3rd Parliament · 2nd Session
Mr. Speaker took the chair at 2.30 p.m. and read prayers.
Report (No. 4) presented by Mr. Hutchison, and read by the Clerk, as follows -
The Printing Committee have the honour to report that they have met in Conference with the Printing Committee of the Senate.
The Joint Committee, having considered all the papers and petitions presented to Parliament since the last meeting of the Committee, recommend that the following be printed : - Precis of correspondence between the Commonwealth Government, the late Right Honorable R. J. Seddon, and the Government of the United Kingdom, &c, respecting the navigation laws of the Empire, and the question of coastal trade. (Presented to Senate.)
Exemptions in regard to manufacturers of agricultural implements.(Presented to Senate.) (Signed) J. Hutchison,
Committee-room, 8th August, 1907.
Motion (by Mr. Hutchison) agreed to-
That the report be adopted.
– In the Perth Morning Herald, of the 22nd July last, appeared the following paragraph -
As an outcome of representations made by the Premier to the postal authorities for postal and telegraphic conveniences at the Black Range gold-field, in addition to those for which provision had already been made, the Department consented, without guarantee from the State, to connect Maninga Marley with the Black Range telegraph terminus by telephone. The work was completed yesterday, when the Premier sent a congratulatory message to the people of the district served. Another locality which is to be served is Beria, better known as Lancefield. At this place it has been decided to establish a non-official post-office, to provide money-order facilities, and to construct a telephone line from Laverton.
I wish to know from the PostmasterGeneral if it is not a fact that the facilities mentioned in that paragraph were granted on the direct representation of the honorable member for Coolgardie, supported by the senators for Western Australia?
– The honorable member was kind enough to ‘tell me that he intended to ask this question, and I am therefore prepared with the following answer -
Application for this line was first made by the Hon. H. Mahon, M.P., and was subsequently supported by Senators de Largie, Henderson, and Lynch, who, with Mr. Mahon, waited upon Mr. Mauger, when Acting PostmasterGeneral, to urge the construction of the line. The report from the Deputy PostmasterGeneral of Western Australia showed that the construction of this line would not be justified without a guarantee, and those interested were so informed. It was subsequently shown, to the satisfaction of Mr. Chapman, that owing to the construction party being in the immediate vicinity attending to the erection of lines to Black Range and Sandstone, and to other reasons, a guarantee could be dispensed with. Instructions were given to provide the line without a guarantee. The establishment of an office at Beria with telephonic communication to Laverton was at the instance of Mr. H. Mahon, M.P., and no guarantee was asked for.
– Will the PostmasterGeneral, without requiring a guarantee, grant the same facilities in Queensland as have been granted in Western Australia at the request of the honorable member for Coolgardie?
– So far as possible. I do not like the guarantee system, and where there is any prospect of a telephone connexion paying, I shall sanction the erection of a line.
– Will the Postmaster-General inform the House whether, as the result of recent negotiations, he is likely to be able to arrange for the conveyance of mails at reduced rates, particularly on short country lines.
– We are meeting the Railway Commissioners in conference, and I hope that an equitable arrangement will be made.
Sir WILLIAM LYNE laid upon the table the following paper -
Report of the Royal Commission on secret drugs, cures, and foods.
Ordered to be printed.
– It is stated in this morning’s newspapers that the Minister of Defence proposes to place on the Estimates a sum for the purchase of ammunition for field artillery. Will he also provide for an appropriation for the purchase of proper ranges for the field artillery ?
– The provision of ranges forthe field artillery has been under the consideration of the Department for some time past. Inquiries as to the land available have been made in each of the States; but it is found difficult to obtain, at anything like a reasonable cost, the large areas which are necessary.
– Ranges are essential if full use is to be made of the ammunition.
– Ranges should be provided; but the prices asked for the necessary land have been such as Parliament would not sanction. The endeavour of the Department is to obtain land which is not fit for anything else. I regard the matter as of great importance, and will not lose sight of it.
– The following cablegram appeared in this morning’s Argus -
A settlement scheme of considerable magnitude has been formulated by the Salvation Army, which has chosen Canada as the field for its colonizing operations.
In pursuance of its project, the “ Army “ will buy ten townships in the province of Ontario, where it is proposed to settle the immigrants from Great Britain. The purchase of the land is conditional upon its approval by a joint commission consisting of representatives of the Salvation Army and the Canadian Government.
I wish to know if the Acting Prime Minister has read that cablegram, and if he will communicate with the Governments of the States, with a view to offering an inducement to the Salvation Army to establish similar settlements in Australia?
– I have not read the cablegram; but I do not intend to communicate with the Governments of the States with regard to the matter.
asked the Minister representing the Minister of Home Affairs, upon notice -
Referring to the Return of 19th February, 1907, showing the total cost of elections to have been in1901, £56,33111s1d; in1903, £51,414 6s. 7d. ; and in 1906, £46,679 9s. 8d., will the Minister say how much of each total represents the cost of printing rolls?
– The answer to the honorable member’s question is as follows - 1901. The elections were carried out by the States. The information asked for in respect of same is not in the possession of the Department.
asked the Acting Minister of External Affairs, upon notice -
With reference to question No. 1, paragraphs (5) and (6), on the notice-paper of Tuesday last, 6th instant, and the replies furnished thereto, respecting the destination and amounts of disbursements in connexion with the £500 voted for the relief of settlers in the New Hebrides -
. Does not Captain Rason furnish the Department with the growers’ receipts or vouchersof payment? If not, how is it possible to trace the destination of the payments in order to secure a proper audit of accounts of expenditure?
Will he request Captain Rason to furnish information as to the names of the growers who have received relief from the fund, and the amount paid to each ?
– The replies to the honorable member’s questions are -
Motion (by Mr. Frazer) agreed to -
That a return be prepared showing -
How many aliens have escaped from vessels into the Commonwealth since the passage of the Immigration Restriction (Amended) Act 1905 ? 2. (a) In how many cases did prosecutions of those responsible for the escapees follow?
If not in all cases, why?
What is the amount of the fines paid ?
Were the fines refunded in any cases; if so, to whom, and why ?
.- I move -
That the Bill be now read a second time.
This Bill was read a first time on the 25th July. In view of the strict scrutiny to which, during the last few months, proposals for Federal legislation have been subjected, I shall begin my remarks by showing that, in my judgment, the Commonwealth Parliament is within its rights in passing a Bill of this description. The power to do so is given to us by the Constitution, section 51 (xiv.), providing that -
The Parliament shall . . . have power to make laws for the peace, order, and good government of the Commonwealth with respect to-
Insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned.
That provision empowers this Parliament, not only to pass a Bill for the regulation of the corporations which are at the present time carrying on fire insurance business, but also to provide, if it thinks fit, for the carrying on of that business by Commonwealth Departments. I have previously shown that our fire insurance companies exercise a very considerable financial influence in the Commonwealth. One cannot fail to be impressed by the magnitude of the buildings wherein their operations are conducted, situated as they usually are on the most valuable blocks in our great cities. All outward indications ‘ show that they do a particularly prosperous business, the life insurance companies appearing to do the next most prosperous business, though differing considerably from the former. The object of life assurance companies is to grant facilities to the people to make provision for their old age or days of adversity. They represent the savings of the community. The prosperity of fire insurance companies, however, is to a great extent built up by the practice of deceit on those compelled by necessity to do business with them. In order to show the financial stability of the Australasian fire insurance companies, I shall quote a few figures obtained by me from the balance sheets published in the Banking and Insurance Record, which is available in the Parliamentary Library. Although I shall quote figures relating to the operations of only a few of these companies, I do not wish to suggest that their system is either better or worse than is that of others engaged in the same business. I believe that the whole of the companies adopt similar methods, and that if one be guilty of deceit in its transactions with those who insure with them, all are guilty. The Victoria Insurance Company in 1905 made a profit of £27,571, and declared a dividend of £17,975, or more than 30 per cent, on a capital of ,£50,181. The New Zealand Insurance Company in 1900 had a capital of £200,000, and reserves to the extent of £255,000. In 1904 it had built up those reserves to £401,519, notwith standing that in the- meantime it had been paying liberal dividends. The profits of the New Zealand Insurance Company for 1904 amounted to £62,098, and it paid a dividend of £30,000, or 15 per cent, on its ,paid-up capital. The Australian Mutual Fire Insurance Company, in 1905, had a reserve fund of .£121, 500, made a profit of £17,136, and paid dividends to the extent of £9,312, or 15 per cent, on its paid-up capital. I have referred to the business done by these companies, not because of any desire to single them out from the others doing business in Australia, but because I have been able to obtain the most accurate information in regard to them.
– Can the honorable member show us what was the average dividend paid by these companies in respect- of a given number of years?
– I shall put before the House all the information that I have on the subject. The sixteen Australasian companies operating within the Commonwealth in 1904 had a total capital of £1,058,285. In 1905 their total capital had increased to £1,101,409, and in most, if not all, cases, the increase had been made out of profits. The total increase for the year was £43,124. During the same period their reserves increased to the extent of £118,952. Their undivided profits amounted to £48,742 - these were really reserves - and in 1905 they made a profit amounting to £350,567, °r ;£53>774 in excess of the profits made by them during the previous year. During the same period, with an increased capital of -£43,000, they made an increased profit of £23,603, or more than half the amount of the increased capital. I have quoted these figures to show that the Australasian fire insurance companies are at present exceedingly prosperous. I do not think that any other financial institutions in Australia are able to show anything like the same returns. I am’ not so foolish as to suggest that this prosperity on their part is a matter for regret. On the contrary, I think it is a good thing that they are accumulating such enormous reserves in order to enable them to meet any serious disaster. I shall show presently by what means they are making these large profits and accumulating such immense reserve funds. The rates of insurance throughout Australia are altogether too high. I am more familiar with’ the position in Western Australia, where the insurance companies for the last few years have undoubtedly been fleecing the community.
– Will this Bill cure that state of affairs ?
– If it does not reduce the premiums, it will have the effect of compelling every company, where a total loss is suffered by the person insured, to pay over the amount of the policy, instead of being able to say that it has contracted itself out of its liability to meet the claim. I have here an extract from a newspaper published at Kalgoorlie, giving the report pf a meeting of a number of prominent business people who belong to what is usually described as the “Anti-Sosh.” party, if there is such a party in Australia. As a general rule they are not prepared to support me. They are usually opposed to State interference, but the fire insurance companies carrying on business in Western Australia increased their premium rates to. such an extent that these people were very glad to appeal to the Premier of Western Australia to introduce a Bill providing for a State Fire Insurance Department.
– The profits of one of the companies to which the honorable member has referred as doing a magnificent business are made partly in a Colony where a State Department of Fire Insurance is in existence. I refer to the New Zealand Fire Insurance Company.
– If the honorable member turns to the published balance-sheets, he will find that the rates levied locally by fire insurance companies doing business in that Colony have been reduced by almost 30 per cent. since the establishment of the State Department of Fire Insurance. When the honorable member interrupted me, I was proceeding to show that business people in Western Australia were glad to appeal for State interference to save them from the exorbitant charges levied upon them by the insurance companies doing business there. In Western Australia, there has recently been a war of rates amongst the insurance companies; the companies have been enjoying the luxury of a fight amongst themselves. The result shows that they were either making outrageous charges prior to this war of rates, or that whilst that conflict lasted, they were prepared to do business at a loss. During the dispute, risks that in some cases were previously taken at £3 per cent, were reduced to as low as 15s. per cent. In other cases, risks were reduced from 42s. per cent. to 7s. 6d. per cent. There was a general fight for business, and enormous reductions were made. Having some knowledge of the experience of various individuals in doing business with insurance companies, I suggested that it would be well during this war of rates, which was a big thing while it lasted, to seekthe abolition of the cancellation clause in the conditions indorsed on the fire insurance policies. When that proposal was made to the companies, however, they declared that they were “ off the business.” They were not prepared to remove the cancellation clause from the conditions under which they were accepting ridiculously low premium rates. It would thus appear that whilst they were anxious during the dispute to secure business at any price, they wished to reserve to themselves the right at a future date to cancel all the policies then issued.
– Had not the policies to extend over a stipulated period?
– Companies will accept a risk extending over perhaps four years, but I have not heard of their accepting one going beyond a three-years period. One of the conditions, however, appearing on every policy issued by them is that they may cancel that policy without giving any reason for doing so.
– Within what time may they take that action?
– At any time, without giving reasons.
– Does the honorable member know of any case where advantage has been taken of that clause to cancel a policy ?
– I do not, but I know of cases in which the companies deliberately refused to abandon the cancellation clause. That seems to indicate that they wished to reserve to themselves theright to cancel policies issued at specially low rates as soon as they could arrive at unanimity on the point.
-When requested by me they removed the cancellation clause.
– While the war of rates was on?
– I am glad to hear it. I know a man at present in Melbourne who met with a refusal when he requested one of the companies to remove that clause from a policy. As my honorable friend has had some business transactions with these companies, I should like him to say whether he secured, during the war of rates, any reduction in the premium charges.
– We insured at onetwelfth the rate at which we were previously insured.
– That would seem to indicate that the rates in the one case were eleven-twelfths too high, or that in the other case they were eleven-twelfths too low. Perhaps it would be reasonable to assume that the rates charged prior to the dispute were about five-twelfths too high.
– I also found that there were very few agents who could abolish the cancellation clause.
– The honorable member knows that no one could abolish the clause, except the man who holds the power of attorney for a company throughout Australia.
