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Wednesday, 15 May 1985
Page: 1969

Senator RYAN (Minister for Education)(11.52) —in reply-I thank honourable senators for their contribution to the debate. I remind the Senate that the basic thrust of this legislation is to expand the operation of the Housing Loans Insurance Corporation. The Corporation will become more flexible and more responsible to its clients needs. The legislation will ensure that the Corporation keeps in line with developments in the nation's financial markets and it will give the Corporation a stronger role in the Government's overall housing policies.

I point out to the Senate that the industry response to the Government's legislative proposal has been particularly pleasing. For example, the Executive Director of the Australian Association of Permanent Building Societies, Mr Jim Larkey, said that the industry was delighted at the expanded role for the Housing Loans Insurance Corporation and that the involvement of HLIC in the secondary mortgage market would contribute significantly to its acceptance and growth. The Mortgage Bankers Association of Australia also supports the legislation, saying that it is particularly timely in view of the first issue of Aussie Macs certificates by the National Mortgage Market Corporation Ltd. The HLIC has a good record of success. We believe that this will be a continuing record. I point out that 1983-84 was an exceptionally good year for the HLIC with 68,000 housing loans being insured and a net profit of $5.4m being recorded, which was a 16 per cent increase on 1982-83. Also, 1983-84 is likely to be even better. Payments by HLIC in respect of 1983-84 trading were: Income tax, $4.9m; dividend $2.5m; and special payment $0.4m.

The Opposition parties have indicated that, if elected to government, they would consider the sale of HLIC. This is contrary to the views of industry and against the interests of the home buyer. The interest of all is best served by a vital and competitive mortgage insurance industry, which includes HLIC in open competition with private insurers. I place on record, too, the fact that the staff and board of HLIC deserve recognition of their success. Mr Frank Blundell, who retired recently as Deputy Chairman of HLIC, warrants special mention. He contributed to the success of HLIC over 20 years and is respected throughout the industry.

A number of points were made by the Opposition in the course of the debate and I will respond briefly to the more significant of them. Senator Archer asked whether the HLIC is required to take out re-insurance cover on its commercial building loans as opposed to housing loans. I confirm the position announced in 1983, that HLIC will be expected to seek re-insurance cover in private for part of its business. Senator Archer also commented on the special interest clause. He said that he could not support a clause which enables a Minister to direct a trading organisation to pursue activities that it would not normally engage in, even with the proviso about tabling such directions in the House. I point out that to provide for the HLIC to offer insurance at the direction of the Minister for a limited number of projects that would contribute to the overall housing objective, but might otherwise fall outside normal criteria, is very well within the purpose of a body of this kind. The current situation is that HLIC must apply normal commercial judgments in its operations. It must deny mortgage insurance to persons and organisations whose proposals do not meet strict commercial standards. There is a precedent for this clause. The Export Finance and Insurance Corporation Act has a similar power of ministerial direction for contracts considered to be in the national interest. I remind the Senate that that provision was first introduced in 1961 by Sir John McEwen. Both provisions give the power of direction to the Minister in respect of contracts which the Corporation would not enter into in the ordinary course of business. This legislation requires consultation with the HLIC on the special interest provision.

The point was made in the debate that the role of government is to govern and not to run business or to make a profit. In response to that, I point out that this Government has a commitment to great national institutions such as Qantas Airways Ltd, Trans Australia Airlines, the Commonwealth Bank and the HLIC. The whole concept of a successful public enterprise clashes with conservative ideology but it certainly very much in line with the policies and philosophies of our Government. It seems to me that the Opposition really cannot make up its mind about public enterprise: If it is successful, the Opposition wants it to be sold; if it is unsuccessful it still wants it to be sold.

Senator Lewis —You are selling Belconnen. Poor old Belconnen.

Senator RYAN —We are certainly not going to sell HLIC. I can give my views about the Belconnen Mall sale on another occasion. I think it would be a little irrelevant to introduce such a matter at this stage. However, the HLIC has been a success for its customers and for the Government. In 1983-84 it produced $7.8m of revenue for the Government. As I said, we expect a better year in 1984-85. I think the Corporation's successful performance is a justification for the expansion which this Bill provides.

The Opposition seems to think that the Government's amendments will result in private enterprise being pushed out of the field. This will not be the case. I should remind Opposition senators that HLIC pays all normal commercial charges, taxes and dividends. This Bill includes a provision to introduce a new special payment which will put HLIC on an equal footing with the private mortgage insurers. This new payment relates to re-insurance costs and removes any possible claim that HLIC is in a position to push the private insurers out of the field. This Bill will not affect the capacity of private insurers to compete. In fact, quite the contrary is true.

The Australian Democrats made a contribution to this debate. The Democrats have dissociated themselves from the Liberal Party's in-principle opposition to HLIC continuing in business and the Liberal Party's in-principle opposition to the Government's amendments. I believe that the Democrats' comments indicate that they can see that the HLIC is on the same footing as other operators in the industry. The Democrats are aware that important parts of the mortgage and finance industry strongly support the present amendments. They know that many people now in homes would not have been in homes if the HLIC had not been in operation.

I thank Senator Haines, who unfortunately is not in the chamber at this stage, for her contribution to the debate and endorse her comments. Her comments, which were a realistic assessment of the value of the HLIC, contrast with the confused response of the Liberals. I shall make some further comments on behalf of the Government in response to the Opposition's proposed amendment, but it will be more appropriate to make them in the Committee stage. I ask the House to support the Bill.

Question put:

That the Bill be now read a second time.