VICTORIA

Report

of the

REGISTRAR OF BlTILDING SOCIETIES

for the

Year ended 30 June 1984

Ordered by the Legislative Assembly to be printed

MELBOURNE F D ATKINSON GOVERNMENT PRINTER 1985

No 12.

VICTORIA BUILDING SOCIETIES

Seventh Annual ReJXlrt of the Registrar for the financial year ended 30 June 1984

The Honourable the Minister of Housing

This reJXlrt, which is submitted pursuant to the provisions of section 113 of the Building Societies Act 1976 (No. 8966), relates to the period 1 July 1983 to 30 June 1984. A statistical and graphical summary of the operations of Permanent Building Societies and the Building Societies General Reserve Fund, to the close of the year under review, is presented in the supplement to the reJXlrt.

GENERAL The year to 30 June, 1984 has been most eventful. The progressive deregulation of the fmancial system continued, generating new OpfKlrtunities and challenges for all finan­ cial institutions and in particular, building societies. Although the initiative in this area lies predominantly with the Federal Government, the States have an imJXlrtant reSJXln­ sibility with respect to those insitutions which operate under State legislation. Victoria took the lead in this area when the Government established the Financial Institutions Review in December 1983. The ReJXlrt of the Review was submitted to the resJXlnsible Ministers, the Hon. R. A. Jolly, M.P., Treasurer, and the Hon. I. A. Cathie, M.P., Minister of Housing, in May 1984. As Chairman of the Review Steering Committee, I acknowledge the contributions of my colleagues on the Committee and the work of the Review Team, in particular that of the Consultant to the Review, Mr. M. E. Eyers. The Review was a major exercise in consultation and considered over seventy submissions. The task of the Review was to identify the present and JXltential future roles of building societies, credit societies, co-operative housing societies and industrial and provident societies; to recommend to the Government what JXllicies it should adopt in respect of those societies; and the broad legislative changes required to implement such JXllicies. With respect to building societies, the Review made a series of recommendations relating to diversification, capital structure, a secondary mortgage market, interest rate regulation and the need for direct participation of building societies in the payments system. The ReJXlrt also made a series of recommendations relating to legislative reform, comple­ mentary State legislation and the restructuring of Government involvement. It is expected that a new Building Societies Act will be prepared for submission to Parliament in 1985. The Report formed the basis of a meeting of State Ministers and senior Government officials in Melbourne in June 1984. Following this meeting a National Working Group of Registrars was established to co-ordinate complementary State legislation. Building societies are major deJXlsit taking intermediaries servicing the household sector. They have a central role in the supply of housing finance and their ongoing viability is an imJXlrtant concern of the Victorian Government. As the activities of domestic and foreign banks become increasingly deregulated it is imJXlrtant that unnecessary restrictions on societies are also removed. By working in close consultation with the industry, the Review has developed a series of recommendations which should ensure the continued competitiveness and viability of the building society industry. As I have noted, the Financial Institutions Review has made a series of recommendations directed towards restructuring Government involvement in the regulation of the building society industry. It is a key comJXlnent of the Victorian Economic Strategy that regulation which is unnecessary for the achievement of Government objectives or which unduly reduces the efficiency of industry should be removed. The Review has submited that the Government should adopt three principal objectives in its regulation of building societies: 1. A legislative and prudential environment within which these financial institutions can compete efficiently to meet the needs of their members and the general public. 2. A system of prudential regulation which ensures that deposits made by members of the public with these institutions are safe. 3. A stable supply of reasonably-priced housing finance. It also makes a series of recommendations directed towards the improvement of the regulatory system. It is intended that implementation of these principles will occur in the next twelve months following an organisational review. The acceleration in the process of deregulation has occurred at a time when pressure on lending interest rates has declined from the historically high levels of recent years. As a result, consultations were held in December 1983 between the Government and industry representatives, after which the ceiling on home mortgage interest rates was reduced from 14.15% to 13.5%. This further eased the burden of home ownership on the community and contributed to the major increase in activity in the housing market over the past year. My appointment to the position of Registrar was confirmed in December 1983 after I had acted in that capacity for some nine months. The year also saw the consolidation of the new Legal and Registry Division of which I am General Manager. This new structure, of which the Building and Housing Societies Branch is an important component, has allowed the application of various skills to issues of policy and procedure relating to building societies and the other societies regulated by the Division. An important role is played here by the Divisional Executive which functions as its corporate management group and as a forum for discussion of major issues. The new structure also includes a Research and Policy Branch. This Branch played a central role in the conduct of the Financial Institutions Review and on numerous other matters relating to building societies. During the year I sought to enhance my relationship with the industry in order to further develop effective channels of communication and consultation. I have had the opportunity to address representatives of the building society industry on many occasions and have bene fitted from numerous discussions. In particular. I note the contributions of the Building Societies Advisory Committee, the Victorian Building Societies Association and the Australian Association of Permanent Building Societies. Officers from the Building and Housing Societies, and Research and Policy Branches have also liaised closely with industry representatives and have attended a number of industry courses and seminars. This process is essential if both Government and industry are to maintain a sufficiently informed understanding of their respective roles and responsibilities. The past year has seen the foundation established for the wide range of changes which will be required both of Government and industry if the challenges of the future are to be met and the opportunities realized.