– I would accept no one else.
– In that the honorable gentleman showed his judgment. When the honorable member has to deal with insurance companies, he knows he is dealing with pretty sharp customers, and had better have any arrangement in black and white.
– The honorable member would insist on a written pledge.
– And I believe the honorable member insisted on a written pledge.
– I got my solicitor to do that.
– The honorable member was very wise to do so. In my opinion, insurance rates are altogether too high in Australia. I should now like to quote from the report of the general manager of the State Insurance Department of New Zealand, in which Colony the insurance companies previously charged rates similar to those imposed within the Commonwealth. This report shows the effect of the establishment of State insurance on the business of the companies.
– That is the information which the honorable member for North Sydney desired.
– Hear, hear !
– The report, which is for the year ending the 31st December, 1906, states -
In compliance with statutory provisions, I have the honour to submit the following report for the year ended 31st December, 1906. The year 1906 is the second financial year of the State Fire Insurance Office, and I am pleased to be able to point out the continued strong support of the public as shown by the fact that the net income for 1906 amounts to £20,962 8s., in comparison with £13,12711s.9d. for 1905.
If my memory serves me aright, in 1904 the total receipts of the State Insurance Department amounted to only£1,400, and an increase to£20,000 ‘in three years seems to show that State insurance is becoming immensely popular in New Zealand.
– What is the profit on State insurance?
– I shall deal with that in a moment. The profit to the State Department is not large, but the profit to the people is considerable. The report proceeds -
Early in1906 the insurance companies abandoned all their “ higher rates,” and from thence forward the rates of premium of the State Fire Insurance Office and the private insurance companies have been alike. I may here say that in my opinion the difference between the rates which now prevail and those which prevailed just prior to the advent of the State Fire Insurance Office represents, say, £200,000 per annum.
This report of the general manager of the Department shows that the profit results to the people of New Zealand, and not to the State office.
– I wish to know the profit to the State office.
– It does not come quite within my speech to give that information, but the profit is stated to be £699 10s. 4d. The report gives this information -
The revenue account and balance-sheet attached hereto show that after writing off £634 5s., one quarter of the preliminary expenses, there remains a credit to profit and loss account of £699 10s. 4d., and this result in my opinion is as satisfactory as could be expected in the circumstances.
These figures show that there has been an immense saving to the people of New Zealand, as the result of the establishment of a State Insurance Department.
– That is an ex parte statement.
– It is the expression of the deliberate decision of a man who is not interested as apartisan, but merely acts as the officer of a State Department.
– He is in the position of general manager.
– I am sure that if my friends opposite were seeking to establish a similar proposition they would be very well satisfied to use as an argument the report of the chief officer of a State Department, rather than that of the manager of any competing institution outside.
– Members of the Opposition will quote general managers also, no doubt.
– Perhaps honorable members may quote general managers of insurance companies in Australia, but they will not be able to quote any who say that the companies are in bad financial circumstances, seeing that the balance-sheets show absolutely” the contrary. As a result of he establishment of the State Insurance Department in New Zealand, insurance premiums have been considerably reduced in that Colony ; and as the New Zealand offices were previously charging rates uniform with those charged in Australia, I am perfectly right in assuming that the companies within the Commonwealth are doing exceedingly well at the present time. I have quoted the high rates as one of the reasons of the great prosperity of the insurance companies, and I shall now refer to another reason, provided in the methods which they adopt.
– Has the honorable member any information which compares like with like - like rates and like responsibilities - in New Zealand and Australia?
– I have not ; such information is almost impossible to obtain ; but I have shown that, although the New Zealand rates and the Australian rates were uniform’, or nearly uniform, prior to the establishment of State insurance, the New Zealand companies have had to reduce their rates and compete with the State Department under conditions more favorable to the people at large. Indeed, the companies of New Zealand have had to reduce their rates approximately by £200,000 per annum.
Mr.J oseph Cook. - That may show that the rates were abnormally high in New Zealand previously.
– That was the case, I believe, but I do not think it will be denied that the rates then were almost uniform with those charged in Australia. After all, that is not the aspect of the question I desire to place before honorable members.
– No, but it is a very important aspect.
– That is so, but I think that if the honorable member looks at the balance-sheets, he will see that the Aus tralian companies are doing very good business at the present time.
– How does that concern the Bill under discussion?
– I have been endeavouring to leave that aspect of the question for the last two or three minutes, but I have been kept from the main thread of my argument by interjections. I now desire to refer to the methods adopted by insurance companies in Australia. If a man desires to have a building insured, a person representing the company comes to him and accepts the risk. To begin with, there is an unsatisfactory feature, for the reason that the person who comes to value the premises, very often, if not in all cases, receives a commission on the amount of the premium to be paid. I think that method is adopted in connexion with agents in all cases, and also in connexion with the salaried representatives of a company. This gives the representative of a company a motive for getting premiums as high as possible, because the higher the premium the bigger his commission. However, we will take it that an insurance is effected for a certain amount, and that a fire happens. I should say that in ninety-nine cases out of a hundred of a total loss those who are insured, and have had no previous experience with companies, are under the impression that they will receive the amount on which they pay a premium.
– Does the honorable member think that there will be onlyan occasional fire under the Bill?
– I hope fires will be less frequent, and that, when disaster does occur, the settlement by the companies will be more speedy - that is the object at which I am aiming. But while 99 per cent. of the people expect to receive the money on which they pay premiums, I think only about 1 per cent, have ever received the full face value of their policy - at any rate, a very small percentage have done so.
– Insurers get the amount of their loss.
– They hardly ever get the face value of their policy, or the amount of their loss. As soon as a fire occurs an adjuster comes along, and here, in my opinion, is introduced a most immoral feature of present day fire insurance. The adjuster, like the valuer, is in nearly all cases paid a commission - at all events, in very many cases. I have made the statement before that I think in all cases that is the custom in Western Australia. The adjuster is not paid a commission on obtaining a big premium, but on the amount to which he can reduce the figure mentioned in the policy due to the insured. I repeat that it is a most immoral feature of present day fire insurance that a man, who is supposed to act impartially, should have a monetary interest in reducing the amount to be paid by the company.
– Does that apply to all adjusters?
– I believe it does ; I am pretty well certain it does in Western Australia.
– Does the honorable member think that fires are always the result of accident?
– That is a point with which I shall deal later. I am assuming that fires are, so to speak, bond fide, and I say that crime will find no shelter or consideration within the provisions of this Bill. It is not my desire to assist any insurer in committing a fraud ; on the other hand, I desire to prevent an insurance company committing a fraud on an insurer when disaster overtakes him.
– Why should an adjuster be impartial, seeing that he represents the company ?
– An insurance company could possibly better answer that question than I. In my opinion an adjuster, should proceed to work with an open mind, and without any monetary interest in a reduction of the amount to be paid.
– What do the premiums amount to?
– I have not the information at hand now, but the losses of the Australasian companies amount annually to £750,000. The adjuster arrives and almost invariably offers the insured less than the amount which is stated on the face of his policy. If a man genuinely believes that he has sustained a loss of£500, he may be offered £400 without prejudice. Should he refuse to accept that amount his attention is directed to all sorts of arbitrary provisions, which are printed upon the back of his policy, and he is threatened with various penalties as the result of his recalcitrancy. I propose to mention some of the things which have been done in Western Australia in this connexion. Upon the back of all the policies issued there is a provision that the insured shall produce his books.
– Is hot that a good provision ?
– It may be. I will show how it works out. It reads as follows -
Persons insured by this company sustaining any loss or damage by fire are forthwith to give notice thereof at the office of the company, or to the agent of the company, through whom the policy was effected, and, within fourteen days, deliver in writing, as particular account of their loss or damage as the nature of the case will admit of, such account of loss to have reference to the value of the property destroyed or damaged immediately before such fire, and shall verify the same by the production of their books of accounts, and by affidavit or statutory declaration of the claimants, together with the testimony of their domestics, their servants, or other persons in their employ.
I now propose to quote the opinion expressed by a solicitor in Western Australia regarding ‘the practices which have been adopted by the various fire insurance companies there. He is a man who has had considerable experience in adjusting claims made against the companies, and in fighting those claims for both sides.
– Name him.
– I have no objection to divulging his name to the honorable member privately, but I am not prepared to publicly disclose it.
– The honorable member is publicly stating his opinion.
– I did not seek his permission to publicly disclose his name, and in the absence of that permission I have no intention of doing so. I can assure the honorable member for Fremantle that he has an intimate knowledge of the gentleman to whom I refer, and that he respects him. This gentleman says -
Most policies require that the insured has to supply receipts and vouchers, and produce books as required by the company within the fifteen days. Very often all these are burnt. The company asks for them, and because they are not forthcoming, use this as a threat to enforce a reduction in the amount.
That statement is absolutely true. The companies have been known to do it.
– They cannot do it.
– Whether they can or not, the fact remains that they do it. I would remind the honorable member that they are not always dealing with lawyers who are well versed in the tricks upon both sides, and that when a man probably has only £100 upon a house standing between him and destitution, he is very likely to accept their offer. These covenants in the policy, I repeat, are read over to the assured, who is told that he can either accept the reduction which is recommended by; the adjuster, or fight the matter in the law courts. That is the opinion which is expressed by a gentleman who knows quite as much upon this subject as does any man in Australia.
– It is only “ bluff “ on the part of the companies.
– Of course it is, but does not the honorable member realize thac the companies live upon “ bluff. “ Should they attempt to bluff a man who happens to understand his legal position, of course they fail, but in ninety-nine cases out of a hundred their bluff is successful.
– One exposure would close up their business.
– They have had more exposures than the honorable member dreams of.
– Insuring is a voluntary act.
– Exactly. But the honorable member should not forget that nowadays persons have to insure or accept the risk of being called upon to face a fire which would involve both themselves and their dependents in utter ruin. To that extent, although the act is a voluntary one, the circumstances of the time make it absolutely compulsory. Then, again, the companies have the following condition indorsed upon their policies -
If any difference shall arise in the adjustment of a loss, the amount, if any, to be paid by the company shall, whether the right to recover under the policy be disputed or not, and independently of all other questions, be submitted to the arbitration of some person to be chosen by both parties, or of two indifferent persons, one to be chosen by the party, and the other by the company ; and in case either party shall refuse or neglect to appoint an arbitrator within twenty-eight days after notice, the other party shall appoint both arbitrators ; and in case of the arbitrators differing therein, the amount shall be submitted to the arbitration of an umpire, to be chosen by the arbitrators before they proceed to act ; and the award of the arbitrators or umpire (as the case may be) shall be conclusive evidence of the amount of the loss, and the party insured shall not be entitled to commence or maintain any action at law or suit in equity upon this policy until the amount of the loss shall have been referred and determined as hereinbefore provided, and then only for the amount so awarded.
My legal friend, whom I have already quoted, informs me that in one instance a company actually refused to pay, and declined to assign reasons forits action. I may tell the honorable member for Robert son that they frequently adopt that course. He says -
They went to arbitration, and afterthat expense they still would” not part, and would not give any reason for not doing so. They did not pay, and the assured could not afford to fight, and he never got a bean.
This is not my statement-
– But it is that of the honorable member’s friend.
– It is that of a man who is ten thousand times more competent to speak upon this question than is the honorable member. While my legal friend has expressed these opinions, I wish honorable members to understand that he did not agree entirely with the provisions of the Bill which I introduced into the last Parliament. He further states -
A man should have the right to sue without arbitration, or the company might be given the right to claim arbitration, but if so they should be bound to pay the amount awarded without being allowed to make other defences. A favorite practice by companies is not to pay, not to refuse to pay, and not to give any reasons for not doing so. When this occurs the assured is placed in this position : He reads the numerous and stringent conditions of his policy. He finds after consultation with his lawyer that it would be easier for him to walk a tight rope than to live up to all these conditions. He imagines all sorts of things, from want of authority on the part of the agent of the company.
That brings me to another point, because in Western Australia it has been held that the agent who secured the risk for a particular company was the agent of the assured, and not of the company.
– Then there could not have been a policy issued ?
– A policy was issued. The result of an action in the Law Courts of Western Australia was that the assured was defeated, and the agent who secured the business for the company was held to be the agent of the assured.
– It was a very hard case, in which I think there was some misrepresentation by the agent.
– It was a hard case, but it indicates the limits to which these companies will proceed in order to defeat the claim of the assured to the face value of his policy.
– Did the fire take place before the policy was issued?
– I think that the policy was perfectly in order, but the company pleaded that it was not the work of their agent, and that consequently they were not responsible for it. Experience shows that fire insurance companies will take advantage of all the conditions which are indorsed upon the back of their policies. They have done it time and again, and will continue to do it. My legal friend continues -
He has before him the expenses of first arbitration, and secondly a Supreme Court action. He is probably compelled by his lessee to build, whether the company pays or not, and possibly there is a hungry mortgagee looming largely on the horizon with threats. He generally accepts what the company offers or gives.
– Yet the author of that letter is opposed to the honorable member’s Bill?
– He did not agree with some of the provisions embodied in the Bill which I previously introduced. His chief objection was to a provision which has been eliminated from this measure. He is not opposed to what is known as the value system of policy.
– Is he in favour of that principle ?
