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Thursday, 28 November 1974
Page: 2978

Senator WRIEDT (Tasmania) (Minister for Agriculture) - I move:

That the Bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

The ACTING DEPUTY PRESIDENT (Senator Georges)- Is leave granted? There being no objection, leave is granted. (The document read as follows)-

The purpose of this Bill is to appropriate an amount of $150m to be advanced to specified banks for lending for housing. The proposed scheme was announced by the Prime Minister (Mr Whitlam) in his statement on the economy in the House on 12 November 1974. The need for this action arises because the reduction in activity in the home building industry was in danger of becoming more extensive than the Government would have wished. However, I emphasise that there is a need to keep the housing situation in perspective. I remind the Senate that dwelling completions in 1973-74 reached a record level of 152,700 and, at the end of the June quarter, the amount of work under construction was still at record levels. Indeed the capacity of the building industry then was undoubtedly still over-stretched. Furthermore, even at the end of the September quarter the number of dwellings under construction was still 28 per cent above the level at end September 1972 and only slightly below the number at end September 1973.

However, with both dwelling approvals and loan approvals declining sharply in the early months of 1974-75, the Government quickly moved to amend the Banking (Savings Banks) Regulations to enable the savings banks to channel a greater proportion of their funds into housing. At the same time, the banks were requested to increase the volume of finance approvals for housing. In short, the Government acted to increase the supply of housing finance as soon as it became apparent that there was a need to do so. I emphasise that, as a result of this action, savings bank loan approvals in the December quarter could be as much as 50 per cent higher than in the September quarter. Nevertheless a temporary gap in the total flow of housing finance appeared likely. It is primarily to avoid such a gap that the Government has decided to provide additional finance through the savings banks in order to minimise any reduction in activity.

The specific allocations to individual savings banks are set out in the schedule to the Bill, which provides for advances to be made to savings banks in proportion to their shares of total depositors' balances with savings banks at end September 1974. The allocations to the Rural Bank of New South Wales and the Bank of Queensland Ltd are based on their respective shares of total savings and trading bank deposits in the same month. These 2 banks are included in the scheme because of their traditional and important role in the provision of housing finance and the fact that, unlike the other trading banks, they do not have savings bank affiliates.

As the purpose of the proposed scheme is to provide an additional quick-acting stimulus to activity and employment in the home building industry, the funds will be made available to the banks on the condition that they are used by them to increase their rate of housing loan approvals over the period from the commencement of the Act to end March 1975, or such later date as the Treasurer approves, by the full extent of the additional funds available to them. The increased lending will be required to be additional to the higher rate of lending for housing which banks would have achieved from their resources, which I have already mentioned.

If a bank is judged to be unlikely to increase this higher rate of lending by the full amount of its share under the Bill, there is provision to enable its share or part thereof to be redistributed to other banks. Thus, clause 4 of the Bill provides that, where the Treasurer is satisfied that the amount initially allocated to a bank under the Bill will exceed the likely increase in the Banks rate of housing loan approvals over the specified period, the Treasurer may reduce the allocation to the bank by the amount of the excess and then re-allocate the excess among some or all of the other banks.

The Government is determined to avoid a return to the earlier boom conditions in the home building industry which were neither beneficial to the community nor to the industry and it is important that these funds be put to use at a time when activity in the industry is slackening. It takes a little time before increased finance is reflected in increased activity and, to facilitate speedy use of the funds, they are being lent by the Australian Government for on-lending by eligible banks on the same terms and conditions as apply to normal housing loans financed from the- bank's own sources. The banks have agreed to take the funds at a margin below their own lending rates which will have regard to administrative costs. Within this framework, banks have been asked to give preference to loans which will result in new constructions, including extensions to homes, and the acquisition of houses not previously occupied. The banks will endeavour to use their allocation under the Act so as to achieve as high a proportion as practicable of their total housing loan approvals under this scheme to persons earning less than $150 per week, and will continue not to make any distinction between male and female applicants in the approval of housing loans.

The detailed arrangements relating to the timing of advances to banks, their repayment by banks, and the interest rates on the Government loans under this legislation are currently being discussed with the banks and will be contained in a written agreement with the banks on terms and conditions of the Government advances. However, the banks have indicated their acceptance in principle of the scheme on the general basis I have outlined. 1 express my appreciation for the banks co-operation in the discussions at short notice of this scheme.

The scheme covered in this Bill is additional to the measures already taken by the Government to increase substantially the volume of finance provided by the savings banks for housing and the action to increase the funds for welfare housing purposes. I am confident that the combined effect of these and other measures should be to restore activity in the home building industry to a satisfactory level. However policy with regard to bank lending for housing will continue, as in the past, to be reassessed in the light of developing circumstances. I commend the Bill to honourable senators.

Debate (on motion by Senator Young) adjourned.

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