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Wednesday, 31 March 1965

Senator WRIGHT (Tasmania) . - I refer to the definition of " approved lender ", which reads - a person approved by the Corporation under the next succeeding section. . . .

Clause 5 reads - (1.) The Minister may, by instrument in writing, declare a class of person specified in the instrument to be an approved class of lenders for the purposes of this Act. (2.) The Corporation may, by instrument in writing, approve a person, being a person included in an approved class of lenders, as a lender for the purposes of this Act.

One will notice the manner in which the approval is given, that is to say, by an instrument in writing - not by regulation, even, because that would be subject to the control of the Parliament. An instrument in writing that emanates from the Corporation or an instrument in writing that emanates from the Minister is neither a regulation nor part of the Act. Therefore, by these two means under the definition in clause 4, the whole benefit of this Bill is intended to be confined to particular classes of persons who lend money. These are to be defined by the Minister's instrument in writing. Within those classes, the actual person who lends money, who must have approval to bring his loan within the benefit of this Bill, is to be indicated by the Corporation, again by an instrument in writing.

I am totally at a loss to see any need for the Minister or the Corporation to have statutory power to approve or disapprove classes of loans or individual lenders. The Corporation being entrusted with the power to insure housing loans, we are confiding to it a discretion to fix the rate of interest and the rate of premium appropriate to the risk. So long as it satisfies itself that the security is of the proper amount and that the house is in a sound condition, which is done by the ordinary processes of commercial valuation, Bill Smith's money is as good as any bank's money.

It seems to me to be the oddest idea that the benefit of insurance of loans should depend upon any particular class of lender being selected by the Minister or any particular individual being selected by the Corporation. The importance of that proposition comes from a statement that was made by the Minister. He said that the legislation is intended to apply to banks, life assurance companies and building societies. If that is so, it is going to exclude many lenders who are now contributing a great deal to housing finance. I have in mind what the Leader of the Government in the Senate said when closing the second reading debate. He said that one of the prime purposes of the legislation is to attract as much money as possible for housing from the private sector of the community which has the money to lend.

I wish to refer to a publication entitled " Studies in the Australian Capital Market ". I am indebted to Senator Prowse for drawing my attention to it. It was edited by R. R. Hirst and R. H. Wallace of the University of Adelaide, and was published in 1964. It shows that in 1962 the building societies invested £289 million in housing finance; savings banks invested £239 million; major trading banks invested £95 million; and life assurance offices invested £154 million. Turning to page 123, the publication states -

Considerable lending on private mortgages is arranged through estate agents, solicitors and mortgage brokers, but there is no way of making a reliable estimate of its size. From such information as is available from mortgage registrations it seems unlikely that private mortgage outstandings would be less than one-fifth of institutional outstandings or, say £300 million in 1962, but that could well be much larger than this.

That figure is in excess of the figures given for building societies, banks and life assurance companies. Therefore, if it is intended to discriminate between classes of lenders so as to exclude lenders who include the major trustee companies of the country, with vast sums of money always available for home finance, I feel that the purposes of the Bill will be defeated. There seems to be no reason why the Minister or the Corporation should, even by regulation - if it is to be done, it must be done by regulation and not by a private instrument that is not available for scrutiny by the Parliament - discriminate against one class of lender. If the Corporation is given the valuation of the security with a certificate as to the soundness of the home or dwelling which constitutes the security, and it knows the term of the loan and the rate of interest to be charged, it has all the elements upon which it should be able to assess the risk. I move -

Leave out the definition " approved lender ".

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