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Tuesday, 2 May 1961

Mr THOMPSON (Port Adelaide) , - A rather remarkable situation has developed in the Parliament, Mr. Speaker, in connexion with the measure now before us. The Minister introduced the bill and gave a lengthy explanation of it, and what do we find? Quite contrary to the usual procedure, according to which honorable members on this side of the House criticize measures introduced by the Government, the only opposition to the bill has been voiced by Government supporters. This leads me to remark on the fact that we frequently find this Government finally accepting policies that have been espoused and advocated by the Labour Party for years. Time after time, the Government produces legislation along the lines of policies put forward by the Opposition.

Mr Hamilton - When did you put this forward?

Mr THOMPSON - I remind the honorable member for Canning that the Labour Government, which was in office until 1949, enacted legislation limiting interest rates on loans and limiting the amount of money that insurance companies could invest in new companies or new shares. As a result of the Labour Party's legislation the proportion of the assets of insurance companies invested in government or semi-government securities was 68 per cent. That was a most satisfactory position, and it was brought about by the overall legislative policy of the Labour Government. What is the position now? The Treasurer (Mr. Harold Holt) told us in his second-reading speech that although actual figures were not available the proportion of the investment of these organizations in government securities would be only about 33 per cent. This shows how the position can deteriorate under a government that is all for private enterprise, a government that says that you can do as you like with your money, and make as much as you can out of it, without worrying about who will pay the piper.

This Government does not care how high interest rates go. We have complained time and time again about hire-purchase companies offering interest rates of 9 and 10 per cent., and that people are investing their money in those companies instead of in government securities at 54 per cent., but all that this Government says is, " We cannot do anything; it is the job of the States to control hire purchase ". I suggest that this is not entirely the position, and that this Government could take action to limit interest rates and to prevent an undue volume of capital being invested in undesirable directions.

I have been rather interested, since this measure has been before the Parliament, to see how outside bodies have tried to influence the general public, claiming that the bill is inequitable, and that it represents an attempt to deprive superannuation funds and life assurance companies of the right to invest their money as they desire. It has been suggested that this legislation will rob such organizations of large profits that they could make on investments. It makes me smile a little to hear the Treasurer saying to these bodies, " Invest 30 per cent, of your money and we will give you 51 per cent, interest on it as a long-term rate ". The rate of 51 per cent, is offered almost apologetically. Is it not a reasonable rate of interest? I say it is more than reasonable. I would reduce the rate if I had my way. Yet it is suggested that we are trying to prevent these organizations from earning as much as they can on their capital.

How much do we want them to earn? Should we say that instead of 51 per cent, they ought to be able to get 8 per cent.? Is that what is wanted? If there are persons who want that, why do they not say so straight out? I have had letters of complaint about this legislation from various individuals, and practically every one of those letters has come from some person working in one of the private banks. The persons writing the letters give their addresses and the names of the banks for which they are working. I would suggest that these people have been influenced in large measure by the propaganda that has been disseminated, suggesting that the legislation is inequitable.

Some few years ago, legislation was introduced in this Parliament to increase to £300 a year the maximum amount of life assurance premiums or superannuation fund payments deductible for income tax purposes. I was sharing an office in Adelaide with the honorable member for Hindmarsh (Mr. Clyde Cameron), whom I do not see in the House at the moment. A man called to see us and said: " You can now invest £300 a year in an annuity or a superannuation fund and claim that amount as deduction from your income for purposes of taxation. It will pay you to do so." Let me give the House a few relevant figures in this connexion. In the case of a man whose income was between £2,000 and £2,400, the rate of tax would be 7s. Id. in the £1, so that he would save 7s. Id. on each £1 of the £300 that he paid to a superannuation fund or a life assurance company. A nominal payment of £1 represented, therefore, an actual payment of only 12s. lid., and the Government was losing 7s. Id. on every £1 paid. If a man took out more life assurance and contracted to pay an extra £200 a year in premiums, the loss to the Government would have been quite considerable.

The honorable member for Melbourne Ports (Mr. Crean) cited statistics, and I shall not reiterate them. They showed that the Government is losing £35,000,000 a year in income tax because of this concession alone. He also showed that the life companies are saving another £9,000,000 in other taxation concessions. This makes £44,000,000 a year that the Government is losing by granting concessions to persons who are paying for superannuation benefits or life assurance policies. The total amount that is paid in premiums each year is about £150,000,000. About £50,000,000 is paid out again because of the maturing of policies or the death of policy holders. This means that the assets of superannuation funds and life assurance companies are increasing by about £100,000,000 a year, while the Government is losing £44,000,000 a year. Now the Treasurer is saying to these companies, "Out of that £100,000,000 that you are getting every year we want you to put £30,000,000 into government loans; at least £20,000,000 in Commonwealth loans and £10,000,000 in loans floated by State and semi-government instrumentalities, such as municipal authorities. We are not asking you to make a gift to the Government.

