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Wednesday, 30 March 1966


Mr JESS (La Trobe) .- Mr. Speaker-


Mr James - Another estate agent?


Mr JESS - Despite that interruption, I will proceed. After listening to the full and fluent speech of the honorable member for Mitchell (Mr. Irwin) I feel that very little is left for me to say. Like all other honorable members, I fully support the Bill. I do not intend to support the amendment moved by the Deputy Leader of the Opposition (Mr. Whitlam) because it is not my intention to support a falling star. Further, although I have a certain sympathy for a number of the points raised in the amendment, I do not think that this is the appropriate time to bring them forward. The amendment reads -

That all words after "That" be omitted with a view to inserting the following words in place thereof: - " whilst not in any way opposing the passage of this Bill, the House is of opinion that the existing Housing Agreement has not fully met the housing requirements of the Austral:an people and that before a new Agreement (to which part of the money to be provided by this Bill may be applied) is entered into, an all-Party Committee should be appointed to investigate all its aspects with particular regard to- -

(1)   rental rebates,

(2)   slum clearance,

(3)   housing for pensioners,

(4)   land development, and

(5)   town planning." 1 think honorable members on both sides will agree that there is a certain relevancy in all of those points and that at some stage they must be considered, but I do not think this is the time to do so. We are now considering a bill to provide an amount of $15 million to assist the States with their housing finance. When details of the new Commonwealth and State Housing Agreement are being thrashed out a number of such matters should be discussed, but I am not prepared to fall at this stage into the trap which the Labour Party invariably sets on occasions such as this, with the object of moving towards unification. The Government parties feel that the States have the major responsibility in the distribution of housing finance. In today's circumstances the Commonwealth may provide the finance but under Federation the responsibility for the ultimate use of that finance rests with the States.

Perhaps some States do not play the game in accordance with the rules set out in the Agreement, but it would be wrong for us to give effect to the points raised by the Opposition in its amendment. Take, for a start, the reference to town planning. Is it the responsibility of the Federal Government to determine whether a convenience should go at a particular street corner or in some other location where some council or other interested body wants it? The Federal Government has enough on its plate without getting into town planning and the other fields referred to by the Opposition. Should the Federal Government have a responsibility for land development? I would not like to think that the Federal Government, sitting here in Canberra, was responsible for land development programmes in my electorate. These matters are handled mainly by local councils, which are responsible to the people in particular areas who elect them. These councils know the details of future plans for their shires or cities. 1 am sure it would be wrong of anybody to suggest that we in Canberra should be the people to say to the councils: " No, you cannot have that." This would be doing nothing more than setting up a bureaucracy, which is something the Opposition would like to do.

Housing for pensioners is a most worthy cause. Through the Department of Social Services and, in particular, under the Aged Persons Homes Act we are endeavouring to do something about housing for pensioners and I am sure that we will do more in the future. Slum clearance is quite an issue, but, again, is it a matter in which the Federal Government should become directly involved? Should the Commonwealth take slum clearance out of the hands of the States and the city councils and say: " We, stuck here in Canberra in the middle of New South Wales, will be responsible for all slum clearance undertaken in Sydney, Melbourne or elsewhere"? I am sure that deep in their hearts many honorable members opposite agree with me, because many of them were town councillors or shire councillors and were prepared to fight for the rights of their organisations, which act on behalf of the people of the areas for which they are responsible.

The Bill before the House simply provides $15 million from the loan market to encourage home building during the next three months and to provide finance lor people requiring homes during that period. The amount is additional to the money that has already been made available under the Commonwealth and State Housing Agreement. It is additional to the $48 million that has been released through the banking system. These various amounts add up to a considerable sum of money for housing. If the private sector of the economy follows the example set by the public sector. 1 am sure that the effect on housing generally will be substantial.

The Deputy Leader of the Opposition said that the Bill was inconsequential and that he did not intend to oppose it. Nevertheless, he spoke for 45 minutes about the Bill. I assume that he made some reference to housing from time to time in the course of his speech, but he lost me and, I suspect, most honorable members on this side of the chamber, in the first 10 minutes.


Mr Gray - The honorable member was lost before he started.


Mr JESS - You should not be interjecting because you are not even in your own seat.

Mr. SPEAKER (Hon. Sir John McLeay)Order! I remind the honorable member for La Trobe that he is addressing his remarks to the Chair, and I am in my correct seat.


Mr JESS - 1 am sorry, Mr. Speaker. I was referring to the honorable member who interjected. I think it is fair to say that the Commonwealth is in a rather extraordinary position as far as housing is concerned. Under the Constitution housing is not directly the responsibility of the Federal Government. But under the Commonwealth and State Housing Agreement the Commonwealth, under its social service powers, is taking an interest directly in housing.


Mr Devine - That is wrong.


Mr JESS - Mr. Speaker, through you, I suggest that later the honorable member for East Sydney be given an opportunity to state his views. I suggest that in the economy of a developing country such as ours there is a need for the responsibility in housing to be clarified. For some considerable time T and the Deputy Leader of the Opposition have urged that this be done. There is a need to undertake a survey into housing, in cooperation with the States, so that the industry may be stabilised and planning for the future undertaken. I refer to planning for housing - not development and the other matters mentioned in the amendment. Everything necessary must be done to maintain the industry on a stable footing, because it is vital to the Australian community. But under the Constitution the Commonwealth faces a number of problems if it attempts to act in the field of housing. Under the Commonwealth and State Housing Agree- ment we make money available to the States, on condition that 30 per cent, of it goes to co-operative building societies. I think that this is too little. When the Commonwealth and State Housing Agreement is discussed I should like to see this figure of 30 per cent, increased because, as has been said by my friend the honorable member for Mitchell (Mr. Irwin), with co-operative housing we can get more houses for a lesser sum than we do under the Agreement.

