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Tuesday, 15 May 1973
Page: 2161

Mr Fairbairn (FARRER, NEW SOUTH WALES) asked the Treasurer, upon notice:

(1)   ls it a fact that, when the revaluation of the Australian dollar was announced on 23rd December 1972, a variable deposit requirement scheme was also established by which 25 per cent of overseas borrowings, with a maturity in excess of 2 years, would in future have to be lodged with the Reserve Bank.

(2)   If so, has this requirement, which effectively increases the cost of overseas borrowings by one third, caused difficulties in the minerals exploration sector, including, and in particular, the service industries.

(3)   What action will be taken to ensure that national development is not in any way adversely affected by the variable deposit requirement scheme.

(4)   Will the Government remove this requirement in respect of industries which are essential to national growth such as minerals exploration.

Mr Crean - The answer to the honourable member's question is as follows:

(1)   Yes. The deposit requirement however does not apply to borrowings specifically to finance trade transactions on normal trade credit terms, or to borrowings not exceeding $100,000 in any 12-month period.

(2)   (3) and (4) The objective of the scheme is to raise the effective final cost of overseas borrowing and thereby reduce the rate of capital inflow which occurred in 1971 and 1972. As the Prime Minister said in his statement of 23rd December 1972, this had resulted in a build-up of domestic liquidity to a dangerously excessive level. By moderating the rate of increase in liquidity the measure is designed to permit the Government to manage Australia's affairs in the interests of Australians. It follows that national development will not, overall, be adversely affected by the scheme, the continuing operation of which is, of course, kept under review.

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