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Thursday, 1 December 1960


Mr CALWELL (Melbourne) (Leader of the Opposition) . - The Opposition offers no objection to the passage of this bill, which is a simple measure which, I understand, is but the forerunner of a larger measure that the Government has in view to deal with insurance. I may be wrong in that regard. I am not now referring, of course, to the proposal to oblige leading insurance companies to invest a certain percentage of their assets in government loans. My sympathies are all with the Government in that regard. In this particular instance the Government, for good reasons, has decided that the amount which insurance companies, other than life assurance companies, shall be required to deposit with the Treasury will be increased from £5,000 to £10,000.

I remember very well the circumstances in which the first bill of this nature was passed by the Commonwealth Parliament in 1932. It obliged the insurance companies, both life and non-life, to deposit sums with the Commonwealth Treasury in order to protect policy-holders. One does not need to go back over that period of history. I suppose that, had it not been for the action of the Lang Government in New South Wales in attempting to seize the deposits of the insurance companies that were lodged with the New South Wales Treasury at that time of financial stringency, Australia might have waited a very considerable time for a Commonwealth insurance act. It might have waited for a long time for the Commonwealth to use its insurance powers. For 32 years, the Parliament did function without any attempt being made to invoke the concurrent power which this Parliament had to pass laws in respect of insurance. At a subsequent period - in 1945 to be precise - a special Life Insurance Act was passed, and that act is still in operation and functioning well.

The legislation now before us deals with a number of forms of insurance that are not connected with life insurance. It does not deal with accident insurance business undertaken solely in connexion with life insurance business. It does not deal with superannuation and insurance schemes operated by friendly societies pr trade unions for their members or dependants. It does not apply to superannuation and pension schemes which confer benefits on employees or their dependants on retirement, disability or death, when such arrangements are provided by an employer or his employees or by both jointly, wholly through an organization established solely for that purpose. It does not deal with funeral and burial benefits schemes. The Government argues that, until 1958, it was accepted that such schemes did not constitute insurance business. Doubts apparently arose on the matter and the exclusion of these benefit funds from this particular legislation, as under the Life Insurance Act 1945-1959, in the Government's view makes the position clear. The clarity is in the fact that these schemes are not insurance schemes. The Government leaves it to the States to regulate the activities of funeral and burial benefit schemes. In my view, most of them are rackets and should be regulated by somebody. It would be a good thing if the Government introduced legislation dealing with them and left it to the High Court of Australia to decide whether they were schemes that came properly under the insurance power. The legislation excludes, too, insurance schemes operated by trusts and companies established solely for the purpose of insuring the property of religious organizations. Many of these provisions are not new because they were included in the 1932 act and the amending act of 1937. They are desirable provisions, and the Opposition offers no objection to them.

As I have said, the bill provides that those who commence the business of insurance in Australia shall be required to lodge a minimum deposit of £10,000 in place of the former minimum deposit of £5,000; but the amount rises, of course, after the commencement of business. If the company flourishes, it has to increase its deposit, and that, too, is right and proper, because the deposit should always be adequate to protect the equity of policy-holders. The Government says that the deposit is to be reviewed annually; and provision is made so that it can be varied up or down to represent not less than 20 per cent, of the premium income up to a maximum deposit which is now being increased from £40,000 to £80,000. We offer no objection to that. We offer no objection either to the fact that foreign companies have to lodge a deposit which will be at a fixed sum of £100,000.

I just want to make one or two other observations before I conclude, and they are these: There seem to me to be too many insurance companies operating in the insurance world outside the great life companies. Nobody can criticize the five or six great mutual life insurance organizations the benefits of which go to the policyholders. In some few cases there are life companies that take a certain percentage of the profit before they distribute their benefits to policy-holders. The companies affected by this legislation are mostly proprietary companies. The profits go to the shareholders of the companies that control them, and in many cases, the shareholders live outside Australia altogether. Now that we are becoming nationalist enough in sentiment to require that foreign interests owning shares in television companies shall be limited to a very small percentage holding, we should look at the question of how far we should permit foreign companies to participate in the insurance business, because there are not so many risks involved and the money made is made very easily. It is taken out of the country for the benefit of people who have never seen Australia and who have no interest in it other than to make profit out of it. In addition, now that this Government has established a precedent with the passage of a resolution limiting the amount of shareholding which English newspapers can have in radio stations in Australia, the time will arrive when some government will ask the Parliament to adopt the same principle in regard to banks, insurance companies and many other institutions and organizations.

I am only speaking for myself in this regard; but there are far too many companies operating with a great deal of wasteful competition. A lot of unnecessary money is spent in overhead, and all that is paid for by premiums which are far too high. I think most of the fire business in Australia is too costly. Fire, marine, accident, and quite a lot of other forms of insurance are being charged at too high a rate and the Australian public is being forced to pay more than it should for the benefits it is offered. The Government could well consider an examination of the whole problem of insurance just as a previous non-Labour Government inquired into the business of banking; but when the report is presented, unlike the Government which had the previous report on banking, it should put into effect the results of the examination in the field of insurance. In some respects, of course, the matter of insurance is carefully safeguarded. Foreign investments in insurance are carefully watched and as far as possible, the whole business is made a matter of a local investment and the profits are used locally.

I would make these other remarks with reference to the 1945 act: We passed that legislation in the hope that it would benefit the Australian people generally, and it did. We included a provision that, if necessary, the Commonwealth Government should establish a life insurance office. This Government repealed that particular provision. I think it was the wrong thing to do. 1 think that provision should be re-inserted at some future time; but this is not the legislation to deal with that particular matter. However, the Government might have to consider later what it will do if some other legislation which it proposes to introduce is not obeyed in the way it wishes it to be obeyed. I commend the bill to the House. I hope that this is not one of the measures upon which the Government is likely to strike trouble with its recalcitrant followers in another place.







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