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Tuesday, 22 May 1973
Page: 2364

Mr HUNT (GWYDIR, NEW SOUTH WALES) - My question is directed to the Treasurer and is supplementary to that asked by the honourable member for Bradfield. Is the Treasurer aware of the alarm that his statements have caused among the investors in permanent building societies and amongst the building societies themselves? Is he aware that these building societies have been an important medium for long term loans and finance for home builders amongst the wage earners of this country? Is he aware that the loss of confidence his statements have caused could deny to thousands of potential young home owners the finance to build their own homes? In view of the Government's attitude to the permanent building societies and their interest rates, what other plans has the Government for ensuring the enormous volume of long term low interest rate finance that would be needed for home buyers and builders so as to maintain the high home building rate which this Government inherited from the former Government when taking office?

Mr CREAN - IfI am required to amplify the answer I gave to the previous question I simply say this: If what I said on Thursday has caused concern, I hope that what I am trying to say now - that I intended no such thing - will at least restore the sudden lack of confidence that seems to have been occasioned by the remarks that I made. I have indicated that I was not reflecting in any way upon the stability of any particular organisation. I had simply pointed out, as is obvious enough, that these concerns have mushroomed to a considerable extent, that they have been able to induce as a source of lending loans from people who would have preferred to have left the money in the savings bank at a lesser rate, and that at least that has had effect of pushing up the interest rate charged for the building of some homes. It is all right to suggest that, because of inflation at 4 per cent, 5 per cent. 6 per cent or 7 per cent - whatever you like - an interest rate of 6 per cent is negative. This of course conveniently begs the question that only some people in the community are lenders of money and that very large numbers are borrowers, and surely both sides suffer from the effects of inflation.

Mr McMahon - What about the savings banks? They are large lenders.

Mr CREAN - If the honourable gentleman wants to get into a philosophical debate about interest rates generally, I am prepared to do that. However with all respect I do not think that question time is the time to do it. But surely one has to try to adjudicate equally or equitably between lenders and borrowers in the process. Some lending institutions have had controls placed upon them that have made it difficult for them to do some of the things that the building societies are able to do. Surely the question is whether the privileges of one, because of the lack of social regulation, are greater than they should be. I am prepared to discuss those matters with the building societies, and I intend to do so this afternoon. If any reassurance is required, let me say that I have not reflected upon the financial integrity of any of these organisations. I have merely suggested that if I were to do suddenly what I think ought to have been done a good number of years ago it might cause some immediate difficulty. At least I give the reassurance that I will not do things suddenly; that I will do them only after the fullest consultation with the interests involved and after considering the information that I will obtain from Treasury and Reserve Bank officials.

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