Bank’s Suggestion Contested

Press, Volume CIV, Issue 30710, 27 March 1965, Page 16

Bank’s Suggestion Contested

(N.Z. Press Association) WELLINGTON,

March 26.

The Commercial Bank of Australia was ‘’somewhat astray in its economics” when its advocated firming up monetary controls on liire purchase trading, Mr \V. G. V. Fernie, chairman of the Hire Purchase Associations, said today.

Commenting on the bank’s latest economic review which said some firming in hirepurchase deposit and repayment conditions would help to dampen consumer demand, as an anti-inflationary move, Mr Fernie said:

“These controls (monetary) have already been firmed iip to a degree which penalises the hire-purchase trade far beyond anything that it attempted abroad and the rates were revised upwards last year in connexion with the present economic trend. “The deposit rate on new cars is now 66 2/3 per cent with a maximum period of 12 months and the rate on consumer goods was doubled from 5 per cent to 10 per cent last year.” Mr Fernie said the bank urged restraints taking effect over a wide front, but this was just what “firmed up” control over hire purchase did

not do, because the hirepurchase field forms only 6 per cent of all sales and 14 per cent of all credit sales. Controls over 14 per cent of the sector would be ineffective and would merely penalise one part of the buying public, those who were not so well off.

Modern economic theory recognised that “firming up" hire-purchase controls was to advocate one law for the richer and another for the poorer members of the community. a most socially undesirable policy, Mr Fernie said.

“The Government Statistician's figures published yesterday show that the increase in hire-purchase deposit rates imposed last year have caused a drop in hire-purchase sales of household and personal goods of £200.000 during the December, 1964. quarter compared with the same period the previous year. “General sales have, nevertheless, increased in volume thus demonstrating that the hire-purchase con trols have no effect other than to transfer the trade into other forms of credit or bring about reductions in savings "