no - one disputes it. table 1 shows that the real growth rate for the world economy was more than twice as high in the 1950 - 1973 period than in the previous 80 years. in australia there was also a major improvement, although less than a doubling. inflation, which had been negligible on average until the second world war, rose to about 4 per cent in the 1950 - 1973 period, with the average being pushed up by the korean war period and the early 1970s. at other times it was a good deal lower, and even with these periods included, it was moderate enough to permit economic expansion for most of the period. unemployment remained low throughout the period, although there was some cyclical movement at times. overall, macro - economic performance was considerably better in this period than in any time before or since, which has prompted economic historians such as maddison ( 1991 ) to refer to this period as the “ golden age ”. table 1 : indicators of world ( a ) and australian ( b ) macro - economic performance ( average annual increase ) 1870 - 1950 1950 - 1973 1973 - 1980 gdp cpi 2. 3 ( 2. 9 ) 4. 9 ( 4. 7 ) 2. 6 ( 3. 1 ) 0. 1 ( c ) ( 1. 3 ) 4. 1 ( 4. 6 ) 7. 3 ( 9. 7 ) ( a ) sixteen largest oecd countries ; ( b ) australian figures in brackets ; ( c ) peacetime years. source : maddison ( 1991 ). there were a number of factors behind this impressive economic performance, but time and space limit me to mentioning only the main ones. the four most important, i believe, are as follows : ( i ) there was a big gap to be made up following the depression and the second world war. the 1950s and 1960s was a period of post - war reconstruction or “ catch - up ” for most countries. the largest growth pick - up occurred in the countries most devastated by the war, such as germany, italy, japan and austria, and the least pronounced ( although still significant ) were in the united states, canada, switzerland, sweden and australia. ( ii ) although populations and governments were eager for economic growth, there was widespread restraint in economic behaviour. the privations endured during the depression and the war meant that as incomes rose, a high proportion was saved. inflationary expectations too had been conditioned by decades of nearly zero inflation, which showed up in

##s in mortgage offset accounts and redraw facilities amount to 16 per cent of outstanding housing debt. this is equivalent to around 2½ years of required mortgage payments at current interest rates. it is important to recognise though that this figure masks a lot of variation across households. we estimate that around a quarter of households with a mortgage have either no buffer or a very small one. loan arrears remain low, although they have risen over recent years. also, we estimate that for almost 4 per cent of borrowers their current loan balance exceeds the value of their property. over half of these borrowers are in western australia where there has been a large and persistent decline in housing prices. so this is an area that bears watching. on a completely different matter, i would like to draw your attention to the fact that we will be releasing the new $ 20 note next week, on 9 october. this note is printed here in melbourne, at our printing works in craigieburn. i have brought along a few notes tonight hot off the presses for you to have a look at. i sometimes get asked why the reserve bank is replacing the existing series of banknotes, especially when more of us are moving to electronic payments. people also wonder with contactless payments now so ubiquitous, do we still need banknotes? given these questions, it might surprise you then to know that the demand for banknotes in australia is still strong. the stock of banknotes on issue, relative to the size of the economy, is close to the highest it has been in 50 years. it is possible that low interest rates are part of the story here. all up, there are 14 $ 100 notes on issue for every australian, 30 $ 50s, and 7 $ 20s. that makes for around $ 3000 worth of banknotes on issue for every australian. i, for one, don ’ t have anywhere near that amount. at the rba, we have recently undertaken some work to understand the whereabouts of all these banknotes. it is hard to know exactly, but we estimate that around a quarter are used to make legitimate day - to - day transactions within australia. 1 it also appears that between half and threequarters are held as a store of value in safes, under beds and at the back of cupboards, both here in australia and elsewhere around the world. we estimate that a further 4 to 8 per cent are used in the shadow economy, either to hide transactions from the tax office or