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Thursday, 9 May 1985
Page: 1928


Mr HODGMAN(11.45) —The Opposition opposes the Housing Loans Insurance Amendment Bill. This Bill is a classic opportunity to note in very sharp focus the philosophical differences between the Hawke socialist Government on the one hand and the Liberal-National Party Opposition on the other. We, as an Opposition, are totally committed to smaller government and lower taxation. Quite frankly, we believe that the overwhelming majority of Australians are sick and tired of big government and sick and tired of heavy taxation. We therefore find the Bill, which proposes a four-directional expansion of the Housing Loans Insurance Corporation, totally unacceptable. It completely cuts across the philosophy of liberalism and the spirit of private enterprise. Let me say at the outset that, upon our return to government at the next election, the Housing Loans Insurance Corporations will be transferred to the private enterprise sector, subject only to one condition-that the level of services presently provided will be maintained. We reaffirm, therefore, both in principle and in practice the decision we took in government in 1981. Notwithstanding the fact that the Housing Loans Insurance Corporation is operating at a profit, it must be accepted that the HLIC is carrying on its functions as a statutory corporation when the job could be properly done, and we believe more effectively done, by private enterprise. The Liberal and National parties have a firm and unequivocal commitment to smaller government and lower taxation. I believe that my fellow Australians listening to this broadcast would certainly agree with both those propositions. The people of Australia are sick and tired of big government and they are certainly sick and tired of heavy taxation.


Mr John Brown —Why didn't you do something about it in your seven years in government?


Mr HODGMAN —Notwithstanding the interjections of the Minister for Sport, Recreation and Tourism, who is at the table, this Hawke socialist Government, in the period it has been in office since March 1983, has taken away from the former Whitlam socialist Government the record of being Australia's heaviest taxing government since Federation. We have no doubt that the functions currently being performed by government at a cost to the taxpayers of Australia will be and shall be wherever practicable transferred to the private enterprise sector upon our return to government after the next election. This is the second significant decision that the Opposition has made in recent weeks. The first was to decide quite categorically that, upon return to government, we would transfer the Snowy Mountains Engineering Corporation to private enterprise. Similarly, the Housing Loans Insurance Corporation will also be transferred to private enterprise, where it rightly belongs.

This Bill proposes a four-directional expansion of the Housing Loans Insurance Corporation. Let there be no doubt that it is the policy of the Minister for Housing and Construction (Mr West) and the Hawke socialist Government to make the Housing Loans Insurance Corporation bigger. Of course, that is not surprising because this Minister-he has never denied the fact-is quite unashamed about his socialist commitment. In fact he is the senior Socialist Left Minister in the Hawke socialist Government.

Let me refer to the four areas in which it is proposed that the Housing Loans Insurance Corporation will be dramatically expanded. What we are seeing in this Bill today, the exact antithesis of our commitment to smaller government, is a four-directional expansion of a statutory corporation of the Commonwealth of Australia. Principally, the Bill will enable the Housing Loans Insurance Corporation to participate in the secondary mortgage market by insuring pools of mortgages against loss. The Minister, in his second reading speech, emphasised that the Corporation:

. . . will be insuring only the performance of the underlying mortgages. It will not be guaranteeing those who pool mortgages for sale or the market securities themselves.

Whilst insisting that the Housing Loans Insurance Corporation will conduct this new aspect of its business on a strictly commercial basis, the Minister contends and the Hawke socialist Government argues:

. . . that the Corporation will be confined to the insurance of losses on the underlying mortgages and not the range of other commercial risks that form part of any market transaction of this kind.

The Government claims that there is 'very positive industry response to this measure supporting the development of the secondary mortgage market in Australia'.

Secondly, the Bill extends the Corporation's insurance services, as stated in the Minister's second reading speech, 'to include all loans secured by mortgage, including loans where the purpose of the loan is not directly related to the mortgage security'. The Government has stated that this complements 'recently announced changes to State legislation involving widening of the lending powers of permanent building societies'.

