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Changes announced in commission interest rates



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noZ*----I T ΡΠ nnΓΡίϊΙΤ~1 ΊΎ Lb J i l 11 V Lu Until l V J lMINISTER FOR COMMUNICATIONS LEADER OF THE HOUSE FOR MEDIA:

CHANGES ANNOUNCED IN COMMISSION INTEREST RATES 81/31

The Minister for Communications, Mr Ian Sinclair, in explaining increased

in interest rates paid by Telecom and Australia Post, said today their · .

continued access to Commonwealth advances made before 1 July 1975 at

relatively low interest rates could no longer be justified.

Mr Sinclair was commenting on the Budget decision to increase the average

rate of interest on these advances to 10$.

Previously the average rate applicable to Telecom was 6.9$, and to

Australia Post 5.2$.

Mr Sinclair said that in reaching its decision the Government considered

that continued access to these advances at relatively low rates of interest,

compared with rates payable for current borrowings, distorted the allocation

of resources in the community. .

This was because it permitted telecommunications and postal services to

be provided at levels of charges which were less than appropriate in

view of the current cost of capital funds.

Mr Sinclair said that when the two Commissions were formed on 1 July 1975» .

they were deemed to have taken over from the former PMG Department

advances from the Commonwealth which were incurring interest at the long­

term bond rate that applied when the advances were made.

In the case of Telecom the level of the former advances was increased

to take account of the capitalised profits earned in the years before

1 July 1975. .

The level of advances at 1 July 1975 vaa S3>994 million (Telecom) and

$105 million (Australia post). Since 1 97 5 -7 6 Australia Post repayments

to the Commonwealth had reduced its. advances to about $40 million at

1 July 1 98 1. The Telecom figure was unchanged.

Mr. Sinclair said the increased interest rates would mean that the

Commissions would pay about $60 million more in 198 1 -8 2 and about

$120 million more in 1982-85.

It was estimated that the Commissions' total interest bill in 1981-82

would be almost $400 million and in 1 98 2 -8 3 about $470 million.

Mr Sinclair said the decision to increase the interest rates w^s not V . _

expected to have a significant effect on postal charges.

Increases in telecommunications charges resulting in part from the rise

in interest rates had been announced earlier this month. .

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18 August 1981