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Monday, 22 October 1973
Page: 2466

Mr BOURCHIER (Bendigo) - On the motion for the adjournment of the House I wish to speak on the matter of bank interest rates which, I think, are a matter of importance to us all at the moment with the bond rate running free. I wish to draw to the attention of the House the very significant effect that this has on what are commonly called the working people of this country - the people who save desperately to put money aside for a rainy day and who have a small savings account of a few hundred dollars or even up to a couple of thousand dollars. Unless they have an amount of more than $4,000 in a savings account their money earns 3i per cent interest. This compares with the 6 per cent that those who save more than $4,000 earn on their money deposited in a savings bank. If a person invests his money, whether it be $100, or more, in a permanent building society or similar institution he will receive an interest rate of 7i per cent on his daily balance. I believe that this situation leaves a very bad taste in the mouths of the many people who have small savings accounts.

Savings deposited in savings banks at the end of the financial year totalled $ 10,438m, which was distributed over 17,542,000 accounts. Of course, the greatest number of those accounts would be the little accounts to which I referred - not the great big ones with many thousands of dollars in them but little accounts belonging to the people who have saved and put aside their money for a rainy day. Many of these people do not use this money to buy their homes; they do not use all their money to buy their cars. They like to have that little pot of money kept aside in case some problem arises. Therefore one finds that when they wish to buy a car, a refrigerator, a television set or furniture foi their homes they have to pay at least 9 per cent or 10 per cent interest on the money they are required to borrow, provided that they can borrow the money through a bank on overdraft, by opening a separate account or by taking out a personal loan. If they borrow through an accredited finance organisation they will probably have to pay a much higher interest rate.

Many young people who wish to buy their own homes save a certain amount of money so that they are able to put down a deposit on their land. They keep saving and set aside a little more again for the house. When they go to build a home, they find that because of the cost of homes today they are allowed to borrow so much and no more. Then they are forced to take out a second mortgage. I believe that in the Australian Capital Territory many people actually take out a third mortgage. This means that these people have to pay interest rates as high as 9 per cent and 10 per cent on the money borrowed to build their homes. They have no hope of ever seeing the day when they can proudly say: 'This is my home'. But the worst thing about this situation is that they cannot afford to put money aside in a savings account, perhaps for their annual holidays, to look after themselves if they become sick or to buy something in an emergency, for the simple reason that they are losing money on every cent that they have in their savings accounts. They receive 3i per cent interest on the money in their savings accounts but they are paying out 9i per cent on their borrowings. Obviously they are losing 6 per cent or 7 per cent on every dollar that they keep aside. This to me is a shameful thing and I believe that it is time that the Australian Government and the Treasurer (Mr Crean) in particular took notice of this situation. I believe that it is time that he had a look at the whole range of interest rates applying to savings accounts. He should do something for the people.

Let us look at the situation of the pensioners of this country - the people for whom the Labor Party so proudly boasts it is doing something. It has done something for them. In the country areas in particular, it has increased the rentals that they are required to pay for their telephone service. It has introduced the payment of income tax on the earnings of pensioners. I am pleased to note that it was not too long after I made a speech a couple of weeks ago on the estimates for the Repatriation Department when I pointed out the anomalous situation of imposing taxation on the earnings of pensioners that the Treasurer obviously woke up and realised that he had to do something. He raised the limit of earnings that these people were allowed to have to something like $3,000 before they became taxable. Nevertheless, I am very much concerned that anybody should be required to pay tax on his pension.

I am speaking particularly of people under the age of 75 years who are not free of the means test but who in fact are subject to the means test To impose taxation on this money is a deliberate fraud on the part of the Labor Government in relation to the people who are so involved, because such an imposition is unfair on them. Although they receive no extra income they are paying out extra money by way of taxation. This should not be allowed. I believe that until such time as these people are free of the means test they should not be required to pay tax on this money. I do not advocate that the tax should not be applied to those who are now free of the means test. I believe that this is quite just and fair, provided that the scale of taxation is reasonable and not at the level it was previously. But, as I said, the Treasurer finally woke up to the situation and has taken steps to overcome the problem.

The next step for the Treasurer to take is to look at the two areas I have mentioned tonight. Firstly, I ask him to look at the matter of interest rates paid to people who have small savings bank accounts. The interest rate should be increased so that these people can feel that they are wanted in this country and so that they are given an incentive to save through the savings banks. If this is not done, it might well be that the Treasurer will find that many of the people among those who hold the 17 million-odd savings accounts will withdraw their money from the savings banks and deposit it with another savings institutions, such as the permanent building societies, where at least they can get a fair rate of interest The other matter at which I would ask the Treasurer to look again shortly is the imposition of taxation on those people who are receiving a pension but who are still subject to the means test.

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