Thirdly, the Bill provides for the Housing Loans Insurance Corporation to be empowered to act as an agent for other insurance companies underwriting mortgage repayment insurance for borrowers in the event of death, sickness, unemployment and so on, particularly during the first years of mortgage repayment. Fourthly, and lastly, there is an interesting provision in the Bill, about which I will have some comment to make later, for a new special interest provision whereby the Minister of the day is empowered to direct the Corporation to provide insurance of loans falling within a specific class of loan deemed to be of special interest. Those are the words used in the Government's housing policy. In political terms, the Minister can direct, and the Housing loans Insurance Corporation will be obliged to respond accordingly. The Minister's direction or directions will be tabled in the Parliament.

Let it never be forgotten that, during the dark Whitlam years of 1972 to 1975, the Housing Loans Insurance Corporation was seen by the extreme socialist elements of that Government as the means whereby the insurance industry of Australia would be nationalised. Let me put it bluntly on the line. In terms of commitment to socialism, this Government is far more dedicated and far more determined to get its way than even the Whitlam Government was. The present mob in office makes Mr Whitlam and Dr Jim Cairns look like a couple of choir boys. I have no reason to disbelieve the intent and the commitment of the first Prime Minister (Mr Hawke) of this country to acknowledge publicly that he is a socialist and proud of it. Mr Whitlam was never prepared to say that, but the present Prime Minister is on the public record. In fact I note with interest the presence of the Minister for Sport, Recreation and Tourism (Mr John Brown) at the table. The Prime Minister made his statement at a campaign meeting for the man who is now Minister for Transport (Mr Peter Morris) when the Minister first stood for parliament. The star performer at the opening of that campaign was Mr R. J. L. Hawke, the then President of the Australian Council of Trade Unions. In a passage which I have quoted to this House on a number of occasions and which I will continue to quote on future occasions, the present Prime Minister said that he had no qualms at all about publicly proclaiming his commitment to socialism.


Mr John Brown —So what?


Mr HODGMAN —The Minister says: 'So what?'. That will go down well with the Right in New South Wales. Whether on land or at sea those people in New South Wales will be very interested in the Minister's comment. Is he switching sides? Is he going from the Right to the Left? He has gone in so many directions that he is the most multi-directional Minister that the Parliament has ever seen. Having said that, let me come back to the point that I was making. The Housing Loans Insurance Corporation was the vehicle whereby the Government of Mr Whitlam had plans to nationalise insurance. Mr Deputy Speaker, I am delighted that you are in the chair, as I know that you have followed politics closely, both before and subsequent to your entry into the Parliament. You will remember that the word was around the traps: 'We will not make the mess of the insurance industry that Ben Chifley made of the banking industry. We have the means whereby we can nationalise it, and we will do it via the Housing Loans Insurance Corporation'. So bluntly, while the HLIC continues to exist as a statutory corporation, it is the means whereby the Hawke socialist Government can move-I predict that it will move if given half a chance-to nationalise the insurance industry of Australia.


Mr West —Ah!


Mr HODGMAN —The Minister for Housing and Construction says 'Ah'. It is almost impossible for me to imitate him.


Mr West —Oh, nonsense.


Mr HODGMAN —The Minister says 'nonsense'. The Minister is the senior Socialist Left Minister of the Hawke socialist Government. He has never hidden his light under a bushel. Asking the Minister in this chamber to disallow his commitment to socialism is like asking a small boy to have free rein in a lolly shop but not to eat anything. Let us just get back to reality. The Housing Loans Insurance Corporation is a very interesting subject for debate. This Corporation has carried out its activities, in my opinion, with considerable distinction. It is one of the few government public sector enterprise corporations which has been operating at a profit. As the Minister at the table will no doubt remind us when he comes to reply, it was initiated in 1965 during the term of a man regarded by many as Australia's greatest Prime Minister, the late Sir Robert Menzies. Nobody could accuse Sir Robert Menzies of being a socialist, and I certainly do not. It would be very prudent to remember why the Housing Loans Insurance Corporation came into existence. Despite the vocal encouragement I am getting from the somewhat depleted ranks of the Hawke socialist Government in this chamber, let me remind the House how it all came about.


