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Tuesday, 18 April 1961


Mr POLLARD (Lalor) .- I never hear the word " insurance " without becoming fairly deeply interested in the whole matter of insurance generally. One may roam the streets of the capital cities of this country - or, for that matter, of many other countries - and behold palatial office blocks owned and occupied by private insurance companies. One immediately is given to wonder where these companies acquire the immense revenues to enable them to build these palaces that they own and occupy. I do not, of course, object to their staffs, their white-collar workers, working under the good conditions that obtain, or should obtain, in such buildings. However, it is most disconcerting to find, as we found the other day by means of newspaper items, that the firms that occupy these premises are able, under the law, to lend the funds that they accumulate from the insuring public to various other persons in the community, on some occasions without proper precautions or without exercising sufficient wisdom. It is a cause of deep concern to find that shares in a particular insurance company have become practically valueless, and that certain interested parties have made an offer for them on the basis of only1d. a share.

When I read of such occurrences I am forced to the conclusion that it is a tragedy that the parliaments of this country have not, long before this, ensured that all fire, building and other such types of insurance are no longer the responsibility of private concerns, but that they shall be controlled and conducted entirely by the nation in the interests of the nation.


Mr Osborne - Do you want to nationalize all insurance?


Mr POLLARD - I would have nationalized them long ago, and you can tell that to whom you like. Let us look at the facts of the situation. I was a soldier settler for a considerable number of years, with a fairly extensive mortgage around my neck. Until that mortgage was discharged I was compelled to insure the fencing, the farm buildings and the homestead, not with any private insurance company, but with the Soldier Settlement Commission of Victoria. I observed the covenant and I paid my premiums every year as I was required to do. The Soldier Settlement Commission, one of the Victorian Government instrumentalities, was wise enough to run its own insurance pool. But, to and behold, when I paid off my mortgage and expressed a desire to continue to insure with the State of Victoria, I was told, " Oh. no, we cannot accept you any longer as an insurer. Go out and insure with some private company ". The result was that I had to pay, and still pay, a higher premium to an outside, private, profiteering insurance company, than I was required to pay to the State instrumentality.

To carry the story further and give other examples of what can and should be done, I can tell honorable members that every purchaser of a housing commission home, or of a war service home, pays his insurance premiums to a semi-government instrumentality, and enjoys the benefits of lower premium payments than he would be required to pay if he insured with any private enterprise insurance company in any part of Australia. Surely these examples prove that insurance should be the responsibility and the monopoly of the State and' Commonwealth Governments of Australia. The Commonwealth carries its own insurance pool. It does not go around looking for a private insurance company with which to insure the great administrative buildings of Canberra. On, no! It carries its own insurance pool. It does not feel disposed to pay premiums to some outside instrumentality to protect it against the risks of fire or some other disaster.

The measure now before the House is termed " a bill to amend the Export Payments Insurance Corporation Act 1956- 1959 ". This bill, in effect, deals with a measure introduced into Parliament in 1956 by the present Government in order to provide insurance cover to people who exported goods from this country. The reason why this Parliament was moved to pass this legislation was that it deals with a type of insurance that is not generally profitable to private enterprise insurance companies. Furthermore, it was a type of insurance that in itself, it was hoped - I believe it has had some measure of success - would stimulate the export of goods to other countries of the world where security in regard to payment might not be as stable as was desirable.

We have had four years of the operation of this act and we find that in the main its business - or the greater part of it - has been transacted with countries within the Asian sphere to the extent of 48.6 per cent. The proportions of its business within other spheres were: Western Europe 19 per cent., Eastern Europe 13.6 per cent., Oceania 5.8 per cent., North America 4.9 per cent., Africa 3.9 per cent., Central America 3.6 per cent., and South America .6 per cent. All the activities of this export insurance corporation have been carried on on a basis of no profit and no loss. Is that not ideal insurance? Why cannot the general public have a no-profit-no-loss type of insurance similar to that which I mentioned as being operated by the soldier settlement commissions, the war service homes authorities and the housing commissions of the various States?

To-day we find that after this House has agreed to several amendments of the legislation since 1956, this corporation has given cover to business worth approximately fi 2,000,000. That is to say that it carries a liability of £12,000,000. This year the premiums on risks insured by the corporation amount to £46,789, and the income from investments is £53,000, giving a total revenue of approximately £100,000.

Expenditure on salaries, rentals, superannuation, pay-roll tax, long service leave, depreciation and other items amounted to £61,000, giving an excess of income over expenditure of £38,000. Yet the cover given by this instrumentality at the moment amounts to £12,000,000. What do you consider a private enterprise insurance company would want as an excess of revenue over expenditure for one year in respect of cover for £12,000,000? If this is indicative of what can be done by a Commonwealth Government instrumentality, it further highlights my statement that all insurance should be nationalized in the interests of the people and handled on a noprofitnoloss basis just as this instrumentality operates.