REGISTRATION OF SOCIETIES, RULES AND DOCUMENTS

On the Register at the beginning of the year 34 Registrations during the year Nil *Dissolutions during the year 1 *Transfers of engagements during the year 2 *On the Register at the end of the year 31 Alterations of rules 19 Special resolutions 8 Change of office 7 *Change of name 2 Charges 2 *For futher details see Supplementary Information I, 2, 3 and 4.

2 LEGISLATION AND REGULATIONS

The Act and Regulations remained unchanged during the year.

STATUTORY INSPECTIONS

During the year the Legal and Registry Division of the Ministry of Housing was re­ organised with Mr. Peter Rogan being assigned to the position of Deputy Registrar of Building and Housing Societies. In the year under review the records of six permanent building societies were inspected on a routine basis and one society was inspected as a follow-up to a previous inspection. In addition, particular areas of the operations of two societies were investigated following complaints from the general public. The majority of societies' records inspected were of an acceptable standard although several minor breaches of the Building Societies Act 1976 were noted. An inquiry was held into the affairs of one society pursuant to the provisions of section Ill of the Act as the society had overdrawn its accommodation facility and its cheques were being dishonoured. As a result of this inquiry a liquidator was appointed to wind up and dissolve the society on the certificate of the Registrar pursuant to the provisions of section 76 of the Act. During the year, thirty-two recorded complaints were investigated. The grievances against individual building societies generally concerned calculation of penalty interest and arrears, insurance requirements and alleged lack of communication between societies and members.

BUILDING SOCIETIES ADVISORY COMMITTEE

At 30 June, 1984 the membership of the Advisory Committee which remained un­ changed throughout the year was as follows: Mr. W. J. Kilpatrick, B.A., LL.B, Registrar-ex-officio Chairman; Mr. R. B. Maybury, A.A.S.A., A.C.I.S., General Manager, Security Co-operative Permanent Building Society; Mr. R. V. Morris, A.A.S.A., Managing Director, Statewide Building Society; Mr. C. 1. Stewart, Managing Director, The RESI Permanent Building Society; Mr. D. H. Perkins, M.A., A.C.A., F.C.A. (Eng. & Wales), Chartered Accountant; and Mr. P. Coman, Assistant Director (Operations), Ministry of Consumer Affairs. The Committee met on seven occasions throughout the year and discussed several issues, some of which are outlined below. The General Reserve Fund is discussed sep­ arately in this report.

Financial Affairs of Societies

The Committee continued to monitor the liquidations of Twentieth Century Building and Investment Society and Castle Permanent Building Society as well as the affairs of other societies which gave grounds for concern. Following an inquiry pursuant to section Ill of the Building Societies Act 1976, a Certificate of Winding Up was signed by the Registrar with the approval of the Minister of Housing on 9 March, 1984 placing Athena Permanent Building Society in the hands of a liquidator.

3 Commencement of Interest The Committee restated its earlier advice that no interest should be charged prior to the settlement of a loan. An exception was recommended in the case where settlement was delayed for a period exceeding six months, thereby encouraging borrowers to settle within that period.

Financial Institutions Review The review of financial institutions administered by the Minister of Housing was discussed and particular attention was directed towards the Government's proposal to allow building societies to advance consumer credit. The Committee endorsed the proposal and recommended that legislative amendments be enacted as soon as possible to allow for its implementation.