Mr John Brown —There aren't many of your lot.


Mr HODGMAN —The quality is on this side of the chamber. I would rather have six of mine than 25 of the Ministers, particularly the 22 who forgot how to vote on the Hawke assets test yesterday. But that is another story. I turn to the concept of mortgage insurance. I do not need to restate this but I will restate it for the sake of those listening to this debate: No parties in Australia have a greater and more positive commitment to home ownership than the Liberal Party and the National Party. During our term in government in the post-war period there was the greatest development of home ownership this nation has ever seen. Home ownership rose dramatically and consistently under the progressive policies of consecutive conservative coalition governments. The plain fact is that our commitment to home ownership has been on the basis that every Australian should have the right to own his or her home.

Mr Deputy Speaker, as you would be well aware, very few people have the capacity to buy a home without access to finance. Therefore, with every home almost inevitably comes a mortgage. Our parties have a firm commitment to giving young home purchasers protection from illness, a death or unemployment, particularly in their early years of home ownership. It was in that context in the mid-1960s that the concept of mortgage insurance was first discussed in Australia. A United States company, a very substantial one at that, the Mortgage Guarantee Insurance Corporation, decided it would like to involve itself in the private enterprise sector in Australia. Quite properly it did so. It would be fair to say that the Australian insurance at that time was at least sceptical, and one might say reluctant, to enter the field. It was in that context, in order to ensure that the home purchasers would have the option, that a coalition government brought in the Housing Loans Insurance Corporation. Had it not done so, there would have been but one insurer. I remember this quite clearly because I was a member of the Tasmanian State Parliament in 1966 when similar legislation-


Mr John Brown —I wish you had stayed there.


Mr HODGMAN —The honourable member might wish I had stayed there. I am very pleased to be here and I am going to be very happy to be back on that side of the House after the next election.


Mr Braithwaite —You'll be a very good Minister.


Mr HODGMAN —I thank the honourable member for his confidence. I must say I am getting distracted, without any disrespect to the two Ministers who are at the table.


Mr DEPUTY SPEAKER (Mr Blanchard) —Order! I would appreciate it if the honourable member kept to the content of the Bill.


Mr HODGMAN —I would be most delighted to, Mr Deputy Speaker. I am starting to look pretty good. I will pass on to other matters. If the honourable members opposite can contain their enthusiasm, I will come back to the concept of home mortgage insurance. It was in the context that I have outlined that the Bill was brought into the Parliament in 1965 by the Menzies Government and, I might say, had bipartisan support in the House. In the intervening period the Housing Loans Insurance Corporation has operated efficiently and effectively. It is the largest mortgage insurer in Australia today. When one reads its report-I am referring to the twentieth annual report, for the year ended 30 June 1984-one can only be impressed at how well it has done. I refer to page 13 of the report under the heading 'Operating Profit'. It states:

At $7.4 million, investment income was only a little above the 1982-83 figure. Funds invested were larger especially with the record volume of new business but interest rates were lower.

Gross profit was $10.3 million and net profit $5.4 million after providing $4.9 million for income tax. Both gross and net profit are the highest yet achieved by the Corporation.

I turn to the balance sheet. With all due respect to the socialist guffaws on the other side of the chamber, the balance sheet is also interesting. It reveals-the pages are not numbered-the payments made to the Commonwealth in respect of both income tax and payroll tax. The Minister, in his second second reading speech, referred to payment to government revenues of $2.9m. I think the figure is really $4.9m after tax had been taken out. The people of Australia might ask: 'Why is it that this Opposition would be proposing to transfer to private enterprise a statutory corporation which everybody agrees has done quite a good job, which is operating at a profit and which to date has not represented a drain on the funds of the taxpayers of Australia?