The purpose of the measure before the House is interesting. The Government seeks to utilize the services of this corporation to provide cover for risks which it considers to be taken in the national interest - risks which may aid Australia in its endeavour to promote further exports from this country. But quite clearly such risks - and the Minister was quite frank about it - could be of such magnitude that the corporation could not be called upon to carry them on a no-profit-no-loss basis. So what do we find? Briefly, it is proposed that on a recommendation from the corporation to the Government a certain export product can be given a risk cover of £X and then the corporation may, on the instruction of the Minister, transact this particular type of business. I do not know what the Minister has in mind. He may have wheat in mind. Is that running in the mind of the Government?


Mr McEwen - No particular commodity.


Mr POLLARD - But could wheat be covered?


Mr McEwen - It could be.


Mr POLLARD - That is so. We then have this situation: We may have a particular product - wheat, for instance - and we may find that in certain circumstances, such as obtain to-day in mainland China, a particular country which seems to be a remarkably good customer has run out of cash resources and for the time being requires to buy wheat or other products on terms, but the instrumentality responsible to the owner of the wheat - in this instance the Australian Wheat Board - may feel that it cannot carry the responsibility of paying the growers for their wheat if it sells it to that country which may not be able to meet its financial responsibilities. In such a case it is clearly indicated - and I do not disagree with the proposal - that it will be within the function of the Australian Wheat Board, immediately this measure is passed and assented to, to approach the Export Payments Insurance Corporation, and say to it, " Here is a type of risk which you are now authorized by law to undertake "; and it will then be for the Minister to say to the corporation, " In the national interest I instruct the corporation to undertake this insurance on the sale of this wheat to mainland China". On that instruction the corporation has no alternative but to provide the insurance cover. What the insurance premium payable by the Australian Wheat Board or by any private instrumentality is likely to be, I do not know; but this bill provides that if any loss results from the failure of the buying country to meet its obligations the Government will meet the loss. Am I wrong?


Mr McEwen - No.


Mr POLLARD - That is the purpose of it. I suggest that there is nothing wrong with that in the international interest. I would go a step further. Although it is admitted by the Minister for Trade that if the Australian Wheat Board is given a guarantee of that kind the Government finally carries the risk, what is wrong with that? According to the Wheat Board, mainland China is suffering a drought which is probably without precedent in its history. In a case like that, not only should the Government carry the risk of providing wheat on terms, but it would not be a bad idea if the Government made a substantial donation of wheat, free of charge, and saddled the Australian Consolidated Revenue with the payment. Similarly, any other famine-stricken Asian country such as India, where people are starving and dying in the streets, should be assisted by a substantial donation of free Australian produce. Not only would that be humanitarian but it would be the type of action most calculated to endear Australia to all these people. Subsequently, when they reached financial stability again, they might bring profitable business to this country.

I have said practically all that is to be said. The purpose of the bill is clear. It is clear that there is a risk. It is clear that a financial responsibility is to be placed on the shoulders of the taxpayers of this country but I think that the powers sought should be vested in the Government. I think it is clear that the Government, in effect, is using this instrumentality as a cover-up instrumentality, although the Minister has frankly admitted that the exports of wheat to mainland China could be a type of business which would come within the ambit of this corporation.

It would be unworthy of me to suggest that, in the event of export payments insurance being extended in respect of mainland China, as I hope it will, the Government, at election time, would have to produce an alibi. If some people were small-minded enough to accuse the Government of being pro-Communist because it had sold wheat on doubtful financial terms to China the Government could say, " We have an exports insurance corporation with a very fine consultative council of Australian citizens whose integrity is beyond dispute and they have undertaken to carry out the business at our request ". Members of the Government could shrug their shoulders and say, " We are not Corns, although we have taken this risk". The Australian public should know these things. I would be the last to brand the Government as doing wrong because it indulged in business such as this.

There are certain provisions of the bill which I think will be better dealt with in committee. I am glad to see a measure of this kind introduced. I am sure that it will be of use to a future Labour government. In its very essence, it reflects a humane instinct. It helps people collectively by having this country accept a financial responsibility.

The bill seeks, in effect, to give power to nationalize the risks of the Australian Wheat Board. If it so happened that the Broken Hill Proprietary Company Limited wanted to continue its exports of steel, corrugated iron, zinc and other products to mainland China, the bill gives authority to nationalize the insurance interests of that company. The Minister for Repatriation (Mr. Osborne) who was at the table asked me to affirm my belief in nationalization of insurance, and for that I have no regret. But he, by his endorsement of this measure, equally with me, has nationalized the risk that may be taken by a semi-governmental instrumentality, by growers, marketing organizations such as the Wheat Board and by great corporations such as the Broken Hill Proprietary Company Limited. Having said those few words, I give the bill my blessing.







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