Penalty Interest The Registrar, on the advice of the Committee, made an Order pursuant to section I 09( I) of the Act which was published in the Victoria Government Gazette on 11 April 1984. The order eased restrictions on penalty interest charged on early discharge of a mortgage or in respect of late payments of instalments and/or interest so that they only apply in respect of a first mortgage loan for an owner-occupied home except where the loan falls within the ambit of section 57(1)(b) of the Act.

Other Matters Other matters discussed by the Committee included: - fidelity insurance guidelines for societies; - society mergers and payments to directors and officers in conjunction with mergers and retirements; the types of investments and advances that societies are permitted to make; the future of small building societies; -repossession and other legal costs in respect of defaulting borrowers; -the proportion of the property valuation which societies are prepared to advance; and officers and directors liability insurance.

BUILDING SOCIETIES' GENERAL RESERVE FUND Supplement No. 10 to this report consists of the annual accounts of the General Reserve Fund administered during the year by the Advisory Committee. The financial accounts of the Fund for the year ended 30 June 1984, indicate that the total funds now held have increased from $11,702,815.50 to $13,473,620.93 although the Minister, on the advice of the Registrar, pursuant to the powers vested in him by section 106 of the Act exempted societies from paying the levy due under section 89( I) of the Act on 31 December. 1983. It was not necessary to provide any assistance from the Fund during the year ended 30 June I 984, other than loans to Castle Permanent Building Society (In Liquidation) and Athena Permanent Building Society (In Liquidation) for the purpose of paying out de­ positors to facilitate the orderly winding-up of the societies. These payments were made, together with other expenses, pursuant to section 91 of the Act. W. J. KILPATRICK REGISTRAR OF BUILDING SOCIETIES Melbourne

4 SUPPLEMENTARY INFORMATION

Contents Page No.

1 . Transfers of Engagements 5 2. Changes of Name 5 3. Dissolution of Society 6 4. Societies on Register 6 5. Growth Statistics 6 • History of Growth - Table 1 7 6. Public Investments During 1983-84 7 • Public Investment and net retention per month - Table 2 7 • Growth of funds invested Figure 1 8 7. Liquid Funds 8 • Percentage of liquid funds - Table 3 8 8. Lending 8 • Lending Table 4 9 9. Building Societies Consolidated Accounts 1983-84 9 • Consolidated Profit and Loss Statement 9 • Consolidated Balance Sheet lO 10. Building Societies General Reserve Fund 10 • Annual Accounts - 1983-84 10

1. TRANSFERS OF ENGAGEMENTS

During the year the following societies transferred their engagements: Ararat Permanent Building Society to Security Co-operative Permanent Building Society (effective 31.8.83)

- Legal & General Permanent Building Society to Hotham Permanent Building Society (effective 19.12.83)

2. CHANGES OF NAME

During the year the following societies changed their names: - Hibernian Permanent Building and Investment Society to Independent Order of Odd Fellows of Victoria Permanent Building Society ( 14.12 .83)

Greater Melbourne Permanent Building Society to Greater Melbourne Building Society (28.3.84)

5 3. DISSOLUTION OF SOCIETY During the year the following society was wound up and dissolved and its registration cancelled. -Gas Corporation Permanent Building Society (11.5.84)

4. SOCIETIES ON REGISTER The following is a list of the societies on the register as at 30 June, 1984. A.B.C. Mutual Permanent Building Society Australian Natives Association Permanent Building Society *Athena Permanent Building Society (In Liquidation) Bendigo Sandhurst Mutual Permanent Land and Building Society Capital Building Society **Castle Permanent Building Society (In Liquidation) Colonial Mutual Permanent Building Society Compass Building Society Federation Building Society Friendly Societies Permanent Building Society Geelong Building Society Greater Ballarat Permanent Building Society Greater Melbourne Building Society Hotham Permanent Building Society Independent Order of Odd Fellows of Victoria Permanent Building Society Interstate Permanent Co-operative Building Society Manchester Unity (Victoria) Permanent Building Society National Mutual Permanent Building Society Odessa Ukrainian Co-operative Building Society Phoenix Permanent Building Society Pyramid Building Society Security Co-operative Permanent Building Society Statewide Building Society Sunraysia Permanent Building Society The National Permanent Building Society The RESI Permanent Building Society Third Extended Starr-Bowkett Building Society ***Twentieth Century Building and Investment Society (In Liquidation) Union Building Society Victorian Savings and Loan Society Wendouree Permanent Building Society