We are not going to take a compulsory loan without interest, but we want you to invest £30,000,000 of that £100,000,000 at 5* per cent.". In the light of that proposition, I am amazed at the statements that have been made in this debate.

The honorable member for Bradfield (Mr. Turner) was cited as a bitter opponent of the bill on the Government side. My view is that the Government, in this measure, is going only a little way in the right direction. I would go further than the Government proposes to do, as all honorable members know very well. But if I did so, I would be accused of interfering with the rights of the individual. Supporters of the Government say that the private individual should be able to do what he likes. At the same time, if my wife wants to buy a dozen eggs she has to pay the price that is set by a government egg board. According to the supporters of the Government, that is not interference with the rights of the individual. If I keep more than 30 fowls, I have to register as a poultry keeper. I have to get permission to sell the eggs that are produced, and I cannot sell them below a certain price. Is that freedom for the individual?

I recall that years ago when the Minister for Social Services (Mr. Roberton) was a back bencher on the Government side, he complained bitterly because producers of dried fruits and other primary products were compelled to sell a proportion of their production under conditions that were laid down by the Government. Of course, the honorable member is a Minister now and he does not object to such practices. I have not heard any member of the Australian Country Party object to egg boards or the fixing of the price of eggs. I have not heard one of them object to a fixed price for the wheat they sell for flour. They agree with those practices, and I am not going to argue with them on that point. My argument is this: If supporters of the Government are prepared to condone interference with the rights of the individual when it suits their pockets, they should not harp continually on the freedom and the rights of the individual. If members of the Opposition advocate controls of that kind, we are told that we are socialists. Indeed, correspondents of some of the newspapers, commenting on this bill, are saying that the

Government is carrying out some aspects of the Opposition's policy; and they object. That is why some of the hard-crusted supporters of the Government object so strongly to this measure. If they do not say it in so many words, they say it by their actions. They are saying in effect -

To him that hath shall be given.

Let us turn now to the net gain of £100,000,000. That is not simply a figure that has been supplied by the honorable member for Melbourne Ports. The Treasurer in his speech said that the accumulated funds of the companies concerned were increasing by about 10 per cent, each year and would soon reach £100,000,000. Most of it is coming from the pockets of the taxpayers. Honorable members on the Government side have said, " Let them have their money and build up their funds. Then they can make loans to young people who want to get married." Critics of the bill have suggested that the Government will take money from the insurance companies and make it harder for them to lend money for housing. I would like to see more money for housing made available through government instrumentalities. A person who gets a loan from a government authority gets it at a lower rate of interest than that charged by the insurance companies. I defy any opponent of the bill on the Government side to cite any case in which a private company or an insurance company will lend money for housing at a cheaper rate than is charged by the Commonwealth Savings Bank, the War Service Homes Division or by State instrumentalities which get their funds from the Commonwealth Government. Any of those government authorities will lend money at an interest rate lower than that charged by the insurance companies. I am not decrying the insurance companies. What I am decrying is the implication that less money will be made available for housing loans if the insurance companies have to invest in government funds. It is about time the people woke up.

I have told the House about an insurance agent who approached some honorable members, and I have referred to the tax concessions that can be claimed by a person with an income exceeding £2,000 a year. That is not an average case. Let us consider the position of the more ordinary person receiving a little over £1,000 a year. A person with an income of more than £1,000 but less than £1,200 will get a tax concession of 4s. 4d. in the £1 for every £1 he invests in life assurance. But what about the man on a higher income? The honorable member for Mackellar (Mr. Wentworth) spoke of persons who could save £500 a year and would be prepared to invest the amount in tax concession bonds. A man would have to get a pretty big salary to be able to do that. I do not propose to speak on the amendment foreshadowed by the honorable member for Mackellar or on his second-reading speech.

I propose to refer to the case of a man who has an income exceeding £4,000 but less than £4,400. If he invested that £400 by which his income exceeds £4,000, in life assurance or superannuation, he would get a tax concession of 9s. 3d. in the £1. Therefore, actually he would pay only 10s. 9d. for every £1 he paid by way of premiums. These are official figures. That man would benefit by total income tax concessions amounting to 9s. 3d. in the £1. That is where the companies come into it. They are not concerned so much about Bill Smith who pays £400 in premiums and gets a tax concession of 9s. 3d. in the £1. The premiums go into their funds. Although the Government is contributing nearly half of the maximum deduction of £400 that is paid to the insurance companies in premiums, these companies do not want to lend money to the Government at 51 per cent. They want to be able to invest it in huge buildings. Honorable members opposite may argue that insurance companies put their money into housing, but I invite them to look out of the window of my office in Adelaide. They would see the Australian Mutual Provident Society building, the Australian Mutual Life Insurance Company building, and similarly impressive buildings belonging to other insurance companies.

