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Wednesday, 9 March 1932

Mr BRUCE (FLINDERS, VICTORIA) (Assistant Treasurer) . - The reception accorded to this measure has been generally cordial, the chief complaint of its critics being that we have not gone quite far enough. The honorable member for Darling (Mr. Blakeley) said that he was quite in accord with the principles of the measure, but deplored the fact that the Government had not on this occasion brought down a full and complete measure to take over the control and regulation of insurance throughout Australia. What he said was largely echoed by the Leader of the Country party (Dr. Earle Page), and several other speakers. The Government considers that insurance is a matter that should be dealt with by the Commonwealth, and that Parliament should exercise the power given to it by the Constitution, and I hope that, at a later date, a complete measure dealing with the whole subject may be submitted to honorable members for their approval.

As I pointed ou£ when introducing this bill, a comprehensive measure has on two occasions been passed by the Senate, but owing to the intervention of a general election on each occasion, that legislation was never completed. Except for the criticism that this measure did not go far enough, the honorable member for Darling approved of the bill, but said that he did not want to see any sudden, drastic, or immediate action taken by the Commonwealth which would embarrass the States which, at the present time, have control of insurance, and have accepted deposits paid by insurance companies in accordance with State laws. I assure the honorable gentleman that there is no intention to embarrass the States in any way. Under this measure power is taken to allow the deposits to remain with the States, and protanto, to be regarded as deposits required under federal law. The honorable member also was not sure whether the States would be required to hand back to the companies deposits in their possession of a value above that required by the federal law. There is no intention to require anything of the kind to be done at the present time. Things will be allowed to remain as they are, pending the introduction of a wider and more general measure for the regulation of insurance on a federal basis.

With one exception, the other points raised were more or less committee matters. The honorable member for Perth (Mr. Nairn), the honorable member for Denison (Mr. Hutchin), and, I think, the honorable member for Wentworth (Mr. E. J. Harrison), discussed the matter of self-insurance, or internal insurance schemes established by various business concerns. I am prepared to deal with those points in committee, though I think that they are, to a large extent, met by the bill as it stands. I intend to propose an amendment to the definition of insurance business, which will clear up most of the difficulties raised by honorable members. That amendment is to strike out after the word "means" the words "the undertaking of liability to make any payment " and to substitute " life insurance business, and includes the business of undertaking liability. The position is further safeguarded by clause 15, which provides that the Treasurer is to have discretion to exempt certain kinds of insurance businesses.

The honorable member for West Sydney (Mr. Beasley) suggested that though this bill had been introduced with an air of great simplicity, as one purporting to safeguard the interests of policy-holders in insurance companies, and to protect the public against mushroom and fraudulent companies, this is really camouflage to disguise certain insidious and dreadful designs of the Government. I assure the honorable member that the whole object of this measure is to protect the rights of policyholders, and to make sure that security will be available in the event of any company meeting with disaster. The honorable member, has, however, forced me to make a few remarks regarding the present Government of New South Wales. The honorable member for West Sydney is very difficult to please; apparently nothing will satisfy him. I have been accused of being at times a trifle outspoken regarding New South Wales, and a little too free in my comments on the Premier of that State, and the actions of his Government. But when introducing the present bill I did not say anything on the subject. The honorable member for West Sydney has now forced me to abandon my reticence. The purpose of this measure, as I have said, is to protect policy-holders, and to safeguard their security. A. bill is now before the Parliament of New South Wales providing -that insurance companies must deposit security with the Treasurer of that State, and one might imagine that that action was being taken on behalf of the policyholders. But a significant feature of the measure relates to the security which has to be deposited. The word " security " is used, but the word " securities " is not used at all. From beginning to end the bill stipulates that money shall be lodged. In every other measure designed to protect the interests of insurance policy-holders it is always provided that money or securities may be lodged ; but in the New South Wales bill there is no reference to securities at all. In the New South Wales

Parliament numerous amendments were made to the insurance bill, and they were all alike. They were to the effect that after the word "' money " the words " or securities " be inserted, the purpose being that securities in addition to money, might be lodged as a deposit. The New South Wales bill is not a comprehensive measure to deal with insurance with a view to protecting the interests of policy-holders. It provides merely that insurance companies shall deposit securities with the Government, and what distinguishes the measure from all similar legislation is that the lodging of security is always defined as the payment of money. It is essential in the interests of the policyholders and the insurance companies that action be taken by the Commonwealth Government to prevent large sums of money from being drawn from the insurance companies into the coffers of the State of New South Wales, there being grave doubt that such money would ever be available to protect the interests of policy-holders.

Honorable members will note that it was not I who introduced this matter into the discussion; that responsibility rests on the honorable member for West Sydney. Since he has raised the issue, I have no hesitation in saying that, if there were no other reason for introducing this measure, the action of the New South Wales Government makes it imperative that steps should be taken by the Commonwealth Parliament to protect the interests of insurance companies in New South Wales. It is extraordinary that the Government of New South Wales, which has so much to say about helping the poor and suffering, and those upon whom misfortune has descended, should introduce a measure, the undisguised object of which is to draw into the coffers of the State large sums of money from insurance companies, so that the Government may carry on a policy which, although it may believe it to be right, every thinking person recognizes- is bringing the State to irretrievable disaster.

The honorable member for West Sydney asked why this measure was being treated as urgent. If he really wishes to know, my reply is that it is because of what is being done in New South Wales at the present time. This measure is urgent because it is necessary to take steps to protect the interests of insurance companies, which hold such a large proportion of the savings of the people of Australia. It is necessary to ensure the stability of those companies, in which the majority of the people are so vitally interested. There is no section of the community, hardly an individual, in fact, who is not concerned with the soundness of the insurance companies which operate in this country. I have no hesitation in saying that it is to protect these institutions, and through them the interests of the public, that this bill has been introduced.

The honorable member for West Sydney stated also that other State Governments have received these deposits, used them for their own purposes, and, in short, done what obviously would be done by the Government of New South Wales if such moneys were allowed to reach its hands. The allegation against the other State Governments is absolutely untrue. In each State the Insurance Act prescribes what shallbe done with the deposits when they are received by the Government, and how the rights of the policy-holders shall be protected. The reflection upon the integrity of the governments in those States which already hold deposits from those carrying on insurance business, has not the slightest justification. A more sane and accurate view was expressed by the' honorable member for Darling who recognized that embarrassment would be caused to any State Government if it were suddenly called upon to hand over large sums of money because Commonwealth legislation had required a change in the custody and control of such funds. Such a demand was never contemplated in the insurance laws of any of the States. TheCommonwealth Government has no desire to embarrass the States. It intends to introduce a comprehensive measure to deal with insurance, and, in the meantime, no hasty or ill-considered action will be taken to require the States to hand over to the Commonwealth the deposits they now hold. The State legislation under which those deposits have been made will be kept alive, pending further Commonwealth legislation on the subject.

The honorable member for Martin (Mr. Holman) canvassed the possibility of the Treasurer investing the deposits of a company in freehold properties, and, subsequently, when the securities depreciated, requiring the company to restore its deposit to its original value. The Government does not desire that that shall occur, and no doubt in committee such a contingency can be provided against. Whilst this is not the comprehensive insurance measure that the Government and other honorable members desire, it is at least a step towards uniformity throughout Australia. The measure is urgent, and I hope that the House will deal with it expeditiously.

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