– I am. sure that if he were, the honorable member would not be convinced of its equity. My legal friend is an undoubted authority upon fire insurance matters, and has had a very extensive experience of them. After the companies have resorted to all the measures which I have indicated, they usually fall back upon their right to reconstruct. The provision relating to this, matter reads -
In every case of loss or damage by fire for which the said company shall be liable, the same, on being duly proved, shall either .be paid within sixty days, or the said company shall have the option with all convenient speed, to re-build, repair, or reinstate or replace the property insured, and in the case of buildings, to put them into as good and substantial a condition as they were in at the time such fire happened.
That is the clause under which the greatest hardships are inflicted on the community. The companies have the right to withhold settlements for sixty days. Within that period no claimant can proceed to arbitration or enter upon litigation to enforce his demands. I intend to again put before honorable members a letter which I read when the Bill was last under discussion. I do so, not because it refers to a particular case, or because I have no other evidence of a similar nature, showing the disinclination of the companies to settle, but because the writer has made a clear statement of the facts, in very moderate language. He is a relative of the Chairman of Committees, and is named McDonald. Before introducing my first Bill, I wrote to him, asking for an account of his experience in connexion with the settlement of a claim under a fire insurance policy. His reply was as follows - 950 Bourke-street, Boulder City, 12th July, 1906.
I received our letter, and I see you wish to be reminded of the actual facts regarding the fire which occurred at my place on January 16th, when my home and furniture were totally destroyed. The fire started in my sisterinlaw’s bedroom, through the curtains coming against a lighted candle. My house and my furniture were insured with the Commercial Union Insurance Company for ,£250 and £y$. Of course, after the fire, I made my claim to the insurance company. After waiting about fourteen days the company’s adjuster, Mr. Horner, arrived, and I met him, and he had a builder named Heron with him, and we took measurements of what remained of the house. After about nine days, I received a wire, “ Heron’s price to rebuild £iSo, offer you that amount without prejudice. Horner.”
That is, £70 less than the amount upon which he had been paying premiums -
Well, I tell you, I was surprised, as the place cost me well over ^300 to build. I immediately wrote back, and said that the only offer I could accept was the place rebuilt as it was before, or the full amount of the insurance, £250. Mr.- Bignell, who lives next door to me, told me that the way he heard Heron and Horner speaking he did not think I would get a fair deal. After another week’s delay I was informed that Mr. Horner would be up on the fields again, and would see me himself. I met him, and he had Heron with him again, and he asked me to accept the money, j£i8o, but I told him I did not want any money, I wanted the place rebuilt as it was before. He said that they would start to rebuild right away, but when I told him I wanted to see the architect’s plans of the place he proposed to build, he was taken back. -He thought he was just going to run up any sort of place, but I would not consent to any building going up without an architect and proper plans and specifications. Horner then took me to Mr. Cummings, architect, Lanestreet, Boulder, and instructed him to draw up plans and specifications, and gave him the measurements of the place. Well, the trouble began then. The architect made me get a copy of invoices for nearly every item in the place, such as box framed windows, size and make of doors, stamped metal ceilings, fly screens for windows, and fly doors, and every little item that was outside of Jarrah timber. As the timber and materials were all purchased in the Boulder, I was able to get -them, “although i<P gave me a great amount of trouble. Another week’s delay and the plans and specifications were finished, and, on the whole, it was a fair thing, and about as near as could be expected. But I had to keep getting notes from the timber merchants to make the architect put them in. Another fourteen days’ delay, and Mr. Horner arrived again, and I asked him when they were going to start and build. He said he was not satisfied with the plans, and I asked him what part he was not .satisfied with, as I had got all the proofs his architect wanted. He said he would underline all he took objection to, and would then send the plans back to me. He then offered me £225 in settlement of my claim for £250 for the house, as I had received the £j$ for the furniture. But I told him again that the only offer I could accept was the full amount of the insurance or the place rebuilt. Another week’s delay, and the specifications were sent back to me with all Mr. Horner’s objections underlined in red pencil, and I had to prove every detail. Mr. Horner said . if I could prove his objections he would recommend that my claim should be settled in full. One item in the specifications that he underlined was - stamped metal ceilings at 22s. 6d. per square, and I produced a copy of Wills and Company’s invoice to show I had paid 37s. 6d. and 28s. 5d. per square for all stamped metal used in my place. The studs in my house were only 18 in. apart, and in the new plans they were 2 ft. apart. But the architect told me that there must be a little give and take in these matters. Well, when I satisfied them of all materials they took exception to the way the place was painted, but I had lost patience, I wrote direct to the head manager in Perth, and went and saw the Kalgoorlie manager, and told him that unless I had a speedy settlement I would publish the full details of my case in the press. I also instructed Mr. J. N. Brown, solicitor, to write a letter for an early settlement. I had also engaged an expert builder to go through the plans with me, and he told me that the place could not be built for under £300. Anyhow, I do not know whether it was the solicitor’s letter or my threatening to write to the press, but the company settled up with me in full, after keeping me waiting over sixty days.
That is the attitude of a company, which, according to some honorable members, does not “point” or raise unnecessary objections. There was not the slightest suggestion of anything wrong in connexion with the fire, nor was any suspicion entertained in regard to *th§ actions of the occupants of the house, or of the adjoining premises.
– What was the company concerned ?
– The Commercial Union.
– That is not an Australian company.
– It is not an Australian company, but it operates in Australia. My experience of it is that it is a good company to leave alone. The Tetter concludes with this statement, that the company endeavoured to beat him for exchange oh the cheque, but ultimately recanted.
– It is costing us more now.
– The honorable member’s time may be very valuable, but it is not so valuable to me as the interests of the unfortunate persons who cannot obtain settlements from the fire insurance companies. Parliament should protect the public, whose money is now extorted from them by the fire insurance companies under false pretences. If my honorable friend thinks has time is too valuable to be devoted to the consideration of the grievances of such of his constituents as have had experiences similar to that of my correspondent, that is a matter for him and them.
– Two swallows do not make a summer.
– The case I have quoted is typical of many others in regard to which I have information.
– I very much doubt it.
– That is another way of saying that my statements are untrue ; a very offensive remark. Those who have known me since I entered this House will be as ready to accept what I say as correct as to accept what the honorable member says. The case to which I have drawn attention is typical of many others which are brought before the adjusters in all parts of Australia. The one subject upon which electors were enthusiastic during my recent campaign in Western Australia was this Bill. I was asked, “ When are you going to deal with the fire insurance companies, by making them pay the amounts which they have contracted to pay ?’ ‘ I have put forward a typical case, presented in moderate language, and I know that the statements which I have read are absolutely, true.
– Some people would call it “ faked.”
– If the honorable member says it is “faked,” he does an injustice to me and to the writer of the letter, whose word I would sooner take than that of the honorable member. I personally know my correspondent, and was in Kalgoorlie when the events of which he writes happened, so that I know the facts of the case, and can vouch for the truth of the statements made.
– It is a very exceptional case.
– In my opinion, it is not exceptional.
– That is where we differ.
– The members of the party to which I belong always differ from the members of the Opposition, who are prepared to defend the unsatisfactory actions of big and powerful financial institutions, while we stand up for those who suffer by them. On one side are those who are always ready to support our financial institutions, and, on the other, those who wish to assist the unfortunate people who are unable to fight their cases in the law courts. I am trying to obtain satisfaction and justice from the fire insurance companies, and I have shown that there is strong reason for believing that proper attempts are not made by them to settle the claims brought against them. I shall proceed to support that statementwith figures. All the companies do not show in their balancesheets the amount of their unsettled claims; [but those that do so naturally desire that this amount shall appear as small as possible. I find that, in the balancesheet of the South British Company, the losses set down as having been sustained in 1904 amounted to £159,000.
– Is that in Victoria?
– The figures relate to the whole of the Australasian business. The company is registered in New Zealand. Although its losses in that year amounted to £159,000, there were, at the time of the issue of the balance-sheet, unsettled claims aggregating £57.599. The Australian Mutual Company sustained losses amountingto £7,000,buttheydonot indicate the amount of the claims that they refused, or - as they would doubtless put it - were unable to settle. The New Zealand Insurance Company, in 1904, suffered losses amounting to £273,000, and the claims unsettled amounted to £67,969. I suppose some honorable members would suggest that all these claims were made a few days before the issue of the balance sheet.
– Would it not take time to settle them?
– The complaint I make is that the time occupied by the companies in settling claims is altogether too long.
– But some time must be occupied in inquiring into the cause of a fire.
– The settlement of claims is in many cases unreasonably delayed. I propose to compare these figures with those relating to the New Zealand State Department of Fire Insurance.
-Can the honorable member give us the volume of business done by these companies?
– I have quoted the losses sustained.
– Are those losses in respect of a year’s operations?
– I am not quite certain, but believe that thebalance sheet in each case represents a year’s operations.
– Many of them are published half-yearly.
– The Banking and Insurance Record is issued annually, and I think there is good reason to believe that these figures, which I have obtained from that source, represent the operations of a year. The point, however, does not affect my argument. The Victoria Insurance Company, in 1904, suffered losses amounting to £36,000, whilst its unsettled claims totalled £7,800.
– That was not so bad.
– The unsettled claims represented about one-fifth of the total losses sustained by the company. In all, sixteen insurance companies sustained losses totalling £755,000, and nine of the sixteen companies show unsettled claims amounting to £192,000. Seven of these sixteen companies do not show in their balance-sheets what their unsettled claims amounted to, but, assuming that the proportion of the unsettled claims to the total losses was the same throughout, then the unsettled claims of the sixteen companies during the period in question must have amounted to no less than £255,000 out of a total loss of £755,000. They would thus represent practically one-third of the total losses sustained during this period. These figures support the view advanced by the writer of the letter which I read a few minutes ago, a letter remarkable for tie moderation displayed by its writer under very trying circumstances. They indicate that the condition of affairs is the same all over Australia, and that there is no general desire on the part of fire insurance companies to meet the losses incurred. ‘ On the other hand, whilst the total losses suffered by the State Department of Fire Insurance in New Zealand during 1906 amounted to £10,312, the unsettled claims shown in the balancesheet before me amounted to only £300. These outstanding claims, therefore, represent about one thirty-third of the total losses, whereas the outstanding claims of the other companies amount to about 33 per cent. of the total losses.
– Is not the honorable member taking the total business of the public insurance companies in the one case, and only the losses of the State Department in the other?
– No. The figures quoted are the proportion of unsettled claims to the total loss in each case, and show an earnest desire on the part of the New Zealand State Fire Insurance Department to settle all claims, whilst, on the other hand, it would seem that there is a disposition on the part of the insurance companies to refuse to do so. To my mind, that is the only conclusion that can be drawn. I have dealt more fully than I had intended to do with this phase of the question, but believe that I have convinced a number of honorable members that there is urgent need for a sweeping alteration in the conditions at present governing the operations of fire insurance companies in Australia. I shall now proceed to explain the improvements which I think this Bill will effect in the present system. If it be passed in its present form, it will lead to the introduction of what is known in the United States of America as the “value” policy. That form of policy has been issued in many of the States of America. Unfortunately, as copies of the laws of the individual States of America are not kept in the Parliamentary Library, I have not been able to ascertain in how many States the value policy system prevails, but I gathered from a work that I read some time ago that it was in operation in about fourteen. That being so, we should not be afraid to introduce it into Australia. I am strongly of opinion that it is unwise for us to be sticklers for precedents. If there is an anomaly to be removed, by all means let us remove it, regardless of whether or not we have precedent for our action. One of the objections raised to the Bill, as introduced by me last session, was that it would unduly interfere with existing policies. That, in my opinion, was an unjustifiable objection, but it cannot be urged against the measure now before honorable members. I propose that it shall not come into operation until ist January, 1908, and that it shall apply only to renewals or new policies issued from that date. Another point is that the Bill will not apply to marine insurance.
– That is too ticklish a subject.
– Marine insurance business requires special consideration, and I have refrained from proposing that this Bill shall apply to that branch of insurance for the reason that. I do not know of any case of hardship that has occurred in connexion with it.
– Marine insurance most closely approximates to the principle for which the honorable member makes provision in his Bill.
– That may be. This Bill, however, will deal with risks on. land and not on water. I have also endeavoured to meet an objection that was raised last session by some honorable members, by excluding from the operation of the Bill goods regarded as a fluctuating quantity. I admitted, when this question was under consideration last session, that it was difficult for a warehouseman to say that he would have £20,000 worth of goods in his warehouse on one day, and stock of equal value a month later. I have, therefore, excluded from the operation of the Bill fire insurance in respect of goods held, for the purpose of trade and commerce.
– Then what will be left ?
– Buildings as well as household furniture and effects that are not kept for the purposes of trade. For example, this Bill would apply to the insurance of a furniture warehouse in Melbourne. The office furniture in that building could be insured under it, but the stock kept there for sale could not. In the same way the Bill would apply to the insurance df “a private house as well as to the furniture and the effects in it. A circular dealing with this question has been issued by some one who has not seen fit to disclose his identify, but who evidently has an interest in fire insurance business. In that circular, we are asked whether haystacks and growing crops would be covered by this Bill. In my judgment, they would not, because they may be said to be held for the purpose of trade. They are fluctuating quantities, and would’ not come under the operation of this measure. I have endeavoured to make the provisions of’ the Bill as simple as possible, but shall be glad to receive the assistance of honorable members in making its scope absolutely clear.
– How is a business man to protect himself from loss if he is not to be permitted to insure his stock?
– A business man would not be prevented by this Bill from availing himself of the ordinary terms offered by fire insurance companies. Clause 5 of the Bill provides -
In the event of total loss covered by a policy, the insured shall, notwithstanding any stipulations contained in the policy, be entitled to recover from the company the amount insured by the policy, and upon which the premiums have been paid. . . .