Mr King - The insurance companies occupy the buildings.

Mr THOMPSON - The buildings belong to them. They invest their money in the buildings. This bill is designed to limit the amounts invested by insurance companies in huge buildings and to encourage them to place 30 per cent, of their investments in Commonwealth loans. Buildings such as those built by the insurance companies require a tremendous amount of money. Let any one try to borrow £20,000 from a bank and see how much security is needed! One honorable member who is interjecting is a banker and he may know a lot about these things, but I know a little about what the banks do. I know the amounts they are lending and the profits that they are making. Generally speaking, our banks are fine institutions, but they require substantial security before they will make a loan. For a loan of £20,000 a customer may need security of £50,000, or perhaps even more. Honorable members opposite who borrow in big sums will know that. In view of the fact that security required by the banks for a loan may be two and a half or three times the amount of the loan, one may well ask how the insurance companies can finance the construction for themselves of huge city buildings costing £1,000,000 or £2,000,000. They say that they invest their own money in these buildings and of course they get a handsome return by letting office space. The return from these buildings is tremendous. Certainly it is more than the 5i per cent, payable on Commonwealth loans. Indeed, if the insurance companies could not get more than 5$ per cent., they would not bother to build office accommodation. They would simply invest their money in government bonds and collect a cheque every half year.

The objection that this measure may prevent insurance companies from helping people to purchase homes is only eye wash. If these institutions invest 30 per cent, of their money in Commonwealth bonds, the Government will be able to impose lower taxation than would otherwise be necessary. It is rather a sore point with some people that they have to pay taxation because loan money cannot be raised on the market. Therefore, I cannot understand the objections of some Government supporters to this measure. The States are clamouring for loan money and the Commonwealth is clamouring for loan money. We are bringing over 100,000 migrants a year to this country and a house is required for an average of every four of them. That means that immigrants alone need between 25,000 and 30,000 houses a year. We have to get the money to build those houses. Private enterprise is not able to provide them. How can we get the money? Honorable members opposite say, " The Government should not try to get money in this way ". The honorable member for Moreton (Mr. Killen) said that he would go part of the way or the whole of the way with the honorable member for Melbourne Ports (Mr. Crean) if he wanted to do away with these taxation concessions altogether. But clearly if we cannot get sufficient loan money then people will have to pay more in taxation. We all know that. In effect, we are now saying to the insurance companies, " Lend back to the Government at 51 per cent, the contributions made to you by the taxpayers - and of course by the Commonwealth Government in the form of tax concessions - or we shall have to obtain by taxation whatever amount we do not raise in loan funds. That amount will then not be available for contribution to your companies ".

In reply to those who maintain that we should not interfere with people's right of investment 1 say that the world to-day is not like the world of 50 years ago. Poor countries such as Indonesia which have gained their independence are tending to take over foreign-owned investments and to run their own affairs. They simply say, " Sorry, old boy, but we cannot pay you ". A few months ago I heard a broadcast by a medical man who had come to Australia from north Africa, where he had established himself on the land and done very well. He had got on very well with the natives, but he said that in a few years all the white people would be out of Africa; the black people would have their own country back. That is the general trend to-day, not because people are Communists and not because they are dishonest, but because they realize that they are all God's creatures. They realize that He did not grow the trees and provide the land and everything else for a select few; He did that for all the people of the world. We all have an obligation to the whole of the people, to all God's creatures, to the poorest child born in the slums as to the child born in the mansion with riches.

To-night, one of my colleagues read out to me that somebody had died in Sydney and left £840,000. I said, "What was he?" He said, " He was a company director ". But the child of a company director should not have every opportunity in life while the child of the poor woman whose husband is an invalid goes without. I know that we cannot make everybody alike. I do not propose that we should attempt to do so. But I say that the wealthy have an obligation to the community in general. That is one justification for legislation such as this.

I hope that I have not riled anybody. I have no personal animosities. I have a great love for everybody, the rich and the poor, but particularly the people right down at the bottom. Much could be done by way of taxation to provide a better balance in the community. There should not be any beggars in the streets depending on their more fortunate fellows to throw coins to them. I do not like that. Give them all a fair and reasonable opportunity!

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