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Address by Senator the Hon Dame Annabelle Rankin, Commonwealth Minister for Housing, to the Australian Association of Permanent Building Societies, Canberra, 17 April 1970

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Mr Chairman, Ladies and Gentlemen,

Thank you for your welcome.

At the outset may I say how disappointed I was not

to be present with you when His Excellency the Governor—General

opened this Conference. Suffice it that a Minister's life is

always subject to the unpredictable calls of the parliament.

There is a horrible thing called "Question Time" which took

place at 10 a.m. in the Senate yesterday. It is a relief to me

to know that there will be no "questions without notice" this


It is always a pleasure to meet representatives of

the permanent building society movement. Over the years I feel

I have become friends with so many of you, as I have journeyed

from State to State and city to city. The seventies will see

the centenary celebrations of a number of permanent building

societies. I recently attended such a celebration in

Launceston, and what a happy occasion it was. And here you meet

for the first time in the National Capital, which is not only

such a beautiful city, but also one in which the activities of

permanent building societies are becoming of increasing


As Minister for Housing it was indeed a great joy to

me to note the record high level of loan commitments entered

into by the permanents in Australia during the last six months

of 1969. Let me congratulate you in getting your hands on so

many savings dollars, and in making so many housing loans.

What of the future? One thing that is certain is



that, if there should be a slower rate of growth in the volume

of your business, Australians will need to invest more savings

in the housing of our growing population, and permanent building

societies will play their part in harnessing and lending these


The latest available figures reveal that the level

of home building activity was rising strongly up to the December

quarter of 1969. The national accounts figures, unavailable

when the December quarter issue of "Housing Quarterly" 1969 went

to the printery show that in the December quarter private

spending on new dwelling construction was 18 per cent greater

than in the December quarter of 1968, and that government expend-iture was up by 24 per cent. These are current price figures,

but it is apparent that the real level of housing activity in the

December quarter was a great deal higher than a year earlier.

Moreover, in seasonally adjusted terms, private dwelling expend-iture increased, at an annual rate of over 12 per cent, between

the September and December quarters.

The latest figures of approvals indicate the

Tikelihood of a further rise in the level of home building

activity. But the most recent advice from my Department's field

officers in the various States suggests that the rate of increase

is beginning to slow down. As is normal, there is some

unevenness in this situation between the various States.

What we cannot overlook is that total available labour,

including the labour available to the home building industry, is

now very fully employed. Overall unfilled vacancies exceed

registered unemployed. Building costs are continuing to rise at

a worrying rate. There are some signs of demand inflation, in


particular in respect of the prices being asked for residential

land. My concern is that these cost and price pressures should

be eased. Although one frequently listens to exaggerated

estimates of the extent of these increases, especially of

the increases in the cost of building a home which ignore the

fact that the average home being built today is a much better

home, and contains far more built-in equipment, that the average

home being built a few years ago, I do not wish to see young

families and newcomers to Australia being asked to pay more

than is necessary to obtain a decent modern home.

Of concern to me, and of course to the leaders of the

permanent building society movement, is the growing tightness

in the money supply.

All this suggests that the coming months may call for

the exercise of high managerial qualities by all those associated

with the home building industry. It is at conferences such as

this, where members from permanent building societies all over

Australia meet to exchange ideas, that new techniques may be

developed to ensure your continued strong growth in the future.

If the permanent building societies may have to be

satisfied, for a while, with a slower rate of growth, I see no

reason why this should be of long duration. The Government is

determined that the development of Australian resources must

proceed, and more and better housing is essential to permit this

to take place. We need more savings in order to maintain a high

growth rate, and I believe that the permanent building societies

will play a most significant part in encouraging and mobilizing


the savings that will be needed to build more homes.

It is interesting to compare the scope of the

activities and sense of responsibility of the permanent building

society movement today with the early efforts of these societies

in providing housing finance° The first substantial growth of

the societies in Australia followed the New South Wales

legislation of 1847, which was designed specifically to encourage

building society formation and followed the British measure of


The gold rushes of the 1850s placed great strains on

housing, and by 1860 both the quality of housing, and the

quantity of housing relative to the population, had declined.

Housing finance was also extremely hard to obtain.

People such as clergymen and trades people, who had

accumulated savings, banded together and advanced small sums to

persons seeking housing finance. These societies were all of

a terminating nature with a planned life of only five to seven

years. The banking institutions of this era were fairly

conservative in their lending policies. The loans made by the

societies came wholly from the accumulated savings of the groups

which had no access to other sources of funds. When sufficient

finance was available, loans were frequently made at a premium.

° For example, some home-seekers found it necessary to repay £1,000

in order to receive a loan of £800. Interest rates were

extremely high, in some cases even as high as 20 per cent.

