asked the Minister for Finance if he can state whether the question of obtaining cheaper monetary accommodation than at presents exists for general State purposes, through the agency of the Post Office Savings Bank from deposits, has been considered by his Department, and whether with a view to attracting increased deposits legislation will be introduced in this Session raising the authorised rate of interest to 4 per cent. per annum.
CEISTEANNA—QUESTIONS. ORAL ANSWERS. - MONETARY ACCOMMODATION.
It is not considered that the raising of the rate of interest on deposits in the Post Office Savings Bank to 4 per cent. per annum would have the effect of providing cheaper monetary accommodation than at present exists for general State purposes. The Minister for Finance is under a statutory obligation to invest Savings Bank moneys entrusted to him and, naturally, feels it incumbent on him to pay as high a rate of interest on such part of the moneys as is invested in Ways and Means Advances to the Exchequer as could be obtained by investment of such moneys in the highest class of Government securities. If the rate of interest on deposits were increased to 4 per cent. it would be necessary in the future, if not at present, to increase the rate of interest on Ways and Means Advances in order to secure that the Post Office Savings Bank Fund should be maintained in a thoroughly solvent condition. It must not be overlooked that the expenses of management of the Post Office Savings Bank Fund are very considerable. According to a return prepared in 1902 the cost of each transaction in the Savings Bank was about sixpence on the average, and it is extremely probable that the cost has increased since then.
Another effect of increasing the rate of interest on deposits to 4 per cent. would be to leave no money available in the Post Office Savings Bank Fund to be set aside against depreciation in the value of the securities in the Fund, and to deprive the Exchequer of any surplus interest.
Moreover, if 4 per cent. were paid on deposits it would lead to considerable interference with normal Post Office work, as it is certain that a large number of people, attracted by the higher rate of interest, would transfer their deposits from the Joint Stock Banks to the Post Office, and banking business would consequently take up a considerable portion of the time of Post Office officials.
Arising out of the Minister's reply, is he aware that prior to the Great War the rate of interest allowed on deposits in the Post Office was equal to and on a parity with the interest allowed on government stocks?
I have no information before me at the moment.
Mr. HOGAN
Is the Minister aware that consols have been issued at 2½ per cent. interest?
I do not think that has anything to do with this question.