Having regard to the way in which the companies construe the arbitration clause in the conditions indorsed on every policy, and the fact that they often refuse to rebuild houses that have been destroyed by fire, I think it is urgently necessary to have in the Bill such a provision as this. In the circular to which I have referred, it is urged ‘that under this Bill all that a company would have to do in the event of a total loss would be to pay the face value of the policy, regardless of the value of the property to which it related. That is not a true statement of the position. The succeeding provision would apply to the insurance of property that is not wholly destroyed by fire. If a property is overvalued, the insurance company–
– Is to blame.
– Certainly. In such circumstances, the company ought to bear its share of the responsibility. It should be its duty to provide against .the .taking of exceptional risks or premiums when it does not intend to pay. Sub-clause .2 of clause 5 deals with partial losses. The circular to which I have referred states that the - one rule laid down now is that unless the parties can agree, the damaged properties shall be sold, and the full amount of the insurance paid, less the proceeds of the sale.
That is an absolute mis-statement of fact on the part of those who have issued the circular. I believe I have proved the misstatement by the documentary evidence I have submitted to-day, and also out of the mouths of the same people, per medium of their balance-sheets, in face of the fact that there is, roughly, £2 50,000 of unsettled claims throughout the Commonwealth to-day. We are told that the full amount will be paid less the proceeds of the sale; but I say that no endeavour has been made to do anything of the kind in Australia. The next clause provides against fraud ;’ and I repeat ‘that if the Bill is not sufficiently stringent I shall gladly assist in amending it so as to prevent any frauds on those carrying on fire assurance business. Any one ‘who attempts fraud of the kind will receive no sympathy from me, and I shall, as I say, gladly assist to make the penalty severe enough to deal with any cases which may arise. The next clause provides for the abolition of the arbitration provisions which are in the policies at present, and which, in my, opinion, are unnecessary. I am told by the companies that my suggestion is an extremely novel one in these days ; and I admit that the tendency is ‘in the direction of arbitration. If we could have equitable arbitration, with a Judge or an impartial person as chairman - in the same way as there is in industrial arbitration - well and good. But the companies refuse to allow any chairman to be appointed unless they know him to be in sympathy with their own ideas; and hence the arbitration provisions lead to a waste of time, and are practically useless. The provisions are never resorted to except for the purpose of securing delay. We are told in the circular that, as a matter of fact, arbitration does not occur in one case out of a thousand, and that it is well known that cases where claims are resisted by the company, and are taken into Court, are few and far between.
– In small cases the parties could not afford to arbitrate.
– They cannot afford to arbitrate even in big cases. Claimants do not resort to arbitration, for the simple reason that the companies insist on having a chairman who is in sympathy with their views, and who ultimately decides the question.
– What the circular means is that a settlement is made in all but one of a thousand cases.
– It means that a number of cases are never settled, unless settled in a way which means that the claimant never gets his money. A new condition in regard to arbitration has been imposed by the insurance companies, in that they now stipulate that, on the death of an arbitrator, another may be appointed in his place. Some of the arbitration cases have lasted so long that it is deemed wise now to provide for the death of an arbitrator before a claim’ may have been settled. I have stated briefly my reasons for submitting this Bill. Of course, it is not so satisfactory, to me as would be one to establish State fire insurance, because I think that the Commonwealth ought to undertake that responsibility. We have power as a Commonwealth to do so, and I believe that the beneficial results to the community would be the same as those which have followed in
New Zealand. There is no necessity for any large capital, because no great reserves have to be built up, the only necessary reserve being found in the confidence and guarantee of the people. The only capital that has been secured by the New Zealand Department is an advance of £2,000, but behind the Department are the people of the Colony, in the event of any great disasters. We in Australia could work on the same basis, with much benefit to ourselves. With State fire insurance, we should not have one-third of the claims unsettled, but all just payments would be made promptly, to the most infinitesimal amount, as in New Zealand. There would be the advantage of cheaper rates, and an absence of the unsatisfactory experiences to which I have referred. While, as I say, the Bill is not so satisfactory to me as would be a proposal for State insurance, there is, at the present time, urgent necessity for removing the inequitable conditions which at present are imposed by the companies, and which must be removed before there can be any reasonable hope of establishing a State Department. Although the Bill may not be perfect, it will, at any rate, have the effect of stopping the adjuster scandal ; in the next place, it will prevent the wrongs perpetrated under the arbitration provisions, which are set out on the back of the policy ; and in the third place, it will considerably reduce the number of unsettled claims which are outstanding as a debt from the companies to the people of Australia. Then, further, the Bill will give greater security to those who insure with the companies.
– Can the honorable member state the amount paid in premiums; and the amount which the companies pay in losses during the year?
– According to some figures given in a speech delivered bv Mr. Prendergast, M.L.A., in the Victorian State Parliament a little time ago, the total receipts of the insurance companies in Victoria, in 1904, were £651,2.46. while the amounts paid in losses was £254,059. The other expenditure of the companies amounted to £243,853, and we thus have total receipts of £651,000 odd, as against the total expenditure of £497,000 odd, leaving a very considerable profit.
– The figures for one year are not a reliable guide.
– I admit that the conditions for one year may not accurately demonstrate the position, because there may be a big fire one year, and no fires for a number of years afterwards.
– The figures for South Australia for seventeen years support the figures just quoted.
– I should think that is very likely. As I say, the provisions of the Bill will give greater security to the insurer, and the clauses which seek to prevent fraud will be a considerable safeguard to the country. I commend the Bill to the fair and generous treatment of honorable members, because it will save unfortunate men, in the position of the man to whom I referred this afternoon, from being contracted out of their just dues by insurance companies who are prepared to resort to such methods in order to make immense profits.
– As one who criticised a similar Bill previously introduced by the honorable member for Kalgoorlie, I should like to say a few words on this new measure. The honorable member has modified in some degree the provisions of the first Bill,’ under the criticism to which they were exposed, and if he did wisely, he would still further modify the provisions to such an extent that the Bill would cease to exist. The honorable member’s own speech is the greatest condemnation of the Bill. He has claimed that the insurance companies’ provisions on the policies are not only inequitable in regard to what he proposes to amend, but absolutely inequitable in a dozen other ways. If that is so, why should a piecemeal mea’ sure like this be introduced? This is the initiation of the exercise of our powers in regard to insurance granted by the Constitution. Are we, a Federal Parliament, justified in dealing in this way with a subject so large - are we justified in sending out such a crude and piecemeal measure as our initial effort in the use of our power under the Constitution.
– We ought to know the Government opinion on the Bill.
– I desire to know what the Government’s action is going to be in connexion with the Bill. I do not claim that the insurance business of Australia is in all cases conducted as it should be. I quite admit that there are some hard cases, such as those to which the honorable member for Kalgoorlie has alluded, but I also know that to pay regard only to such hard cases, without considering the whole of the circumstances connected with insurance, is the worst possible way to make laws.
– Does the honorable member say that the companies always settle to the full amount?
– There are differences between insurance companies, just as there are between other institutions.
– Except as to their rates.
– Yes. That reminds me that the New Zealand Government Insurance Department, as I understand, desires to have the same rates as the other insurance companies - to combine with the companies to keep the rates at a certain figure.
– But the rates have been brought down in New Zealand.
– I have not much time in which to deal with this Bill on the second reading. The measure is a very serious proposal, which strikes at the basic principle of insurance, namely, that only the loss incurred by an insurer shall be paid. That principle is not only asafeguard to the insurance companies - I do not think so much of that aspect, because, if the safeguard were removed, the companies would put up their rates to cover the loss - but is also a safeguard to the honest insurer, because his rate is not put up in order to pay dishonest men who may fire their properties. Then the principle is also a safeguard to the community, because the fewer fires there are the better for the community. The Bill has another important bearing, to which I have already alluded. It is the initiation of the exercise of our powers under the Constitution in regard to insurance. If it be necessary, as I believe it is, to exercise those powers - necessary to have one uniform law for all Australia, and, if it foe desirable to have one standard policy - fair as between the parties concerned - then it is for the Government, ‘ and not a private member, to submit a proper measure. The Bill should not be a small measure like that before us - large in its effects, but small in its scope - but a measure dealing equitably, fairly, and comprehensively with the whole insurance law of Australia. Surely the Government are not going to stand by, as I am sorry to say they often have stood by, and see measures submitted in a way which takes out of their hands the initiative they ought to exercise.
I say that we ought to know the viewof the Government upon this matter.
– Has not a private member any rights?
– Undoubtedly he has. But the Government also have responsibilities. They may approve or disapprove of this Bill. If they approve of it they should indicate that they propose to bring it forward as part of their policy, and if they disapprove of it they should say so at once. ‘ If the Bill be passed we shall be committed to this important change of insurance policy, and consequently we ought to know whether it is to be a part of the. Government programme. That is one aspect of the question which I wish to impress upon honorable members. I think that our responsibility, as the Commonwealth Parliament, is involved in this Bill, which initiates our insurance legislation, and the Government responsibility is also involved in it. Therefore, the sooner we hear from a member of the Government what is to be its attitude upon this very important question, and the sooner we learn its attitude towards all matters of insurance upon which we have power to legislate under the powers conferred by the Constitution, the better. These private proposals are all very well in their way. I do not blame the honorable member for having brought this Bill forward - he had a perfect right to do so - but I think that the Government ought to devote more attention to proposals emanating from private members, and ought to indicate their policy in regard to them at an earlier stage. Sometimes they do not indicate their policy concerning them at all. I intend to be brief in my criticism of the Bill because the arguments which I previously directed against certain of its provisions still stand. The measure professes to save expense to insurers - especially to those who suffer by fire. I say that it will increase costs to them. If a company is to be compelled to take these uncertain risks, if it is to issue policies, knowing that many of its insurers,by reasonof the great difference between the value of certain forms ofproperty at the time they were insured and the price which they would subsequently realize upon the open market, will be tempted to incendiarism, then it must provide for annual inspection, which must be paid for by higher rates, and give infinite trouble to insurers. That would not be in the interests of the community.
– Has incendiarism been worse in New Zealand of recent years than it was previously ?
– No such provision is operative in New Zealand. I venture to say that if the honorable member will communicate with the manager of the New Zealand State Insurance Company he will find that that officer will oppose any such proposal as this. No comparison can be instituted such as the honorable member suggests, because there is no such provision in the New Zealand law. It is a very dangerous provision-
– It was not necessary to incorporate it in the New Zealand Act, because that Act goes further than does this Bill.
– The same companies are operating in New Zealand as are operating here. I may tell the honorable member, in passing, that I visited New Zealand last year, and whilst there made inquiries concerning the rates charged by the State Insurance Company, and, so far as I could judge, they were quite as high as are our Australian rates. Under those rates the State Insurance Company of New Zealand made a profit of only £600, whilst another New Zealand company, as has been mentioned here to-day, made many thousands.
– Does the honorable member deny that the rates were reduced in New Zealand?
– I neither deny nor affirm it. I do not know. I do know, however, that since they were said to have been reduced, the rates of the State Insurance Company are, so far as one can judge, very much the same as are the rates in Australia. I admit that it is sometimes difficult to compare.
– Because in New Zealand the houses are wooden ones.
– Nobody would ever dream of instituting a comparison between buildings which were constructed of different materials. I atn perfectly satisfied that if this Bill becomes law, the honest insurer will be required to pay more than he ‘pays now to cover the losses caused by dishonest insurers. When the honorable member for Kalgoorlie first brought forward this Bill, he had not the advantage of the criticism which has since been directed to -it. But in the .last Parliament he had that advantage. Yet I note that there are still blots remaining: upon the measure - blots which were pointed out at the time, and which make it absolutely unworkable. For instance, subclause 2 of clause 5 states -
In the event of partial loss covered by apolicy, the insured shall, notwithstanding any stipulations contained in the policy, be entitled to recover from the company compensation equal’ to the amount of the loss sustained, but not exceeding the amount insured by the policy. Such loss shall be ascertained by mutual agreement or by the sale of the salvage, and a deduction of the amount received therefrom from the amount of the policy.
Let us suppose that a house has the roof destroyed by fire. How can the salvage be sold? A person cannot sell the ground, because it has not been insured, and if the house were sold and the purchaser had to remove it, it would have to be sold as old bricks and mortar. I recognise the honorable member’s difficulty in dealing with that point, but the provision relating to it ‘ in> this Bill is so1 crude as to be absolutely unworkable..
– We need only to omit the word “ salvage.”
– There are many other difficulties which require to be removed. For instance, there is the difficulty created by the difference in the price which the land might bring - the difficulty that it is impossible to bring the sei ling: price of the land .into the calculation. “ I will not detain honorable members at greater length with detail criticism, because I have dealt with this .measure before. I only wonder that the honorable member has introduced it again in its present form. It may be very easy to declare that if an insurance company likes to accept a certain risk it shall pay that risk in the event of a fire taking place. But we have to consider the injury which would be sustained by the community at large if such a system were adopted. I am satisfied that it would lead to what would be against the interests of the community - a large increase in the number of “ fires. When a -property was not saleable in the market for anything like the amount for which it was insured, the temptation to incendarism would be very great. Why not say at once that if a man wished to dispose of a property which he had insured,, the company should pay him the face value of his policy, and take over that property, -because that would result in -a saving of wealth to;the community ‘by check- ing incendarism? The assured would say to the company, “As long as I retain this property, I will pay you a premium of so much, but when I no longer desire to retain it you must take it off my hands.” I do not think that this matter has been fully considered. The honorable member for Kalgoorlie has said that goods not used as merchandise should be insured in this way, but not other goods. I would point out that the difficulties of settlement would be immensely increased by such a proposal. Suppose that a carter insured his property, and that he had fodder for his horses on the premises. Let us further suppose that he had a number of drays there. If a fire occurred, would his loss of these goods be paid by the companies under the provisions of this Bill ? Complications would arise in a thousand ways, and would render settlements infinitely more difficult than they are at present. Take the case also of a person insuring his furniture. Every year a valuation would require to be made, because the furniture, which was worth so much at first, would be worth very little after a number of _years.
