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Thursday, 1 April 1965

Senator McKENNA (Tasmania) (Leader of the Opposition) . - I indicate on behalf of the Opposition that we cannot support the proposed amendment. This Bill embarks the Commonwealth in an entirely new and unexplored field - that is, the financing of loans to an amount beyond the usual trust level. Ultimately, it will go up to perhaps 95 per cent, of the cost of a home. The first and the greatest task of this Corporation will be to attract money to this new purpose. In the light of those conditions, we find that the providers of housing finance are to be largely institutionalised. The number of private mortgagees today, compared with pre-war years, has fallen very considerably. The Government had several courses open to it. The first was to deal with the major institutions interested in the provision of the finance of housing, such as banks, insurance companies and building societies. The second course open to the Government was to concentrate in the first place upon private lenders. The third course was to open its doors to everybody at once.

The Government has the responsibility of attracting money for this purpose. I say at once that, in my own judgment, unless the Government can interest the institutions and attract money from the institutions fairly quickly, then the Corporation might as well put up its shutters. I believe it would never get off the ground. I do not profess to know what is the wise thing to do or which is the wise approach. We in this country are without experience regarding this matter. But I think it proper that the Government should assume the responsibility of saying how and where it will start and carry that responsibility. I think that, in the circumstances, the decision to determine classes of lenders is not one to which we would at this stage offer any objection. We think it a possible approach. It may well be the one that will yield the best results. It may be, too, that in choosing those three bodies the Government has in mind the readiness with which it can encourage or stimulate bodies of that nature into making funds available in this new field. For instance, it occurs to me that just as the Government stimulated banks, insurance companies and superannuation funds into supporting Commonwealth loans by certain taxation privileges and concessions, it may be able to import into that category of concession loans that are made in support of the activities which are envisaged for this Corporation. That may well be. I should like the Minister, if he has that thought in mind, or if he feels free to express it, to indicate whether that is one of the factors which induced the Government to make the decision that it did. So the Opposition is not disposed to contest the provision in sub-clause (1.).

I say, secondly, that there must be some form of control of lenders. One could not open the door indiscriminately to lenders. Particularly at an early stage of this new venture, we have to guard against the possibility - and we have had demonstrations of the possibility - of an unscrupulous salesman getting hold of people with small deposits and selling the one bolck of land to a whole succession of people on the assurance that he can finance the building project they contemplate up to 95 per cent. Of course, he is cut out at this early stage because his prospects are blighted by the fact that those types of loans can be arranged only between well established institutions. I have no doubt that the confidence man would see the opportunity that the prospect of raising loans of up to 95 per cent, of the total cost of a home would excite in the minds of home hungry people with small deposits who see no other , likelihood of ever obtaining a home. I think the Government has properly to guard against that sort of thing happening at this early stage. That is one example only of the type of thing that, I consider, could happen and would need to be guarded against particularly in this incipient stage of the scheme.

I spoke yesterday of the fact that because institutions of three types only at the moment have been approved, it would be impossible for individuals who had arranged advantageous agreements between themselves to get the benefit of the insurance cover from the Corporation. That point is answered to a certain extent in the second reading speech of the Minister for Defence by the fact that he has indicated that the making of such arrangements is contemplated but the servicing of such a loan, or the administration of it, is to be undertaken by one of the approved lenders - -that is, one of the institutions. That, no doubt, would involve the lender and borrower in meeting some charge to the institution. I have no doubt that, ultimately, whatever charge is involved in that transaction would fall on the borrower and would add to the costs of the finance. The borrower may well consider that charge worth while, having regard to the great advantage that he gets in securing a very large loan on first mortgage at a reasonable rate of interest. The cost might well be more offset by the disadvantages that a loan of the nature and magnitude would bring. It is not possible for private individuals - solicitors and others - to make the arrangements and have the loan administered by one of the major bodies. I do not know whether the Government is wise in what it is doing, but my own feeling in the matter is that it is entitled to make its decision at this time and to move a little cautiously into this untried field. For those reasons in general, we do not support the proposed amendment.

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