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Tuesday, 17 September 1974
Page: 1161


Senator Guilfoyle asked the Minister representing the Minister for the Capital Territory, upon notice:

Has the survey conducted by the Traffic Section of the Department of the Capital Territory on the problems of the road toll been completed; if so, has a report been presented to the Minister and is it available for study by State Parliamentary Road Safety Committees.


Senator Willesee - The Minister for the Capital Territory has provided the following answer to the honourable senator's question:

The Traffic Section of the Department of the Capital Territory did conduct a survey but it was limited to field studies to obtain data to be utilised to measure the alcohol involvement of Australian Capital Territory drivers. Analysis of the data is almost completed and a final report will be submitted to me soon. The report will be available for study by all people and organisations concerned with road safety. A preliminary report was forwarded to the House of Representatives Select Committee on Road Safety earlier this year.

Canberra: Increase in Rates (Question No. 105)


Senator Baume asked the Minister representing the Minister for the Capital Territory, upon notice:

(   1 ) What is the average increase in rates to be paid by owners of property in Canberra, following upon the recent revaluation of land.

(2)   What is the amount of extra revenue anticipated from the new rates.

(3)   What is the percentage increase in rates as a result of the revaluation.

(4)   Over what period is this rating to apply before new values are struck and a further rate rise ensues.


Senator Willesee - The Minister for the Capital Territory has provided the following answer to the honourable senator's question:

(1)   The revaluation was to the levels applying as at 1 January 1973. It was made in accordance with accepted valuation principles and had regard to market values reflected in comparable sales at that time and changes of circumstances that had arisen since the last valuation. The average increase in general rates to be paid by owners of rateable property in Canberra in 1 974-7S is $ 1 3.86.

(2)   The unimproved value of ratable land in Canberra at 30 April 1974 was $598.6m. At the rate of 1.2740 cents in the dollar this value will yield $7,626,024 in 1974-75. This is $652,269 more than the yield would have been at the old value and rate from the identical land.

(3)   The percentage increase in total rates resulting from revaluation of land and a reduced rate in the dollar in 1974-75 is 9.35 percent.

(4)   The current practice is to revalue each 3 years. It is intended this practice will be continued and the next revaluation will then be to levels prevailing at 1 January 1976. It is expected the values will then be introduced for the rating year commencing 1 July 1977.

Increases in annual rate charges do not necessarily automatically result from increased unimproved values. The level of rates payable each year is determined by the amount of revenue required to meet the estimated cost of municipal services.

Interest Rates


Senator Wriedt -On 10 July 1974 Senator Withers asked Senator Murphy a question, without notice, concerning Government policy on interest rates. The Treasurer has provided the following answer to the honourable senator's question:

The Government does not like high interest rates but they are an unavoidable consequence of a tight monetary policy which, in present circumstances, is a necessary pre-condition for curbing inflation.

So far as lending for housing is concerned, it would have served no worthwhile purpose to be increasing the supply of housing finance when the housing industry was overstretched, as it has been during the past eighteen months. In those circumstances additional finance does not build more houses: it simply adds to inflationary pressures, to the disadvantage of all potential home-buyers.

The recent increases in interest rates on savings bank housing loans follow increases which have occurred in other sectors of the economy. The savings banks compete with other financial institutions for deposits (on which their lending for housing depends) and to compete successfully they must offer competitive rates; in turn, increases in lending rates are an unavoidable corollary of increased deposit rates. The Government's scheme for tax deductibility of home mortgage interest, for which legislation is to be introduced in the Budget Sittings of Parliament, will provide significant relief from increased interest charges for low and medium income home loan borrowings.

Interest Rates


Senator Wriedt -On 10 July 1974 Senator Wright asked me a question, without notice, concerning the recent increases in interest rates and the interest rate on ordinary savings bank accounts with balances under $4,000. 1 said that I would obtain a full answer from the Treasurer.

With regard to the recent increases in interest rates, I refer the honourable senator to the answer by the Treasurer which I have provided in response to a question on the matter asked by Senator Withers of Senator Murphy.

With regard to the rate of interest payable on smaller ordinary savings bank accounts, the Treasurer has provided the following information: The Banking Act provides that the Reserve Bank, with the approval of the Treasurer, has authority to make regulations relating to bank interest rates. In practice, bank interest rates have not been formally determined under the Banking Act but maximum rates have been fixed after discussion between the Reserve Bank and the banks, and with the approval of the Treasurer.

On 8 July 1974 the Governor of the Reserve Bank announced that, following discussions between the Reserve Bank and the savings banks and with the approval of the Treasurer, new maximum interest rates for savings bank deposits and loans has been fixed.

The Governor stated that the maximum rate which savings banks may pay on deposit accounts was to be increased from 7 to 9 per cent per annum and that actual rates to be paid by individual banks on the various forms of accounts would be announced by them. The situation is that the predominant rates for ordinary accounts have remained unchanged at 3.75 per cent per annum on balances up to $4,000 and 6 per cent per annum on the upper segment, while the rate offered on investment accounts is now 9 per cent per annum.

As indicated, within maximum rates, each savings bank has discretion, subject to consultations with the Reserve Bank, to determine the rates payable on particular segments of depositors' balances according to its own circumstances, which would include the cost of conducting the various types of accounts and the income that can be earned on the funds deposited. With regard to the interest rate paid on smaller ordinary accounts, I am informed that, while the savings banks keep this rate under careful review, many of these accounts are in fact conducted at a loss because of the substantial administrative cost involved in conducting accounts which are the subject of numerous small transactions. Unlike trading banks, savings banks do not impose charges for keeping accounts or collecting cheques. Small increases in the interest rate on ordinary savings accounts are very costly; for example, I understand that a 1 per cent increase in the interest rate would cost the savings banks about $90m per annum.

There are also income restraints affecting savings banks. Over half the assets of savings banks are in public sector securities, on which the yield is fixed at the time of acquisition; the high rates now ruling are therefore only obtainable on new investments or when existing investments are rolled over. Savings banks' income is also affected by the preferential interest rates on the majority of their housing loans.

It is, however, essential to the retention and growth of deposits which in turn provide funds for home purchases by individuals and for financing essential Government expenditures, that reasonably competitive interest rates be offered on the large ordinary accounts and investment accounts which are vulnerable to competition from other institutions.

Investment accounts, which carry the maximum interest rate of 9 per cent, are the savings banks' major competitive deposit instrument. During the eight months since the last adjustment in savings bank interest rates these accounts have risen by some $800m.

It is also relevant to point out that savings bank depositors with balances on ordinary accounts above certain minima, ranging from $100 to $500 depending on the savings bank concerned, can transfer their funds to an investment account at 9 per cent per annum. Investment accounts are subject to one month's notice of withdrawal after a minimum term of three months.







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