Reserve Bank of Australia Annual Report – 1979 Calendar of Official Actions

Announcement dates are used in most cases.

1978

23 June

The Loan Council agreed to a 1978/79 government loan programme for the States of $1,434 million (the same as in 1977/78) and to a borrowing programme for the States' larger semi-government and local authorities of $1,297 million (8.5 per cent higher than in 1977/78).

The Loan Council also adopted new guidelines for the consideration of proposals for special additions to the normal annual semi-government borrowing programmes and for overseas borrowings by authorities.

30 June

The exchange rate for the Australian dollar against the trade-weighted basket of currencies was 86.2 (May 1970 = 100). Values of the rate at the end of each month in 1978/79 are shown below.

27 July

The Government announced that negotiations for a Commonwealth borrowing overseas had been completed. This and subsequent overseas loan raisings are summarised below. The dates are those on which the Treasurer announced that negotiations had been finalised; amounts, in Australian dollars, are proceeds subsequently received.

7 August

A Commonwealth cash and conversion loan to open on 14 August was announced. Yields ranged from 8.8 per cent to 9 per cent.

From 8 August:

• Savings Bonds Series 12 was on sale with interest rate unchanged at 9.0 per cent; a lower interest rate of 6.5 per cent (down from 7 per cent) was offered for amounts redeemed before the first interest payment date;
• maximum rates for borrowings by local and semi-government authorities were reduced by 0.1/0.2 of a percentage point; the maximum rate on public loans with currency of over 10 years was reduced by 0.2 of a percentage point to 9.4 per cent;
• the yield on 26 week Treasury notes was reduced by 0.044 of a percentage point to 8.705 per cent.

15 August

The Commonwealth Government Budget for 1978/79 was brought down. Estimates for the major aggregates were:

• outlays of $28.9 billion (7.7 per cent higher than in 1977/78);
• receipts of $26.1 billion (up 11.0 per cent);
• an overall deficit of $2.8 billion and a domestic deficit of $1.7 billion ($3.3 billion and $2.5 billion, respectively, in 1977/78).

The Government saw the Budget as consistent with an outlook for financial conditions indicated by growth in the broadly defined volume of money (M3) in the range of 6 to 8 per cent over the course of 1978/79.

29 August

Effective immediately, the Banking (Savings Banks) Regulations were amended, reducing from 45 to 40 per cent the proportion of depositors' balances required to be held by savings banks subject to the Banking Act in certain prescribed assets (mainly liquid assets and public securities).

12 September

Effective 13 September, the Reserve Bank reduced the SRD ratio of the major trading banks from 4 per cent to 3.5 per cent, The funds released were part of a replenishment of the banks' Term and Farm Development Loan Funds.

17 September

The Treasurer announced that agreement had been reached on procedures to bring the basis of financial reporting by banks subject to the Banking Act closer to those of other Australian companies.

21 September

The Treasurer announced that the Primary Industry Bank of Australia Limited had been granted an authority to carry on banking business in Australia (see page 28).

31 October

A conversion loan was announced for Commonwealth securities maturing on 15 November. Compared with the August loan yields were about 0.2 of a percentage point lower, ranging from 8.65 per cent to 8.8 per cent.

From 1 November:

• Savings Bonds Series 13 was on sale with a reduced interest rate of 8.75 per cent;
• maximum rates for borrowings by local and semi-government authorities were reduced by 0.2 of a percentage point;
• the yield on 26 week Treasury notes was reduced to 8.618 per cent.

1 November

Major trading banks announced that rates of interest on overdrafts (other than for housing) drawn under limits of less than $100,000 would be reduced by 0.5 of a percentage point on or about 1 December. From 8 November similar reductions to rates on new term loans and new farm development loans of less than $100,000 were to occur, and the highest interest rate on new personal instalment loans was to be reduced from 7.75 per cent (flat) to 7.5 per cent (flat).

6 November

The Loan Council approved the first borrowing programme under the guidelines set for infrastructure financing at its June 1978 meeting; the programme was in respect of projects in six States and amounted to $1,767 million over eight years.

17 November

Subject to similar reductions being made by building societies, banks indicated a willingness to reduce by 0.5 of a percentage point interest rates on most existing loans, and on the generality of new loans, to individual customers for the purchase of new and existing housing. Savings banks also agreed to reduce interest rates on savings investment accounts by around 0.25 of a percentage point. It was indicated that there would be some flow-on to fixed deposits of under $50,000 with trading banks. Interest rates of most permanent building societies were reduced in the following month or so.

