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Wednesday, 31 March 1965

Senator LAUGHT (South Australia) . - I listened with great interest to Senator Bishop's remarks and I rise now to support the Bill without a number of the reservations that he mentioned. The purpose of this Bill is to establish the Housing Loans Insurance Corporation which will insure lenders against losses arising out of the making of loans for housing. The Bill has been created and brought to this Parliament under the powers vouchsafed to the Commonwealth by the Constitution. As all honorable senators know, we in this country work under a limited Constitution, so this Bill should be examined specifically from that angle. I agree with Senator Bishop that it will bring great benefit to the people of Australia who desire a home of their own. I do not agree with him that the fact that this proposed Commonwealth organisation will guarantee loans will draw off investment.

The honorable senator referred to war service homes. The Minister in another place gave a very interesting undertaking in that regard in reply to an Opposition request, similar to that which Senator Bishop has made, for war service homes loans to be brought within this scheme. I would prefer to see the outcome of the undertaking before becoming too critical of the Bill because, after all, the guaranteeing of war service homes loans is a matter for another department. The Minister for Housing (Mr. Bury) is reported on page 304 of " Hansard " of the House of Representatives as saying -

We will review the war service homes scheme. This problem will be considered in relation to war service homes and repatriation measures.

Senator Bishopsaid he hoped that the Corporation would not consider itself to be bound by strict business principles. I hope that business principles will be observed in all considerations relating to the operation of this Bill. We are trying to save borrowers from all the problems associated with second mortgages as a result of which they have been compelled to agree to rather high rates of interest. Therefore I believe that this new scheme should be implemented in strict accord with sound business principles because when loans are made without sound business principles being observed there is always the chance of a mortgagee sale or a foreclosure. That is the very thing that this Bill sets out to avoid. It sets its face distinctly against problems such as would thereby arise. However, I think Senator Bishop gave the Bill a very generous and understanding consideration. It certainly helps, in a debate like this, when the Opposition has obviously gripped the main principles of the Bill.

I desire to set out in some detail just what insurable loans are to include. Insurable loans are to include loans made for the purpose of acquiring land and constructing, or completing the construction of, a dwelling on the land. They will not include a loan made for the purchase of land for speculation or anything like that. They will not include a loan to purchase land for agricultural or horticultural purposes or for any business purposes. They will include a loan to purchase land on which a dwelling will be constructed. They will include a loan made to construct a dwelling or to complete the construction of a dwelling on land owned or leased by the borrower, that is, where the dwelling is partly completed.

What is of significance in this Bill above ail bills relating to housing that I have considered during my 14 years in the Senate is that it guarantees a loan made to purchase an existing dwelling. Because of the backlag in building, emphasis over the years quite rightly has been on the purchase of new dwellings; but now loans made for the purchase of an existing dwelling are to be included. This is a rather important factor because it will go a long way towards preventing waste in housing-

Some very fine residences have been built over the past 30 or 40 years. Although some of them may look a little out of date now, they were built when materials were of a high standard and when workmen were well trained. These residences stand in areas in our capital cities and major country towns where all the facilities exist - 'transport, water, electricity, schools, hospitals and so on. It has been rather difficult to find a market for these houses because, under the various governmental housing schemes which have existed, it has not been possible to obtain the finance with which to purchase them. As a consequence, some of our very fine suburbs have dropped in popularity. I am sure that this Bill will cause a fresh interest to be taken in this type of residence because loans to purchase them will be guaranteed under this measure. Governments, both State and Federal, will be saved a good deal of money because the services and facilities are already in and around this type of home and, therefore, will not have to be provided. In addition, I believe that purchasers of these homes, by and large, will get very good value. A lot of the discomfort suffered especially by young people who go into the outer suburbs, possibly 10 miles or more from the capital and 10 or even 20 miles from their place of work, will be avoided if they are able to purchase this older type of home in areas that were built up 20, 30 or even 40 years ago.

Guarantee will extend also to loans to alter, improve or extend a dwelling. These would include loans for, amongst other things, the permanent provision of water supply, electricity and sewerage, and the conversion of an existing dwelling into two or more dwelling units. I think that is a very wise provision. It will help the housing situation because the tendency these days is for families to be smaller than they were 30 or 40 years ago when a number of larger type homes were constructed. It is now possible for two families to live in one of these old style houses provided certain additional facilities, such as bathrooms, are created. The Government has shown imagination in including loans for this type of construction. As Senator Bishop has said, the Bill provides that loans may be made also- to meet expenses in respect of the provision or improvement of roads, kerbing, guttering or footpaths in connexion with land in which the borrower has a prescribed interest.

As honorable senators know, there is an obligation on a householder to the municipality to assist in the construction of footpaths and kerbing and sometimes the demand made by a municipality for kerbing expenses is severe. The Government has wisely covered loans made for these purposes. The Bill also provides that loans may be made - to discharge a mortgage, charge or other encumbrance over land in which the borrower has a prescribed interest . . .'

So it can be seen that although Senator Bishop has suggested that provision could have been made for one or two other types of loan, the Bill as framed contains a pretty massive list. I remind the Senate that the Minister for Housing (Mr. Bury) has given an undertaking that consideration will be given to the question of war service homes.

I want to make several observations now concerning housing on matters which I consider to be linked closely with the Housing Loans Insurance Bill. I do not call for any legislative action by the Government at this stage but I think action is required on these matters by way of conferences with the States. I regret that throughout Australia at present there is not a system of strata titles under the lands titles system. A system has been well tried in New South Wales and I believe one was recently introduced in Victoria. But in none of the other States or the Australian Capital Territory is there any provision for the registration of a strata title.

