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Thursday, 1 April 1965

Senator WRIGHT (Tasmania) .- Before the Minister replies to that point, may I interpose some brief comments on his remarks and those of the Leader of the Opposition (Senator McKenna). The Minister described this proposal as an administrative necessity. He said that reliance could be placed upon the three types of institutions at the original stages of the activities of the Corporation. I wonder whether the Minister gives a really responsible reflection of opinion as to trustworthiness and soundness of judgment of the other sections of lenders whom he excludes. I myself see no greater reliability in a bank or a life insurance company and, indeed, no equal sense of responsibility in many of the building societies, particularly small building societies, than in established lending companies of integrity, trustee companies and, indeed, many of the great private trustee companies which rely for their advice upon the legal profession. This applies also to many of the estate agent companies which play an active part in the arrangement of housing loan finance.

It seems to me to be rather an indication of inexperience to suggest that people who lend in that field will not exhibit sufficient responsibility in respect of the safety of their own money to be some assurance to the Corporation that they will see their money properly secured and safeguarded. Senator McKenna said it appeared to him that the moneys to be used for this purpose would come largely from the institutions. He could not have given much attention to this matter, because I pointed out last night that those who have studied it in detail suggest that the lenders on whose behalf I speak have an outstanding liability in this field of finance of more than £300 million whereas the greatest liability in the three classes Whom the Minister presently proposes to approve - the banks, life assurance companies and building societies - is that of the building societies. It amounts to £289 million.

Senator McKenna - What is the total liability of the three classes?

Senator WRIGHT - The 1962 figures revealed that in the case of the building societies the liability was £289 million; in the case of the savings banks, £239 million; in the case of the major trading banks, £95 million; and in the case of the life assurance companies, £154 million. So those who say that the exclusion of those not in the classes presently to be nominated will enhance the flow of money for house finance are following a most unusual course.

Senator McKennasaid that the Government must have some control; otherwise the Corporation would receive attention from the confidence men. I have stated his argument briefly. Of course will be confidence men in this business, but has the insurance world found it necessary to stipulate certain classes in order to exclude confidence men? We trust the Corporation to deal with the security of those to whom it will extend insurance. There will be no obligation upon it to give insurance to the English, Scottish and Australian Bank Ltd. if on the day after this legislation is passed the bank takes along to it a portfolio of mortgages amounting to £200,000. The Corporation would be recreant to its trust if it took those as an omnibus proposition. It will have to give to any proposals that are submitted to it the ordinary scrutiny that an insurance company would give to proposals it received and which the Export Guarantee Insurance Corporation gives to proposals submitted to it.

I thought I emphasised last night that I was quite prepared to leave it to the judgment - to the commercial integrity - of the Corporation to say: "Mr. X, we do not wish to deal with you ". It need not assign any reasons, but I am sure it will act on proper business considerations. It will not be dictated to by a classification of lenders who are approved by a Minister, be he of Liberal persuasion or, if unfortunately the possibility crystallises into eventuality, be he a Socialist Minister.

Senator Ormonde - That is spoiling it.

Senator WRIGHT - No. I am not indicating a lack of confidence in the integrity of any individual Minister. I am dealing with the ministerial classification of people who are entitled to consideration from the Corporation. To give to a Minister the right to stipulate the classes of lenders who may do business and those who may not is, to my mind, opposed to the principles which should govern the administration of this legislation and to political principles generally. It is for those reasons that I speak in support of the amendment I have proposed.

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