government's economic policy? What steps are proposed to rectify this defect in economic control?


Mr McMAHON - It is obvious that the honourable gentleman has read with care the recent statement made by the Deputy Governor of the Reserve Bank of Australia which was published in one of yesterday's newspapers. As to the 4 questions that he has asked, the answer to the first one is yes and the answer to the second one is, I believe, a growing volume, yes. In relation to the third question I believe that as a result of the recent decision in the concrete pipes case the Commonwealth now has authority under the Constitution to legislate with respect to financial organisations and that this power would cover at least three-quarters of the kind of organisation mentioned in the table that was prepared by the Deputy Governor.

As to whether it is desirable to have changes made, I have sent the article across to the Treasury officials asking that a detailed examination of it be made, but in a matter as important as this there can be no doubt at all that it will take some weeks before an analysis can be completed. I mention also that I have some differences of opinion with the Deputy Governor in relation, for example, to the build-up of payments to the Commonwealth in order to achieve the Budget surplus of approximately $650m in the year. I believe that industry itself has now made certain adjustments in order to offset the difficulties that can arise because of this payment of funds in the last quarter. But equally I believe that the Commonwealth should, as it now is doing, carry out inquiries in order to ensure that we have more regular collections of funds throughout the year and not have them concentrated in the last quarter.







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