– The honorable member knows that there may be a variation or cancellation of the policy at any time.-
– Is there to be an annual valuation made in every house throughout Australia in order to ascertain that the depreciation which has occurred has not been such as would induce the insured to set fire to his premises ?
– In the case pf 90 per cent, of those insured, is not there a renewal of the policy each year?
– Yes, often without inspection; but why? Because they have to prove their values should there be a fire. There is a very wide distinction between the two processes. In the one case there would require to be an annual valuation all over Australia of property which had not been injured by fire, and in the other a valuation is only needed in the comparatively few instances in which fires have occurred. If that expensive system were forced upon insurance companies, would it not have to be paid for by the insured? The Bill, in that respect, confers no boon upon the insured, but quite the reverse Regarding the hard cases mentioned or others, I may say at once that I am not in favour of some of the terms which are indorsed upon insurance policies. But the remedying of that is a matter for a complete Insurance Bill under the powers conferred upon us by the Constitution, and it should be introduced by the Government. Then private members, if Parliament concurred, might from time to time amend the Act, but the first work - the large work, which is to affect all Australia, and to place insurance upon a proper basis throughout the Commonwealth, assuming that it is now upon a wrong basis - should be undertaken by means of a Government Bill. The honorable member for Kalgoorlie has quite pleased me by his statement that the companies are in a sound financial position. Of course, I should be gratified if I were a shareholder in them, which I am not, but I am very, glad to know, as an insurer, that they are so sound financially.
– I agree with the honorable member.
– As an insurer, probably the honorable member will. But I contend that this Bill does not attempt to remedy many defects in our insurance laws. It merely touches upon one point, and it does so in a very dangerous way.
– It touches upon a crucial point.
– No; there are many other matters which are more important. The measure is one in regard to which a Minister should state the policy of the Government. We should know whether the Government are prepared to adopt it as an instalment of their general policy in relation to insurance, or whether they are opposed to its provisions, and, therefore, will do their best to prevent the passing of the measure; because we ought not to pass a measure which will disturb all insurance if it is to be repealed later on by a more comprehensive Government Act.
Debate interrupted under Sessional Order.
Motion (by Mr. Hughes) agreed to -
That leave be given to bring in a Bill for an Act to amend the Commonwealth Public Service Act 1902.
Bill presented, and read a first time.
Motion (by Mr. Chanter) agreed to -
That leave be given to bring in a Bill for an Act to amend the Commonwealth Electoral Acts of 1902 and 1905 as regards the Court of Disputed Returns.
Bill presented, and read a first time.
Consideration resumed (vide page 161 1).
– The honorable member for North Sydney seemed to think that, as relief cannot be given to every one, the honorable member for Kalgoorlie should not try to relieve the hundreds who are suffering injustice at the hands of the fire insurance companies. I take a very different view. If the measure will relieve the cases of hardship which we have had brought’ under our notice this afternoon, its introduction will be absolutely justified. The honorable member for Kalgoorlie made out an excellent case for an alteration of the law relating to fire insurance, and I hope to supplement if with some figures which I wish to place before honorable members. The object of the Bill is, in the first place, to provide that an insurer who suffers the total loss of an insured property shall receive the amount for which he has insured it - a very fair proposition ; and, in the next place, that where only partial damage results from a fire, he shall be paid only the amount at which the damage is estimated. Furthermore, the Bill protects the fire insurance companies from fraud and illegal practices; so that it is fair to both the companies and those who insure with them. In a circular which has been issued by the Fire Underwriters’ Association in regard to the Bill, it is stated that, if the measure were carried, encouragement would be offered to gambling ; but I think honorable members will admit that all fire insurance business is gambling. An aspect of the case which was not dealt with very fully by the honorable member for Kalgoorlie is the injustice done to the public by. the action of the companies in forming themselves into a “ ring.” Some years ago, in South Australia, I insured the premises of the firm with which I was connected with the Liverpool, London, and Globe Insurance Company, and after I had paid premiums for some years, I received ‘a notice increasing the rate to 8s. or 9s. per £100, accompanied by a circular, which read -
The increased premium, . as per the renewal notice attached, is strictly in accordance with the provisions adopted by the fire tariff of all companies. ,
By forming themselves into a ring, the -fire insurance companies have eliminated competition, and insurers are compelled to pay the rates which they demand. That is another justification for passing legislation regulating fire insurance. There can be no doubt that it is very difficult to get claims^ settled by the companies. The honorable’ member for Kalgoorlie has proved that that is so. He showed that the nine companies doing business in Australia which state in their balance-sheets the amount of their unsettled claims had, in one year, no less than £^200,000 worth of claims unsettled, while seven others gave no figures at all in regard to this part of their business. Not one person in twenty who effects an insurance reads the conditions of the policy. I have spoken to scores of persons who have insured furniture, asking them what they thought to be .covered, and in nine cases out of ten I have been told that if the house were burned, insurance would be paid upon all the furniture and ornaments it contained, although, as a’ matter of fact, all sorts of exemptions are insisted on. The Bill is necessary to prevent persons from over-insuring. It has been referred to as offering an inducement to arson ; but the inducement is greater under the present conditions, which allow of the insurance of property for considerably more than its value. An insurance manager, to whom I was speaking the other day, told me that the companies do not permit persons to overinsure ; but my experience shows that they do. I had a plant insured for a certain amount, and each year wrote off 20 per cent, for depreciation, re-insuring it at the reduced value; but the company would have taken it at the original value for the whole period. The companies do this all over the Commonwealth. Persons insure, for the same amount each year, houses, plant and stock, which are constantly depreciating, and, although the companies accept premiums for the full amount, if fire occurs, they pay only on the actual value of the property at the time of the disaster. That should be prevented. Something might well be said about the profits made by these companies. The figures will astonish honorable members.
– Is the object of the Bill to cut down the profits of the fire insurance companies?
– I sincerely hope so.
– They are attacked because they are doing well?
– When I complained in the South Australian Parliament of the action of the London, Liverpool, and Globe Company in raising my premium to 8s. or 9s. per £100, some of the leading merchants of Adelaide congratulated me, and supplied me with very valuable information, because they were anxious that something should be done to prevent companies which were receiving such unfair profits from pressing too heavily upon their customers. The original capital of the London, Liverpool, and Globe Insurance Company was £245,600. In the years 1883, 1884 and 1885, it paid dividends at ‘ the rate of 57 J- per cent, per annum ; in 1886 and 1887, at the rate of 65 per cent. ; in 1888, at the rate of 70 per cent. ; and in 1889, 1890, and 1891, at the rate of 75 per cent.
– The companies have had to pay away many hundreds of thousands of pounds in connexion with the San Francisco disaster:
– I am dealing with Australian conditions. If our conditions were similar to those of ‘San Francisco and South America, I should be prepared to assist the insurance companies.
– In San- Francisco they are refusing to pay.
– The sixteen Australasian fire insurance companies have not done as well as the London, Liverpool and Globe Company ; but they have done very well, seeing that for the three years, between 1902 and 1905, their underwriting surpluses amounted to 14.15 per cent., 14.06 per cent., and 16.64 per cent. That is a very handsome return. According to the balance-sheets published in the 1905 volume of the Australasian Insurance and Banking Record, after deducting losses and expenses, the trade surpluses of” eleven of the Australasian companies run from 18 to over 40 per cent. Is it fair that so large a profit should be taken out of the pockets of those who do business with these companies? Is it not time that we took action to compel them to deal more fairly with their customers?
– How will this Bill cure that trouble?
– I do not claim that the Bill, as it stands, would do so. I quote these figures in order to show that it is necessary for us to go even further than the honorable member for Kalgoorlie proposes. If the honorable member for Parramatta thinks that the trouble should be cured, then I shall invite him later on to join with me in taking action in that direction. The honorable member for Kalgoorlie has said that he will be glad to have our assistance in improving the Bill. As a matter of fact, I do not approve of the whole of its provisions, and there is no reason why we should not amend it. One at least of the provisions of the Bill, as it stands, is unworkable ; but I’ hope that we shall proceed to make the whole measure a thoroughly practical one.__.
– The fact that the percentage of profit is low in the case of some of the companies is because they pass on a lot of it to capital. Where the percentage is large, the business is more or less a gamble.
– Exactly. The whole business is a gamble, although I admit that it is a necessary one. At a conference held in Ballarat on ist May, 1896, figures were quoted in regard to the operations of the companies which opened the eyes of the people of Australia. The operations of fifty-four offices - the names of which were given-; - for 1894-5, were dealt with. The expenses were set down at £.3>309,4i7, the commissions amounted to ,£3,002,172, dividends to £1,836,188, and the premiums paid to £19,211,647. Thus, out of premiums amounting to £19,211, 647, £6,300,000 was expended in respect of management and commission, and £1,800,000 in dividends. A glance at the prices ruling for shares in insurance companies must satisfy any one that a fair and legitimate business is not being done. In many cases the scrip is from four (o twenty times its original value. This should convince honorable members that the profits the companies are making are altogether too large. According to the Banking Record of 1895, page 398, the fire premium income of the Commercial Union Assurance Company for 1892 was £1,010,514. Its losses totalled £751,146, and its expenses amounted to £331,194. For 1893, its fire premiums amounted to £1,127,744, its losses to £678,873, and its expenses to £345,219. These companies are equally prosperous to-day, and we should compel them to adopt reasonable rates if their sense of fairness will not permit them to do so. The honorable member for North Sydney expressed a desire to secure a statement giving a comparison of the premium rates ruling in New Zealand with those obtaining in Australia. I find that Mr. Prendergast, the leader of the Opposition in the Legislative Assembly of Victoria, stated in the House last week that he had obtained from the Government of New Zealand official information showing the operations of the State Fire Insurance Office up to 30th June last. He said that the first statement before him related to the year 1906, and was as follows -
The State Fire Insurance Office commenced business with premiums 10 per cent, less than those accepted by the private insurance companies, and a little later the latter reduced to the same level all rates, except on dwellings, which were lowered by 33^ per cent. The State Fire Insurance Office thereupon reduced dwellings by 33^ per cent. The private insurance companies also decided : (1) To decline reinsurances from or to give reinsurances to the State Fire Insurance Office, and (2) to decline to accept any risk on which the State Fire Insurance Office held a line; and this attitude was maintained by the private insurance companies until early in 1906, when they agreed : (1) To continue to decline reinsurances from or to dive reinsurances to the State Fire Insurance Office, but (2) to allow each other to accept risks on which the State Fire Insurance Office held a line, and also to abandon their objection to the State Fire Insurance Office accepting risks, on which they themselves had lines. The State Fire Insurance Office has evidently found favour with the public, and, seeing it has been successful, it fully justifies the object of its inauguration, viz., that the Government office should regulate the rates of fire insurance premiums on the basis of fair prices, which on an average would leave a reasonable and legitimate and trade profit on the business of fire insurance for all concerned.
The honorable member for North Sydney will observe that, according to this official information, the fire rates in New Zealand, were considerably reduced upon the establishment of the State Department. If it be true that at the present time they are only approaching the rates prevailing in Australia, I should like to know what they would have been but for the creation of the State Department. The dairy farmers of South Australia have had a similar experience. As a matter of fact, it was found that for some time they were not being paid a fair price for their cream, and the Government were induced to step in and establish a State butter factory, That factory is not turning out a very large quantity of butter, but, as the result of its establishment, the dairy farmers are now securing a fair price for their cream.
– The position is the same in every case.
