AMP leaps into the breach

Press, 1 May 1984, Page 18

AMP leaps into the breach

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New Zealand’s largest life assurance office, Australia Mutual Provident. Society, has reacted quickly to the remarks by the Minister of Finance, Sir Robert Muldoon, that they were not playing the game. On Friday night, in an address to a celebration of the Superannuation Investments fund, Sir Robert said that he was disappointed that the life offices did not co-operate in bringing interest rates down. He warned the L.O.A. that the Government might reconsider its attitude to taxdeductible life insurance premiums. AMP directors and executives met during the weekend to discuss the society’s position and draft an answer, which was presented to a news conference that had been planned

ADRIAN BROKKING,

earlier. Government inflexibility was partly to blame for high interest rates, said Mr lan Stanwell, the New Zealand general manager of the AMP Society. Mr Stanwell said the Government’s decision to maintain interest rates at either 11 per cent or 14 per cent — with nothing in between — meant that AMP’s farm and commercial loan rates were higher than the society wanted them to be. He said AMP might, for example, want to reduce a particular farm loan from 14 per cent to 12 per cent. But faced only with the choice of 14 or 11 per cent it would stick at 14 per cent. “What we have therefore is a classic example of how arbitrary regulation can block, rather than en-

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courage a drop in mortgage rates,” he said.

“AMP has always tried to keep the interest rates it charges on mortgage loans in line with the market. “We began to review our rates downward in August last year... making our decision in the light of what we believed was in the best interests of the total New Zealand economy. He said that AMP had agreed to reduce all reviewable housing loans to the 1114 per cent levels by August. Tax-deductible life insurance premiums were a completely separate issue, he said. Tax deductions helped both the individual and the whole economy, and to penalise the individual would penalise the whole of New Zealand.