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
Thursday, 11 June 1970

Mr Les Johnson (HUGHES, NEW SOUTH WALES) - Like the honourable member for Kingston (Dr Gun) I feel disappointed that the Government has been unprepared to meet the very considered viewpoint determined in another place about this matter. It is true, as the honourable member has pointed out, that an amendment was moved in this Committee on a previous occasion. That amendment required much closer scrutiny than what the Senate has now called for. The honourable member for Kingston has enunciated the requirements which were involved in that amendment. I should like to refresh the memory of the Committee with the recommendations of the Senate, the amendment that has come from another place to this place and to show in contrast the part that is proposed to be eliminated in accordance with the Minister's speech made a short time ago. The Senate has asked for details of how the reserve fund has been invested. I understand that that part of the amendment is acceptable to the Government. Then from the Senate has come a proposal that we should also seek, require and write into the legislation a provision making it necessary to provide details of direct or indirect interest in shareholdings held by directors in a fund in organisations in which the fund's reserves have been invested. I understand from what the Minister has said that the Government is not prepared to accept that provision. I rise to speak because I believe that this Committee, and no doubt the country at large, is entitled to a better explanation as to why the Government is so intent on eliminating that particular provision. After all, we live in an era when these things are under suspicion and, in my view, justifiably under suspicion. We have heard recently of involvements in Comalco, for instance. When we come to public funds, in my view the public has a right to know precisely who is involved and to what extent. There should not be any reason at all foi the Government to be intent on clouding over the provision and the availability of this kind of information. 1 think honourable members will recall that the Nimmo Committee has looked closely at this matter and has made recommendations about it. In its report, that Committee gave close and detailed attention to the reserves held by funds. I am not sure what amount these reserves represented; I think they are about $70m at present.

Dr Gun - They would have gone well above that.

Mr Les Johnson (HUGHES, NEW SOUTH WALES) - They have gone well above that? This is a large sum of money, and how is it employed? The Nimmo Committee took a sample group of these organisations - a 'representative group' was the term the Committee used - and they showed reserves of $52.8m. They showed that 3.61% or $l.9m was invested in shares, 10.9% or S5.8m in debentures, 8.2% or $4.3m in mortgages, and 1.4% or $1.74m in other investments.

Dr Klugman - That comes from OPSM

Mr Les Johnson (HUGHES, NEW SOUTH WALES) - Whether or not it is from OPSM, which is the organisation that make glasses. I do not know but I think we have a right to know. I am concerned to note that the yield from all these investments amounted to only 5%. The fact of the matter is that even the Commonwealth seeks a higher interest on its money these days and requires everyone else to get more for their money. I think the shareholders and the people represented by voluntary health insurance funds also have an expectation of receiving a higher yield, if that is the way the country is to be run.

The Minister had something to say about the matter on 4th March this year when he referred to the investment of fund reserves. I bel:eve he has jettisoned and repudiated the stand he took earlier. He said that the friendly society funds were already required to confine their investments to trustee investments and that many open funds also substantially followed this practice. He also said that the Government had closely examined this proposal and had concluded that funds had generally displayed a proper sense of responsibility in the matter of investments. It has also been noted, he said, that the non-trustee investments, which some funds hold, have generally produced good returns. That varies with what I showed a moment ago in terms of statistics. The Minister also said that the Government had therefore decided not to adopt the recommendation but to permit some degree of flexibility in the matter of investments.

I remind the Minister of the recommendations of the Nimmo Committee in this regard; they were most unambiguous and forthright. In fact, they gave rise to the amendment first moved by the member for Kingston, subsequently moved in another place and now moved on 2 occasions in a repetitive sense - in an insistent sense. Honourable senators in another place believe that this is a most important matter. They regard it as important for the same reason the member for Kingston regards it as important and that the recent Nimmo Committee regarded it as being important. That Commitee states:

We recommend that a condition of registration applicable to all organisations bc that their investments bc confined to trustee securities under the laws of the Stale in which the organisations are located.

There is no provision at all that requires that. The Committee continued as follows: That the investments of organisations be limited to trustee investments under the laws of the Stale in which they are located.

We wonder why one part of this amendment has been accepted while the important part - that is, the details of direct or indirect interests in shareholdings held by directors - is not being upheld by this Government.

Dr Klugman - They are Government supporters.

Mr Les Johnson (HUGHES, NEW SOUTH WALES) - Yes indeed. We. are talking about pecuniary interest. In any held of government starting with the basic form of government - local government - pecuniary interest is something that must be manifested, something that must come to the surface. Any alderman or councillor in any shire in this country has to reveal his pecuniary interest. Yet we find on this occasion the Government upholding a situation that is at variance with and is the complete negative of this well-established Australian practice. People have a right to be inquisitive about these things and to ask: Is it possible for people who are directing voluntary insurance funds to be in a position where they manipulate these funds? If they manipulate them, what amount of extra benefit accrues to them?

In another place we do not have a predominance of Labor Party people at all. This proposal has been dealt with twice in that chamber and, in the wisdom of honourable senators in that place it has been sent back to us twice. I submit that the reason why it has come back with such dedicated insistence is that the principle is so well established and that the Minister, if he intends to depart from it, is obligated to give to this Parliament reasons why we are heading off in some other direction. It is the job of this Government to protect the public: It is not its job to protect people with private interests, to protect shareholders, or to allow people to hide behind the cloak of obscurity. I strongly recommend with the utmost enthusiasm that the Minister, if necessary, defer consideration of the matter until he has a chance to have another look at the enormous ramifications. I think it will be a sad day indeed for Australia, as we head off again into another era of voluntary insurance with large sums of money to be accrued, if we make it possible for funds to bs invested in a way that could be against the best interest of the contributors and the Australian public at large.

Suggest corrections