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Wednesday, 20 April 1966

Mr CONNOR (Cunningham) .- 1 rise to make some observations on a matter which has come very much to the forefront of public notice in recent days. It is the question of the mobilising of Australian capital and resources for stimulating Australian national development. There has been remarkable development of Government thinking on this matter. If we hark back to the statement made by the present Prime Minister (Mr. Harold Holt) in September of last year, we find that he said - and he has just repeated about a fortnight ago, I think, in answer to a question by the honorable member for Gippsland (Mr. Nixon) - that the Reserve Bank was having general discussions with the other trading banks and the general financial institutions to see what could be done.

In the meantime, we have had various expressions of opinion. For example, last September the Chairman of the Commonwealth Banking Corporation, Mr. Callaghan, said that the question of the banks taking an equity interest in developmental projects was one on which there were certain reservations to be held. In particular, he said that their taking an equity interest raised serious philosophical problems about the role of banks.

We progress from there to the sterling call to arms of Sir Maurice Mawby, who came out and attacked the unnecessary caution of the general financial institutions in Australia in relation to national development and investment. His comment, as reported in " Financial Review " of Monday last was that the traditional approach of Australian institutions contrasted unfavourably with the attitude of American financial institutions.

Progressing from there, on the following day, to a very sterling rallying cry by the Deputy Prime Minister (Mr. McEwen) at Bendigo, he attempted to out-Herod Herod and announced that there should be something in the way of a national investment corporation. That is a very laudable thought indeed, but it needs much more development than that honorable gentleman gave to it. lt might be truly said, in the words of the cynic, that just as the devil himself knoweth not the mind of man, so the Government of this country certainly does not know what is the mind of the Deputy Prime Minister.

Let me digress here to say that his egregious proposal for a 50-50 JapaneseAustralian shipping line is something which baffles the imagination or good sense of the Australian community. With the advent of Anzac Day, it might be appropriate to make the comment, particularly with a Japanese trade delegation here, that the question arises as to who won the war and who lost the peace, especially when we find that the gentlemen who are coming along today are proposing something which very greatly resembles the greater South East Asia co-prosperity sphere. What could not be achieved by war could be won by economic penetration in peace. I would be the last to decry trade on a legitimate basis with Japan, but I share the apprehension of the vast majority of the Australian people as to what is happening today in terms of the control of the development of Australia's national resources and in particular the dictation which will eventually result from overseas as to what our ultimate policy for development is to be. He who pays the piper calls the tune. I give the Deputy Prime Minister (Mr. McEwen) very great credit for his statement that at least he would make sure that Australia did not become an international quarry for its mineral resources.

The question of development, investment and mobilisation of Australian capital also highlights the position with regard to the statutory reserve deposits which, at the present time, amount to about $640 million. I find myself in the august company of the financial editor of the Sydney " Bulletin " who points out the absurdity of Australia running about the world asking for overseas investment to come here at a time when a very substantial nest egg, which was put away for a rainy day, can be brought out and used because that rainy day is here.

We have today accumulating evidence of our tremendous natural resources. We have had the discovery of off shore oil. We have the obvious need for the development of natural gas resources. We have the need to raise within Australia funds for this purpose. At the present time the role of the life assurance companies leaves much to be desired. A most delightful article was published in yesterday's " Financial Review " which traverses the whole subject to the detriment and discomfiture of conservative Australian institutions. In particular, we have the statement that the life policy growth of lending for housing in recent years has been extremely modest and the traditional argument that a very substantial proportion of the life assurance companies investments under the 20/30 legislation is held in government securities is also a little threadbare in the light of their other activities.

One of the most remarkable activities on which we have yet to have the full spotlight focussed is that of the Mutual Life and Citizens Assurance Co. Pty. Ltd. and its association with H. G. Palmer (Consolidated) Pty. Ltd. I remind honorable members that last year I directed two questions to the then Treasurer, Mr. Harold Holt, asking that the Commonwealth Actuary and Insurance Commissioner should conduct an investigation into certain matters relating to the types of investment in which the M.L.C. directors were indulging. I understand on good authority that that investigation has been made and completed and that, pursuant to the Act, the Commissioner has communicated his conclusions to the interested company. Whilst the provisions of section 57 of that Act preclude the disclosure of certain information, that prohibition does not apply to the publication of the conclusions as communicated to the company concerned.

A company of that nature, holding vast assets, should, in the best interests of its policyholders and its shareholders, make a full disclosure of the recommendations. We are entitled to know, because insurance companies hold money in a fiduciary capacity and they should invest in a proper way. I think it was Professor Sir Douglas

Copland who said that we had a milk bar economy. Today he might be prepared lo revise that statement and say that we have a hire purchase economy because today hire purchase investment - anything in the nature of a high interest return - is infinitely more attractive to public institutions than the more orthodox forms of investment, and certainly in terms of Australia's vast natural resources.

If we are scratching the bottom of the barrel for natural resources, let' me remind the House of aggregate losses of $100 million in recent years in wild cat investments. For instance, Reid Murray lost S38 million; and that is a minimum assessment of the loss. H. G. Palmer (Consolidated) Pty. Ltd. lost $34 million and, on present reports, is still losing, the result depending on the liquidation of its assets. Latec Investments Ltd. lost $15 million and the Sydney Guarantee Corporation $8.5 million. But if honorable members want the summit of wild cat investment, just consider the order for the FI IIA bomber on which we stand to lose a good $80 million or more on the original quotation.

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