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Wednesday, 9 March 1932

Mr BEASLEY (West Sydney) . - Sub-clause 2, if my interpretation of it is correct, provides an opportunity for the Commonwealth Treasurer to authorize, at his discretion, that whatever amount or security a State may have deposited with it, shall be returned to theperson by whom the deposit was lodged. During my second-reading speech, I stated that this provision would give power to the Treasurer to direct, at his discretion, that funds lodged with, for instance, the Queensland Government, which funds, according to the honorable member for Darling (Mr. Blakeley) amount to £1,400,000, shall be returned to the insurance companies concerned. No reason has been given for the insertion of this sub-clause in the bill, although it will enable the Commonwealth Government to place in an embarrassing position a State that may, in the near future, be experiencing the conditions prevailing in New South Wales to-day. I have mentioned Queensland as an illustration, because there is likely to be a change of government there shortly, and if there is a new government, it may adopt an attitude to this bill similar to that which the Tasmanian Government is taking against another measure which has recently been passed by this Parliament. This legislation is coloured with party politics. I am not prepared to permit the Commonwealth Treasurer to exercise thispower to the detriment of New South Wales, andpossibly, to the detriment of other States in the near future. According to Mr. Barnes, the Queensland Treasurer, if his Government were forced to disgorge the funds lodged with it by insurance companies, the State would be in a serious position. I can imagine how ruthlessly this power will be applied by the Commonwealth Treasurer if a change of government takes place in Queensland. I warn the supporters of the Government, who represent States other than New South Wales, that this provision is likely to react against them. I refuse top ilace in the hands of this Governmentpower which will enable it to sabotage the efforts of a Labour government to finance its operations. I move -

That sub-clauses 2 and 3 be omitted.

Mr.BRUCE (Flinders- Assistant Treasurer) [9.28]. - This sub-clause has been inserted in the bill in order to assist the States. One method of dealing with the whole problem would have been for the Commonwealth to require the immediate return of all securities and moneys deposited with the various States, to the insurance companies concerned, and the immediate payment by those companies to the Commonwealth of the prescribed amount of security. The Government does not believe that that would be a fair or wise thing to do. To demand that the transfers should take place immediately would dislocate the finances of some of the States. This demand is not being waived for the reason suggested by the honorable member for West Sydney (Mr. Beasley), namely, that the States have committed some breach of trust and spent the money; but because under the law of most of the States the Treasury may re-invest such deposits in State securities, and most of them have done so. This clause has been inserted to protect States against the inconvenience of having to call in these moneys at short notice. The change-over from State to Federal control of insurance can be made in an orderly manner, and when it, is completed there will, I trust, be one federal insurance law dealing with all phases of insurance business.

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