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Wednesday, 16 February 1977
Page: 158

Mr BRADFIELD (Barton) - I wish to raise a problem that has developed throughout my electorate over the last 2 months. I have no doubt that many other members are experiencing the same difficulty in their electorates.

Dr Klugman - Unemployment.

Mr BRADFIELD - No, it is not unemployment. The problem which I raise revolves around the attitude of banks, and particularly bank managers who are using the Federal Government as an excuse when refusing people loans. I should like to state briefly the Government's policy in this respect. The Federal Government is not restricting banks in lending money. What is happening is that bank managers who have little backbone, who are hesitant to say no to customers requests and who are not prepared to say that a loan does not fall within the category of their banks are saying: 'I am sorry, the Government will not let us lend any money'. They say that instead of coming out and giving a true and honest answer.

Let me explain what the Government's policy has been in this respect. The Government, through the Reserve Bank, has asked the trading banks of Australia voluntarily to restrict their lending to $100m per month. I might add that that is a pretty generous sort of limit, because when the banks lent money unchecked a few months ago the highest monthly amount lent was $109m and the average was $100m a month. So the Reserve Bank has instructed the trading banks to keep their lending to around the average of $ 100m a month. The figures show that the banks have the money and that they are still lending, but I am concerned about a possible change that could take place in their lending pattern. We all know that today banks have hire purchase subsidiaries. A person who goes along to a bank to borrow a small amount of money is immediately directed into the personal loan area or is advised to arrange a loan from the bank's hire purchase subsidiary, in which case he has to pay interest of between 16 per cent and 18 per cent. I would like to see a fair thing done for the public of Australia and people on the other side of the House are not always willing to do that.

I do not know whether many people realise that banks are not restricted by the interest rate that is determined by the Reserve Bank when they lend large sums of money. I think that they are not restricted above $75,000. However, below $75,000 they are restricted to the standard trading bank interest rates. Therefore, there is a willingness on the part of banks to lend large sums of money and to neglect small businesses, people who want to do alterations to their homes and people who do not qualify for the savings bank loan but who want to buy homes. There is a tendency for banks to neglect the small people and to lend money out in larger amounts where they can get marginally higher interest rates.

Although banks probably would not admit it, there is a tendency for them to lend larger sums of money because they have the same amount of overhead whether they lend $100,000 or $10,000. Therefore, banks prefer to lend the larger amounts because the same amount of time is spent signing papers as is spent with lending smaller amounts.

Mr Morris - What are you going to do about it?

Mr BRADFIELD - I am doing something now. I am telling the Australian public not to accept the assertion by their bank managers that the Federal Government has stopped them lending money. I want to tell the Australian people that the money is available. The Government has not placed restrictions on lending. The next time that bank managers are asked for a loan I ask them to have a little more backbone, to explain the truth to their customers and not to hide behind the assertion that the Government will not let them lend money. The banks are not terribly restricted. The restrictions by which they are bound are quite generous. There is no credit squeeze. There is plenty of money for the Aus.tralian people. It is just that this money is not going to the small person or the small business.

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