Fed: Beazley attacks cheap loan to Reserve Bank official

AAP General News (Australia)
04-10-2000
Fed: Beazley attacks cheap loan to Reserve Bank official

By Stephen Spencer, Economics Correspondent

CANBERRA, April 10 AAP - A discount home loan to a senior Reserve Bank official was
incredibly insensitive, Opposition Leader Kim Beazley said today.

The bank was today refusing to comment on reports the loan was given to deputy governor
Stephen Grenville, whose salary package exceeds $300,000.

However the Reserve Bank annual report confirms the RBA has a single home loan outstanding
to either Governor Ian Macfarlane, whose salary package exceeds $450,000, or Mr Grenville.

"Loans to the Governor and Deputy Governor are permitted only in terms of section 71
of the Reserve Bank Act," the report states.

"At 30 June 1999, there was one such loan of $77,007 ... which had been made for a
home in which the officer resides, and is on the same terms and conditions as for other
officers of the Bank."

The revelation comes just days after Mr Grenville and the eight other board members
approved a 0.25 percentage point interest rate rise, the third rise in five months.

"I understand that it's legal," Mr Beazley told reporters of the loan. "But it's incredibly
insensitive."

A spokesman for the Reserve Bank today declined to say whether Mr Grenville was the
beneficiary of the loan.

However he pointed to the Reserve Bank Act 1959, which specifically empowers the bank
to lend money to its staff for the purchase of their own home.

"The Bank may lend money to an officer:

(a) for the purchase, erection, alteration, renovation or enlargement of a home in
which he or she resides or intends to reside;" the Reserve Bank Act states.

The spokesman said this applied to all bank officers and not just board members.

He also declined to say whether the bank offered its staff discount loans.

However banking industry sources said the Reserve was no different from other banks
in offering staff discount loans as part of its salary package.

AAP ss/mfh/rs/bwl t

KEYWORD: RESERVE

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