Reserve Bank of Australia Annual Report – 1966 Other Activities of the Bank

Note Issue Department

Notes in circulation decreased by a net $27 million, following an increase of $6 million the previous year.

Changeover to Decimal Currency

On 14th February, 1966, the date of the changeover to decimal currency, dollar notes in denominations of $1, $2, $10 and $20, the equivalents of the £.s.d. notes then in circulation, were issued to the public. From that date banks commenced to issue dollar notes and withdraw from circulation £.s.d. notes deposited with them. This procedure resulted in a rapid changeover from old to new notes and, by the end of April, 1966, the bulk of the £.s.d. notes had been retired from circulation. Of the total note circulation as at 30th June, 1966, only 15 per cent comprised £.s.d. notes.

Notes in Circulation 1966

Distribution of the new notes to every bank branch and the simultaneous withdrawal from circulation of £.s.d. notes involved the greatest movement of money ever to take place within a short period in Australia. With the cooperation of banks, police, postal and transport authorities, elaborate security plans were brought into operation to safeguard the heavy movements of notes to and from bank branches throughout the Commonwealth which took place during the early stages of the changeover.

The new dollar notes were printed by the Note Printing Branch of the Bank in Melbourne. Designing of the notes commenced in September, 1963, and the first new notes came off the printing presses in June, 1965. By C-day 182 million dollar notes were ready for issue to the public, more than sufficient to replace every £.s.d. note in circulation. To achieve this position, note production had been lifted to a record level.

In addition to printing the new dollar notes, the Bank's Note Printing Branch also produced a series of 22 Australian decimal currency postage stamps, as well as decimal stamps for Norfolk Island and Nauru. Other postal stationery printed in decimal currency included stamp booklets, aerogrammes, lettersheets, lettercards, embossed envelopes, registration envelopes, postal notes and new postal orders. Production of postal material during the year ended 30th June totalled 1,392 million items.

The Bank, acting as agent for the Commonwealth Treasury, was also responsible for the distribution of the new decimal coins. To avoid double handling of the large quantity of coin involved, the Reserve Bank undertook the task of delivering initial supplies of the new coins direct to every bank branch throughout the metropolitan and country areas. Planning of the transport operation and the associated security arrangements was carried out in association with the Commonwealth Department of Supply and the Commonwealth and State Police Forces. Armoured car companies were employed to effect delivery of coin in the metropolitan areas of Sydney and Melbourne. The delivery operation took 10 weeks to complete and, during this period, over 400 million coins were delivered to 5,000 branches of banks situated throughout Australia.

RURAL CREDITS DEPARTMENT

Seasonal finance through Rural Credits Department for marketing, processing and manufacture of primary produce reached a peak of $291 million in February, 1966, compared with a peak of $322 million in March, 1965. There was increased demand for finance for some commodities, notably sugar, canned fruits, oats and eggs, but a fall in wheat production from a record 1965 crop of 369 million bushels to 258 million bushels was mainly responsible for the lower peak debt.

Although there was a decline in the peak advance, the minimum figure at $112 million was substantially higher than in the previous year and the average level of advances over the whole year rose appreciably. Advances outstanding at 30th June aggregated $175 million, a fall of $68 million over the year. This reflected the lower level of wheat stocks, which were down by about 45 million bushels, and also lower outstandings for term sales of wheat overseas.

Considerable call emerged during the year for additional finance from co-operative sugar mills. The coincidence of expansion in the industry and continued low world market prices for sugar imposed strains on the usual sources of finance and Rural Credits Department was able to assist towards the seasonal requirements of eligible associations of producers.

In all, assistance was provided for the marketing of 21 commodities, including such widely varied products as cotton, dairy produce, ginger, peanuts, rice and superphosphate.

The Rural Credits Development Fund, which receives each year half the net profits of the Rural Credits Department, has now approved grants of more than $5.2 million since its inception in 1925. During the year, grants totalling $517,000 were approved from the Fund. Many of these grants were for University research projects connected with the promotion of primary production in Australia. For example, finance was provided for studies to be undertaken on the physiology of sheep and cattle living in an arid environment, naturally-occurring insect attractants and their application to eradication programmes, the resistance by insects to insecticides and drought resistance in wheat. Grants were also approved for organisations concerned with extension activities.

BONDS AND STOCK

Inscribed Stock Registries conducted at Reserve Bank branches continued to handle a substantial volume of business in connection with new issues of Commonwealth securities and registration of transactions on existing issues. In 1965/66 there were four Commonwealth cash loan flotations and a new issue of Special Bonds; three of the cash loans were combined with conversion offers to holders of six maturing series. The first issue of Special Bonds, Series A, reached final maturity in January, 1966, and some 45,000 holders were offered conversion to the Special Bonds series then on issue; each holder received a premium payment at maturity in terms of the prospectus. In addition to these flotations, for which the number of applications received maintained the high level of the previous year, Registries continued to issue Treasury notes and accept advance subscriptions to cash loans.

Decimal currency conversion of bonds and stock records at Sydney and Melbourne was accompanied by the introduction of a new mechanised system of ledger posting, while the actual decimal currency conversion processing was effected with the assistance of the computers recently installed at these offices. The conversion operation at other Registries was extended over a period of months, leaving the crucial balancing until the official changeover period. With the exception of a few series maturing prior to 1968, Commonwealth bearer securities for all current issues of conventional loan series, Special Bonds, Treasury notes and Treasury bills were reprinted in decimal currency.

The monthly preparation of interest payable on Inscribed Stock holdings at Sydney and Melbourne Registries, as well as much of the first interest payable on loan applications received at other Registries and banks throughout Australia, is now processed by computer. Preparation of loan statistical information and periodical analyses of Inscribed Stock holdings are other major items of bonds and stock work for which the computers are being used.

