Reserve Bank of Australia Annual Report – 1982 Banking, Issue and Other Functions

1. Banking Operations

The Reserve Bank provides banking services to the Commonwealth Government, four State governments and the Northern Territory Government. In 1981/82 these customers issued about 91 million cheques, the majority being welfare payments by the Commonwealth Government. The handling of cheques was aided by the installation of computer systems, including equipment that reads and sorts cheques at high speed, at Adelaide and Perth branches during the year. Similar systems had previously been placed in other mainland State capital branches.

In 1981/82 more customers of the Bank began using magnetic tape, rather than cash and cheques, to effect payments, particularly payrolls. Funds are transmitted to bank accounts by an exchange of tapes between banks. As a further step to improve the efficiency of the cheque clearing system, banks decided during the year that from 1 July 1982 all cheques exchanged at the Australian Clearing House will have amounts encoded in machine-readable figures.

2. Bonds and Stock

The Bank acts as manager and fiscal agent for the Commonwealth Government's domestic loan raisings and debt servicing operations. Inscribed stock registries are maintained at each of its branches. The face value of Commonwealth Government securities on issue at all Australian registries at the end of 1981/82 was $25,533 million, comprising: Treasury bonds $17,468 million; Australian Savings Bonds $2,210 million; Special Bonds $108 million; Treasury notes $3,680 million; Treasury bills $1,400 million and other Commonwealth Government securities $668 million. The face value of securities on issue increased by $170 million over 1981/82; the number of stockholder accounts decreased by 16,000 to around 177,000.

Treasury bonds and Australian Savings Bonds were on issue more or less continuously throughout the year. There were 8 new series of tap stocks introduced and 2 new series of Australian Savings Bonds. Registries processed gross subscriptions of $2,986 million to tap issues of Treasury bonds (including official subscriptions) and $1,313 million to Australian Savings Bonds. Sales of Treasury notes by tender amounted to $12,595 million. Redemptions of Australian Savings and Special Bonds were again very heavy, amounting to $2,034 million during the year.

The Bank also conducts a register of Income Equalisation Deposits on behalf of the Australian Taxation Office. During 1981/82 deposits of $57 million and withdrawals of $55 million were processed. At the end of 1981/82 there were 10,940 accounts with aggregate balances of $166 million.

3. Note Issue

The total value of notes on issue at the end of 1981/82 was $5,837 million, an increase of 14.6 per cent during the year compared with a rise of 12.0 per cent during the previous year. The total value of $50 notes on issue continued to rise at a faster rate than smaller denominations. By the end of the year, their share of the total value of the issue was approaching 50 per cent.

During the year note printing operations were transferred from Fitzroy to Craigieburn, Victoria. The opportunity was taken to acquire several new printing presses to replace some obsolete smaller presses. Stocks of notes had been built up prior to the move to cover the interruption to production during the transfer to the new location. By the close of 1981/82 production had been largely restored to former levels. Production during the year was 210 million Australian notes (compared with 354 million notes during 1980/81) and 98 million items of other security printing.

The Bank continued during 1981/82 to conduct trials of automated high-speed equipment for the sorting of used notes before re-issue. This equipment, which also counts and authenticates notes, is now operating at the Bank's Sydney branch and installations at other branches are planned.

4. Rural Credits

The Bank's Rural Credits Department provides seasonal finance to assist the marketing, processing and manufacture of primary produce. These advances enable primary producers to receive payment for a large part of the value of their produce prior to sale. During 1981/82, advances outstanding reached a peak in January of $496 million, of which $374 million was advanced to marketing boards and $122 million to co-operatives. This compared with a peak of $409 million in 1980/81. The higher level of advances this year reflected the recovery of agricultural production from the drought-affected levels of 1980/81.

The Australian Wheat Board, which in the past accounted for a major part of the Department's peak advances, has over recent years obtained an increasing proportion of its seasonal finance by the issue of promissory notes and bank-accepted commercial bills. In 1981/82, for the first time, the Board's total requirements were obtained from commercial sources.

Interest rates charged on most advances by the Department ranged, at 30 June 1982, from 15.75 per cent per annum to 16.25 per cent per annum, an increase of 2.5 percentage points during the year.

5. Research Grants

As provided in the Reserve Bank Act, half of the net profit of the Rural Credits Department is transferred each year to the Rural Credits Development Fund. During 1981/82, grants from the Fund totalling around $2.0 million were approved for projects aimed at promoting primary production.

During 1981/82, grants amounting to $155,000 were approved from the Bank's Economic and Financial Research Fund for post-graduate research in economic and financial topics relevant to the Australian economy. Two Fellowships in Economic Policy, which are usually tenable for one year for research on policy issues relevant to the Australian economy, were also awarded from the Fund.

6. Information Services

The Bank publishes a range of material relating to its work. During the year further changes were made to the Bank's monthly Statistical Bulletin. From the issue for July 1981 it was renamed the Reserve Bank of Australia Bulletin and a charge introduced. The contents were expanded by the inclusion of more articles, mainly on financial matters, and by wider statistical coverage. A six-monthly review of financial and economic conditions and a quarterly survey of the Bank's operations in the bond and money markets now appear regularly in the Bulletin. Additional statistics include data on borrowings by local and semi-governmental authorities and on forward foreign exchange transactions.