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Tuesday, 16 August 1960

During 1959-60 the Commonwealth issued three public cash loans in Australia, two of them being associated with conversion offers to holders of maturing securities. Total subscriptions to the cash loans, including subscriptions received before 1st July, 1959, were £120,241,000. Securities eligible for the two conversion offers amounted to £295,634,000. Of these, £226,519,000 were converted, £67,807,000 were redeemed and £1,308,000 were still outstanding at 30th June, 1960.

The issue of Special Bonds - Series B was discontinued in January, 1960 and was followed by the issue of Special Bonds - Series C. Proceeds of sales of Special Bonds - Series B and C during the year were £26,177,000, while redemptions of Special Bonds - Series A and B were £3,215,000. Net cash proceeds from Special Bonds were thus £22,962,000. In addition, maturing Common-

 

wealth bonds and inscribed stock totalling £10,875,000 were converted into Special Bonds.

During the year four loans were raised overseas. Two of these, each for $25,000,000, were in New York, and yielded £21,649,000. Loans for £Stg.l2,000,000 in London and 60,000,000 Swiss Francs in Switzerland yielded £14,894,000 and £6,117,000, respectively. After allowing for the net amount of overseas borrowing expenditures charged during the year, the cash proceeds of overseas loans totalled £42,115,000.

In November, 1959, the first issue was made of Seasonal Treasury Notes, which were designed to moderate seasonal fluctuations in the liquidity of the banks and the public. The Notes had a currency of three months. They were issued at intervals until March, 1960, and the amount outstanding .reached a peak of £44,979,000 in February, 1960. All of the Notes matured and were repaid before the close of the financial year.

Details of public cash and conversion loans raised in 1959-60 (other than issues of Seasonal Treasury Notes) are given in the following table:-

As mentioned above, the amount of £120,241,000 subscribed to the three public cash loans issued in 1959-60 includes advance subscriptions received before 1st July, 1959. On the other hand, some of the subscriptions to the last of these loans had not been received in full by 30th June, 1960. Furthermore, the figure of £120,241,000 does not include advance subscriptions in hand at 30th June, 1960, nor does it include instalments received in 1959-60 of subscriptions to loans issued in 1958- 59. Allowing for such factors, the actual cash receipts in 1959-60 from public loan raisings in Australia were £619,000 less than shown in the preceding table. After taking account of net expenditure charged during the year, the actual cash receipts in 1959-60 from overseas loan raisings were £545,000 less than shown in the table.

In total, therefore, cash receipts in 1959-60 from public loan raisings both in Australia and overseas (including net receipts from the issue of Special Bonds) were £184,699,000. State domestic raisings yielded a further £5,068,000, thus bringing the total cash receipts from loans in 1959-60 to £189,767,000. This compares with the Budget estimate of £190,000,000.

Of the amount of £246,937,000 required to finance the Loan Council borrowing programme and advances to the States for War Service Land Settlement, £57,170,000 therefore remained to be provided by the Commonwealth. Of this, £54,895,000 was made available by the Commonwealth subscribing, from the Loan Consolidation and Investment Reserve, to a special loan of £55,000,000 (face value) issued in June, 1960. The remaining £2,275,000 was financed by the use of balances available in the Commonwealth Loan Fund.

In summary, the sources of finance for the 1959- 60 Loan Council borrowing programme and for advances to the States for War Service Land Settlement were as follows: -

 

LOAN REDEMPTIONS, 1959-60.

It was estimated in the Budget that redemptions of securities maturing during 1959-60, redemp tions of savings certificates and repayments of loans from the International Bank would total £70,000,000. Securities amounting to £295,634000 were offered for conversion in public loans in Australia during 1959-60 and, of these, £67,771,000 were redeemed from the National Debt Sinking Fund. Redemptions of savings certificates, costing £2,427,000, and repayments of loans from the International Bank, costing £7,235,000 ($16,187,000), were also met from the Sinking Fund, making £77,433,000 in all met from that Fund. Current receipts of the Sinking Fund were £71,024,000. After meeting repurchases, minor redemptions and repayments and discounts on conversion loans, £53,435,000 of this was available to meet the redemptions mentioned above. This was supplemented to the extent of £22,826,000 by the sale to the Loan Consolidation and Investment Reserve of securities held as investments by the Sinking Fund and to the extent of £1,172,000 by drawing on the cash balance in the Fund.

In addition to the redemptions of £77,433,000 mentioned above, the Sinking Fund expended £13,423,000 in Australia in 1959-60 on repurchases, redemptions of overdue securities and miscellaneous repayments and £4,090,000 on repurchases and repayments overseas, principally repurchases on the London market, costing £817,000, and repurchases on the New York market, costing £2,683,000. The total amount expended by the Sinking Fund in 1959-60 in reduction of debt was therefore £94,946,000, made up as follows:-

 

An amount of£237,000 was also paid from the Canadian Loan Trust Account for contractual repurchases in Canada. Securities with a face value of Canadian $583,000 were repurchased and cancelled.

In addition to the reduction of £84,097,000 in Commonwealth and State debt in Australia resulting from the operations of the National Debt Sinking Fund, there was a reduction of £80,365,000 in Commonwealth debt through the operations of the Loan Consolidation and Investment Reserve. With a view to reducing the large amount of Commonwealth debt, chiefly war debt, that would fall due in subsequent years, the Government established this Reserve in 1955. In practice, the Reserve exchanges medium and long term securities from its own portfolio for early maturing securities held elsewhere. The early maturing securities thus acquired are normally cancelled on receipt.

CHANGES IN GOVERNMENT SECURITIES ON ISSUE- 30th JUNE, 1959 TO 30th JUNE, I960."







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