– That is so. I do not think that we should take into consideration the question of what profit is being made by the State Fire Insurance Office of New Zealand. As a matter of fact, I do not like to see a State Department making large profits. Its object should be, not to make profits, but to convenience the people and provide the cheapest possible service consistent with efficiency. When I was a member of the Parliament of South Australia,. I sought to obtain information as to the receipts and losses of the insurance companies doing business there, but at first found it impossible to do so. I therefore moved for a return supplying the necessary information. Various obstacles were placed in the way of its preparation. Although the Fire- Brigades Act required that the insurance companies should submit to the Fire Brigades Board copies of their balance-sheets, I ‘found that only the secretary to the Board was permitted to see them. I certainly respected the reason for this practice, namely, that one company did not wish another to ascertain the volume of business that it was transacting. In the interests of the public, however, I urged that we had a right to secure the fullest information on the subject, and I am glad to say that the State Parliament agreed to my motion for the preparation of such a return. My motion provided that the return should show the premiums received and the losses sustained during a period of ten years. It was decided, however, that the return should cover- a period of seventeen years. This return snowed that for ten years the losses did not exceed £5,000 per annum; while, on- the other hand, the premiums averaged £61,000 per annum. For the whole seventeen years, the premiums averaged £63,000 per annum, but I am unable to give the losses for the same period. There can be no question that the profits were understated. Certain office expenses were, to my mind, unjustifiably deducted. I regret that the honorable member for Kalgoorlie has not proposed that we shall’ go further in the direction of fire insurance law. The honorable member for North Sydney says that if we ave to deal with this question at all, we ought to cover the whole ground. The House has shown no inclination to do anything of the kind, but that is no reason why we should not seek to make at least some improvement in the present system. I should like to see established a State Department of Insurance for the Commonwealth. Such an establishment would lead to enormous savings. Instead of the sixteen expensive Staffs of the Australasian companies, we should have one central office carrying out the whole of the work, and I am sure the result would be that the present rates would be reduced by more than one-half. I regret that under clause 4, goods, wares, or merchandise, owned or held for the purpose of trade or commerce, are to be excluded from the operation of the Bill. The honorable member for North Sydney expressed his pleasure that the provision in the Bill, as submitted last session, that the insurance of all goods should come within its operation, had been eliminated. Personally, I regret that that course has been adopted. I do not know of a greater injustice than that which is suffered by business people under what is known as “ the average clause” in the conditions indorsed on insurance policies. I hope that we shall try to devise some means of remedying the evil. The average clause is misleading and unjust. The face risk on a policy may really be much less than the insurer anticipated. Let me illustrate the point that I wish to make. A business man might have on his premises £3,000 worth of goods, and might take out a policy for £2,000. The insurance company would be quite willing to accept a premium upon that amount, but if the man were unfortunate enough to have all his goods destroyed by fire, he would receive, not £2,000, but something like £1,330. It is unfair that a company should be allowed to accept premiums upon an insurance policy ‘of £2,000 and pay only £1,330 when the whole of the goods covered by that policy are lost.
– Do they never pay the full amount of a policy?
– Let me explain. The argument of the companies is that the insurer has taken a risk up to £1,000- that is, that the company takes the risk of £2,000, and for the remaining £1,000 the insurer takes the risk. Consequently, if a fire occurs, a proportion of this £1,000 risk is considered in adjusting the claim. If a company insures any class of goods for £2,000, and the whole of those goods are destroyed, it is only fair that the company should pay the full amount, seeing that the premiums are on a risk of £2,000. The difficulty is really in ascertaining whether the goods have been destroyed, be cause a man may have £10,000 of goods in his warehouse to-day, and only £2,000 worth three months hence. That, however, is a matter that can be dealt with in Committee. It is possible that sub-clause 2 of clause 5 referred to by the honorable member for North Sydney will require amendment. The word “ salvage “ makes it rather difficult to deal with the provision. Honorable members can imagine a case in which a man has insured his furniture for, say, £200, and damage has been done to the extent of £50. The company offers to Pay £5° to the insurer, and, if the insurer is not satisfied, the company, under the BiU, will be compelled to sell the remaining £150 worth of furniture at what is practically, a forced sale, where only a fraction of its value may be realized, and also (pay the insurer the full amount of £200. I do not think that such a provision is fair to a company, and in Committee I shall endeavour to so amend the clause as to make it more equitable. A similar position would arise in such a case as that referred to by the honorable member for North Sydney. A building which, for instance, had its roof burnt, could be restored, and it would be very unfair to compel a company to sell a partially damaged building for whatever it would fetch, and, at the same time, pay the insurer the full amount. The underwriters assure us that this is a Bill to incite crime. If that be so, it is an argument for the abolition of fire insurance altogether. All fire insurance is an incitement to crime, but the punishment for wilful fire raising is so severe that I do not think there is likely to be any considerable increase in the number of incendiaries, simply because of the slight injustice proposed to be done to insurers. There are some remarkable statements in the circular. For instance -
Every description of property is subject to fluctuations in value. Buildings may lose in value by deterioration and in various other ways, such as the decay of a locality or changes in the cost of material and labour.
That is quite so, but that is a matter about which the companies have never troubled their heads; they have allowed insurers to believe that if anything happens to an insured building, they will get the amount for which it has been insured. There is an injustice which it is our bounden duty to remove at the earliest moment. The circular also says that it would not be a convenience to the public for the companies to be perpetually revising the amount of the insurance, and endeavouring to adjust it to th* actual value. What trouble would there be in doing that ? If a man is in business it is well known what the usual deduction for depreciation is. It would be just as easy for the insurance companies to fix a fair depreciation on all properties insured as it is for them to fix the rates of premium on the amount insured - rates are most arbitrary. It must be remembered that all the companies met and agreed upon a tariff which applies, not only to one industry or one street, but to all the different streets and conditions in both town and country. If the insurance companies can do that, it would be a simple matter for them, in the case of furniture or other goods not new, to write off 20 per cent, for depreciation, and make a corresponding reduction in the premium paid. The circular goes on to say that the business is a special one, and cannot with advantage to the community be conducted without safeguards. But what safeguard has the insurer at the present time? He has not even the safeguard of the solvency of the insurance company,, but has to take the whole risk, although he is called upon to pay any premium which the company chooses to extort. The circular further says that it is contrary to public policy for ii man to make money out of a fire. If that be so in regard to the insurer, surely it should also apply to the insurance company. The companies ought to be able not only to make a fair profit, but to do well. It is when they become extortionate that it is time for the Government to step in. We are told in the circular that the cost of insurance under the Bill will be increased. But the companies have increased the cost of insurance just as far as their conscience would allow. There is nothing to prevent the companies at the present time going further, except their fear lhat, in view of their enormous profits, which are published, the State would feel bound to step in and see justice done. Although I am not satisfied with the Bill as it stands, I am wholly in agreement with its object, and I shall do whatever I can to pass it into law.
– I agree with the honorable member for North Svdney that it is a pity to deal piecemeal with such legislation. I acknowledge that there is a good deal in what has been submitted bv the honorable member for Kalgoorlie. While I am perfectly certain that what he placed before the House were facts, I can not, of course, say that the facts are quite so- significant as they seemed, from the stress he laid on some of them. For instance, we had certain cases mentioned as having come from a lawyer. I do not mind much those cases which come from lawyers. We cannot possibly strike an average of those which are disputed or undisputed when we take cases from the business done by professional men, because, in every instance, they have to do with disputes. Again, I do not mind very much the apparent deductions he drew from the figures in regard to the amount of the losses suffered between certain balance-sheets and the total of the unsettled claims. For instance, the. honorable member for Kalgoorlie mentioned one case in which £160,000 was the total of the claims in the interval between the two balance-sheets, while the actual unsettled claims amounted to something like £60,000. If the balance-sheets are, as in many cases, issued half-yearly, we have a total of over £200,000 of settled and unsettled claims, and if only onefourth of that total are unsettled, it simply means that they are pending inquiry. If the interval between the balance-sheets is only six months, and the total claims ,£200,000, and only a fourth” of these are unsettled, there is no significance to be attached to the figures. We must assume that at least ,£50,000 of the claims will be unsettled for six or seven weeks, seeing that, in case of fire, there must be some scrutiny or ascertainment, through invoices or otherwise, as to the total stock and damage of goods. Even then, we should have to find the proportion of the total claims to the’ total business done, before we could draw anything like a reasonable deduction. Again, I do not pay much attention to the quotation in regard to the profits made by the companies. Some companies carry a large portion of their profits to a reserve fund, which is proper insurance ; other companies do not do so, which is not proper insurance, but, largely, gambling. I shall not say it is purely gambling, though it partakes too much of the character of gambling to make it true insurance. For that reason, when big fires occur in certain parts of the world, a number of companies go to the wall, because they have never based their returns on a true calculus of probabilities in relation to fire. A great many companies were ruined when Chicago was burnt, and the same occurred in connexion with the more recent disaster at San Francisco; but in true insurance, catastrophes of that sort ought not to smash- companies. Some of the States have hesitated to follow the example of New Zealand in establishing a State system of insurance, because it requires a very wide basis of operation to average a true calculus of the probabilities of fire. This seems to have been done fairly well in New Zealand, though not so well as was anticipated. There have been no big fires in that Colony, but the difference between the State premiums, as quoted by the honorable member for Kalgoorlie, and the premiums of ordinary companies, was at the start, as mentioned by the honorable member for Hindmarsh, about 10 per cent., and is too small to suggest the success of the New Zealand system in comparison with private companies. In the case of lives, we can fairly well ascertain the percentage of deaths, even within a year. If we take Bayle’s Table, we can, in the case of one thousand people of the age of twentyeight years, ascertain that about 1 per cent, will die within the year, and even if there is abnormal mortality in relation to that number, it does not go up to more than n or 12 per thousand. With, therefore, the abnormalities of human life so little affecting the rate of premium, we may with absolute certainty predict what the premiums ought to be. There is not required, in the case of lives, an area of operation over a very wide field, but in the case of fire insurance, the circumstances arc? quite different. We cannot, over a period of ten years, or even fifteen years, form a general theory as to the number of fires - the calculations must be more or less haphazard. Under the circumstances, there is a very large element of gambling risk in fire insurance operations that are limited to comparatively small geographical areas, or to areas in which settlement is not very dense. One result of a Bill of this sort, which makes an exception of Australia to the general principle that insurance is a contract of indemnity, may be that some of the larger companies may decline to take the risk of operating in the country where the conditions do not harmonize with their general principles. If that be so, we shall drive away those very companies which, with their wide spheres of operations, can afford to do business at lower rates. I merely throw out the suggestion as a pos.sible development of this Bill. No doubt we are entitled to make the proposed change from a contract of indemnity, which is the basis of insurance, to an Act of Parliament regulating, to a great extent, the future relations of insurer and insured. We are., 1 say, entitled to make the change if it be expedient. Insurance is more or less a monopoly. One of the very reasons I gave - that the sphere of operations prevents a State, if not a large State, from engaging In such an undertaking with the prospect of benefits great enough to justify State interference - shows that, more or less, it must be a monopoly, because it requires a company with considerable operations to do the work. .The better class of companies are those who do not only local business, but also business over a greater part of the British Dominions. But the business is in its nature a monopoly, and, being such, we are entitled to effect a change in the law of” contract if it becomes expedient to do so. I do not approve, of the legislation, which the honorable member desires to place upon our statute-book. To my mind, it is a pity to deal with the question of insurance in a piece-meal fashion, and by a measure which is so open to criticism, as far as it goes. There ought to be a comprehensive Bill introduced relating to insurance. Perhaps, if the subject be well considered, with the staff which the Government have at their disposal, a measure may be submitted which will mitigate, if it does not entirely remove, some of the evils upon which the honorable member for Kalgoorlie dwelt in moving the second reading of this Bill. I acknowledge that cases of great hardship do occur. I have had professional experience of some cases, in which claims were ultimately paid up to many times the amount originally offered to the insured. Of course, it is to the interest of insurance agents, who assess the damage caused by fire, to stand as well as they possibly can with their companies. However honest a man may be - seeing that he is only the assessor for one side in a good many cases - he will, as far as possible, keep down the estimate of damage. As a result, the insured frequently labours under a sense- of injustice when, through lack of capital, he is unable to employ another assessor to counteract the estimate of the companies’ assessor, or to proceed to arbitration where, should he fail to establish his claim, he would be required to pay the whole of the costs. Then there are cases in which insurance companies, not wilfully, but owing to excessive suspicion - that arson might have been committed,, in the absence of evidence to the contrary, harass the assured. Though these cases may not be as numerous, or may not go so far as the honorable member declared, they exist, perhaps, to an extent that would justify some legislative check being imposed upon their operations. By means of combinations the companies also maintain premiums at an unfairly high rate. But against that we must re- collect that fire insurance business is, to a large extent, a gamble, and the premiums must necessarily be high to enable them to survive great losses. The companies receive a tremendous shock when big losses occur, and, consequently, the premiums paid must be high. The premiums, therefore, seem to bear a very large proportion to the capital invested, but, as a matter of fact, in some cases, the invested capital is not the security of the assured. It is the capacity of the shareholders to answer applications for calls. They take the risk, and accept a certain premium. That premium 5s not based upon the true principles of assurance. Consequently, the premiums seem high. We must not attach too much significance to that, but that there have been combinations to maintain premiums at undue rates is well attested by the evidence given by the honorable member for Hindmarsh in connexion with suggested proceedings in the South Australian Parliament. While I do not like to oppose an attempt to accomplish something by means of a Bill introduced by a private member, I’ think that the Government should announce that, within a’ reasonable time, they will bring forward a comprehensive measure dealing with the question of insurance. I do not like to say that the Bill under consideration will fail in its operation, but I fear that it is a dangerous one to pass, at all events, in its present form. Where a total loss occurs, it undoubtedly proposes to substitute an entirely new principle - the gambling principle - for that of indemnity, which is the true principle of insurance. Of course, I exempt marine insurance, because in that case the insurance is effected for the whole value invested. Why ? Because, as a rule, marine insurances are effected for voyages, and a proper estimate of the value of the vessel is obtained before she is insured. The valuation takes place at the beginning of every voyage. But that does not occur in connexion with the insurance of f furni- ture or houses. It would not pay a com: pany if it were obliged to obtain a fresh valuation of every property insured before accepting a renewal premium each year. The payment of a small premium of ios. per £100 would not justify an annual valuation, which might perhaps cost 15s. Under the circumstances, the fire insurance companies, to a large extent, have to rely upon the honesty of the assured, instead of testing his honesty every year by means of a valuation. I am afraid that if the Bill is’ passed in its present form we shall be substituting a new principle - really that of a gamble, represented by the payment of the total value of the policy irrespective of the loss sustained - for the present indemnity contract,’ which to some extent is a security against the commission of arson. If the assured must prove the total loss which he has sustained before he can recover, there is no doubt that that safeguard must diminish the probability of arson being committed. The particular provision in the Bill relating to this matter is subclause 1 of clause 5. But, in sub-clause 2 of the same clause, the honorable member for Kalgoorlie departs from this principle, and falls back upon the old one - the contract for indemnity - by declaring that the company concerned shall be called upon to pay, not the difference between the amount of the insurance and the loss SUStained, or the difference between the amount insured and the salvage, but the difference between the loss at the time of the fire and the loss immediately afterwards. That is the effect of sub-clause 2 of clause 5. In other words, this Bill is inconsistent with itself. The first portion of clause 5 deals with a new principle, and the next, portion abandons it, thus evidencing the necessity for a comprehensive and well-considered measure being presented to the House. Sub-clause 2 of clause 5 states-
In the event, of partial loss covered by a policy, the insured shall, notwithstanding any stipulations contained in the policy, be entitled to recover from the company compensation equal to the amount of the loss sustained but not exceeding the amount insured by the policy.
