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Tuesday, 26 August 1980
Page: 680

Mr UREN (REID, NEW SOUTH WALES) - Is the Treasurer aware that the Commercial Banking Company of Sydney Ltd yesterday urged a 2 per cent lift in the official interest rate charged on overdrafts of less than $100,000 and a one per cent rise in housing loan interest rates in order to protect the profits of the bank? Would a further one per cent rise in housing loan interest rates mean an increase of $22 a month on a loan of $30,000 repaid over 25 years? Would it impose a heavier burden on those families already paying off their homes? Is it a fact that a person earning less than $305 a week would be virtually excluded from housing loan bank finance and that such exclusion would apply to around 85 per cent of those on single incomes? Would such an increase in home loan interest rates further depress the home building industry, which, according to the Indicative Planning Council for the Housing Industry, is already operating 1 1 per cent below capacity nationally and as much as 22 per cent below capacity in Victoria? Will the Treasurer give a guarantee that his Government will give higher priority to the needs of people than to the profits of private banks, and reject the call of the CBC for a further rise in home loan interest rates?

Mr HOWARD - I have seen the remarks attributed to the Managing Director of the Commercial Banking Company. I think the honourable gentleman and the House will be aware that it has been the policy of this Government, in respect of the interest rates which are within the control of the Reserve Bank of Australia, to show a preference for small borrowers, and as a consequence that preference has continued to be enjoyed by the very segment of housing borrowers about whom the honourable gentleman professes to be concerned in his question. The result of that policy is that not only do small business borrowers get the benefit of that, but also the small home purchase borrowers benefit. The honourable gentleman is aware that no government can responsibly give the sorts of guarantees that are sought by him. I point out to him that in 1979-80 the volume of money made available for lending by the major institutions was the highest for several years. In 1979-80 the building societies and banks recorded the highest volume of lending for quite some time. The honourable gentleman will do well to remember that, and also he will do well to remember that dwelling construction during the course of 1979-80 rose very strongly, by several percentage points in real terms.

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