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Thursday, 9 May 1985
Page: 2015


Mr FITZGIBBON(9.07) —The Housing Loans Insurance Corporation is now in its twentieth year of operation. It has been an outstanding success. That is undisputed. It has a proud record of being a viable commercial operation contributing substantially to government revenue. In 1983-84 it returned a net profit of $5.4m and paid $2.9m in dividends and special payments to revenue as well as $4.9m in income tax. Consistent with this Government's well-known aim of assisting those most in need, the Housing Loans Insurance Corporation has been instrumental in enabling many Australians, particularly those in the low income bracket, to achieve the great Australian dream of owning their own home. The people on the other side of this House wanted to sell this asset. The master of histrionics, the honourable member for Denison (Mr Hodgman), who is no longer in this chamber, wanted to flog it off. The honourable member for Mitchell (Mr Cadman), who has just finished speaking, says that he did not want to flog it off. However, in this chamber he voted to flog it off. So how sincere is the Opposition when it comes to the provision of housing for those on low incomes?

The decision of this Government to reverse the Fraser Government's intention to sell the HLIC has certainly been justified. During 1982, when the Fraser Government had reached its nadir, the number of loans insured slumped from nearly 60,000 to 38,000, and slumped even further in 1983 to 36,000. However, due to the confidence instilled in the Australian community by the sound economic management of the Hawke Government, loans insured in 1984 soared to in excess of 68,000.

The Housing Loans Insurance Corporation has won the broad support of the insurance industry and the overwhelming, wholehearted support of the Australian people. It has won the envy of the Mickey Mouse highwaymen on the other side of the other side of the House. They hate it, as they hate every success of the Labor Government-and they have much to hate. There are many outstanding successes of this Hawke Government. The initiatives in this Bill add to the Government's success in the field of housing. These initiatives will allow the development of new lending arrangements which assist low income earners to achieve home ownership. 'Low income earners' is worth while emphasising because that is what this Labor Government is all about-helping those most in need.

As the Minister for Housing and Construction (Mr West) said in introducing this Bill, the Labor Government is achieving success in the housing field because, firstly, it has the confidence of business; secondly, it has the good sense to utilise the expertise of industry; and, thirdly, it can work with union co-operation rather than union bashing. The Opposition started 105,000 housing constructions in 1982-83. The Labor Government saw the commencement of the construction of 137,000 houses in its first year of government; 32,000 more houses. No wonder the conservatives' faces are green with envy. The Hawke Government's turn around of what was a miserable coalition performance has brought considerable economic and social benefits for the nation.

Although the HLIC is guaranteed by the Commonwealth, it is self financing. Its funds have been derived wholly from its business activities. It has contributed substantially to the development of the mortgage insurance industry in Australia. Of the four major initiatives contained in the amendments before us now, the most innovative is the entry of the HLIC into the secondary mortgage market. The gap in the secondary mortgage market was recognised in the report of the Campbell Committee of Inquiry into the Australian Financial System and the report of the Martin Review of the Australian Financial System.

The Campbell Committee considered the establishment of a broadly based and active secondary mortgage market as a useful development. It saw potential benefits deriving from greater integration between the housing finance sector and other sectors of the capital market; greater mobility of housing finance funds between regions of excess supply and demand, particularly across State boundaries; and greater diversity of choice for investors. The conclusion reached by the Martin Committee was that the development of an active and broadly based secondary mortgage market would assist the Commonwealth's objectives in the housing area. The Martin Committee believed that the development of a secondary mortgage market would be particularly valuable in attracting funds for housing from non-traditional sources, a method much preferred to the imposition of direct controls over non-bank financial institutions or the establishment of special funds.

Additional funds for housing are generated in the secondary mortgage market, generally by lending institutions in the housing field gathering together bundles of mortgages and selling them to other institutions. The Corporation's role is to facilitate the development of the secondary mortgage market by insuring pools of mortgages against loss, thus giving investors in the secondary mortgage market unchallengeable security.

The Minister in his second reading speech emphasised the fact that under the Government's proposal the Corporation will be insuring only the performance of the underlying mortgages. The Corporation will not be guaranteeing those who pool mortgages for sale or the market securities themselves. The establishment of a secondary mortgage market will provide a number of benefits to the community, mortgage creating institutions and the Government.

Apart from the major benefits I have already mentioned, the generation of additional housing finance will increase opportunities for home ownership. Another benefit to the community will be derived by providing a stable and flexible supply of housing finance. It will help home buyers and the construction industry to even out fluctuations of mortgage credit. Increasing the availability of housing finance will also lower the cost of borrowing, on both national and State bases.

Advantages accruing to mortgage creating institutions from the secondary mortgage market are derived from greater liquidity because such institutions are able to sell and buy mortgages according to their need for cash. Such lending institutions will be able to increase their profits by holding this cash and other low yielding assets and increasing the holdings of higher yielding assets, thus allowing savings banks and building societies to adjust their holdings of assets in such a way that their earning and liquidity preferences are matched. When financial institutions retain the responsibility of servicing the mortgages for a fee, it generates additional profit. This additional income may be sufficient to service the entire portfolio.

I am running out of time, because we have so much legislation to get through and I do not want to deprive others of the opportunity to speak. There is a clear market need for this service. The HLIC has already been approached by major institutions likely to be involved in the secondary mortgage market. The HLIC should be involved in the secondary mortgage market because it is a Federal Government body with an established reputation and could encourage the participation of substantial institutions and influence the development of the market in a sensible way, as opposed to some of the ratbag methods advocated by the rapacious fingerlings on the other side of this House.

I know that Opposition members will appreciate the positive benefits of this Bill-or they would if they were fair dinkum. I doubt very much whether they are fair dinkum; otherwise we would have seen from them some appreciation of the first home owners scheme. That scheme brought home ownership within the reach of many thousands of low to moderate income earners, people who would not otherwise have had the chance to buy their own home. Truly it can be said that while the coalition is intent on destruction the Labor Party gets on with the job of construction.

I have a great deal of other notes which I would like to use, but I am afraid that my time has almost expired. I conclude by saying that this legislation gives many thousands of Australians the chance of home ownership. I support the Housing Loans Insurance Amendment Bill.