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Thursday, 9 May 1985
Page: 1937


Mr CADMAN(12.35) —I am delighted to see that the Chairman of the Housing Loans Insurance Corporation, Mr Jim Fitzpatrick, is in the chamber today. I pay tribute to the work of Mr Fitzpatrick and his team at the HLIC over a long period. They have been assiduous in following the legislation that they have been required to follow. They have managed their organisation with great ability.

The amendments to the Housing Loans Insurance Act proposed by the Minister for Housing and Construction (Mr West) are a complete sham being perpetrated on the HLIC. By offering the HLIC entry into the secondary mortgage market with the guarantee of this Government, the Minister has given a complete monopoly of that market to the HLIC. The Minister has not been prepared to make this offer to the housing loans insurance industry at large. The Minister has not provided a mechanism for those private enterprise organisations currently in the market to guarantee themselves through a fidelity fund or any other process. The Government has shown blatant favouritism to one instrument of government in regard to the secondary mortgage market. That is bad for the development of that market in Australia.

The Minister claimed in his second reading speech that this is a brand new day for Australia's finance, for the process of assembling funds for release into the building and housing industries. He is absolutely wrong. The most significant factors preventing the development of the secondary mortgage market in Australia today are the charges placed on the transfer of mortgage documents by State governments. Whilst there has been some movement by some State governments to relieve the burden on people wishing to transfer mortgages, I wish to enunciate for the House the facts as they stand.

Every State is different; every State has variable charges; every State does its own thing. The Minister has not consulted one of them. Most States have Labor governments, with which the Minister should feel he has a particular affinity, and the Minister should have negotiated with those governments before coming into this Parliament with a change to the legislation. This legislation allows the Housing Loans Insurance Corporation to enter into the secondary mortgage market field by underwriting the losses that could occur on packages of mortgages. The situation varies greatly in different States. In Queensland, whilst there has been a reduction in the charges for transfer of mortgages, the stamp duty at the moment stands at 25c for each $100 or part thereof. In the State of Victoria, which seems to be the jewel in the crown of the socialists, the charges are indescribable. Most home buyers have to borrow sums of over $10,000. I have calculated the charges on a loan of $35,000, which is an average loan. There is a charge of $11 for the first $10,000 and a charge of $100 for the following $25,000.


Mr Hodgman —How much?


Mr CADMAN —A charge of $111 just to transfer a document. That is a considerable variation to the amount charged in Queensland. I have searched the documents in New South Wales. Unless the transfer comes under the area of agreements or memoranda, which are not otherwise charged, there is a blanket cover of 50c per $100 in New South Wales on the transfer of mortgages. South Australia is a brilliant State which is really going for this in a big way. It is ripping off citizens and preventing the establishment of a secondary mortgage market. In South Australia, for a loan of $35,000, one would pay a transfer fee of $1,030-an incredible amount.

The Minister says everything is right for the development of secondary mortgage markets because his big, socialist government has come in and solved the problems. That is untrue. There is a great impediment to the movement of mortgages and the provision of funds around Australia by the process of packaging mortgages, insuring them properly and then trading in mortgages. The real impediments are the State governments. The Minister in his speech gave no real hint to the impediment of this process, yet he has been prepared to give a government guarantee to a government instrumentality which will provide for that organisation a monopoly opportunity. That will not be conducive to the extension of secondary mortgage markets in Australia.

The Minister could have adopted plenty of other processes and mechanisms to achieve the same objective. The underwriting of losses is Government guaranteed. I do not see any reference to the Insurance Commissioner or his role in this field. Has the Minister had discussions with the Insurance Commissioner about this factor? How do the other two private enterprise organisations stand in this business? What is their function? They will go down the tube on this. The additional business being given to the HLIC is not fair and equitable, nor is it a commercial process. The Minister mentioned in his speech time and again the commercial attributes being ascribed to the HLIC, yet when one reads the fine print there are not the commercial attributes which the Minister would have us believe there are.

I refer to the Housing Loans Insurance Corporations twentieth annual report, for 1984. It mentions something the Insurance Commissioner had to say in his 1983 annual report about the HLIC and the fact that he should have some say about mortgage insurance. I quote one short paragraph:

I am not in a position to recommend the authorisation of companies conducting mortgage insurance because of the inappropriateness of the Act to supervise mortgage insurance business. Consequently the 3 companies entitled to carry on insurance business as at 30 June 1983 with applications current are mortgage insurance companies.

There is the situation of the Insurance Commissioner, who has not in any way been brought into the changes in the legislation. I would have thought that consequential amendments to the Insurance Act would be necessary from the Minister's action on this matter.

I refer also to the initiative within the Bill whereby underwriting companies may reinsure with the HLIC in regard to events such as death, sickness or unemployment. I would have thought that was completely unnecessary, because this mechanism is providing a reinsurance process which, surely, lies outside the scope of the HLIC. That is the way I read it. I cannot see anything but a reinsurance power being taken on. I quote from the Minister's speech:

The third major initiative provided for in this Bill is to empower the Corporation to act as agent for other insurance companies underwriting mortgage repayment insurance for borrowers in the event of death, sickness, unemployment and so on. This kind of insurance cover can be important in the first years of mortgage repayment.

I would not quibble with the Minister's concern for individuals in that case, but the Minister has empowered the HLIC to reinsure other insurers. The real gem of this Bill is the special interest provision which will allow the Minister, after some consultation, to direct the HLIC into areas of special interest nominated by the Minister. Is this the welfare housing provision? Is this to buy a boat to run around Sydney Harbour? Is this to give mates in government positions special loans? What is this provision for? It is not specified. Why has it been incorporated? Is the Government going to bleed the HLIC dry, as the New South Wales Government has bled its instrumentalities dry in order to fund its massive, ludicrous, fantastic programs which ignore completely the interests of the people of New South Wales? That process deserves full explanation. The special provision that allows the Minister to direct the HLIC is a disaster.


Mr DEPUTY SPEAKER (Mr Blanchard) —Order! It being 12.45 p.m., the debate is interrupted in accordance with sessional order 106A. The debate may be resumed at a later hour.