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Thursday, 1 April 1965

Senator WRIGHT (Tasmania) . - Before the Minister replies to those questions I would like to make a few remarks concerning this amendment. I must express my complete surprise at an amendment of this import being proposed with such brevity and without any adequate explanation from the honorable senator who submitted it. In the first place, the amendment refers to " an authority of the Commonwealth or of a State ". Senator Bishop did not indicate in any way, except by an oblique reference to a' South Australian situation, what he had in mind. I would have thought that if this Committee were asked to consider a proposal of this kind, the person proferring the amendment would tell us what authorities of the States - the whole six States - were comprehended in the proposal, and what was the legal meaning of " authority ". I would also expect somebody to make a reasonable attempt to list the Commonwealth authorities involved. I must express my complete surprise that a responsible body such as this Committee should be invited to consider the amendment with such inadequate material before it and such a weak explanation.

However, it is implied that " an authority of the Commonwealth " should include the War Service Homes Division. Indeed, this was mentioned in the debates in another place as a particular feature of this amendment. I should have thought that was worthy of being given some special attention, and that this aspect of the matter would not be prejudiced by including the War Service Homes Division in the omnibus term " an authority of the Commonwealth or of a State". Inasmuch as any thoughtful member of the Committee will always be concerned to consider proper benefits for the war service homes beneficiaries, it occurs to me that is pertinent to point out that under section 38 of the War Service Homes Act provision is made for the Director of War Service Homes to insure homes built under the Act - any homes in which the Director has an interest. It is provided that the Regulations may make provision for - . . voluntary insurance against fire and prescribed risks of a dwelling house which has been at any time before or after the commencement of this sub-section but has ceased to be the subject of a contract of sale or mortgage entered into for the purposes of this Act and is owned by a person who was a borrower or purchaser or a widow of any such person or the personal representative of any such person.

Whatever be its validity - and as to that I do not propose to offer any suggestion - section 38 of the War Service Homes Act now confers much wider power than is being given in this Bill in relation to the acceptance or arrangement of voluntary insurance by home owners while the homes are subject to a mortgage, or while they are subject to a contract of purchase, or at any time thereafter.

I am informed that the Director of the War Service Homes Division operates an insurance scheme at rates which are very attractive in comparison with those which are available in the market. That system having been established in relation to war service homes, I wonder what the advantage is in bringing second mortgagee interests, which are charges upon the home owner's interest in the house, into this general housing loan insurance. There may be an advantage. I am not denying it, but I want a light shone on it. Prima facie, this is attractive until it is considered in relation to the system specially designed by the Director of the War Service Homes Division for insurance of the entire interests of the home owner, by a very simple amendment it should be possible to apply that system, first to the home owner, secondly to the first mortgagee - the Director of the War Service Homes Division - and thirdly to any second mortgagee who, we know, under the War Service Homes Act must get the permission of the Director before he can come into existence as such. I should think that the application of this general system to second mortgagees under the war service homes system would add an incubus of generalities which would be out of place and probably out or line with the general benefit which accrues from the special arrangements under the war service homes legislation. The Minister in another place has said that he will take this matter into consideration and, rather than interweave it into the proposal before us, will see whether the benefit can be given under the war service homes legislation, which seems to me to be the more attractive course.

Having said that, I want to add that if those reasons are not valid, I would not see any objection to applying the cover of this legislation to second mortgagees of war service homes simply because they are second mortgagees. I know that the Minister has insisted in this legislation that the insurance should be available to one single first mortgage, because of the advantage of getting the whole of the mortgage money in one security. If my first two arguments are invalid, merely because Senator Bishop's amendment intends to apply this insurance to a second mortgagee, the fact that it is a second mortgage should not preclude it. The Minister has already indicated that this insurance will be available to second mortgages in cases where the purpose of the loan is to finance alterations to existing dwellings upon which there are already first mortgages. A second mortgagee under the War Service Homes Act is always subject to the permission of the Director and in that respect one can depend upon the supervision exercised by the Director for the benefit of the mortgagor, the war service homes beneficiary. The Director probably will not permit a second mortgage for speculation or to establish a business, but I believe that he will readily allow a second mortgage for extension of a house or where improvements to an old house arc required. Having regard to the general supervisory protection of the Director over the mortgagor, before a second mortgage is arranged, there is more guarantee than exists in the ordinary case that a second mortgagee is warranted. I make that contribution to the debate in the hope that the position will be further clarified.

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