*On a Certificate of the Registrar, Athen a Permanent Building Society was placed in the hands of a liquidator on 9 March, 1984. **On a Certificate of the Registrar, Castle Permanent Building Society was placed in the hands of a liquidator on 16 June, 1983. ***By order of the Court, Twentieth Century Building and Investment Society was placed in the hands of a liquidator on 25 July, 1980. None of the liquidations had been completed by 30 June, 1984.

5. GROWTH STATISTICS The total assets owned by Permanent Building Societies at 30 June, 1984 exceeded $3971 million, an increase of approximately $677 million over the previous year. That increase represented an industry growth rate of approximately 20 per centum, an increase of approximately 8 per centum on the previous year, reflecting the fierce com­ petition for funds that exists in the market place.

6 TABLE 1- HISTORY OF GROWTH

Year Ended Borrowed 30 June Total Assets Funds* Reserves Asset Growth ··-·-··-·-··---- $M $M $M % 1975 640 610 7 16.3 1976 897 870 7 40.1 1977 1161 1134 11 29.4 1978 1386 1351 13 19.4 1979 1749 1707 16 26.2 1980 2105 2079 26 20.4 1981 2364 2320 28 12.3 1982 2931 2861 32 24.0 1983 3294 3195 41 12.4 1984 3971 3844 157 20.6 ---·-··---·-·-· Since 1975 total assets owned by societies have increased by $3331 million, a growth of 620.5 per centum. *Borrowed funds include paid-up share capital, deposits and loans.

6. PUBLIC INVESTMENT DURING THE YEAR 1983-84

During the year ended 30 June, 1984, aggregate funds invested by the public in the form of withdrawable share capital, deposits and loans increased from approximately $3020 million to approximately $3568 million. Table 2 shows the net withdrawable funds retained per month and the monthly balance of share capital, deposits and loans from I July, 1983 to 30 June, 1984.

TABLE 2 - PUBLIC INVESTMENT AND NET RETENTION

-··----~------~---~ 1983 1984 June Oct Nov Dec Jan Feb Mar Apr Jun Net Retention $M 48 21 46 91 70 24 142 53 30 (32} (88) 39 109 Public Investments $M 3020 3057 3105 3196 3300 3325 3466 3519 3547 3513 3424 3463 3568

These figures are extracted from the monthly statistical reports lodged by societies at the Registry of Building Societies and all calculations are made from the statistics of 27 societies. The other three societies did not provide enough information to warrant inclusion. However, it should be noted that these societies are too small to influence these statistics. There is no correlation between the figures in both categories of Table 2 because the net retention figure is only calculated on withdrawable share capital and deposits. Never­ theless, a similar pattern can be drawn from both sets of figures.

7 FIGURE 1 GROWTH OF FUNDS INVESTED BY PUBLIC $Million 3600 3500 3400 3300 3200 3100 3000

Aug Sept Oct Nov Dec Feb Mar Apr May June

7. LIQUID FUNDS Section 63(1) of the Building Societies Act 1976 requires that societies hold liquid funds equal to not less than 10 per cent. or such other percentage as is prescribed of the total of members paid up share capital, deposits held by and loans made to the society. As can be seen by the statistics provided below, the industry in Victoria operates substantially above the prescribed level.

TABLE 3- PERCENTAGE OF LIQUID FUNDS 1983-84

·-·-·-·-·~·~·~-·- Societies Jul Aug Oct Nov Dec Jan Feb Mar Apr May Jun Top 10 24.8 24.7 23.9 23.8 24.1 25.1 25.6 25.1 22.9 21.7 21.9 21.6 Between 11-20 33.9 31.8 32.4 29.5 30.0 29.3 31.1 30.4 28.0 23.5 22.1 23.7 Remainder 42.4 42.8 44.7 40.7 43.1 42.9 44.8 46.8 46.4 46.2 39.0 37.9

-·~~--~~·~·~· *Weighted 25.5 25.3 24.6 24.2 24.4 25.4 26.0 25.5 23.3 21.9 22.0 21.8

*Weighted Average on the above computation is based on the total assets of the societies. The 10 largest societies (in terms of total assets) have a weighted contributing factor of 0.927, the next 10 societies a factor of 0.070 and finally 0.003 for the remaining societies.

