Reserve Bank of Australia Annual Report – 1978 Calendar of Events

1977

30 June

From 1 July, yields on 13 and 26 week Treasury notes reduced by 0.08 and 0.13 of a percentage point respectively. From the same date, the Bank reduced the SRD ratio of the major trading banks from 9 per cent to 8 per cent.

6 July

The variable deposit requirement against overseas borrowings was suspended. The embargo period on overseas borrowings reverted to the position prior to 17 January of applying only to borrowings of less than six months.

11 July

Cash and conversion loan to open 15 July. The rate on the shortest-dated bond was slightly reduced to 9.7 per cent; rates on longer-dated bonds, at 10.2 per cent for 5 years and 10.4 per cent for 10 years, were unchanged from the May 1977 loan.

3 August

The trade-weighted index of value of the Australian dollar was reduced to 91.1 (May 1970 = 100), a devaluation against the “basket” of currencies of approximately 1.5 per cent. The level of the trade-weighted index at the end of each month in 1977/78 is shown below.

8 August

The Treasurer announced arrangements for the Government to make a further issue on the Euro-dollar market. The issue would maintain the Government as a moderate net borrower overseas.

11 August

The basis of valuing gold in Australia's reserves was changed from the official IMF price (about $37 an ounce) to the monthly average price on the London market (at that time about $130 an ounce).

16 August

Commonwealth Government Budget for 1977/78 brought down. Major features were:

• an estimated increase in outlays of 10.5 per cent to $26.7 billion;
• an estimated increase in receipts of 14.3 per cent to $24.4 billion;
• a projected deficit of $2.2 billion.

22 August

The Conciliation and Arbitration Commission granted an increase of 2 per cent in all federal awards.

6 September

From 9 September, the Bank reduced the SRD ratio of the major trading banks from 8 per cent to 6.5 per cent. Of the $252 million released, $168 million was added to banks' free liquidity; the remainder formed part of a replenishment of banks' Term and Farm Development Loan Funds.

27 September

Arrangements announced to extend the programme of Commonwealth borrowings overseas to $1.7 billion. Included in the extended programme were two placements with the Reserve Bank by the BIS, each of US$100 million, and an additional stand-by facility of US$200 million with that institution.

13 October

The Bank announced arrangements for support of a large building society in Queensland — a particular instance of the general arrangements by which, against the background of the Reserve Bank's support of banking liquidity, banks stand behind responsibly managed financial institutions which have adequate asset backing.

13 October

The Government announced measures aimed at improving the finance facilities available to small business.

14 October

A conversion loan to open 15 October with yields ranging from 9.65 per cent for the shortest-dated bonds to 10.2 per cent for longer-dated bonds. Terms reflected declines in market yields in the previous month or so. Savings Bonds Series 9 on sale from 17 October with an interest rate cut by 0.25 of a percentage point to 9.75 per cent. Maximum rates for borrowings by local and semi-government authorities cut by 0.2/0.3 of a percentage point.

25 October

From 26 October, issue yields on 13 and 26 week Treasury notes reduced by 0.08 and 0.15 of a percentage point respectively.

28 October

From 31 October, maximum interest rates on borrowings by local and semi-government authorities reduced by 0.3 of a percentage point.

3 November

From 4 November, issue yields on 13 and 26 week Treasury notes reduced by 0.08 and 0.09 of a percentage point respectively.

9 November

Legislation passed providing the framework for the establishment of a bank to refinance loans to enable longer term credit to be made available to primary producers.

11 November

Savings Bonds Series 10 on sale from 14 November with the interest rate cut to 9.25 per cent.

12 December

The Conciliation and Arbitration Commission granted an increase of 1.5 per cent in all federal awards.

1978

27 January

The Treasurer announced that progress in lowering the general structure of interest rates had been under review. The Reserve Bank would be discussing bank interest rates with the banking system. Savings Bonds Series 10 withdrawn from sale.

2 February

Savings and trading banks to reduce by 0.5 of a percentage point interest rates charged on new, and virtually all existing, housing loans. Rates on savings banks' investment accounts and trading banks' three month small fixed deposits to be similarly reduced. Similar reductions subsequently made by building societies.

5 February

The Treasurer announced that further overseas borrowing would be undertaken if necessary to supplement Australia's foreign currency reserves. There were raisings in May and June additional to the earlier $1.7 billion programme.

10 February

Terms announced for a conversion loan to open 15 February with yields ranging from 8.9 per cent on the shortest-dated securities to 9.2 per cent at the longer end, reflecting further falls in market yields. Savings Bonds Series 11 to be on sale from 15 February with an interest rate of 9.0 per cent. Maximum rates on borrowings by local and semi-government authorities cut by 0.6/0.7 of a percentage point.

21 February

The Government confirmed its intention to discuss with the states and financial institutions plans to implement a deposits insurance scheme to strengthen permanent building societies and protect depositors.

28 February

The Conciliation and Arbitration Commission granted an increase of 1.5 per cent in all federal awards up to $170 per week, and $2.60 for awards above this level.

30 March

From 3 April, the Bank reduced the SRD ratio of the major trading banks from 6.5 per cent to 5.5 per cent.

28 April

From 3 May, the Bank reduced the SRD ratio of the major trading banks from 5.5 per cent to 4 per cent.

9 May

Terms announced for a conversion loan to open 15 May with yields ranging from 8.9 per cent on the shortest-dated securities to 9.1 per cent at the longer end.

7 June

The Conciliation and Arbitration Commission granted an increase of 1.3 per cent in all federal awards. The Commission subsequently commenced to review the principles introduced in April 1975 governing wage determination.

8 June

The Treasurer announced:

• a relaxation of some procedural requirements for smaller foreign investments;
• a modification of existing foreign investment guidelines to enable companies which are largely foreign owned, but which have at least 25% Australian equity, to develop, subject to certain conditions, investment plans for new projects;
• suspension of the embargo on overseas borrowings for periods of less than six months.