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Thursday, 10 November 1938

Mr ANTHONY (Richmond) . - This apparently innocuous amendment has been introduced very late in the discussion of this bill. In fact, nothing whatever was heard of it until a couple of days ago. There is, however, a good deal more in it than meets the eye, and I shall bring under the notice of honorable members certain considerations which hitherto seem to have escaped their notice. Had certain facts been mentioned earlier, some honorable gentlemen who have spoken in favour of the amendment would not have done so. I make it quite clear that 1 do not quarrel with the protectionist policy of some honorable members of the committee who have participated in this discussion. Although I am a member of the Country party, which is usually regarded as being favorable to a low tariff policy, I have fairly broad views on the fiscal question, and have stated them from time to time. I believe that Australian industries must be protected. If this country is to be developed, secondary industries must be established on a reasonable basis, and must be accorded a reasonable degree of protection. But what is the position in regard to the Australian insurance companies? Already they enjoy almost a totality of the business of the fruit-growers. They enjoy 100 per cent, of the workmen's compensation business of the apple and pear growers, practically 100 per cent, of their household and furniture insurance business, and also of other business in relation to the carriage of their fruit from the time it leaves the orchard until it reaches the ship's hold. What happens when these companies are given a monopoly of business? To a great deal of the legislative programme of the Lang Government, I was totally opposed; but I give Mr. Lang credit for having established the State Insurance Office of New South Wales. That office was opened principally to assist with the operations of the Workers' Compensation Act introduced by the Lang Government. The conditions of that measure were considered to be so stringent that the insurance companies felt that they could not offer rates which would be generally regarded as reasonably fair. The Lang Government thereupon opened the State Insurance Office, and during the seven years in which it transacted business it reduced the insurance rates by 50 per cent, and, although beginning operations with no capital, accumulated a fund of £624,000. The annual report of the Auditor-General of New South Wales for 1933 stated explicity that, athough the Workers' Compensation Department commenced operations without any initial capital, it accumulated in seven years, after having provided for income tax, a surplus of £624,000. That is equivalent to a profit of nearly £100,000 a year. When the next government came into office it abolished the State Insurance Office on the ground that it did not believe in government, competition with private enterprise. The result was that in a very little while the premiums payable in respect of workmen's compensation increased as follows: -

I could give other examples, but I have said sufficient to show what happens when the local insurance companies are given a virtual monopoly of business. I remind honorable gentlemen that no liberalization of the provisions of the Workers' Compensation Act was made to justify such increase of premiums. The Australian insurance companies felt it necessary to increase the rates by more than 100 per cent. in some cases, and by nearly 100 per cent. in many others. The honorable member for Ballarat (Mr. Pollard) suggested that no great disparity was likely in the charges of the insurance companies with offices in Australia and those with offices abroad. Perhaps in the light of what I have said, he may alter his opinion.

All that I ask is that there shall be an open field of competition as was the case when the Government Insurance Office existed in New South Wales. What happens when there is competition was shown recently when the butter industry decided to give its export insurance business to Lloyd's of London. There was an immediate protest which resulted in the Dairy Produce Board deciding to invite tenders. When the renders were received, it was found that whereas Australian companies offered cover at 5s. per cent., Lloyd's rate was 4s.1d. per cent. It cannot be said that that difference of 20 per cent. is accounted for by higher administrative costs in Australia.

Mr Scullin - The Australianin- surance companies have to pay arbitration award rates to their employees.

Mr Holt - What was the net amount saved?

Mr ANTHONY - It represents about £5,000 per annum. It must be remembered that the object of this bill is to relieve the growers of apples and pears from some of their present troubles, as well as the further distress which is likely to follow unless legislative action be taken. Some time ago the Ogilvie Government in Tasmania called fora report on the fruit-growing industry. Mr. Limbrick, B.A., who presented his report to the Parliament of Tasmania in 1936, said -

It would be interesting indeed to know why one firm of shipping agents can get insurance for1d. (Australian currency) per case and another for1d. (sterling) per case while other insurances run to 1.78d. (sterling), equal to 2.2d. (Australian), or more than double the first-mentioned above ...

In the light of the above discussion, and at the cost of some repetition, the. following recommendations are put forward for consideration : -

(   1 ) The State Fruit Board should make an effort to secure a reduction in insur ance charges. I am definitely of the opinion that the business could be underwritten at between¾d. and1d. per case, a potential saving of about £5,000 per annum.

I remind the committee that whether the insurance be placed with English or Australian companies, the premiums will be paid by the growers of the fruit. All charges must come out of the prices received for their apples.

Mr Pollard - That is also where the profits of the insurance companies come from.

Mr ANTHONY - I should not oppose the amendment so strongly ifI believed that by confining the business to Australian companies considerably more employment would be provided in Australia. The giving of a monopoly of the insurance business to Australian companies would provide employment for possibly a few additional typists, but the chief result would be an increase of the emoluments of the directors of the insurance companies in Australia.

Mr Pollard - What about supporting my suggestion that the board should undertake its own insurance?

Mr ANTHONY - Before agreeing to that suggestion, I should like to investiga te it further ; it may not be practicable at this stage. If a saving of 20 per cent. could he made it would represent about £."i,000 per annum.

Mr Pollard - How did the Dairy Produce Board make a saving?

Mr ANTHONY - By calling for tenders, it obtained cover from British companies at rates 20 per cent. lower than those offered by Australian companies.

Mr Pollard - The honorable member has not allowed for the fact that there is a home-consumption price for butter.

Mr Scullin - The terms of the amendment are not mandatory.

Mr ANTHONY - That may beso; but the amendment would take the management of the business out of the hands of the board, and vest it in the Minister. That is not desirable.

Mr Forde - The purely English insurance companies do not pay Australian faxes, orcomply with Australian awards.

Mr ANTHONY - They probably pay wages as high as those paid by Australian companies. I am not arguing against Australian rates of pay. All I ask is that there shall be a check on the Australian companies. I believe that, in the main, the business will be placed with the Australian insurance companies. They ought to be able to get most of it because they have influential directors in every State and canvassers on the spot. As the Treasurer explained in his speech on the Income Tax Assessment Bill, a great deal of this money will, in any case, go to England in the form of re-insurance with companies there. In view of the precarious state of the industry, and the fact that a saving of even a id. a case means a great deal to the growers of fruit, I must oppose the amendment.

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