8. LENDING

During the year ended 30 June, 1984 societies advanced $831,829,000 to borrowing members. Loans approved but not advanced totalled $171,073,000 at 30 June, 1984. The introduction of the First Home Owners Interest Rebate Scheme together with the decrease in interest rates gave a pronounced boost to the building industry which resulted in the significant increase in the societies lending portfolios.

8 TABLE 4- LENDING

----~·-·-·-·-- Year Net Loans Increase on Increase Outstanding Previous Year Per Annum $,000 $'000 % 1974-75 494,834 52,304 11.82 1975-76 691,433 196,599 39.73 1976-77 908,542 217,109 31.40 1977-78 1,116,103 207,561 22.85 1978-79 1,372,315 256,212 22.96 1979-80 1,644,039 271,724 19.80 1980-81 1,874,674 230,635 14.03 1981-82 2,030,505 155,831 8.31 1982-83 2,105,369 74,864 3.69 1983-84 2,5ll,846 406,477 19.31

9. BUILDING SOCIETIES CONSOLIDATED ACCOUNTS 1983-84 Building Societies Consolidated Profit and Loss Statement for the Year Ended 30 June, 1984

1984 1983 $'000 $'000 $'000 INCOME Interest on Loans 340,563 301,646 Interest on Investments 163,412 141,673 Other Income 17,514 13,306 ------~---- TOTAL INCOME 521,489 456,626 EXPENDITURE Interest Deposits 347,824 301,411 Institutional and Overdraft Borrowings 9,171 4,496 Administrative Audit Fees 680 599 Depreciation & Amortisation 6,036 4,501 Directors Fees 699 636 Salaries and Labour Costs 43,091 37,076 Other Expenses 58,234 ----46,134 TOTAL EXPENDITURE 465,735 394,853 OPERATING PROFIT BEFORE TAX 55,754 61,773 Less Provision for Taxation 12,115 6,268 ·---- 43,639 55,505 Less Dividends Accrued and Paid 31,658 47,519 NET OPERATING PROFIT 11,981 7,986 Add Unappropriated Profits 1 July, 1983 (note 1) 11,542 9,925 23,523 l7,9ll Less Transfers to Reserves 7,953 632 --·-·-- Unappropriated Profits 30 June, 1984 15,570 11,590

:--.=~ =-----=:::=~ Note 1: The variation in the amount shown as unappropriated profits as at 30 June, 1983 and I July, 1983 is a result of 2 societies being placed in Liquidation and several Transfers of Engagements.

9 Building Societies Consolidated Balance Sheet as at 30 June, 1984 1984 1983 $'000 $'000 SHARE CAPITAL AND RESERVES: Paid Up Share Capital 985,729 780,432 *Reserves (includes Statutory) 38,359 29,649 *Unappropriated Profits 15,570 11,590 1,039,658 821,671 REPRESENTED BY: ASSETS: Accounts Receivable 24,084 29,888 Cash at Bank and on hand 18,869 17,096 Deposits - at bank 154,950 203,764 - Bills and other securities 447,146 572,524 - Institutional 450,839 275,908 Land and Buildings (including furniture and fittings) 74,721 70,269 Mortgage Investments 274,001 Other Financial Assets 3,823 8,056 Other Physical Assets 10,855 11,219 -·-·- l ,459,288 1,188,724 MORTGAGE LOANS: Amount owing on loans 2,511,846 2,105,369 --··- TOTAL ASSETS 3,971,134 3,294,093 LIABILITIES: Accounts Payable 54,774 42,042 Bank Overdraft 14,994 14,173 Deposits 2,665,791 2,343,283 Loans 169,548 59,036 Other liabilities 319 1,376 Provisions 26,050 ---12,612 TOTAL LIABILITIES 2,931,476 2,472,522 NET ASSETS 1,039,658 821,671

