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Thursday, 21 May 1970

Mr UREN (Reid) - 1 rise again to speak because the Minister is sitting at the table and apparently he does not intend to answer any of the criticisms levelled by honourable members on this side. This astonishes me. I want to know, and members of credit unions throughout not only New South Wales but the length and breadth of Australia, and in particular in Canberra, want to know from, the Minister in the Committee stage why the Government is adopting this policy. Before this legislation was drafted why did nol the Minister or officers of the Department of Housing, or even the Prime Minister (Mr Gorton), have some discussion with the credit union people? After the legislation was placed before the House on 5th March there were discussions but even then there seemed to be no compromise al all on the part of the Government. The Labor Party proposed a reduction in the amount of loan from $7,000 to $3,000, a reduction in the repayment period from 12 years to 5 years and a reduction in the amount of S50,000 required to be lent every year. There is a provision in the Bill that if they accept an applicant for a loan credit unions meet these requirements or be liable to a $500 fine. I make that remark only in pawing.

I want to know from the Minister why the figure of $5,000 was set. 1 want to know why it was not reduced at least to $4,000 so as to give an opportunity to some credit unions in New South Wales to come within the provisions of the Bill. Why has the Government continued to force them to make long-term loans over a period of 12 years when they have not th" apparatus for th:s purpose. I want to know from the Minister why the Government insists on the figure of $50,000.

There is no understanding of what a credit union is. What is a credit union? Members of a credit union have a personal association which brings them together and into contact with one another and which gives each member a strong sense of responsibility to the entire group. They can be employees of an organisation, members of the same church, union or lodge, or residents of a well-defined community area. They are a co-operative and collective group, and they should be encouraged by this legislation and other Commonwealth legislation, but there is no encouragement under this legislation.

The other matter concerns conditions which I regard as stringent conditions. One of the conditions that has not yet been mentioned is that the loans must be made at an effective rate of interest of not more than 74% per annum on a reducing balance basis. This legislation will compel credit unions to make loans at not more than 74%, yet the Commonwealth bond rate at present is 7%. The Minister said that the rate must be not more than 74%' per annum. We must clearly understand that the credit unions are not in competition with the banks. They are in competition with the fringe institutions and, as I pointed out earlier, the major shareholders of the fringe institutions are the banks themselves. One of the major institutions which enters into the financing of housing, land and alteration of homes, is wholly owned by the Bank of Adelaide. The Bank of New South Wales has a 42.89% interest in such an institution. If one looks at the interest rates of the fringe institutions with which the credit unions are in competition 'one will see that they are 19% to 20%. At no time do credit unions charge a high interest rate. In fact it cos!s them 5% to 6% for their money. Yet they are forced to make loans at not more than 74%.

All we want to do is to allow these cooperative and collective groups who want to help their fellow beings to have the opportunity at least to share in the homes savings grant of $500. I might say in passing that the interest rate of the Commonwealth Savings Bank has increased, by 14% during the period June 1964 to April 1970 and on a $15,000 loan the interest is $3,700 more. This docs not come within this section of the Bill and I want to keep my criticisms at this time to this section alone. 1 hope that I first see the Minister and then that 1 hear his voice, if he has any voice or any positive thoughts on this matter. I want to know why his Government maintains these stringent conditions. Why has it reduced the amount only from $7,000 to $5,000? Why did it not reduce the 12-year repayment term to 5 years? Why does it insist on credit unions having to spend at least $50,000? Some of these small credit unions are groups of people in a firm, a church or a union and in some cases they make available more money for housing per member than do many of the larger credit unions. But there is no consideration whatsoever of what the credit unions do. I will outline some of the assistance which credit unions give. They make money available to their members for the purchase of a block of land. They make money available to cover a second mortgage. They make money available for alterations. These are the major tasks of credit unions. They do not . have the financial backing to make long term loans. The Government knows this. The Government represents the great banking and financial monopolies. It is not concerned with people. It is not interested in helping the credit unions. It is not interested in helping the small person. It represents only the wealthy sector of the community. It stands by the wealthy sector of the community and will not give the credit unions a fair go. The Government knows that if it were to help the credit unions the banks would put the brakes on, as they did with regard to the Australian Industry Development Corporation Bill.

Question resolved in the affirmative.

Resolution reported; report adopted.

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