BANKING SERVICES

Customer Accounting

The Bank provides a full range of banking services for the Commonwealth Government, several State Governments and other governmental bodies. It also conducts accounts for trading banks, savings banks and overseas central banks and financial institutions, as well as for primary-produce marketing authorities and co-operative associations financed through the Rural Credits Department.

In Sydney and Melbourne the bulk of customer accounting is now carried out by computer. To enable the maximum advantage to be taken of the available computer processing capacity by both the Government and the Bank, all cheques issued in Australia by Commonwealth Government departments on high volume accounts are now drawn on the Bank's Sydney or Melbourne offices and processed by computer.

The availability of computer processing capacity at Sydney and Melbourne offices also contributed significantly to a speedy and smooth decimal currency changeover at these points.

Centralised Facilities for Distribution of Cash to Banks

In August, 1965, the Bank commenced a centralised system for the distribution of cash to branches of eight banks in the Sydney metropolitan area. Later this year it is proposed to extend the centralised facilities to include the despatch of currency to country branches of banks in New South Wales. A wide range of modern mechanical equipment has been installed in the Cash Department to enable the large volume of notes and coin handled daily to be processed speedily and accurately.

Rural Liaison Service

The Service continues to carry out its function of providing rural information to banks. During the year, in addition to its regular circulation of publications and answering of enquiries, further schedules showing land values and associated data were supplied to banks. These schedules now cover all rural areas of New South Wales and Tasmania and 41 of the local government areas of South Australia. Work is proceeding on additional areas in South Australia and on revision of some schedules covering New South Wales districts where such action is warranted.

With large areas of Australia seriously affected by drought during the year, the Service undertook in November/December a special field survey of some 250 properties in selected Pasture Protection Districts in New South Wales. This produced some very useful first-hand data on the physical and financial effects of the drought on primary producers in the areas surveyed.

ECONOMIC LIAISON

During the year the Bank continued to benefit from contact between its economic liaison officers and a wide selection of people engaged in private commerce and industry and in governmental service. The assistance given in the form of information and comment on trends and current conditions is greatly appreciated.

ECONOMIC AND FINANCIAL RESEARCH FUND

The Bank continues to provide financial support for post-graduate research in economic and financial fields bearing on the Australian economy. Further assistance was extended for a number of projects commenced in earlier years and grants were made for several new projects, including research into the transport industry, production and marketing of consumer durables and econometric studies of the Australian economy.

STAFF

There are now 2,662 staff in the Reserve Bank Service and, in addition, the Bank has 496 temporary employees. Of the total, 827 are employed in the Note Issue Department, Melbourne.

During the course of the year, the Bank introduced major changes in its policy relating to the employment of women. For many years women officers have had to resign from the Bank's service on marriage, though some have been reemployed on a temporary basis. Now, women officers who marry may continue in the Bank's service as officers, retaining their superannuation, leave, salary and promotional rights. The Bank also introduced a scheme designed to make better use of the capabilities of women on its staff. Greater opportunities and training are now being given for women to follow careers in clerical and administrative work. Those who prove their aptitude for this work are employed on conditions of service similar to men.

Specialist and general training continues to be provided for officers of all ranks at the Bank's Staff Training College in Sydney. At senior levels this is supplemented by participation in executive training courses at the Australian Administrative Staff College, Bankers' Administrative Staff College and other specialist courses such as SEANZA Courses for central bankers, International Banking Summer Schools and Bankers' Overseas Trade Courses, and by reciprocal interchanges of staff with central banks in various countries.

During the year Mr. J.M. Garland resumed duties in the Bank from the position of Executive Director for Australia, South Africa, Vietnam and New Zealand with the International Monetary Fund and International Bank for Reconstruction and Development in Washington. Mr. J.G. Menzies resumed from the position of Deputy Governor of the Central Bank of Malaysia. In recognition of his services in this post, Mr. Menzies had conferred on him a high Malaysian award. Mr. R.C. White also resumed from the post of Economist with the South Pacific Commission and Messrs. N.J. Brady and B.McG. Dodds from three-year secondments with the International Monetary Fund and Central Bank of Malaysia, respectively.

Mr. T.J. Bartley has taken up duties as alternate Director for Australia, South Africa, Vietnam and New Zealand with the International Bank for Reconstruction and Development in Washington. Mr. G.W. Keep is on loan to the United Nations Economic Commission for Asia and the Far East (ECAFE) to assist with preparatory work on the Asian Development Bank. Mr. R.G. Sampson continues as Deputy Governor of the Bank of Zambia. Mr. C.L. Mobbs is carrying out an exchange control assignment in Ghana and Messrs. John Beach and Marcus Diamond are on secondments with the Central Bank of Malaysia and the International Monetary Fund, respectively.

Senior retirements during the year included Mr. A.L. Lowther, Assistant Manager, London.

The Board gratefully acknowledges the effective contribution made by the Staff to the work of the Bank throughout the year.

PREMISES

The Bank's building programme advanced during the year with the completion of one major project, another nearing completion and the calling of tenders for construction of two smaller buildings.

The new Adelaide premises at 182 Victoria Square were occupied on 14th March, 1966. The building has two basement levels for vaults and bulk cash handling, a ground floor entrance lobby and banking chamber and 16 upper floors rising to a height of 220 feet above the Square. In terms of an agreement reached when the site was purchased, seven floors have been leased to the South Australian Government.

Work on the Melbourne building is nearing completion and some sections of Melbourne branch are already established in the new premises. Tenders have been called for the construction of a four-storey building for the Port Moresby branch of the Bank and also for a building in Darwin where the Bank intends to open a branch.

Preliminary planning for new branch buildings in Brisbane and Perth has commenced.