10. BUILDING SOCIETIES GENERAL RESERVE FUND ANNUAL ACCOUNTS 1983-84 COMPRISING THE FOLLOWING: BALANCE SHEET STATEMENT OF INCOME AND EXPENDITURE STATEMENT OF RECEIPTS AND PAYMENTS NOTES TO THE ACCOUNTS INVESTMENT SCHEDULE PRINCIPAL ACCOUNTING OFFICER'S STATEMENT STATEMENT BY ADVISORY COMMITTEE MEMBERS AUDITOR'S REPORT

10 BUILDING SOCIETIES GENERAL RESERVE FUND Balance Sheet as at 30 June, 1984

1982/83 1983/84 $ NOTE $ $ GENERAL RESERVE FUND 11,421,161.30 Contributions 11,586,440.50 281,654.20 Accumulated Surplus 8 1,887,180.43 -----·-· TOTAL GENERAL RESERVE 11,702,815.50 FUNDS 13,473,620.93 These funds are represented by: NON-CURRENT ASSETS Investments 2(c) 675,000.00 D.I.H.A. 650,000.00 387,500.00 Home Finance Trust 337,500.00 544,478.75 M.M.B.W. 544,478.75 247,500.00 M.U.R.L.A. 247,500.00 400,000.00 S.E.C. of Victoria 400,000.00 2,254,478.75 2,179,478.75 Loans to societies 617,300.00 Twentieth Century 117,300.00 Athena 11 828,000.00 Castle 10 871,843.61 617,300.00 1,817' 143.61 ~-~·---·- ·--· 2,871 ,778. 75 3,996,622.36 CURRENT ASSETS Investments 59,983.00 City of Melbourne 376,800.00 S.E.C. 486,750.00 Brisbane City Council 246,250.00 Telecom Australia 490,000.00 Hydro-Elect. Comm. Tas. 1,659,783.00 164.67 Cash at bank 10,205.39 7,008,000.00 Interest bearing tenn deposits 9,278,639.89 163,929.08 Accrued interest 189,353.29 ·-·-·--· 7,172,093.75 9,478,198.57 11,703,655.50 13,474,820.93 Less: CURRENT LIABILITIES 840.00 Accrued expense 4 1,200.00 $11,702,815.50 $13,473,620.93

The above statement should be read in conjunction with the attached notes to and fonning part of the Financial Statements.

11 BUILDING SOCIETIES GENERAl. RESERVE FUND Statement of Income and Expenditure for twelve months to 30 June, 1984 1982/83 1983/84 $ NOTE $ $ INCOME Interest 449,440.31 - Semi-govt. securities 364,737.81 694,274.67 - Investments 959,980.63 49.47 Bank Account 36.82 --·---~·--- 1,143,764.45 I ,324,755.26 Abnormal Items 26,325.94 Capital gain on redemption of investments 60,217.00 Repayment of grant previously written off 250,000.00

~-~~~- $1' 170,090.39 Total Income $1,634,972.26

LESS: EXPENDITURE 1,111.69 Financial institutions duties 9 9,732.41 1.00 Bank charges 1 '108.22 6.10 Federal debit taxes 65.40 640.00 Audit fee 1,420.00 Fidelity Guarantee Insurance 17,120.00 ---·--·-- $1,758.79 Total Ependiture $29,446.03 $1 '168,331.60 NET SURPLUS FOR YEAR $1,605,526.23

The above statement should be read in conjunction with the attached notes to and forming part of the Financial Statements.

12 BUILDING SOCIETIES GENERAL RESERVE FUND Statement of Receipts and Payments from 117/83 to 30/6/84

NOTE $ $ CASH BALANCE - 117/83 164.67 ====--== RECEIPTS Contributions 218,863.06 Less: Refunds (53,583 .86) 165,279.20 Interest received Interest bearing term deposits 879,694.55 Bank account 7.50 Semi-government securities 5 419,629.00 1,299,331.05 ~·--- Redemption of Grant to Society 12 250,000.00 Redemption of Advance to Societies 500,000.00 Redemption of investments Semi-government securities I ,795,000.00 Interest bearing term deposits 6 83 '723, 702.56 86,268,702.56 TOTAL NET RECEIPTS 87,733,477.48

LESS: PAYMENTS Fidelity Guarantee Insurance 17,120.00 Loan Castle Perm. Building Soc. 10 871,843.61 Loan- Athena Perm. Building Soc. I I 828,000.00 Audit fees 1,060.00 Bank fees I, 108.22 Federal debit taxes 65.40 Financial institutions duties 9 9,732.41 Interest bearing term deposits 7 85,994,342.45 TOTAL NET PAYMENTS 87 '723,272.09 --·-·------CASH ON HAND - 30/6/84 $10,205.39 ==::==-~~

The above statement should be read in conjunction with the attached notes to and forming part of the Financial Statements.