This is the sort of title that is desirable and necessary in the case of home units. When there is not a sound title system for them, it is not possible to borrow for the construction or improvement of home units. I believe that until a system of strata title is established throughout Australia, the full effect of this legislation will not be felt and the benefits conferred by the measure will not be available to the very people we are trying to help. They are the people in the lower income groups, childless couples and aged persons who have possibly sold their large home and want to go into something smaller. Such aged persons are not hanging on to something they are not using but are prepared to sell their property so that others can use it provided they can get a small home unit.

I should like to see the Government give this matter active consideration. I hope that at the next Premiers' Conference the Government will confer with the Premiers as a matter of high priority with a view to the introduction of not completely uniform legislation necessarily but legislation of practically the same kind in every State so that loans made pursuant to this Bill may be legal first mortgages over units.

Even before that is done, here is a challenge to the Government to show its bona fides by legislating within the A.C.T. and by encouraging legislation in the Northern Territory and the Territory of Papua and New Guinea to ensure that in those areas where the Government has either legislative dominance or full responsibility, a similar provision is made.. The implementation of measures affecting war service homes would be assisted also if such remedial legislation were passed in the States and Territories. It is a shame that this Government has done nothing to ensure that recipients of loans from the War Service Homes Division who want home units can get them in States other than New South Wales. There is a real challenge to the Government to make this Bill apply to borrowers who get war service home loans and want to have a home unit.

I welcome the market for mortgages. I hope the Minister is able to create and encourage such a market. I hope also that trustees will be encouraged to make trust and estate loans on homes which are built with the guarantee embodied in this legislation. A lot of available money in Australia is held by the Public Trustee, by trust companies and private trustees. This money is held purely for the running of a trust. Usually the trust ceases with the life of a person, and with the death of a widow or a life tenant the money is available. Under Our law a trustee cannot invest money in other than gilt edged securities without incurring personal liability. These securities are generally bank fixed deposits, government loans, and loans on land, houses and real estate un to -> certain proportion which is about 60 per cent.

I hope that in the course of time and when the proposal embodied in this Bill is put into operation, the Minister will consider conferring with the States on the laws relating to trustees to ascertain whether it is possible to get the States to include in the permissible avenues of investment for trustees investment in a loan with the protection of a guarantee such as that provided in the Bill. I believe such provision would be of great benefit to the beneficiaries of trust estates who are entitled to a life interest. Instead of getting 4 per cent, or 4i per cent, as they do now from recognised gilt edged trust investments they might get up to 6 per cent, with the excellent guarantee that will be afforded by the Commonwealth Government. So I ask the Minister to explore the possibility of Public Trustees, trust companies and individual trustees being able to negotiate loans for the purpose of house building and also to do his best to ensure that the States will add to their list of permissible investments loans negotiated under such conditions.

Senator Wright - What possible reason is there for not insuring loans by trustees under this Bill?

Senator LAUGHT - I understand that the Minister believes that, to get this scheme operating, it will have to start with some of the bigger traditional lending organisations. I am rather inclined to go along with him at this stage because it is a completely new venture for the Commonwealth to guarantee lending for housing. I would like to see the scheme commence in the way the Minister suggested. But I do not want him to put out of his mind, or for any supporter of the Government to put out of mind, the possibilities of extending this facility along the lines I have suggested.

I am in thorough accord with the Bill so far as it goes. I regard the Bill as a first instalment of an imaginative new venture in connection with housing loans. I hope that the Minister will pursue further amendments of this Bill with the same vigour that he pursued further amendments of the Homes Savings Grant Act which was before the Senate last year. In the Minister for Housing I think that we have a man of very great capacity, imagination and drive. I have no doubt that this Bill will be of great benefit to the Commonwealth.

I desire to conclude with one or two other thoughts. I believe, as Senator Bishop did, that clause 23 of the Housing Loans Insurance Bill is of great significance. It states -

The Corporation may decline to enter into a contract of insurance in respect of an insurable loan if it is not satisfied that the dwelling-house to which the loan relates has been constructed, or will be constructed, as the case requires, in accordance with sound standards of construction or, in the case of a loan made for the purpose of altering, improving or extending a dwellinghouse, or for purposes including that purpose, that the alterations, improvements or extensions will be carried out in accordance with sound standards of construction.

By this section the Commonwealth, as any wise guarantor of a loan should do, can ensure the sound construction of a dwelling. In that regard I would like to commend to the Government certain work which appears to be going rather slowly and it is work in which Senator Gorton, as Minister for Works, is taking an interest. Senator Gorton, from time to time, or his officers, has attended conferences with the State Ministers who have the responsibility of fixing building standards, safety standards and other matters relating to buildings. I know that those Ministers have been attempting to encourage their respective governments to bring in some legislation of a uniform nature to ensure the highest standards of building activity. I know that Senator Gorton is primarily interested in the matter of constructional works in his capacity as Minister for Works. He is interested in the bigger jobs. But I look forward, with some confidence, to the time when a higher standard of building operations can be brought about. I hope that the State Governments will be interested in furthering this project.

This field of housing normally does not fall into the lap of the Commonwealth to undertake. But we are entering into it because we are engaging in the insurance of housing loans. When one engages in insuring something one must consider whether what one is insuring is properly constructed. The Commonwealth is entering this avenue and I hope that some progress will be made along those lines. I accordingly commend the Bill to the Senate and I hope it wi'.l receive a speedy passage. I hope that the Minister will regard this as a first instalment only and that he will keep an active and open mind with regard to improvements which may be brought to his notice from time to time. At present I am not concerned with the fact that he has not nominated the rate of premium, nor that he has not nominated the rate at which the Commonwealth expects loans to be granted. 1 have no doubt that very soon he will come to a decision on those two figures. As is obvious to honorable senators, these figures can be decided upon only after consideration of all the facts. The further consideration given by this Parliament to the measure will, I think, depend upon those two figures.

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