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Thursday, 8 December 1960

Mr Ward (EAST SYDNEY, NEW SOUTH WALES) d asked the Treasurer, upon notice -

1.   Is it a fact that Mr. H. Norman Giles, who is the deputy chairman of the Commonwealth

Banking Corporation, is also managing director of Elder Smith and Company, a private firm of woolbrokers?

2.   Can he say whether some of the applicants for financial assistance from the Commonwealth Development Bank, which functions under the direction of the Banking Corporation are, or have been, clients of Elder Smith and Company?

3.   If so, does the managing director of Elder Smith and Company occupy a position in which he can influence a decision in respect of applications to the Development Bank for financial assistance to suit the business interest of the private form of woolbrokers with which he is associated?

4.   Is there any evidence that this practice is being followed in some cases?

5.   Can he say whether an application by Mr. Lance Davis, farmer, of Bendemeer, New South Wales, was refused following an altercation which Mr. Davis had with Mr. Norman Giles over the delay of Elder Smith and Company in making payment of money due to him?

6.   Will he furnish details of all the circumstances associated with the repossession by the Development Bank of Mr. Davis's agricultural machinery which were referred to, but not contained, in his letter to me of 14th November, 1960?

Mr Harold Holt ---The answers to the honorable member's questions are as follows: -

1.   Yes.

2.   I am informed by the Commonwealth Development Bank that it has received and approved applications for finance from clients of all major pastoral companies in Australia.

3.   No.

4.   No.

5.   I am informed by the Commonwealth Development Bank that the application was declined without reference to any member of the Corporation Board.

6.   No. As indicated in my letter of 14th November, to the honorable member, I am informed by the managing director of the Commonwealth Banking Corporation that a very thorough examination has been made of the circumstances of the case in question and that action was taken by the Commonwealth Development Bank only after it had made strenuous efforts over a protracted period to resolve the position.

Mr Malcolm Fraser (WANNON, VICTORIA) r asked the Treasurer, upon notice -

1.   How many banks are at present borrowing from the Reserve Bank?

2.   What amount do these banks at present owe to the Reserve Bank?

3.   In how many and which of the last eighteen months did the trading banks borrow from the Reserve Bank, and what was the extent of the borrowings in each month in which they occurred?

4.   Can he say what factors, especially recently, have persuaded banks to borrow at the Reserve Bank penal tate rather than curtail advances?

5.   What is the Reserve Bank penal rate?

6.   Would credit control be more effective if the penal rate were higher?

7.   What calls into, or releases from, statutory reserves have been made by the Reserve Bank during the last eighteen months?

Mr Harold Holt - The answers to the honorable member's questions are as follows: - 1, 2 and 3. Figures for Reserve Bank loans to banks are not published.

4.   Borrowing from the Reserve Bank is not to be regarded as an alternative to a curtailment of advances. A bank which finds it necessary to borrow is required to take all steps necessary, including a reduction in its rate of lending, to repay the loan and to avoid a further borrowing. The rate of interest charged on Reserve Bank loans is only one way in which banks are discouraged from borrowing. In current circumstances, all trading banks, and particularly those in debt to the Reserve Bank, are being required to direct their policies towards a significant reduction in advances outstanding. This objective is being sought through various directives to the banks as well as by continued pressure on their liquidity.

S and 6. The rate of interest charged on Reserve Bank loans to the trading banks is not published. Therefore it is not possible to discuss implications of the current rate or any alternative rate.

7.   Since June, 19S9, the movements in banks' statutory reserves with the Reserve Bank have been as follows: -


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