13 BUILDING SOCIETIES GENERAL RESERVE FUND NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

I . ~neral Policy (a) The Building Societies General Reserve Fund was established under the provi­ sions of the Building Societies Act 1976 in order to provide: (i) protection for members, investors and depositors of societies which are being or have been wound up, and (ii) temporary financial assistance to societies. (b) Societies are required to contribute an annual levy to the Fund calculated as a specified proportion of their withdrawable funds. These contributions are taken direct to the contributions account in the balance sheet. However, for the financial year I 983/84 it is likely that no contributions will be required by the Registrar as it is felt sufficient monies are in the Fund to cover foreseeable contingencies. 2. Summary of Significant Accounting Policies (a) The accounts are prepared in accordance with the historical cost convention whereby assets are recorded at cost unless stated otherwise. (b) Accrual accounting has been adopted for all accounts except that arrears of contributions from societies are not recognised as income unless their receipt is considered virtually certain. (c) The Fund's semi-government investments are stated in the accounts as $2,179,478.75 which represents cost less principal repayments (see attached schedule "A" for details). The market value of the Fund's investments with semi-government authorities, excluding those which were arranged as credit­ foncier loans, was $1,507,792.85 (Cost $1,641,978.75) as at 30 June, 1984. 3. Accrued expense represents the amount set aside for payment of audit fees. 4. The charge of $1,200.00 represents the year's estimated audit fee. 5. Interest received - Semi-government authorities $ City of Melbourne 2,056.25 Hydro-Electricity Comm. Tasmania 58,000.00 D.I.H.A. 84,618.75 Brisbane City Council 54,000.00 Home Finance Trust 50,600.00 M.M.B.W. 58,454.00 State Electricity Commission 62,400.00 Telecom Australia 26,000.00 M.U.R.L.A. 23,500.00 $419,629.00

6. Redemption- Interest bearing term deposits $ National Australia Bank 5,565,381.37 A.N.Z. Bank 10,974,796.96 Australian Bank Commonwealth Bank 4,960,924.23 Westpac Bank 2,000,000.00 Cash Management Account (V.D.F.) 58,309,600.00 First Federation Discount Ltd. 900,000.00 Cape! Court Securities Ltd. 50,000.00 A. U. C. Discount Ltd. 963,000.00 $83,723,702.56

14 7. Payments - Interest bearing term deposits $ National Australia Bank 5,565,381.37 Australian Bank A.N.Z. Bank 10,974,796.96 Westpac Bank 7,810,000.00 Commonwealth Bank 4,960,924.23 Cash Management Account (V.D.F.) 54,770,239.89 First Federation Discount Ltd 900,000.00 Trans City Discount Ltd. A.U.C. Discount Ltd. 963,000.00 Capel Court Securities Ltd. 50,000.00 $85,994,342.45

8. Accumulated (deflcit)/surplus 1982/83 1983/84 $ $ (886,677 .40) Balance brought forward 281,654.20 -~ 68,331.60 Net surplus for year 1,605,526.23 $281,654.20 Accumulated surplus $1,887,180.43

9. Financial Institutions Duty of $9,732.41 - $3,576.68 is attributable for the period before 1/7/83 while $6,155.73 is applicable to the current period. 10. Loan Castle Permanent Building Society (In Liquidation) -This amount may not be fully recoverable. Interest on the loan is not accrued and not treated as income. 11. Loan Athena Permanent Building Society (In Liquidation) This amount may not be fully recoverable. Interest on the loan is not accrued and not treated as income. 12. Part repayment of Grant to Twentieth Century Building Society (In Liquidation) previously written off as non recoverable.

