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Wednesday, 7 July 1915

Senator DE LARGIE (Western Australia) . - The provisions regarding deposits to be lodged by companies will put the companies of Australia on quite a different footing to that on which they have been working hitherto. Under this Bill, the State Acts will cease to apply; and I remember that when I made a comparison between the amount of deposit necessary under the State laws, and that provided by this Bill, I found that in some of the States the deposit was quite as large, for one State, as that which we are asking under this Bill for the whole of the Commonwealth. That is to say, the adoption of these provisions will reduce by six the amount of deposit which companies are obliged to make at present. It should be the aim of the measure to guard against the creation of anything like mushroom companies, which have little else to show than a big brass plat© and a showy office window. We must make sure that a company coming into existence does not consist of straw men, and has really behind it the capital that it claims to have. If we require for the whole Commonwealth only the same amount as a company now has to put up under a State law, we shall really be making a very radical alteration, and, before the clause finally passes, I should like to hear reasons why such a substantial reduction should be made. Under the clause the deposit required from a fire insurance company is much less than that required from a life assurance company. As a matter of actual fact, in view of the greater risks run, a much larger deposit should be required from a fire office than from a life office. In insisting on a substantial deposit, we are not asking for actual hard cash, or placing any great burden on a company, because it is provided that approved securities may be accepted. The putting up of a deposit, therefore, does not mean a loss of capital or interest to a company, and we ought to be quite sure that a sufficient deposit is required. The reduction which it is proposed to make is altogether too great, and I should like the Minister to look into the matter again before such a drastic alteration is made in our insurance laws.

Senator MILLEN(New South Wales) £5.53]. - I was surprised to hear Senator de Largie say that the deposit required is less than in some of the States. He should, not forget that there is a further requirement on the companies to supplement the £20,000 deposit each year until is, accumulates to £120,000. I am as anxious, as he is to see that what he calls mushroom companies do not spring up; "but there is another aspect of the matter to be considered. I do not know any of the established companies that have made the slightest objection to the deposit, although in the aggregate it will amount to .much more than they have to put up now. Companies like the Australian Mutual Provident Society already hold as part of their assets a much larger amount in public bonds than is stipulated for in the Bill, and they have no objection to handing those bonds over to the Commonwealth Treasurer, especially as the Treasurer will be responsible for their security.

Senator NEWLANDS (SOUTH AUSTRALIA) - Will the Commonwealth have to pay interest on those securities ?

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