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Thursday, 17 May 1973
Page: 2260

Mr SNEDDEN - I address my question to the Treasurer. In view of the Government's stated intention to provide stated maximum housing assistance to those on low incomes, will the Government agree to a proposal by the Association of Permanent Building Societies to make their liquid reserves available for lower interest lending? The Association has estimated that it has $125m which can be made available at a lending rate of 6 per cent. Is the Government prepared to provide the guarantees sought by the Association to undertake the scheme which seems to accord closely with the Treasurer's own housing priorities?

Mr CREAN (MELBOURNE PORTS, VICTORIA) (Treasurer) - I think the whole question of the role of the permanent building societies and others with respect to the provision of credit for housing needs to be re-examined. I do not think the permanent building societies, in particular, are in any position to dictate the circumstances. I believe that they have been more favoured borrowers than have some other areas of credit extension in the past. This has had the unfortunate effect of forcing up the lending rate generally. What has happened is that funds that formerly resided in the State savings banks and, to some extent, in the trading banks and to which an interest rate of about 4 to 5 per cent applied, have now been encouraged by, in my view, too blatant advertising programs into organisations offering to the lender something like 61 per cent interest. If that is the borrowing rate, obviously the lending rate to the purchaser of houses has to be at least in excess of 61 per cent.

The permanent building societies up to date have not had any liquidity arrangements placed upon them. They are not like the insurance companies which have to pay a certain proportion of their funds into government securities. They are not like the trading banks which are subject to liquid assets and government securities, statutory reserve deposits and other kinds of arrangements and limitations on borrowings. I believe that the permanent building societies have mushroomed far too fast for the general welfare of housing in Australia. They are the kinds of organisation that cut across all the canons of prudent finance; that is, they borrow short and lend long. For those reasons I do not want to say too much about the situation at the moment. It would be highly unfortunate if anything in the nature of a run were to take place against the permanent building societies. I hope that for their own sake, as well as for the good of the people they claim to serve, something will be done about restraining the rate at which they lend and also the excessive, in my view, advertising campaigns that they conduct.

Mr Snedden - I asked you about the interest rate.

Mr CREAN - I know, but I am not giving any answer separately about this point. All I am saying is that I do not think the permanent building societies are in any position to call the terms. I have said before in this House that we are giving serious consideration to putting upon other lending institutions, including the permanent building societies, some of the controls on lending policy that already exist in respect of life insurance and the banking system generally. When I am in a position to make a statement I will-

Mr Snedden - You have said that twice. You are just occupying question time with tedious repetition. Resume your seat.

Mr CREAN - I hear a lot of tedious repetition from the other side. I have been rather surprised since I became Treasurer. I do not think I have been asked one substantia] question by the Opposition since I came to office. I regard it as a tribute to the way that I am doing the job.

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