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Thursday, 27 May 1915

Senator DE LARGIE (Western Australia) . - The subject-matter of the Bill is one that has been so well established in most civilized countries that we can reasonably expect, from time to time, a revision of the rules that govern a business of this kind. This is the first attempt by the Commonwealth to legislate in this direction, and, seeing that we have been in existence something like fourteen or fifteen years, we cannot be charged with being in too great a hurry. I would have been better pleased if the Government had gone into the matter a little more comprehensively, and I prefer to regard this as a small instalment of a very big question, because the Bill merely deals with the common private enterprises or proprietary societies doing business in what is recognised as certain lines that require a great deal of supervision. It has been found that a Government insurance scheme is the best supervision of private companies. ' Senator Millen has directed attention to the interpretation of the' word " reasonable " as applied to the charges that may be made or allowed by the Commission who will have the administration of this Act. It is difficult to determine what " rearsonable " would mean in matters of this kind, because one would require to know the volume of business, the amount of profits, the cost of carrying on and other charges, before one could say that a certain charge was reasonable or unreasonable. Insurance is certainly a good thing. We are all anxious to provide for the inevitable, and we all like to know that when the day of trouble comes along we will have something to fall back on and compensate us for losses, whether by fire or otherwise. Consequently we have to ask ourselves what is the best system of insurance that we can provide for the people. The Minister when introducing the Bill referred more to industrial than ordinary insurance in the Old Country. Whilst the percentage in cost of administration was very high, he could easily find illustrations of the same thing much nearer home. None of our financial institutions have been so extortionate in their demands, or extravagant in the cost of administration, as our insurance societies. Bad as some of our other financial institutions are, none has been so loosely administered as insurance societies in Australia. The Minister will remember criticisms in the press of his own State some years ago with regard to the Citizens Insurance Company. M!ore recently a similar state of affairs was revealed in Victoria, showing that the cost to the people was enormous. The point which we, as the custodians of the people's wel fare, should always keep before us is : What benefit are the people getting from businesses which we grant private enterprise a licence to conduct.? It is five years now since the report of Mr. Justice Hood and Mr. Knibbs was furnished, so that it is getting somewhat out of date. It does not refer to the state of affairs revealed in Parliament in connexion with societies in this State. There is, therefore, some ground to find fault with it, as it is not so comprehensive and complete as we should like it to be. I am sorry that an inquiry of that kind was handed over to any officials, no matter how high they may be in the service of the State or the Commonwealth. Inquiries of the kind ought to be made by members of Parliament. If they are, Parliament can place more faith in their reports. I do not wish to reflect in the slightest degree on the ability of the gentlemen who formed the Commission. One of them was the greatest authority on statistics in Australia, and I have the most complete admiration for him as a statistician, but I question whether he is at all suitable to report on insurance. It is a mistake to take an officer presiding over a most important branch of the Government service away from his work, to inquire into matters foreign to the difficult task for which he is paid. It cannot be .said that Mr. Knibbs has any special knowledge of insurance, and I, therefore, deplore the fact that the inquiry was submitted to those gentlemen, whose professional qualifications made them no better fitted for the work than are honorable members themselves. Reference has been made to a deputation which is likely to wait on the Minister in regard to the Bill. I hope the Minister will be very careful as to the advice that may be tendered to him by the deputation, because they can scarcely be coming here for any other purposes than to look after their own interests. I question whether they should be received at all. Let them put their case in print, and have it circulated amongst honorable members. It is not proper for any deputation to interrupt the consideration of a Bill by Parliament.

Senator Keating - I understood from what Senator Millen said that they were simply . going to formulate representations, put them in print, and submit them to the Government.

Senator DE LARGIE - I did not understand so. If it is so, I do not see much objection. The Minister said that it cost 60 per cent, of the total receipts of insurance societies in the Old Country, particularly those doing business in industrial insurance, to cover the cost of working. I understand that in this country it costs about the same percentage to run our insurance companies. In Victoria, less than two years ago, the case of the Colonial Mutual Life Society, which had got into difficulties, came before the State Parliament. A number of the policy-holders petitioned Parliament to take the administration of the society out of the hands of the board of directors. A Bill was suddenly presented to Parliament to take control of the society. The policy-holders in their petition made serious charges against the board of directors. One was that the method of election was grossly irregular, and that the directors, by means of the proxies they held, could retain their positions on the board, and defy the majority of the policy-holders. Another was that through the maladministration of the society, its funds were practically in a state of insolvency. The case was a peculiar one, because the State Premier, Mr. Watt, brought in a Bill to take the administration of the society out of the hands of the directors. It did not provide that the policy-holders or shareholders should elect the new board. Parliament was to undertake the task of nominating toe board, and the names were mentioned. Amongst them was a member of this Parliament, Mr. Agar Wynne. The Bill was literally rushed forward, and Mr. Watt asked that it should be passed in one sitting. To this the Labour party objected, and the ordinary procedure had to be followed. The Bill, therefore, was not dealt with as quickly as Mr. Watt wanted it to be. Notwithstanding the alleged urgency of the matter, about a fortnight later Mr. Watt withdrew the Bill, and presented another containing very radical alterations. During the discussion many charges were made as to the extravagant manner in which the business of the society was conducted, and figures applying to all societies in Victoria were given. It was said that in a period covering ten years the fire insurance com:panies of Victoria received, on a yearly average, £600,000, and paid out only £200,000. The figures quoted by the