15 SCHEDULE "A.. BUILDING SOCIETIES GENERAL RESERVE FUND INVESTMENTS AS AT 30 JUNE, 1984 (See Note 2(c)) Maturity Face Value Rate N.R.Y. Cost/Pr Inc. Interest Receivable Date Name $ % % $ $ Due Date INTEREST BEARING TERM DEPOSIT 21111/84 Westpac 5,810,000.00 11.45 NIA 5,810,000.00 332,622.50 21/11/84 30/7/84 Cash Management Ne 1,200,000.00 13.75 NIA I ,200,000.00 26,671.23 3017/84 AT CALL Cash Management Ne 2,268,639.89 NIA NIA 2,268,639.89 NIA AT CALL ~ ------Current 9,278,639.89 359,293.73 ------~-- -- SEMI-GOVERNMENT SECURITIES 1/10/86 M.M.B.W. 94,000 15.9 NIA 94,000.00 7,473.00 1 Apr/1 Oct l/2/88 S.E.C. 400,000 I0.4 NIA 400,000.00 20,800.00 1 Feb/1 Aug 117/88 M.M.B.W. 150,500 9.6 NIA 150,500.00 7,224.00 1 Jan/1 Ju1 1/7/88 M.M.B.W. 250,000 9.6 9.7 248,841.50 12,000.00 1 Jan/1 Ju1 -0\ 117/88 M.M.B.W. 50,000 9.6 9.75 48,502.00 2,400.00 I Jan/1 Jul 15/10/88 M.U.R.L.A. 250,000 9.4 9.56 247,500.00 11,750.00 15 Apr/15 Oct 5/2/89 Home Finance Trust 250,000 Repayments (125,()()()) 9.3 NIA 125,000.00 32,083.41* 1 Jan/1 Jul Less: -- l/2/90 D.I.H.A. 250,000 10.8 NIA 250,000.00 13,500.00 l Jan/1 Ju1 9/5/90 D.l.H.A. 200,000 11.2 NIA 200,000.00 11,200.00 1 Jan/1 Ju1 1/10/90 M.M.B.W. 2,500 10.4 10.0 2,635.25 I30.00 I Apr/1 Oct 26/4/92 D.l.H.A. 250,000 Less: Repayments (50,000) 16.1 NIA 200,000.00 136,850.00* 26 Apr/26 Oct 26/4/92 Home Finance Trust 250,000 Less: Repayments (37 ,500) I6.I NIA 212,500.00 153,258.77* 1 Jan/1 Jul - Non-Current 2, 179,478.75 Total $11,458,118.64

*These investments are credit-foncier loans for which the interest amounts represent the sums of interest to be received by the Fund from date to their maturity. BUILDING SOCIETIES' GENERAL RESERVE FUND STATEMENT BY PRINCIPAL ACCOUNTING OFFICER

To the best of my knowledge and belief the accompanying balance sheet, statement of income and expenditure, and statement of receipts and payments are drawn up so as to give a true and fair view of the state of affairs of the Fund at the 30 June, 1984.

H. G. F. WRIGHT, F.A.S.A., C.P.A. ACCOlJNT ANT

STATEMENT BY ADVISORY COMMITTEE MEMBERS

In the opinion of the members of the Committee, as recorded by a resolution of the Committee, the accompanying balance sheet, statement of income and expenditure, and statement of receipts and payments are drawn up so as to give a true and fair view of the state of affairs of the Fund at the 30 June, 1984, the operations of the statement of income and expenditure, and the receipts and payments of the Fund for the year then ended. The accounts have been maintained in accordance with the requirements of Part VIII of the Building Societies Act 1976. For and on behalf of the Advisory Committee Members.

W. J. KILPATRICK CHAIRMAN

AUDITOR'S REPORT To the Members of the Advisory Committee: Notes 10 and ll to the financial statements state that loans to two societies in liquidation may not be fully recoverable and that interest is not being accrued as income. A provision for non recovery has not been made. The loans have been confirmed by the liquidator but we are unable to form an opinion as to their recoverability. Subject to the above, we report that, in our opinion, the accompanying balance sheet, revenue account and statement of receipts and payments are drawn up so as to give a true and fair view of the state of affairs of the Fund at the 30 June, 1984, the operations of the revenue account and receipts and payments of the Fund for the year ended on that date.

DELOITTE HASKINS & SELLS Chartered Accountants

R.K.BOYCE Partner

By Authority F D Atkmson Government Printer Melbourne