Reserve Bank of Australia Annual Report – 1980 Banking, Issue and Other Functions

1. Banking Operations

During the year under review, there was a further general increase in activity in the operational areas of the Bank. Currency processing functions undertaken at the Bank's branches experienced further growth; steps taken to strengthen security measures in the Bank's premises also made additional claims on staff resources.

In its capacity as banker to the Commonwealth Government, and the Governments of four of the States and the Northern Territory, the Bank paid approximately 91 million cheques during the year, about 3 per cent fewer than in the previous twelve months. Regular welfare payments by the Commonwealth Government account for the majority of cheques drawn on the Bank. The major factor in the reduction of cheque numbers in the past year was the effect on cheque issues of changed arrangements for payment of medical benefits by the Commonwealth Government.

The Bank accepted an invitation during the latter half of the year to join a newly established inter-bank committee, the Australian Banks' Payment Systems Committee. Representing the interests of all banks, the new committee is concerned with the management and development of the various forms of non-cash payment systems that are conducted by banks. Broadly, the emphasis of developments in these systems is towards reducing the mounting volume of paper associated with conventional payment systems.

Following a review of the Bank's computer facilities,steps were taken during the year towards a re-equipment programme covering Head Office and each mainland State capital branch.

2. Bonds and Stock

The Bank, on behalf of the Commonwealth Government, maintains an Inscribed Stock Registry at each of its branches. At 30 June 1980, stockholder accounts in Australia numbered about 167,000 compared with about 155,000 at 30 June 1979.

The total face value of Commonwealth Government debt administered by the Australian Registries at 30 June 1980 was $23,773 million, an increase of $1,057 million over the year. The debt at 30 June 1980 comprised: Treasury bonds $15,718 million; Australian Savings Bonds $2,880 million; Special Bonds $478 million; Treasury notes $1,615 million; Treasury bills $2,500 million; other items $582 million.

During the year, changes were made in the procedures for marketing government securities (see page 21 of the chapter on financial developments). Under the new arrangements, the Bank conducts weekly Treasury note tenders and sees to the issue of tap stocks as agent for the Commonwealth Government. Tenders for Treasury notes may be lodged at any branch of the Bank and notes are taken up by successful tenderers (on any day over the following week) at the branch where the tender is lodged. The tap arrangements for bonds provide for the daily issue, at all Registries maintained by the Bank, of prices and yields at which tap stocks may be obtained.

Australian Savings Bonds remained on continuous issue throughout 1979/80 with two new series being introduced.

The Bank maintains a register of Income Equalisation Deposits on behalf of the Australian Taxation Office. As at 30 June 1980, there were about 12,000 deposit accounts with aggregate balances of $136 million, compared with about 9,000 accounts totalling $79 million at the end of 1978/79.

3. Note Issue

During 1979/80, the value of notes in circulation rose by 10.6 per cent to $4,549 million; this increase was a little smaller than the increase for the previous year. The table below shows, for the past five years, the value of notes in circulation. The value of $20 and $50 notes in circulation has grown quickly, and is now equal to about 80 per cent of the value of all notes in circulation. The value of $1, $2 and $5 notes in circulation has grown more slowly while the value of $10 notes in circulation has fallen.

The Bank's Note Issue Department printed 375 million notes during 1979/80, much the same as in the previous year. Notes of the $1 and $2 denominations accounted for about half the notes printed. The Note Issue Department also printed some 861 million other items of security printing, chiefly postage stamps.

4. Rural Credits

Seasonal finance is provided by the Bank's Rural Credits Department to assist the marketing, processing or manufacture of primary produce. In 1979/80, advances outstanding reached a peak of $962 million in January ($891 million to marketing boards and $71 million to co-operatives); last year, the peak was $1,196 million. Advances outstanding at 30 June 1980 totalled $253 million ($175 million to marketing boards and $78 million to co-operatives) compared with $521 million a year earlier.

As in the previous year, part only of the financing of the Australian Wheat Board was made available by the Rural Credits Department. A substantial portion of the Board's seasonal financing requirements was met by the issue on the market of promissory notes and bank-accepted commercial bills.

Lending for canned deciduous fruit increased substantially in the context of a new industry marketing scheme through the Australian Canned Fruits Corporation, which was established on 1 January 1980. Financing for most other commodities, particularly coarse grains, was also at higher levels.

Interest rates charged on advances by the Department were increased by 0.5 per cent from 10 March 1980; rates at the end of June 1980 ranged from 9.5 per cent to 10.0 per cent per annum.

5. Research Grants

Half of the net profits of the Rural Credits Department is, in terms of the Reserve Bank Act, transferred each year to the Rural Credits Development Fund. During 1979/80, grants totalling $1.3 million were approved from the Fund for projects aimed at promoting primary production. Two Research Fellowships in Agriculture were awarded. The grants and Fellowships were awarded after obtaining advice from an advisory committee with a membership drawn from universities and other organisations.

In 1979/80, the Bank approved grants totalling $119,000 from its Economic and Financial Research Fund for post-graduate research on economic and financial topics relevant to the Australian economy. Two Senior Fellowships in Economic Policy were awarded.

6. Information Services

The Bank publishes a range of material that relates to the work of the Bank. Publications currently available include ‘Reserve Bank of Australia: Functions and Operations’, which describes the history of the Bank and the way it operates; ‘Exchange Control’, which summarises exchange control policy and procedures; ‘Money for Business’, a guide to the types and sources of finance available to the business community, which was prepared in collaboration with the major trading banks and some other members of the financial community; two volumes containing proceedings of the Bank's 1977 and 1979 Conferences in Applied Economic Research; a series of discussion papers outlining economic research carried out in the Bank's Research Department; and Occasional Paper No. 7, which contains the twelve papers submitted by the Bank to the Committee of Inquiry into the Australian Financial System.

The monthly Statistical Bulletin contains a wide range of financial and other statistics, together with comment on recent developments, selected speeches, and accounts of research projects carried out within the Bank. A Company Supplement and two Financial Flow Accounts Supplements to the Bulletin were also published during the year. Selected financial data arising from collections under the Financial Corporations Act, and from the Primary Industry Bank of Australia were added to the Bulletin in 1979/80.

Seminars for secondary school teachers of economics were conducted in Hobart, Melbourne, Perth and Sydney during 1979/80.

7. Bank Premises

In 1979/80, work continued on the construction of the new note printing works at Craigieburn, Victoria, and the extension to the Bank's Head Office was completed.