Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Thursday, 15 May 1930

Senator RAE (Hew South Wales) - I do not know what reinsurances amount to, but I think provision could be made in the bill to prevent money from going outside Australia.

Senator McLachlan - That cannot be clone in connexion with the State Life Insurance Company of Queensland.

Senator RAE - It could with other companies. The amount involved in connexion with the company referred to by Senator McLachlan would not be considerable, and I suppose that arrangement has been made for reasons not associated with the insurance business. I think Senator Colebatch's suggestion could be met by leaving out the word " foreign " ; the clause would then refer to a company which was not carrying on business in Australia.

Senator Sir Hal Colebatch - But it might apply to a company not yet formed.

Senator RAE - I intend to press my amendment, as I think we should demand more than a mere £20,000 as a deposit.

I remind Senator McLachlan that this is not a penalty inflicted solely upon foreign companies.

Senator McLachlan - It has to be considered in conjunction with clause 27.

Senator RAE - Under clause 27 Australian companies are not being asked to pay more than foreign companies. A Commonwealth company proposing to carry on insurance business after the commencement of this measure will be allowed to lodge the deposit of £20,000 at the rate of £2,000 per annum. I do not think that in the matter of instalments there is any difference between clauses 24 and 27. I am quite agreeable to support the proposition if the principle is conceded that we should give preference to Austraiian companies. The whole of the assets of Australian companies are available for the protection of policy-holders, but in the case of proprietary companies whose head offices are abroad, the local policy-holders are protected only to the amount of the deposit. Numerous difficulties would arise if, when a foreign company failed, the dividend available had to be collected in Great Britain. Senator McLachlan, who is in charge of this measure, should not be obsessed with the idea that it isperf ect in every respect, but should accept an amendment in accordance with the settled policy of the country. Every penny of insurance money which goes outside the country, may be regarded as tribute to outside interests. If we could not conduct the business ourselves, it would be a different matter; but Australian life insurance companies have been effectively operating for many years, and we should not place further burdens upon the people by inducing foreign companies to come to Australia.

Senator Sir HALCOLEBATCH (Western Australia) [8.55]. - It would be quite a simple matter to re-draft this clause to distinguish between British and foreign companies, and also to provide that foreign companies all deposit a higher amount. The necessary amendment could then be made in the definition clause in order to make a distinction between British and foreign companies. I do not think that the obligation placed upon British companies should be higher than is suggested here.

Senator McLachlan - There are no companies other than Australian or British companies carrying ou life insurance business in Australia.

Senator Thompson - But foreign companies may commence business here.

Senator Sir HAL COLEBATCH - If Senator McLachlan carried his argument to its logical conclusion, he should be agreeable to strike out the clause altogether. It is futile to say that there are no companies other than British or Australian companies carrying on business in Australia; this clause has no application to companies now carrying on business in Australia. I do not like the idea of referring to British companies as foreign companies and then to penalize British companies. I am entirely in sympathy with the suggestion that a foreign company wishing to commence business here should be required to make a very substantial deposit. There is more than a sentimental reason behind my suggestion. Some 35 years ago the Equitable Life Insurance Company of New York - a foreign company - commenced operations here, did a large insurance business and ultimately let down the people who had put money into it. The same thing might happen again. It is more difficult to safeguard the interests of investors in a foreign company than those of investors in an Australian or British company. I think it is worth while considering whether it is not practicable to make some differentiation between British and foreign companies.

Suggest corrections