Minister regarding the cost of administration of industrial insurance in England are on about the same extravagant basis. There is, therefore, just as. much need for us to give every consideration to the matter here as for the English people to attend to their side of it. It was found that for every pound charged by the insurance companies, only 6s. 8d. was paid out to insurers. The other two-thirds went in management expenses. If this indicates anything, it indicates gross extravagance in the working of these societies, and the existence of a number of well-paid, fat billets. This Parliament should direct attention to this aspect of the matter, in order to see whether* a more economical method of insurance, fire and life, may not be instituted in Australia. I am sorry to say that the report presented by the two Commissioners who inquired into this subject some years ago does not give us the information which we might reasonably have expected from them, and I think that we shall be doing our duty in this Parliament and looking after the welfare of the whole community if we allow this Bill to stand over for a few months, and submit the whole question to a Select Committee from this Chamber. As we have already waited fourteen years for this measure, we can reasonably wait another few months. Such a Committee could investigate various matters to which publicity has been given since the report of the Commissioners was drawn up, and which apparently were unknown to them. In other words, it could investigate the matter in a more up-to-date way, and its report would be very valuable in the light of information that has come forward from time to time since the previous report was furnished. I do not wish it to be understood that Victoria is the only State in the predicament that I have indicated. Other States may be in just as bad a position, and inquiry may show that they are having forced on them an extravagant system of insurance, whereas we want as economical a system as we can secure. It would not be necessary for any Select Committee that is appointed to go over the whole ground, as many things already contained in the report of the Commissioners need not be touched upon; but there are many things not covered by that report to which attention might be directed. The weak point of the Bill before us seems to be that it has been framed upon a report that is far from being full. I do not blame the gentlemen who framed it, because matters have developed since that report was presented, just as they do develop from time to time in all. countries; but as many years have elapsed, it has become somewhat obsolete, and much new matter might he discovered, and I feel sure could be discovered, by an inquiry at, the present time. Some time ago, as the result of the amalgamation of two well-known insurance societies in Victoria, the Australian Widows' Fund and the Mutual Life and Citizens' Society, the substitution of one board of directors and one management for two boards of directors and two management staffs, brought about considerable economy. In this connexion, I was amused this morning by reading in the Age the criticism of a Presbyterian clergyman of Brighton upon the extravagance of the Eight Hours Celebrations Committee. As the extravagance that Labour organizations have the opportunity to indulge in is so very slight, it is amusing to hear people outside speaking of their having offended in this regard.

Senator Guy - Labour Governments come in for the same criticism.

Senator DE LARGIE - Labour Governments may practise extravagance in a manner in which it cannot he practised by Labour organizations, because Governments have control of public funds which are big enough to permit of extravagance, but that is not the case with Labour organizations. Imagine the average Labour organization being accused of extravagance !

Senator O'Keefe - That clergyman was angry because the Eight Hours display was a gambling concern. Because he did not believe in gambling, he considered that there should be no Eight Hours art union.

Senator DE LARGIE - He directed the whole of his criticism to the maladministration of the funds of the Eight Hours Celebration Committee. Apparently his hostility to anything in the nature of a Labour organization was his uppermost feeling. But I wish to point out that, strangely enough, a, member of one of the boards of directors that was superseded by the amalgamation of these two societies to which I have referred was the minister of one of the largest and most fashionable Presbyterian churches in Melbourne - I refer to the Rev. Dr. Marshall - and when the board of directors on which he had a seat was superseded because there was only room for one under the amalgamation, each member of it was provided with a very handsome pension for life, amounting to £250 per year. So this Presbyterian clergyman came in for this pension along with smart business men.

Senator Gardiner - He heard the call.

Senator DE LARGIE - Yes, and it was a very remunerative call. When the clergy do indulge in this kind of thing they can show sharp business men a few points. This amalgamation also provided very handsomely for the retiring manager, by providing him with a pension of £2,000 per annum for life. And another officer - I believe it was the actuary - was given a similar pension.

Senator Keating - Some of the officers fared very badly.

Senator DE LARGIE - Evidently the board of directors and the manager and actuary knew how to look after themselves. I mention this matter in order to show how boards of directors of insurance societies may indulge in extravagance, and I feel sure that if a Select Committee were to inquire into the matter it would be found that a great deal of this extravagance is brought about by the number of well-paid billets for which provision has to be made. The only satisfactory way of overcoming the difficulty is for the Government to undertake the business of insurance. I think that the Commonwealth Government are ina better position to do that than any company, because a great deal of the Government machinery can be applied to it. For instance, we have post-offices distributed all over the Commonwealth. The contention is that the biggest item of expense an insurance company has is the cost of collecting, but by means of our post-offices we could collect the premiums at a much smaller cost than any private company.

Senator Senior - Not unless we made insurance compulsory.

Senator DE LARGIE - I am quite agreeable to go to that length, if necessary, but I cannot see that with voluntary assurance the machinery of government would be any more expensive in the matter of collecting premiums.

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