1 December

Interest rates on advances by the Rural Credits Department of the Reserve Bank were reduced by 0.5 of a percentage point from 1 December. The new range of rates was from 9.0 to 9.5 per cent.

20 December

The Treasurer announced the amendment of the Banking (Foreign Exchange) Regulations to abolish export licensing and to introduce new arrangements for the control of export proceeds.

1979

11 January

Effective 16 January, the Bank raised the SRD ratio of the major trading banks from 3.5 per cent to 4.5 per cent.

15 January

The Treasurer said that the Government had no objection to the establishment of currency futures trading facilities, provided such facilities complied with existing exchange control policy (see page 28).

18 January

The establishment of a committee to inquire into the Australian financial system was announced (see page 28).

29 January

Some changes were announced in the conditions which apply to exchange control authorities for direct investment overseas by Australian residents. The main change was that earnings from such investments may be retained for use overseas in the financing of growth in working capital, and for firmly planned future expansion, without specific prior exchange control authority.

11 February

A conversion loan was announced for Commonwealth securities maturing on 15 February. Yields ranged from 8.65 per cent to 9 per cent.

From 12 February, maximum rates for borrowings by local and semi-government authorities were increased by 0.2 of a percentage point.

21 February

Effective 2 March, the Bank raised the SRD ratio of the major trading banks from 4.5 per cent to 5.5 per cent.

9 March

The Prime Minister announced that $150 million of the Australian Wheat Board's financing requirements would be met by an issue of commercial bills.

2 April

The Loan Council agreed to changes in the system of marketing Commonwealth securities; some technical aspects of the proposed system were considered at a meeting in late June (see page 28).

Effective 3 April, the Loan Council also decided to increase, from 0.1 to 0.3 of a percentage point, the margin between maximum interest rates for private and public borrowings by local and semi-government authorities.

11 April

The Reserve Bank repaid US$50 million of a US$100 million placement with it by the Bank for International Settlements.

12 April

From 17 April the yield on 13 week Treasury notes was increased by 0.670 of a percentage point to 9.023 per cent; the yield on 26 week Treasury notes was increased by 0.678 of a percentage point to 9.296 per cent.

22 April

From 23 April:

• Savings Bonds Series 14 was on sale with a higher interest rate of 9.25 per cent; maximum permissible individual holdings of Savings Bonds and Special Bonds (all series combined) were increased from $100,000 to $150,000;
• maximum rates for borrowings by local and semi-government authorities were increased by 0.7 of a percentage point.

The Treasurer announced that the Australian Wheat Board would be refinancing, through private markets, a further $300 million of advances from the Rural Credits Department.

9 May

A conversion loan for Commonwealth securities maturing on 15 May was announced. Yields ranged from 9.6 per cent to 9.7 per cent.

14 May

The Reserve Bank confirmed the provision to The Bank of Adelaide of a specific liquidity facility, initially made available to the extent of $10 million (see page 29).

23 May

The Bank announced that, in addition to its other arrangements for trading in Commonwealth Government securities, it would be making available, through authorised money market dealers and stock exchange brokers, quantities of each of the three securities issued in the May conversion loan. These intermediaries would be provided, on request, with the Bank's selling prices to them on the day.

24 May

The Treasurer announced a series of measures to raise the Commonwealth Government's revenues and reduce its outlays in the financial year 1979/80.

7 June

The Bank increased the yields on May loan stocks, which were available according to the arrangements announced on 23 May; the new yields ranged from 9.85 per cent to 10.09 per cent.

13 June

Effective 14 June, maximum interest rates for borrowings by local and semi-government authorities were increased by 0.4 of a percentage point.

27 June

The Reserve Bank repaid a US$100 million placement with it by the Bank for International Settlements.

29 June

The Loan Council agreed to a 1979/80 government loan programme for the States of $1,245 million, about 13 per cent less than in 1978/79; and to a borrowing programme for the States' larger semi-government and local authorities of $1,302 million, about the same as in 1978/79. It also approved borrowings totalling $401 million in 1979/80 by State authorities under the infrastructure financing programme.