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Thursday, 27 September 1973
Page: 1606

Mr MULDER (EVANS, NEW SOUTH WALES) - I direct my question to the Minister for Housing. As a result of yesterday's decision by the New South Wales Government to permit building society interest rates to rise by 1 per cent, I ask: What effect will this decision have on home owners repaying loans to terminating building societies? Will these borrowers be hit as hard as borrowers repaying loans to the permanent building societies or does the general structure of the terminating building societies system help to cushion the effect? What action does the Government propose taking to assist borrowers placed at a disadvantage by these interest rate rises?

Mr Les Johnson (HUGHES, NEW SOUTH WALES) - I think there are close on 9,000 terminating building societies in Australia. Most of them are distributed in the States of Queensland, New South Wales, Victoria and Western Australia. The terminating societies are insulated to some extent against the increases recently announced. This principally follows the successful negotiation of the Commonwealth-State Housing Agreement which is currently before the House. The Agreement provides that 30 per cent of $21 8m, about $70m, made available under the Agreement is to be diverted to the terminating building societies through the home builders' account. It is fortunate for the recipients and potential recipients of home builders' account money that we have negotiated this agreement. The funds made available carry an interest rate of 4 per cent for the general purposes of the Agreement and 4J per cent in respect of terminating building societies which finally put their money out to borrowers at 5i per cent.

There is a considerable increase in the amount of money to be utilised by the terminating building societies, particularly that part which derives from the Australian Government's support. Last financial year some $56m was made available under the CommonwealthState Housing Agreement. This year approximately $70m will be made available to provide housing assistance for the identifiable category of people who go to terminating building societies - those who receive an income in the vicinity of 95 per cent of average weekly earnings. The category of people who are assisted by State housing authorities receives in the vicinity of 85 per cent of average weekly earnings. In answer to the honourable member's question, there is a very considerable cushioning available which will greatly assist that low income category in this period of rising interest rates.

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