That is the principle of insurance at the present time. So that this Bill will not improve matters. The law of general averages is not touched by the new definition embodied in the measure. The Bill is chiefly designed to protect insurances upon houses and furniture. But the danger is that sub-clause 2 will be chiefly operative, because the bulk of the losses sustained will be partial losses. Even if one article of furniture only were destroyed by fire, it would represent a partial loss, and the principle of the payment of the total amount would apply. If a joint assurance of furniture and a house were effected - one cannot oblige a fire insurance company to issue separate policies - it might be that if the house were totally destroyed whilst the whole of the furniture was not, the assured, instead of getting the total amount, would get -only the difference between the value of the house and furniture immediately before the fire, and their value immediately afterwards, so that he would be in no better position than he is at present if the Bill became law. The impression which I formed in listening to the honorable member moving the second reading of the Bill was that the measure ought not to be initiated by a private member, but by the Government. For the edification of the House, the sooner the Ministry declare their policy upon the matter the better.
Debate (on motion by Mr. Hume Cook) adjourned.
In Committee (Considerationresumed from 7th August, vide page 1565) :
Clause 14 -
The Governor-General may exempt, for such time and subject to such conditions as he thinks fit, from all or any of the provisions of this Act-
any ship of war;
any vessels trading exclusively between Australia and New Zealand or Fiji, or other places adjacent to Australia;
any particular vessel or class of vessels ; and,
any persons, animals, plants, or goods.
.- In paragraph d of this, clause, it is proposed to give the Governor-General power to exempt from the provisions of the Act any person, animals, plants or goods. Judging from reports which I have seen, this provision is regarded in some of the States as rather dangerous, since it gives the Minister too much discretion. Under it, any animals, plants or goods could be exempted from the operation of the measure. There is no such provision in the South Australian Act, and the regulations passed under that Act fix a specific period of quarantine for each class of animal, so that any one reading the Act and the regulations is completely informed on the subject. I am not willing to submit an amendment; but I ask the Minister to consider the advisability of modifying the clause. If the measure is sensibly administered, there will be no danger, although the South Australian Chief Inspector of Stock speaks of the clause as a very dangerous one.
– The power given by the clause will be exercised sparingly, and only on the strongest recommendation from the quarantine authorities. However, since the honorable member has raised the point, I shall consider the matter again.
Clause agreed to.
Clause 15 -
The owner of any Australian vessel going from one State or part of the Commonwealth to another State or part of the Commonwealth, shall, if required by the Minister by order in writing so to do, cause to be carried on the vessel an efficient disinfecting apparatus or appliance approved by him.
Penalty : Fifty pounds.
Amendment (by Mr. Groom) proposed -
That after the word “ Commonwealth,” line 3, the words “ or of any vessel carrying passengers and trading regularly with the Commonwealth “ be inserted.
– Inasmuch as this amendment applies to all British and foreign vessels, I think that if it is agreed’ to, the passing of the Bill will have to be delayed until the King’s assent has been obtained. The clause as it stands deals with Australian vessels; but the amendment makes its provisions apply to all oversea vessels, and, if I am not mistaken, legislation of this kind must, under the provisions of the Imperial Merchant Shipping Act of 1894, be reserved for the. King’s assent.
– The amendment applies the provisions of the clause to all vessels trading regularly with Australia, requiring them to carry efficient disinfecting apparatus ; but I am inclined to think that the honorable member is in error in believing that the Bill must therefore, if it be carried, be kept back for the King’s assent. We have power to order British vessels into quarantine; but the clause simply requires that if they trade regularly with Australian ports they must carry disinfecting apparatus.
– Will the clause apply to all sailing vessels?
– If they trade here regularly, and carry passengers.
– If they trade here regularly and do not carry passengers ?
– Then it will not apply to them.
.- In my opinion the word ‘ ‘ master ‘ ‘ should be substituted for the word “ owner “ in this clause. It may be difficult to find the owner of a vessel, while it may be necessary to travel half round the planet to serve a notice upon him. The master, however, will be on board, and always accessible. I wish, too, to know why, if the Government consider it necessary, in the interests of health, that vessels trading regularly to Australia shall carry disinfecting apparatus, the provision is made to apply only to such vessels as carry passengers. Surely the health of seamen is equally entitled to consideration? I think that the clause should apply to all vessels.
– I shall look into the matter.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 16 -
The owner or master of any Australian vessel or of any vessel going from one port in the Commonwealth to another port in the Commonwealth, shall, when required by a quarantine officer by order in writing so to do, cause his vessel to be fumigated or submitted to any specified process for the destruction of rats, mice, and insects in the presence and to the satisfaction of an officer.
Penalty : Fifty pounds.
.- I atn advised that, if the power given in this clause were exercised by an inexperienced officer, valuable merchandise might be seriously damaged. Certain disinfectants will damage certain cargo, and their use, therefore, may involve shippers in serious loss.. There ought to be some safeguard against this. I do not assume that any official will maliciously try to injure shippers or ship-owners ;. but I suggest that consideration should be given to an amendment which I have been asked to submit, inserting after the word “ Commonwealth,” in line 4, the words “ and not proceeding to a port outside the Commonwealth and in completion of the voyage.” This would narrow the scope of the clause. No doubt the Government should have the fullest powers, to use in times of emergency ; but I suggest that consideration should be given to this proposal for safeguarding shippers and ship-owners from loss by the action of ignorant or over-officious persons.
– If the honorable member carefully examines the clause he will recog nise that there is no reason why it should be dreaded. The process of fumigation would be specified, and the owner of the vessel would then see that the work was carried out as directed. I cannot conceive of an officer attempting to fumigate a vessel in such a way as to do damage to its structure or cargo.
– As a matter of fact, such a thing has frequently taken place.
– This and the preceding clause were inserted on the recommendation of the Conference, who reported -
The Conference has advised in the proposed Commonwealth Quarantine Bill that it should be made lawful to require vessels trading in Commonwealth waters to be fitted with such disinfecting plant as the Director-General may deem necessary, and as may be prescribed by regulation.
Then we have the statement in regard to this clause that -
It has further advised that the Commonwealth Government should seek powers for subjecting every vessel trading in Commonwealth waters to an approved process for the destruction of vermin at intervals.
I think that the honorable member will recognise the necessity for this power.
– I do.
– The only question which the honorable member raises is whether the power should be limited.
– Whether we should limit the area of operation.
– A vessel might proceed f roma a plague-infected port in Australia to a clean port in the Commonwealth, and as the result of the escape of vermin from it the disease might be spread in the latter port. The mere fact that that vessel intended subsequently to proceed to a port beyond the Commonwealth should not be sufficient to exempt it from the provision as to fumigation.
– I recognise the necessity for taking this power, but should like the AttorneyGeneral to carefully consider the question I have raised.
– I shall do so. The honorable member desires that this power, which must necessarily be taken, shall not be exercised in a way likely to cause ‘injury to a vessel or its cargo. I promise to have special representations made fo the Department, and to have the point considered.
– I am satisfied.
– This provision would be unobjectionable if it applied only to vessels in ballast, but what would be the position if a steamer with a cargo of butter proceeded from a plague-infected port in Australia to a clean port, where a Customs House officer determined that it should be fumigated? The whole of the dargo of butter would be tainted, and rendered valueless. I recognise that it is very necessary, in the interests not only of , the people generally, but of officers and seamen, that vessels should be fumigated from time to time, but the point I wish to make is that in order to destroy rats, mice, and other vermin on a vessel all the holds would have to be treated. If that course were adopted in the case of a ship having on board a cargo of perishable produce, great loss would be sustained. This prevision should be exercised with great caution and discretion. Under the clause as it stands a quarantine officer at the last Australian port of call could cause a vessel bound for a port beyond the seas to be fumigated. I think it would be better to provide that vessels shall be fumigated before taking in cargo.
– A vessel that had been fumigated whilst empty might take in a cargo at an infected port, and proceed to another in which there was no disease. This is a power which will rarely be exercised.
– In nearly every port in the Commonwealth steps are taken to prevent rats boarding or leaving vessels berthed at the piers. Fenders are placed on the ropes, and the rats cannot get over them.
– Sailors assure me that *hey do.
– It is possible that they do in some cases, owing to neglect in placing the fenders in position; but if reasonable precautions be taken, and the fenders are not allowed to buckle up, rats and other vermin cannot escape from a ship. Some vessels coming from an infected port might have on board goods that would not be injured by fumigation. Hides and minerals, for instance, would not be injuriously affected by the process, but perishable produce, such as butter, would be rendered absolutely valueless. I believe that vessels should be thoroughly fumigated from time to time, but I urge that the fumigation should take place before any cargo is shipped.
– I hope that this power will be granted he Minister, and am sure that no attempt would be made to fumigate a vessel unless it was absolutely necessary in the interests of public health that that step should be taken. I recognise that, even although butter, on our oversea vessels, is kept in refrigerating chambers, it would be tainted by the process of fumigation, but I feel confident that no abuse of this power will occur. I agree that it would be well- to fumigate a vessel only when she had discharged all, or nearly “all, her cargo. The honorable member for Franklin must recognise, however, that there is carelessness in connexion with every industry, and that any neglect in fixing vermin-proof fenders on the ropes of a vessel berthed at one of our piers might lead to a serious outbreak of disease. If is, therefore, necessary to have a provision of this kind in the Bill. Although I should regret to see a shipment of butter sacrificed as the result of fumigation, I think it would .be better to run the risk of such a loss than to neglect any precaution necessary to preserve the public health. It would be better to damage a whole shipment of butter than to sacrifice the life of one individual.
– I hope that the honorable member for Kooyong will not press Gis proposal. Whilst there is much force in what has been said as to the position in regard to vessels trading between the larger ports, and also with ports beyond Australia, I would remind the Committee that we have a number of vessels trading between the central and some of the smaller ports of Australia. Perhaps it may not be out of place for me to mention that, through the agency of vessels trading between Sydney and ports along the coast of New South Wales, the bubonic plague was carried into my electorate. The Municipal Councils are the authority charged with the administration of the health laws, and if the suggestion made by the honorable member for Kooyong were adopted, they would have no power to order a vessel to be fumigated.
– The honorable member for Kooyong has agreed not to press his amendment. All that he now asks is that care shall be exercised in administering this provision.
– I agree that a provision of this kind should be exercised with due care, but we certainly ought to have the right to deal in this way with vessels coming from plague-infected ports.
– How would this provision affect trade at, for instance, the Tweed River ?
– I presume that it is fairly well known that all coastal vessels are more or less alive with rats, and that vermin on board ship can best be destroyed by fumigation, since they secrete themselves under the linings and covering boards. This work can be carried out most effectively after a ship has discharged its cargo, which, in the case of the smaller vessels trading to ports within my electorate, consists very often of maize and similar produce carried to one port, and of general merchandise canned on the return trip. Once a vessel has discharged her cargo, the work of fumigation can be thoroughly carried out with small expense to the owner.
– Should it be done periodically ?
– As a matter of fact, a vessel should be fumigated after every trip she makes, when trading from an infected port. A vessel might be perfectly clean when she reaches one port and yet be practically overrun with rats when she arrives at the next. I hope that this power will be retained, for, as I understand it, under the proposal made by the honorable member for Kooyong, a vessel could not be fumigated when empty.
.- I trust that full power to order the fumigation of a vessel will be given the Federal authority, but I must admit that there is a. good deal of force in the contention that during the process cargo might be seriously damaged. I hope that great attention will be paid to cargoes, especially those from China and Japan. A few days ago I read of an incident in connexion with the fumigation of a cargo which had arrived in the United States from Japan; and it emphasizes the contention that a cargo may be damaged in the operation. In fact, when the work of fumigation was going on, the cargo commenced to sneeze, and, on a search being made, it was found that the “ merchandise “ consisted of Japanese women. The discovery of such a cargo would be one good result of fumigation.
– I have no intention to restrict the power of the Commonwealth under this clause; the object I had in view is secured by the Ministerial undertaking that the authority will be exercised with caution. Care is absolutely necessary, because there have been actual instances of officers exercising the power vested in them to the great disadvantage of ship-owners and shippers. In the case of butter, for instance, if any taint be imparted to it the consignment might as well be thrown overboard at once. I quite agree that the Commonwealth should have full power to take every necessary precaution when there is an outbreak of disease. I urge the Minister to reconsider this provision with a view to seeing whether greater precautions cannot be taken against the injudicious exercise of the power given.
