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Thursday, 18 October 1973
Page: 2347

Mr KEATING (Blaxland) - The Opposition is proposing the deletion of the essential part of this Bill. At the last election the Australian Labor Party proposed to the people an extension of the role of the Australian Industry Development Corporation, a corporation set up by a Liberal government, but, of course, started at the behest of Sir John McEwen. In its original form the Corporation was limited. It was financed with a government appropriation of SI 00m of which to date about $53m only has been spent. The Labor Party secured a mandate from the people to design legislation to attract and marshal the credit of the small investors throughout the length and breadth of Australia to give them some stake in the national growth of Australia and in its vast mineral and energy deposits and also its vast secondary industries. As the Minister for Overseas Trade (Dr J. F. Cairns) said a few moments ago, it is near impossible to buy back the farm which, in minerals and energy, is so overwhelmingly controlled by foreign capital both in equity and in voting power on boards. It would need far in excess of an appropriation that the Parliament could provide to AIDC by way of capital to achieve a buy-back operation. The only way that this sort of capital can be raised is by the subscriptions of the Australian people, by companies, by life offices and by pension schemes. The Bill has designed in it a National Investment Fund but the Opposition's amendments are designed to destroy that concept. The Government cannot accept the amendments because they are contrary to the spirit of the Bill.

We have heard much talk about life assurance offices. I do not think any supporter of the Government would quibble about the role of life assurance offices, but I do not think there is any great thing to be said for growth for growth's sake in life offices. They have grown quickly in the last few years. The investment decisions of the life offices have, in many ways, run against the interests of the national economy, particularly when one has regard to the areas into which money has been channelled. As the Minister has said, a lot of money has been spent on high rise office buildings in the capital cities. Money has gone into investments which have shown a good rate of return for the life office funds but not good in terms of the priorities that should be fixed in the national interest. The chairman of perhaps Australia's largest assurance company told me that the Liberal government of the day refused to allow his company to invest in the Hamersley deal in Western Australia when it was being put together in the late 1950s or early 1960s. Such money should have gone into that area but did not. The Government is trying to marshal the people's money into those areas.

All that we are suggesting in this Bill is that the National Investment Fund be given the same type of assistance and be recognised as the same sort of organisation as life offices. The Government will allow a tax deduction up the level of $1,200 for money subscribed to the fund in the same way as it allows it for insurance payments. The Government is offering investment bonds which can be taken up by the public. The Government intends to add $10 to the value of every $100 invested in such bonds. The Deputy Leader of the Opposition (Mr Lynch) asked why the Gov ernment should complement the $100 with a $10 subscription. Basically the answer is that the National Investment Fund money will be used by the Australian Industry Development Corporation in a number of areas which are in the national interest but which may not produce a high return on investment. It would be fair to assume that in those circumstances the bonds would have a low yield. The Government felt obliged to boost the buoyancy of such a bond by adding a 10 per cent supplement to it. When the bond is sold the supplement remains with the Commonwealth. The fact that the money would not be invested in a high growth area indicates that the Government should at least assist in making the bonds attractive to the public.

Mr Lynch - Why should people be apprehensive about this scheme?

Mr KEATING - If there is any apprehension I do not see why there should be. If the public can get a 10 per cent complement for every $100 invested I cannot see why they should be apprehensive. The previous Government gave the life assurance offices more than a good run. The endowment policies were in fact used in 2 ways: Firstly, to build up the life offices; and secondly, to operate as a taxation concession - and it was a very generous taxation concession. Someone could take out an endowment policy with a maturity date in 5 years time and find that he was able to deduct $1,200 from his taxable income each year and then receive an increment on the value of the policy at the end of the 5 years. So he saved taxation for 5 years and received an increment as well. That sold a lot of insurance. It also cost the Commonwealth Treasury a fortune. We have stopped that. We are prepared to continue the $1,200 taxation deduction to assist life offices with genuine life assurance and endowment policies extending over a reasonable period. All the funds that went into short endowment policies naturally assisted life offices too much. All we are saying is: Let us have the same assistance in principle for the National Investment Fund, not as extravagant perhaps as that given in relation to an endowment policy, but certainly assistance to the point where this Fund has a real opportunity to attract money.

The Oppositition will move a subsequent amendment to limit the capital of the Fund to $500m. It says that the reason for this is that if the Fund is able to attract unlimited funds it will upset the capital market so drastically in Australia and that it will affect the amount of money going into housing. People investing in building societies would do so for reasons different from those of people investing in this Fund. People invest in blue chip stocks and blue chip organisations for reasons of security and return - modest return with reasonable security. I think that is the reason they would invest in the National Investment Fund. But if they invest in a building society and get li or 8 per cent at call, it is a different prospect altogether. There are 2 different types of investors in that case. It is not a matter of robbing one to feed the other. What the legislation is doing, of course, is limiting the capacity of multi-national corporations to raise money on the Australian capital market.

Frankly, I never heard any words uttered by the Opposition when in government particularly by the Deputy Leader of the Opposition and the right honourable member for Lowe (Mr McMahon), the 2 speakers who have spoken on behalf of the Opposition, about the raising of capital in Australia by multinational corporations. We have seen a lot of them go to the investing public of Australia for $30m or $40m, not to be invested by Australians in an Australian company to give Australians equity but being raised by a foreign company, and Australians being paid 8 to 10 per cent for it, which has then taken up equity in an Australian enterprise. That has been the way that a lot of capital has been used in Australia. We want to chop that out. .We do not think it is a good thing. We think that the Government should assist in marshalling funds to be invested for the benefit of all people in national development projects. This is what the National Investment Fund is designed to do. It is the vehicle by which the expanded AIDC can achieve this aim, and the Opposition's amendments would only destroy the concept of it. They do not deserve support and I commend the original Bill to the Parliament.

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