Reserve Bank of Australia Annual Report – 1981 Banking, Issue and Other Functions

1. Banking Operations

The Reserve Bank, as banker to the Commonwealth Government, and the Governments of four of the States and the Northern Territory, provides a wide range of banking services. During the year, the Bank paid 91 million cheques drawn against the accounts of its Government customers. The majority of these were for welfare payments by the Commonwealth Government.

The Bank continued to co-operate with other banks in investigating new methods designed to reduce the volume of paper being processed by the banking system. As a member of the Australian Banks' Payment Systems Committee, it is closely involved in a research group examining developments in payment systems.

2. Bonds and Stock

The Bank maintains, on behalf of the Commonwealth Government, an Inscribed Stock Registry at each of its branches. Stockholder accounts in Australia, as at 30 June 1981, were about 194,000 compared with about 167,000 at 30 June 1980.

The face value of Commonwealth Government securities managed by all Australian Registries increased by $1,590 million over the year. The debt at 30 June 1981 comprised Treasury bonds $16,272 million, Australian Savings Bonds $2,810 million, Special Bonds $228 million, Treasury notes $3,527 million, Treasury bills $1,900 million, and other items $626 million.

During 1980/81, 3 new series of Australian Savings Bonds and 11 new tap issues were introduced; both types of security were on continuous issue throughout most of the year. Sales of Treasury notes by tender totalled $12,018 million, gross sales of tap issues (including official subscriptions) amounted to $2,775 million and $2,024 million of Australian Savings Bonds were sold. The continued high levels of both subscriptions and redemptions of Australian Savings Bonds added considerably to the work of the Registries.

The Bank conducts a register of Income Equalization Deposits on behalf of the Australian Taxation Office, and during 1980/81 processed deposits of $72 million and withdrawals of $45 million. At 30 June 1981, there were around 12,000 accounts with aggregate balances of $163 million, compared with a similar number of accounts totalling $136 million at the end of 1979/80.

3. Note Issue

The total value of notes on issue rose to $5,094 million at the end of 1980/81, an increase of 12 per cent during the year, compared with a rise of 10.6 per cent in the previous year. The total value of $50 notes on issue continued to increase more quickly than for other denominations; they now account for about 42 per cent of the total value of the issue.

The table below shows the total value of the denominations of notes on issue for each of the past five years.

Value of Notes on Issue
$ million
As at end June $1 $2 $5 $10 $20 $50 Total
1976/77 58 134 123 634 1,502 868 3,319
1977/78 61 137 127 608 1,628 1,127 3,688
1978/79 65 140 136 583 1,759 1,430 4,113
1979/80 68 144 142 563 1,888 1,744 4,549
1980/81 73 150 151 546 2,023 2,151 5,094

The Bank's Note Issue Department produced 354 million Australian notes in 1980/81; it also printed 671 million other items of security printing, chiefly postage stamps. By arrangement with Australia Post, printing of postal stationery, including stamps, was phased out during the year; the production technology for stamps has diverged over recent years from that for currency.

Over 60 per cent of note production was in $1 and $2 notes which are used more frequently in cash transactions, and consequently require replacement more often than notes of higher denominations. In April 1981, the Treasurer announced that the Government was considering the introduction of a $1 coin which, if introduced, would progressively replace the $1 note. Before reaching any conclusions on the matter the Government is seeking public comment on the proposal.

During the year, the Bank continued its close co-operation with the commercial banks on matters affecting the security and efficiency of distribution of currency. It has also been conducting trials of high speed equipment for the processing and verification of notes received from banks.

4. Rural Credits

The Bank's Rural Credits Department provides seasonal finance to assist the marketing, processing, or manufacture of primary produce. As a result of reduced financing for the Australian Wheat Board in 1980/81, advances outstanding reached a peak of $409 million in May ($279 million to marketing boards and $130 million to co-operatives), which was considerably below the peak in 1979/80 of $962 million. Advances outstanding at 30 June 1981 totalled $363 million ($245 million to marketing boards and $118 million to co-operatives), compared with $253 million a year earlier.

Once again, part only of the Wheat Board's total seasonal financing requirements was made available through the Rural Credits Department in 1980/81. The Board obtained the major portion of its needs, which were lower this year due to the smaller wheat crop, through issues of promissory notes and bank-accepted commercial bills.

Although drought affected many rural areas in 1980/81, Rural Credits financing increased for most commodities other than wheat, reflecting, in part, higher initial payments to growers in anticipation of higher average unit returns.

The range of normal interest rates charged on advances by the Department was increased by 3.75 percentage points per annum during the financial year and, at end June 1981, the range of normal rates was 13.25 per cent to 13.75 per cent per annum. Customers affected by the drought in drought-declared areas were exempted from the increases.

5. Research Grants

Under the terms of 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 1980/81, grants from the Fund totalling $1.3 million were approved for projects aimed at promoting primary production. In addition, one Senior Research Fellowship in Agriculture was awarded.

During 1980/81, grants totalling $124,000 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, and two Senior Fellowships in Economic Policy were awarded.

6. Information Services

The Bank publishes a range of material relating to its work. Publications currently available include:

  • “Reserve Bank of Australia: Functions and Operations”, which describes the history and activities of the Bank;
  • “Exchange Control”, which summarises exchange control policies and procedures;
  • “Money for Business”, which is a guide to the types and sources of finance available to the business community;
  • A volume containing proceedings of the Bank's 1979 Conference in Applied Economic Research;
  • A series of Discussion Papers outlining economic research carried out in the Bank's Research Department, including thirteen papers published during 1980/81;
  • Three Occasional Papers – No. 7, containing the Bank's submission to the Committee of Inquiry into the Australian Financial System, and No. 8A and No. 8B, on Australian Economic Statistics.

The Bank continued to publish in its monthly Statistical Bulletin a range of banking, financial and other economic statistics. During 1980/81, the Bulletin also included an increased number of special articles, relating mainly to the Bank's own areas of operation. Three Supplements to the Bulletin – the annual Company Supplement, the annual Financial Flow Accounts Supplement and a Financial Supplement–were published during the year.

During the year, an Editorial Committee assumed responsibility for the content of the Statistical Bulletin which, in July 1981, was renamed Reserve Bank of Australia Bulletin. It is available from all offices of the Bank at a small charge.

7. Bank Premises

The major construction phase of the new note printing branch at Craigieburn, Victoria, was completed in April 1981. The main printing areas were handed over to the Bank some months earlier to permit commencement of the installation of printing machinery and equipment. Operations of the note printing branch are being transferred progressively from the works at Fitzroy, Victoria.