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Treasurer starving the Aussie bond



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PRESS STATEMENT BY THE HON. JIM CARLTON M.P. TREASURER STARVING THE AUSSIE BOND

Mr Keating announced in the House today in response to a question by the Shadow Treasurer, Mr Jim Carlton on whether the Australian Savings Bond has been abandoned as an instrument of Budget financing that,he was reviewing both the role and interest rate applying to the Australian

Savings Bond.

, The interest rate on the Australian Savings Bond has remained unchanged at 11.25 since December 1983. With prime rates as high as 18^% the Australian Savings Bond is clearly uncompetitive and has resulted in massive net ~ redemptions. -

Since January 1985 $129 million worth of Australian Savings Bonds have been issued and the value of redemptions has been $1298 million, that is net redemptions have been $1169 million. Last month alone, net redemptions totalled

almost $200 million.

_ Clearly this net drain on Government finances is . going far beyond the "...possibly some further net redemptions" assumed in the Budget (p. 75 Budget Paper No. 1).

The Treasurer appears to be ashamed of the Aussie Bond.

He is frightened to raise the interest rate to a competitive level as it would draw attention to the damangingly high level of interest rates necessary to maintain his economic strategy.

If he does not move soon, Mr Keating will go down in history as the Treasurer who starved the Aussie Bonds to death. .

CANBERRA 13 NOVEMBER 1985 ,

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