People are often asked why they climb Mt Everest. The answer is an impressive and empirical one: 'Because it is there.' I use that analogy to say that the reason why the Opposition will transfer the Housing Loans Insurance Corporation to private enterprise is that 'that is where it should be'. It is carrying on a function which could be carried on by private enterprise without constituting a risk to the taxpayers of Australia and a drain on the funds of the Commonwealth. Philosophically it can be said with no reflection on the Corporation that it is in fact in 1985 a socialist wart on the face of private enterprise and that like any wart it should be removed. The Review of Commonwealth Functions of 30 April 1981, which represented a substantial period of inquiry by senior Ministers of the then Fraser Government reached the unanimous conclusion, which is incorporated on page 24 of the report, that the Housing Loans Insurance Corporation, HLIC, should be sold subject to the understanding that the purchaser maintain the level of services presently provided. That decision, both philosophically and pragmatically, is as relevant today as it was back in 1981. I am proud that the Opposition on this matter has been prepared to make a decision similar to the decision it made in relation to the Snowy Mountains Engineering Corporation, that upon our return to Government it should be transferred to the private enterprise sector.


Mr Goodluck —You have had a lot to do with it.


Mr HODGMAN —I am obliged to the honourable member for Franklin for his commitment to home ownership. He has helped the poor members of our community such as pensioners and the underprivileged to get into their own homes in the electorate of Franklin, which is very much to his credit. Mr Deputy Speaker, you came originally from the United Kingdom. I am certain you have followed what has happened in the United Kingdom since 1979. In 1979 the newly elected Prime Minister, Mrs Thatcher, decided that she would make an attack on the continued expansion of public sector spending. She looked for areas in which she could cut back or at least hold spending. She looked at areas in which she could make government slimmer and more efficient and at the end of one year she was the first to concede that the strength of the bureaucracy is such that almost everything she attempted to do to cut back in public spending-and, therefore, cut back the tax on the people of Great Britain-had failed. If the bureaucracy was told that a particular department's appropriation was to be reduced by 10 per cent, it would immediately recommend cuts in areas which did not affect one single public service job but which had great political and emotional significance. The other day I witnessed a videotape of a speech delivered in this country only a few weeks ago in which the example was given of a particular department that it would pick the most heart-rending, emotional and traumatic area and say: 'We will cut back and put that area out of business'. Of course, the Minister in charge would say that he could not accept that and consequently the cut would not occur.

So what did Mrs Thatcher decide to do after 1980? She decided that the only way to reduce the size of government and the already enormous burden on the taxpayers of the United Kingdom was to transfer, whenever and wherever possible, to the private enterprise sector those functions of government which were being carried on at cost to the taxpayers-functions which never should have been carried on by government in the first place. She has dramatically and effectively displayed to the world, as indeed the Reagan Administration is now doing, that the people of Western democracies will get lower taxation only when there is smaller government.


Mr West —What about subsidies?


Mr HODGMAN —From the noises from the other side of the House, it is very clear that Senator Cook, a Labor senator from Western Australia, is correct. He publicly stated the other day that the implementation of the Hawke socialist Government's policies would involve higher taxation.


Mr Reith —He supports them.


Mr HODGMAN —Of course he does. Does any member of the Hawke socialist Government seriously argue that, after the tax summit, this extraordinary theatrical operatic exercise we are about to enter into, the totality of taxes will be lower? Of course not.


Mr Braithwaite —Expenditure will be up, taxes up.


Mr HODGMAN —The honourable member for Dawson is quite right. He is an accountant; he knows the figures. Why does this Government not start talking about cutting back on expenditure? This is the Government of big spending and high taxing. It is in this area that this Bill affords the opportunity for the people of Australia to see the arguments on both sides clearly exposed. If they want bigger government and higher taxation they will support the Hawke socialist Government, whose approval rating is dropping now faster than the Australian dollar-heaven knows, that is bad enough! But if the people would like to see smaller government and lower taxes, that will be the prime reason why at the next election the Government will be thrown out and we will be put back in.

The decision taken by the Opposition is one of which we are proud and one which we believe the community will accept. It involves no reflection-I emphasise that-on the personnel of the Housing Loans Insurance Corporation. I note in passing that three of the members of the Corporation have very long and commendable records of service in performing their functions. One was appointed by the Menzies Government, a second was appointed by the Gorton Government and the third was appointed by the Fraser Government. The remaining three have been appointed subsequent to the change of government. Therefore, I emphasise that this is what can be fairly described as a clean debate because, as I am aware, there will be no suggestion of mismanagement, inefficiency or even impropriety on the part of the HLIC. The question becomes one of principle.

