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Thursday, 20 April 1961

Mr HAROLD HOLT - It is a fact that the Government will be introducing legislation designed to encourage the life offices to invest in government securities to the extent mentioned by the honorable gentleman. We have given a good deal of thought to the implications of the proportion of this investment compared to other types of investment normally engaged in by the life offices concerned. I would think that there is little likelihood of any disturbance of the normal investment pattern of life offices for these two important reasons: First, the figure of 30 per cent, referred to by the honorable gentleman is significantly below the average of investment in government securities maintained by the life offices at the present time. Secondly, it is a traditional part of life office business to lend to a home-builder or purchaser and associate that lending with some policy investment by the borrower, not only in order to secure the immediate business from the borrower, but in order to commence an association with him and his family which will be likely to produce other insurance investment as the years go on. I believe that any insurance office which appreciably reduced its lending for home-building or home-purchase would find itself at a serious competitive disadvantage with those life offices which were prepared to make funds available for this purpose.

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