Many people do not want to live in Housing Commission homes. There are people who have not the requisite income or capital to allow them in the present instance to buy homes in the areas they would prefer. If, however, they could go to co-operative housing societies and be assisted in purchasing land and in gaining security they would much prefer to build in the areas of their choice. J am against forcing people to live in settlements that I think will, unfortunately, become slums in time. At present the only legislative control the Commonwealth has in respect of finance for housing relates to trading banks, savings banks and insurance companies. The States have control over what is commonly called the fringe banking institutions. We know that money goes into these fringe banking institutions which are building home units - these Own your own flat" schemes - and charging high rates of interest. An incredible number of these units are dotted throughout Melbourne and, I am sure, throughout Sydney and the other capital cities. Because of the drought, and perhaps because of caution in the general public, at present these units are hard to sell. Indeed, if a person is prepared to pay a high rent he can select a flat or apartment from a great many that are available now. This was not the case until recently. One reason why the home unit and apartment section of the building industry has declined is that so many such places have been built by these fringe banking institutions, which have to pay high interest rates on money borrowed and which have to charge high rates, that there is a glut on the market.

I should like now to quote from " Collected Papers on Finance Etc." by L. L'Estrange, which was sent to me. A copy is available in the Parliamentary Library. Mr.

L'Estrange is a very distinguished gentleman who has rendered a great service to housing in both Federal and State spheres.


Mr James - He must be a Labour man.


Mr JESS - I do not think he is. However, he has performed a good service in undertaking a survey of housing in all its ramifications throughout Australia. I understand he has sent a copy of this document to the Government and to the Opposition. In it he draws atten.ion to anomalies that exist in the housing field. I should like to read what he says about the situation where, under its powers, the Commonwealth expects and demands the trading banks and insurance companies to invest a percentage of their finance in government securities and local government loans and restrict them as to the amount they can lend out. This is having an effect on the private sector and on the amount that could be used for alleviating the housing situation. Mr. L'Estrange writes as follows -

The Report of the Board of Inquiry on a recent finance corporation has, in my view, underlined the need for State legislation defining the principles of money management to be followed by such finance corporations and possibly also by Trustees for Debenture Holders therein.

In my view, such Corporations receive money on deposit from the public (either on current account or fixed term) (and whether or not the same is secured or unsecured). Such moneys are then advanced to the public by way of personal loan, mortgage, hire purchase agreement, or sale of goods and land repayable by instalments, plus interest or other charges on a percentage basis for the term of the loan.

In my view the management of the finances under the control of the Company should be handled the same as with Trading Banks, i.e. a liquidity ratio to be maintained in the form of cash and Government securities (L.G.S. ratio), together with a variable proportion to be held in a Statutory Reserve Deposit account as with the Trading Banks.

While we may try to take action to encourage housing or to restrict inflation I do not think any honorable member would disagree that we have no control over these fringe banking institutions and hire purchase companies, many of which have been set up by the banks themselves and in which the banks are investing money at high interest rates. These companiesarein- fluencing the housing position in Australia. Mr. L'Estrange also said -

As to the ratios so held by Trading Banks, see the Reserve Bank Bulletins and the Federal Banking Act and the Federal Reserve Bank Act.

Federal Reserve Bank directives now apply only to Trading Banks and Savings Banks.

So far as Savings Banks are concerned, approximately 65 per cent, of their depositors' funds are required to be held in the form of public securities - mainly as a means of. the Federal and State Governments obtaining contributions to Government, semi-government and local government loans.

A ratio of 30 per cent, is also to be so main tained by Life- Insurance Offices.

However, this burden of supporting the loan market is not cast upon other finance corporations, resulting in some distortion of the market arising out of such factor.

The normal minimum liquidity requirement for Trading Banks is about 18 per cent, of depositor's funds, plus a variable contribution to the Statutory Reserve Deposit Fund, at present about 1 1 per cent.

Without quoting further, I suggest to honorable members that they look at this document prepared by Mr. L'Estrange. The Government should again consider the question of how much money life insurance companies are forced to pay into loans and government securities. The finance corporations, which are taking money from the public sector and investing it at high interest rates, could and should, through the Commonwealth Government and State Governments, be made to conform to banking practices. If State savings banks were permitted to lend more money for housing and were not required to pay so much into semigovernment and government securities they could, as Mr. L'Estrange suggests in his paper, provide mortgages to those persons who secure homes constructed under the Commonwealth and State Housing Agreement. In this way the Commonwealth would receive money to re-invest, perhaps in slum clearance projects. Housing must be looked at by the Commonwealth Government working in conjunction with the States.

I pay tribute to the former Minister for Housing (Mr. Bury) for what he has done and for setting up the Commonwealth Housing Loans Insurance Corporation which I think will be of great benefit. Sufficient time has not yet elapsed to enable us to know whether or not it will be a success. We have a long road ahead of us and we must travel it in company with the States. We must solve the housing problem. We must determine whose - responsibility it is and what will be the most effective means of overcoming it to the benefit of the Australian people, the Australian nation and the building industry. I do not intend to support the amendment at this time. However, I am sure that each section of the amendment regarded in isolation has some merit, and that the Government will take them into account.







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