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Wednesday, 15 May 1985
Page: 1972

Senator LEWIS(12.20) —The Opposition is opposed to clause 9 which very substantially expands the operations of the Housing Loans Insurance Corporation. The Corporation, because it is government-backed, is able to operate unfairly in the private sector. I am not questioning that it has been managed efficiently in the past, but it has over $60m in investments. It is not responsible to any shareholders. I imagine that, had it been a public company, by now there would have had to have been a distribution of capital in some way to its shareholders, but because it is a government body it is able to maintain these investments. Certainly it is paying its fair share of taxes; no one is arguing that it is not paying all the outgoings which private enterprise would be required to pay, but it is able to maintain these profits. It has nearly $68m-worth of investments, yet the Government is talking about privatising some things like war service homes and the Belconnen Mall. If this organisation is not worth $100m plus its investments I should be surprised, so we are probably talking about an opportunity for the Government to capitalise about $168m to $170m and then to allow private enterprise to move into the area.

It may very well be that the building societies support this extension, but that is because, as a result of this housing loans insurance organisation being in existence as a government-backed body, the premiums in housing insurance are artificially depressed. I know that some people say: 'That is a good thing. It is keeping down the premiums'. I can imagine hearing Senator Haines say: 'Yes, what a marvellous thing to keep down the premiums'. I see that Senator Walsh has come into the chamber. I am sure that he will understand, even if Senator Haines does not, that if, as a result of the Government being involved in private enterprise in this way, premiums are artificially suppressed-in other words, the market forces are not able to flow-something will erupt in some way. It is like trying to squeeze a sausage balloon; the air must be expanded to somewhere. Just precisely where that will be, I do not know; and I do not attempt to make any predictions. I merely say that, as a result of the Government remaining in this area, that squeeze is taking place and the air must escape somewhere. There will be some sort of explosion. Of course, the explosion could well be that private enterprise ends up withdrawing totally from housing loans as such.

It is now proposed that this Government instrumentality be able to expand fourfold in effect and to move into other areas in relation to re-insurance in the private sector. The result of that will again be to involve some sort of artificial depressant in this area. The market forces will not be able to operate. There is no need for this body to move into this area. Re-insurance is taking place within the private sector, and I hope that it expands within the private sector because I see much merit in re-insurance. But I cannot see any merit in 1985 in this body now moving into that area.

Finally, this clause which we are opposing contains a provision which will enable the Government to make a direction to the Housing Loans Insurance Corporation as to the nature and extent of contracts that it is able to enter into in this area. Clearly there is a first step towards the regulation and control of the insurance industry through this Housing Loans Insurance Amendment Bill. The Opposition will certainly be opposing clause 9.