The societies of the 1850s and 1860s provided finance

mostly to those borrowers who were known to the people providing


the funds. The organizational structure was not adapted to

meet the needs of the growing number of home-seekers. In the

place of these lending groups came the permanent societies to

meet the need for a high level of building activity in the 1870s.

These societies were to tap the increasing level of savings which

offered new sources of funds for residential development.

In the early 1870s, the permanent societies were

able to lend only those funds subscribed to them and which, in

most cases, formed their permanent capital. At this time

permanent societies appear not to have been actively seeking

deposits, but after 1875 building society deposit rates were

raised above those offered on bank deposits, so that deposits

became an important source of finance to the societies.

This was followed by two important changes in the

policies of the permanents in respect to their advances. In the

seventies they lent mainly to wage earners, and individual loans

were small. By the end of the eighties, however, the pre-occupation of societies in lending to wage earners had diminished

in favour of lending to speculative builders and of investing in

speculative ventures. The period for loan repayments also

increased from about eight years in the eighties to about twelve

years in the nineties. The speculative element in building

society operations intensified during the latter half of the

eighties and in the early nineties, though this intense speculation

appears to have been more rife among societies located in

Melbourne than elsewhere. In any case, building societies shared

in the land boom and suffered many of the consequences of the

subsequent collapse. The societies were caught with highly

illiquid assets in a falling market. They were badly hit, and

their position and reputation took long to reconstruct.

There can be no doubt that the societies learnt

many lessons from their experience in the last decade of last

century. The desire to speculate has been abandoned. And there

is now the new safeguard of housing loans insurance, the offer

of which the permanent building societies have not been slow to


One cannot fail to be impressed by your achievements

in the past few years. Between 1962-63 and 1967-68, permanent

societies throughout the Commonwealth increased the level of

annual lending from some $45 million to more than $166 million

per annum. This represents an annual average growth rate of

nearly 30 per cent. My Department estimates that new loans

made by societies in 1968-69 were some 50 to 60 per cent above

the previous year's lending.

There has also been a growth in responsibility, about

which Sir Paul Hasluck spoke. In recent years, societies have

recognized the need to hold liquidity reserves sufficient to

meet any unexpected calls by shareholders and depositors. At

their 1969 balancing dates, a sample of societies held liquid

assets of some $56 million, or more than 13 per cent of their

share capital and deposits. And this ratio does not include

any stand-by arrangements the societies usually have with other

lending institutions, such as trading banks, insurance companies


and so on. This is pleasing to see, for it shows that in

recent times you are aware of your responsibilities to the

investing public.

I have noticed that, in the few months up to June

in the past two years, there has been a seasonal decline in the

level of your new lending. I have gathered that the same

seasonal factors may be operating this year. This leads me

to wonder whether there is some means by which you may be able

to spread your lending more evenly over the twelve months period.

No doubt you have already given this some consideration.

I fully appreciate that what I am suggesting is fraught with

difficulties, but you may wish to have a further look at it.

If T do discern some signs of a slowing-down in the

number of loans being approved for new housing, I can

nevertheless see an assured long-term future for the home

building industry. Both our population and our housing

standards are continuing to rise.

We may be confident that this will occur because

it is clear that an increasing marriage rate, the growth in the

number seeking second homes, quickening demolitions, a continued

trend to higher occupancy amongst the unmarrieds and a

sustained high rate of home-ownership by married persons will

combine to enerate large housing requirements. The continuing

high rate of economic growth and prosperity that Australians

expect to experience in the next decade will almost certainly

generate the ability to pay for a growing; number of new and

better homes. But here the development of appropriate

-financial machinery will be important.


I have heard it rumoured - perhaps it is more than

a rumour, and I hope it is - that your Federation is

contemplating establishing a permanent secretariat in Canberra.

This is to be welcomed. My hope is that, if or when you do

establish a national secretariat in this most pleasant city,

you will be able to provide for it to undertake a number of

research activities. My personal view is that you would stand

to benefit from a central organisation which would study your

activities, and keep each of you up to date about overall


It is only recently that any up-to--date statistics

of your total operations have been available, and the very

valuable information collected and published by the 'bureau of

Census and Statistics is now filling what was a great void.

But more is needed.

It may interest you to know that my Department is

in process of publishing a descriptive booklet telling people

in simple language what building societies are all about.

But there;is much to be told to the general public about your

industry - about matters which y ou are best able and most

competent to inform on. Building societies have traditionally

been the repositories of small savers' funds. Is this still

so today? T'T h .t is the length of period for which savers hold

their funds in building societies? Greater education of the

general public in the role and operations of building societies

can only enhance your reputation.




In conclusion., I wish the Federation, and every one

of your members, success in the tasks that lie ahead.