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Monday, 2 December 1985
Page: 2640


Senator BOLKUS —My question is directed to the Minister representing the Treasurer. Has his attention been drawn to a recent claim by the Opposition Leader, Mr Howard, about the importance of interest rates? Can the Minister advise the Senate of the Government's attitude towards home mortgage rates, in particular by comparison with the policy of the Liberal Opposition?


Senator WALSH —It is well known that the Liberal Party is for the deregulation of housing interest rates. It was announced by the Leader of the Liberal Party only a few weeks ago that that should be done. If that were done it is beyond doubt, under present circumstances, that interest rates for home mortgages would increase under a Liberal government. The Premier of South Australia said recently, I understand, that if the Liberals get their way, that is, in deregulating housing loan interest rates, the typical borrower of a bank housing loan will be facing an extra $70 a month in repayments. That is what the people of Australia, and the people of South Australia in particular, can expect if the Liberal Party gets its way and implements Liberal Party policy.

The Treasurer gave a firm assurance about a month ago, and I think he may have even repeated it since, that this Government will not deregulate housing loan interest rates. I was pleased to note that just last week the Commonwealth Bank of Australia wrote to its borrowers advising that it had decided not to proceed with a loan service fee which it had previously announced-I think that was back in September-it intended to apply. As a result of that change in the policy of the Commonwealth Bank, the banks are not using the device of a loan service fee to circumvent the mortgage interest rate ceiling or to surreptitiously increase the effective rate of interest. I would be fascinated to know whether the Liberal Party, under its present Leader, appreciates that action by the banks. However, I am sure that the Australian Labor Party, not only federally but also in South Australia where the Labor Party and particularly the Premier are very closely in touch with the needs of families, will appreciate that action by the Commonwealth Bank.

Finally, I suppose that one might say that if there were no Commonwealth Bank around, which, of course, is also Liberal Party policy, there would be no effective competition from the public sector on private sector banks. I seek leave to incorporate in Hansard the circular from the Commonwealth Bank dated 19 November 1985 in which the Bank announced that it had decided not to proceed with the proposed loan service fee.

Leave granted.

The document read as follows-

COMMONWEALTH BANK OF AUSTRALIA

General Manager

Retail Banking

19 November 1985

Dear Borrower

LOAN SERVICE FEE

In August 1985 we announced that a fee to offset the costs of conducting your loan account would be charged half-yearly from December 1985.

There have subsequently been very many representations made to us concerning the effect of the fee particularly in the light of recent movements in market interest rates which have flowed on to home loan borrowers.

We have decided not to proceed with the proposed fee and no loan service charges will now be debited to your Home Loan Account.

Please accept our sincere apologies for any concern we may have caused you on receipt of the earlier notification.

Yours faithfully

B. K. STOTT

General Manager,

Branch Operations