Reserve Bank of Australia Annual Report – 1975 Banking and Issue Operations

In addition to its responsibilities in the forming and carrying out of monetary and banking policy, the Bank provides extensive service functions through its branches and agents.

Banker to Governments

The Reserve Bank is banker to the Australian Government, the Governments of four of the States, and the Administration of the Northern Territory. In this capacity the Bank processed approximately 78 million cheques during 1974/75. This was about 5 per cent more than in the previous twelve months.

Review of the operations of the Bank at Launceston revealed a significant decline in the level of activity and, during 1974/75, the Bank decided that continuation of the branch could no longer be justified. Arrangements are proceeding to close the branch and the associated Registry of Inscribed Stock during 1976.

On behalf of the Australian Government the Bank conducts inscribed stock registries at each of its branches. Through the Australian Government registries three cash and conversion loans were handled during 1974/75, together with the continuing issues of special bonds and Treasury notes. The securities which matured on 15 September 1974 were redeemed as no conversion offer was made to holders. The face value of government debt managed by the Bank at 30 June was $13,152 million, a rise of $1,824 million over the year. This was largely attributable to the increase in Treasury notes on issue which totalled $2,076 million at 30 June.

Rural Credits Department

The Rural Credits Department of the Bank continued to provide seasonal finance to assist the marketing, processing or manufacture of primary produce. At 30 June 1975 outstanding advances totalled $203 million, about the same as a year earlier. Advances to co-operative societies, at $98 million, were $39 million higher but this was about offset by a reduction in advances to statutory marketing boards.

As usual, the level of financing fluctuated widely during the year. A peak of $405 million was reached in February 1975, comprising $351 million for marketing boards and $54 million for co-operative societies, as against the peak of $380 million in February 1974. The lowest level of advances for the year was $100 million in September 1974 compared with $94 million in November 1973.

Finance for the marketing of wheat was again the major influence on lending. Deliveries to the Australian Wheat Board from the 1974/75 harvest were 10.7 million tonnes, only 0.5 million tonnes less than the previous season and among the highest ever recorded. Despite a fall in export prices in the second half of 1974/75, realisations remained high.

Advances by the Department for most other commodities were higher than for the previous season. Significantly larger amounts were provided for dairy produce, canned fruits, rice, cotton and oats.

Interest rates charged on advances remained unchanged at the range of 9.5/10.0 per cent per annum set on 15 July 1974.

Note issue

The value of Australian notes on issue increased by 18 per cent during 1974/75 to a total of $2,545 million compared with rises of 17 per cent and 22 per cent in the years 1972/73 and 1973/74 respectively. The $50 note, introduced in October 1973, accounted for about 16 per cent of the value of notes in circulation at end June as against about 9 per cent at end June 1974; this upward movement has been reflected mainly in a fall in the proportion of $10 notes outstanding.

The Bank's Note Issue Department produced 282 million Australian notes during 1974/75. In addition, the initial order of Papua New Guinea currency notes, first issued on 19 April 1975, was printed for the Bank of Papua New Guinea. The Department also produced 1,430 million pieces of other security printing such as stamps and postal orders.

In keeping with Government policy that the term “Australia” be used wherever practicable, the designation on Australian notes was altered by substituting the title “Australia” for “Commonwealth of Australia”; a corresponding change was effected in the legal tender clause which appears on each note. The change was introduced with the issue of the $50 note, and has since been carried through to all other denominations.

Research Grants

The Rural Credits Development Fund approved grants totalling $673,760 during 1974/75 for research, extension and development projects concerned with primary industries. The Bank also awarded a Senior Research Fellowship (Agriculture) during the year. Grants and Fellowships are awarded on the advice of a Committee which includes representatives from universities and other research organisations. The Fund is financed by the transfer each year of half the net profits of the Rural Credits Department.

The Bank continued to provide support through the Economic and Financial Research Fund for post-graduate research on economic and financial topics relevant to Australia. In 1974/75, grants totalling $105,428 were made from the Fund to universities. The Bank also offered Fellowships in Economic Policy to two applicants under a scheme initiated in 1974. In the event neither of the successful applicants was able to accept the Fellowship. The scheme was advertised again shortly before the end of the financial year.

Publications

During the year revised editions of “Reserve Bank of Australia — Functions and Operations” and “Australia's Dollars and Cents” were issued. The Bank continued to publish the monthly Statistical Bulletin. Economic and Company Supplements to the Bulletin were also published.