Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 2 May 1961

Mr BANDIDT (Wide Bay) .- We have been treated to a treatise on fringe banking and associated matters. I suggest that those matters were not associated with the bill except when the honorable member for Parkes (Mr. Haylen) mentioned two things in particular. The first thing was that he did not like life assurance companies, and he conveyed to the House that the Opposition would treat them rough. Next he told us that these companies, in effect, were sharks, and he said that the Commonwealth Government should start a life assurance company of its own. Surely the honorable member knows that some of the biggest life assurance companies in Australia are purely mutual and that all their benefits are shared by their beneficiaries. If the honorable member were also to make inquiries regarding one particular State insurance company he would find that the benefits given by that company are not as good as those paid by one of the big mutual life assurance companies which operates in that State. It is sufficient to say that the life assurance companies, in particular, have rendered a great service in Australia, and especially to the policy holders, to whom, of course, they owe primary allegiance.

One can dwell too long on what the honorable member for Parkes has said. I prefer to discuss statements made by the honorable member for Melbourne Ports (Mr. Crean) and the honorable member for Bradfield (Mr. Turner). Those two honorable members are at variance, and I think it would be worth while to examine in what way they are at variance. In the first place, the honorable member for Melbourne Ports had this to say -

This Government claims not to believe in controls. It claims to support something that it calls free enterprise. Its action now serves to highlight the fact that it is impossible always to hold such pure theories. Sometimes one must choose between the private interest and the public good.

On the other hand, the honorable member for Bradfield considered that this bill was the first step on the Government's part to perdition. What the honorable member for Melbourne Ports has overlooked is that there is a dividing line between complete freedom and anarchy; that it is essential to have order in a community rather than disorder. I suggest that we can believe in freedom of action by the individual and, at the same time, acknowledge that we must have laws which say, for instance, that we shall not drive on a certain side of the road. We should not give the individual freedom to drive, willy-nilly, on whichever side of the road he wishes to use; and so we have laws to regulate our freedom. Neither should we have freedom to do completely what we like. In fact, it is a well-established principle of our common law that we have freedom to do what we like, provided that we do not injure others; and so we have checks and balances on the freedom that every one looks to enjoy. Similarly, in the case of insurance, the Government has found it necessary to introduce checks and balances on the extent to which life assurance companies may invest in outside investments rather than help the Government along.

The honorable member for Bradfield raised one strange argument in support of his various contentions. He said that the bill is so complex that one may fail to understand it; and I take it that he implied by that that because the bill is complicated it is no good I direct the honorable member's attention to the fact that the income tax assessment legislation, as it already stands, is a very long and very complicated act.

Mr Thompson - And it is very difficult to understand.

Mr BANDIDT - lt may be difficult to understand, but it has been drawn and amended from time to time for a definite purpose, lt stands there as our law dealing with income tax, and the fact that it is very long and very complicated does not mean that the law is no good; it does not mean that we should get rid of income tax in our country. It means nothing of the sort. So the fact that this amending bill has necessarily to be complicated does not, in itself, make the measure either good or bad. In fact, the bill is a good one because it restores to the Government a fair measure of the money which the life assurance companies and superannuation funds were diverting to other channels.

I propose now to read what the honorable member for Bradfield said when he remarked that this measure was a step towards perdition. He said, as reported at page 1244 of " Hansard "-

What is repugnant to me about this measure is that citizens will be compelled to invest their savings, not in what brings in a good return or even a fair return, but at sub-economic and unfair rates in what the planners consider to be socially desirable projects. This is entirely repugnant to me.

What the honorable member has overlooked is that this bill does not introduce an element of compulsion. What it does, purely and simply, is to give these companies a choice; and I would like to remind the honorable member that the extensive privileges of relief from taxation and the extensive benefits which have been given to the life assurance companies in the past were not given as a right. They were given as a privilege to those companies, for a purpose, and that purpose was necessarily the desirability of having as many people as possible save money and save it in a form which proves very useful and desirable.

There are many advantages regarding life assurance, and I do not need to go into them in detail. It is surely unnecessary at this time for any one to have to argue for very long to prove that life assurance is a good thing. But I suggest, in brief, that life assurance directly encourages saving. It helps families at a critical time - for example, when a breadwinner dies. It creates a reserve fund, and even if a policyholder takes out a whole-of-life insurance policy he can still borrow against it in time of need. To a degree, life assurance saves the Government social service payments, because if a man insures himself for sufficient coverage, perhaps by means of an endowment policy, when he reaches retiring age he receives enough from that endowment and thus does not have to draw on social service funds for a pension, or, at least, not to a great extent.

Finally, life assurance creates an estate for a deceased person and so yields revenue to the Government. So from many points of view life assurance is very desirable. The Treasurer stated in his second-reading speech -

Over the last ten years, more than 60 per cent, of Commonwealth and State capital works expenditure has had to be financed ultimately from Commonwealth taxation revenue. For this financial year, the proportion looks like being nearly two-thirds.

Surely it is obvious that our country needs a great deal of capital. The Treasurer then went on to say -

The life companies increased their total assets by £562,000,000 between 1949 and 1959. They increased their holdings of public authority securities by £81,000,000 but only £4,000,000 of this increase was applied to Commonwealth securities during that period. lt is no reflection on the life assurance companies to say that they invested their money in that manner because they have a duty to do the best that they can for their beneficiaries. The only trouble is that from the Government's point of view they have not invested enough in Commonwealth securities and the Government, therefore, has found it necessary to introduce a measure which will encourage, not force, them to invest in this direction.

The honorable member for Melbourne Ports stated that it costs Commonwealth revenue £44,000,000 a year for an investment of £100,000,000 a year in life assurance. He stated also that it costs the companies £25,000,000 a year to administer their affairs, but the honorable member foi Swan (Mr. Cleaver) pointed out that those companies administered over £1 ,000,000,000 worth of insurance. If the honorable member for Melbourne Ports looks at any authoritative figures he will find that the great life assurance companies, in particular, pride themselves on the fact that their expense rate - the cost of running their offices each year - is very low. They handle a tremendous amount of business. But it must not be overlooked also that in addition to receiving £100,000,000 a year these companies also are creating an asset which, as I have stated previously, is of tremendous benefit to the people of this country. lt is sufficient for me to say in conclusion that in view of the fact that life assurance companies and the policy holders of those companies receive a tremendous benefit by way of taxation concessions, the time has come when the national interest must be considered and when something that was previously a privilege must be reviewed. That is exactly what the Government has done.

The honorable member for Bradfield has overlooked the fact that the life assurance companies are entirely free to invest their money in any way they wish, even to the extent of investing in the fringe organizations to which the honorable member for Parkes referred. They are entitled to invest their money in what they consider to be the best interests of their policy holders. If, under this legislation, the result is that it is better for the companies to invest 30 per cent, of their funds in public securities, then we may be sure that the companies, being quite capable of handling their own affairs, will invest in that direction. In fact, if they find it best to invest more than the 30 per cent, in government securities, they will do so.

I see nothing compulsive in the bill, nor do I see anything repugnant to Liberal or Country Party principles. I cannot agree with the honorable member for Melbourne Ports who stated that it has become necessary to force life assurance companies to invest in any direction. This bill does not force them to do so. In fact, it encourages them to do so in an admirable manner

Suggest corrections