The Minister is totally committed to expansion of the public sector. He would like to see it grow, at the obvious cost to private enterprise. We have started, with two small steps, to return to rational government in Australia, to smaller government and lower taxation.


Mr West —It is paying a dividend; it is paying taxes.


Mr HODGMAN —I say with respect to the Minister that he displays a naivety occasionally which is almost shattering. The fact that the Corporation is paying a profit at the moment does not mean that it will continue to do so even with the best management and with the best will in the world, and it does not mean that it should be operating in the public sector at the taxpayers' expense. The Minister's commitment is to bigger public sector activity because that is the ultimate objective of one committed to socialism. He has never denied it. Our commitment is to free up the public sector, to get as much of it as possible back into private enterprise and to bring about a lowering of the incredibly heavy tax burden on all Australians.

This is the Government which promised back in March 1983 tax cuts for 96 per cent of Australians. What do we find-a piddling, fiddling, tiddling little tax fraud con cut in 1984. This is the Government that promised to bring back rational economic policies. What have we seen? We have seen the Australian dollar, which under Malcolm Fraser was worth $US1.20, drop now to 64c. In the old days we used to say that somebody was only '19 bob in the pound'. We have a Prime Minister today who is only 63c in the dollar. We have the 'world's greatest Treasurer' who received a gold medal last year; it is going to be repossessed before Christmas this year.

The Hawke socialist Government's economic policies are directed along three clear and recognisable lines-a bigger public sector, bigger government and higher taxation. One only has to look at the Press reports of comments in recent weeks about taxation. Now we see government members coming out of the closets-the capital gains tax disciples of the Hawke socialist Government. But that is not all. Gift duties and death duties are being proposed, so the Government is not just driving people off their little farms because of the wicked, disgraceful Hawke assets test, it is following them into the grave because of its pay as you die scheme.

This is a government which is committed to socialism. It is about time that the Australian people realised that this is the most dangerous government that has ever been inflicted upon this country. We have in power the most dangerous Prime Minister whom this country has ever had. It is because he sees the Housing Loans Insurance Corporation as the medium through which he can nationalise the insurance industry of Australia that today--


Mr Goodluck —Our Leader is in the chamber to listen to you, Michael.


Mr HODGMAN —That is right; he is in the chamber. Today, the Hawke Government proposes a four directional expansion. Do not tell me that this has not been done with malice aforethought. If the Whitlam Government thought that the HLIC was the means by which the insurance industry could be nationalised in 1973, is there anybody in Australia who is connected with the insurance industry who would not be trembling in his boots, or in her shoes, if he or she had seen this Bill, because the bigger the Government makes the Housing Loans Insurance Corporation the easier it makes it for the ultimate move, according to the commitment of a socialist Minister in the Hawke socialist Government, to nationalise the insurance industry.

I ask honourable members and the people of Australia to contemplate what Australia would be like if our private enterprise insurance industry were nationalised, because this legislation is the medium by which it could be done. If this Parliament sits by idly and permits this expansion to occur, it will create a situation where the HLIC becomes the catalyst for the ultimate move. The Government will not make the mistakes that Mr Chifley made when he took on the banks. Today it could be argued-in fact it is argued by some economists-that the way to bring about a nationalisation of Australian private enterprise is to by-pass the banks and go into the other areas of the tertiary sector, in which the prime target is the insurance industry.

In the debate to follow, honourable members will have the opportunity to say whether they have a genuine commitment to smaller government and lower taxation for all Australians. We on this side of the House have made our decision. We have hoisted our colours to the mast. Let us watch how the apologists for the Hawke socialist Government try to dress up this Bill as being innocent, indeed benevolent. We know what they are on about. The people of Australia nearly knew what they are on about by 1 December last year. By heaven, they now know for sure, and come the next election Government members will be back on this side of the chamber where they rightly belong, and they will be there until the millennium. We oppose the Bill.