.- I do not believe in any power of the Commonwealth being curtailed in this connexion, and I am supported in that view by the incident related by the honorable member for New England. In Hongkong no fewer than 1,100 dead bodies are found every year .in the streets, and in at least 200 of these cases, the cause of death .is plague, yellow fever, or small-pox. It will be seen, therefore, that the chance of contagion is very great, and I indorse the view that ships, especially those from the East, should be thoroughly fumigated, and the strictest vigilance exercised in regard to them. I shall vote against any amendment which has a tendency to lessen the power of the Federal Government.
Clause agreed to..
Clauses 17 to 19 agreed to.
Clause 20 -
The master of an oversea vessel arriving in Australia shall not, unless from stress of weather or other reasonable cause, suffer the vessel toenter any port other than a port declared to be a first port of entry.
Penalty : Five hundred pounds.
.- If there be. a port of entry proclaimed in Western Australia, will every vessel have to call at such a port in order to get clearance under the quarantine regulations? How is it to be determined what the ports of entry are to be? It will interfere very much with commerce if a vessel, with a cargo for the northern ports of Western Australia, has to call at the port of Fremantle in order to get clearance. My object is to have a clearer definition of what is a port of entry.
Mr. GROOM (Darling Downs- AttorneyGeneral [6.7]. - The Bill does not impose any restriction in the way the honorable member suggests. Clause 13 provides that the Governor-General’ may, by proclamation, declare any ports in Australia to be the first ports of entry for oversea vessels. The .power must of necessity be wide, because, from time to time, new ports may be created, and they will require to be proclaimed as first ports of entry. Further, it may be sometimes advisable, especially in a State like Western Australia, if there is a desire to have direct importation, to even declare a port to be a port of entry for the time being, and have proper officers there, in order to carry out the necessary inspection on the arrival of a vessel.
– All that is done by proclamation?
– Yes ; there must be elasticity under the Bill. Of course, there will be regular proclaimed ports known to everybody as ports of entry.
.- I can foresee considerable difficulty, owing to the wording of this clause, in the case of vessels from the East, which desire to land cargo in some portion of the north-west of Australia. Then, there might be a cargo consigned to Portland, “Victoria, or to some port in Queensland, which is not declared a port of entry.
– Surely the honorable member does not suggest that cargo from oversea may be landed at any port without restriction ?
– Certainly not. My contention is that very serious injustice may be inflicted on persons in out of the way portions of Australia who desire to land cargo from eastern ports, or even from Europe. In the case of Portland, for instance, if that be not declared a first port of entry, a vessel with cargo would first have to come to Melbourne in order to get clearance.
– Would not any port, with oversea trade at all, be declared a port of entry ?
– I presume it would. Clause 50 provides that no person shall land any imported animals or plants in any port except one declared to be a port where such cargo may be landed. Under the circumstances, there would have to be provision made at all ports of entry for the proper supervision of vessels from which it was desired to land animals or plants, but there might not be at those ports the necessary officials. Under ordinary circumstances, if some supervision were not exercised, a cargo of undesirable aliens might be landed in the north-west. At the same time, the Minister must see that great injustice might be clone under this clause to persons not only in remote ports, but in the more settled ports of Australia. In Port land, for instance, there is a jetty for oversea trade, and, unless that be declared a port of entry, all vessels with cargo for that place will have to first go to Adelaide or Melbourne.
– Is there oversea trade there now?
– Would that be the first port of call in Australia?
– Then a vessel would not be interfered with at Portland.
– But a vessel might come with an oversea cargo consigned to Portland, where the captain knew he could get a full cargo of frozen produce, for instance, for Europe.
– Does not the honorable member think that, if a vessel came to Portland, as the first port of call, there ought to be proper supervision?
– Most certainly.
– I understand the honorable member to suggest that Portland should be declared a port of entry.
– Certainly. I am endeavouring to show that the number of ports of entry should be increased.
– We desire to know what ports are likely to be declared ports of entry.
– That is very necessary information. This clause provides for very wide supervision over oversea cargoes, and such supervision may sometimes create great difficulties.
Clause agreed to.
Clause 21 (Hoisting of quarantine signal).
.- This clause provides that the master of every vessel subject to quarantine shall “ hoist the quarantine signal at the main-top.” This is a technical matter, of which I personally know nothing, but I am informed that the proper word should be the “ maintruck,” because there is no main-top in certain vessels. I undetstand representations have been made to the Minister, who is willing to make the necessary technical change.
– I undertake that the clause shall be technically put right.
Clause agreed to.
Clause 22 -
The master of every vessel shall (unless the vessel is actually performing quarantine under the supervision of a quarantine officer) forthwith, after becoming aware that any disease has broken out on his vessel which he believes or suspects or has reason to believe or suspect to be a quarantinable disease -
notify a quarantine officer of the breaking out of the disease, and
hoist the quarantine signal at the maintop of his vessel, and keep it so hoisted until he is authorized by a quarantine officer to take it down or until the vessel is released from quarantine.
Penalty : Fifty pounds.
Amendment (by Mr. Groom) proposed -
That all the words from “The master” to “ quarantinable disease,” inclusive, lines1 to 7, be left out with a view to insert in lieu thereof the following words : - “ When the master of any vessel becomes aware that - “(a) any eruptive disease; or “ (i) any fever disease attended with glan dular swellings ; or ” (c) any disease which he believes or suspects, or has reason to believe or suspect, to be a quarantinable disease - has broken out on board his vessel, he shall forthwith (unless the vessel is actually performing quarantine under the supervision of a quarantine officer) - “
– I understand that, according to this clause, if an eruptive disease breaks out in a ship, the master will be rendered liable to a penalty of £50 if all these difficult precautions are not taken. This is a matter for medical men, but I should say that there are a number of eruptive diseases which may not be at all suspicious, and yet we are imposing on masters of ships much work which the) are not at present called upon to do.
.- The proposed amendment requires a certain amount of consideration, and I think some notice should have been given of this proposal. The amendment proposed by the Attorney-General would make it necessary for the master of a ship to hold-up his vessel merely because there was an eruptive disease on board. He might merely be carrying a passenger suffering from eczema or prickly heat, and surely these diseases would not be a sufficient excuse for holding up a vessel. Of course, in the case of prickly heat, it would be wise to inspect the patient lest he should be in the incipient stage of a disease which was serious.
– In a case like that the master would merely be required to notify the authorities.
– I think that after the master becomes aware that any disease has broken out upon his shin he should notify the authorities.
– I would draw the honorable member’s attention to the fact that paragraphs a and b are retained in the amendment.
– I think that the word “ fever “ should be omitted, and the word “febrile” substituted for it.
– The word “fever” has been inserted upon advice.
– At the same time, it is not technically correct. The amendment has been badly drafted. As, however, the Attorney-General is acting upon advice, I do not propose to move an amendment, but if he will look into medical nomenclature he will find that the term “ febrile disease “ is more in accordance with professional language.
.- I think that every honorable member Who witnessed the honorable member for Corangamite struggling with the technicalities of this proposal, which has suddenly been sprung upon the Committee, must have recognised the impropriety of dealing hastily with a matter of such great importance. I need scarcely point out that the amendment involves the whole crux of oversea quarantine, so far as it concerns individuals. Yet we are asked to deal with it at a moment’s notice, and without any honorable member, except the honorable member for Corangamite, being afforded an opportunity to peruse it in print. I suggest to the Attorney-General that in matters of this kind the Committee should be considered. The honorable member for Corangamite at first expressed the opinion that the proposal in the Bill was better than that contained in the amendment, but, after studying the latter carefully, he concluded that the amendment was not a bad one, if it aimed at what he thought it aimed. If an expert can be so puzzled by an amendment, surely lay members of the Committee cannot be expected to do better. I venture to say that the honorable member for Corangamite himself finds it very difficult to understand the difference between the proposal in the Bill and the amendment. I, therefore, suggest that the consideration of the clause should be postponed. The provision reads -
The master of every vessel shall (unless thevessel is actually performing quarantine under the supervision of a quarantine officer) forthwith, after becoming aware that any disease has. broken out on his vessel which he believes or suspects, or has reason to believe or suspect, tobe a quarantinable disease -
notify a quarantine officer of the breaking out of the disease, and
hoist the quarantine signal at the maintop of his vessel, and keep it so hoisted until he is authorized by a quarantine officer to take it down or until the vessel is released from quarantine.
Honorable members will see that under paragraph (b) which I understand has been incorporated in the amendment, the master of a vessel who discovers that any disease has broken out on board is required to hoist the quarantine signal at the main-top of his vessel. I do think that intricacies of this sort might with advantage be left to the executive authority. Why should we insert in the Bill a provision that in a particular part of a ship’s rigging a signal should be hoisted?
Amendment (by Mr. Wilson) proposed -
That the amendment be amended by leaving out of paragraph (4) the word “fever,” with a view to insert after the word “ with “ the words. “ fever and.”
.- The difficulty which I see in the amendment is that glandular swellings, unless they are febrile, would not be regarded as sufficient evidence upon which to quarantine a ship. Of course, simple-minded members like myself cannot be expected to understand a proposal of this character without being afforded an opportunity of studying it in print. When I. have a Bill before me, I make it a practice to carefully study every provision in it, so that I know exactly where I stand. But when an amendment like this is suddenly placed before honorable members, those whose intellects, like my own, work slowly, are placed at a great disadvantage. I suggest that in future the Attorney-General should take care that every new clause which he proposes to incorporate in a Bill shall be printed and circulated amongst honorable members.
Sitting suspended from 6.30 to 7.45p.m.
.- I rise to offer my opposition to the proposal of the Government, because, with the exception of the Minister and the honorable member for Corangamite, no one knows what it is, and, as I, like other honorable members, must take my share of responsibility for every provision that is agreed to with my consent, I must know what is proposed before I can support it. In my opinion, we might well postpone the fur then consideration of the clause until the serious business of the evening - which I take to be the introduction of the Tariff - is concluded. This is not a party measure, and we ought to be most careful that nothing is done in regard to it which may risk the health of the people of Australia.
– The honorable member does not know what the proposal of the Government is, and yet he opposes it.
– As a conscientious representative of the electors of Wentworth, I must oppose a proposal which is unknown to all but the Minister and the honorable member for Corangamite, to whom, I understand, it has been submitted under the bond of professional secrecy. The Minister suggests that the amendment of the honorable member for Corangamite should first be dealt with ; but I am filled with suspicion of these medical gentlemen who are in the confidence of the Government, and therefore am indisposed to accept the offer.
Mr. SPEAKER reported the receipt of messages from His Excellency the GovernorGeneral, transmitting Estimates of Revenue and Expenditure, and Estimates of Expenditure for Additions, New Works, Buildings, &c, for the year ending 30th June, 1908, and recommending appropriations accordingly.
– The preparation necessary for the task I have before me has involved a great deal of time and work, and I can only hope that I shall successfully accomplish it at such short notice. I felt that I should deliver the Budget statement at the earliest possible date. I may mention that last year the Budget was delivered on the 31st July. In 1905 it was delivered on the 22nd of August, and the year before that on the 18th October. I deem it proper that the House and the country should be informed as’ to the state of our finances at as early a date as possible. The necessity for this was emphasized a few nights ago, when some exception was taken to our dealing with somewhat ordinary business until honorable members were made aware of the state of the finances. It is with a view to give honorable members that information at the earliest possible moment that I have undertaken to deliver the Budget at such short notice: I regret that’ it has- fallen to my lot to undertake this task. I had hoped that it would have been performed by .my late colleague the ex-Treasurer, Sir John Forrest. As I assumed the office of Treasurer only on Tuesday week last, and did not enter the offices of the Department until one or two’ days later, honorable members will understand the strain that has been placed not only upon myself, but upon the officers of the Department in the meantime. I have, at the commencement, to tender my thanks to Mr. Allen, Mr. Collins, and the other officers of the Treasury Department for the manner in . which they have worked to enable rae to deliver the Budget statement to-night. It has been only with great difficulty that I have been able to put together the absolutely essential figures bearing upon our current financial transactions. In making my statement to-night, I intend, as far as possible, to avoid entering into too many details, and to confine myself to some-extent to totals. I hold that it is mystifying to honorable members to have to follow a very detailed statement, and it is also unnecessary to supply details in the Budget statement when full particulars are supplied in the papers which have been circulated amongst honorable members, and which have still to be .laid on the table. The last Budget speech which I had the honour to make was delivered just on the eve of Federation in the New South Wales Parliament, and at a time when many warnings were uttered as to the disastrous results which it was said would accrue from the union of the Australian States. But from the position we are in to-day, we are able to see that those warnings were unnecessary, and that many of the fears at that time expressed were without foundation. The prosperity of Australia, instead of decaying under Federation, has advanced by leaps and bounds.- In 1.900 the imports amounted to £41,388,030, and the exports to £45,956,882, the total trade at that time being £87,344,912. From the last figures available - those of 1906 - I find that the imports have risen to £44,729,506, and the exports to £69,737,763, the total trade being £114,467,269, an increase of £19,279,503 on the preceding year. There is also to be noted a great increase in the deposits in the savings banks and the rail- way returns in the various States, which is ample evidence of a period of great prosperity. The figures bearing out this statement will be found in the papers laid on the table, and it is therefore unnecessary that I should reproduce them here. There can be.no doubt that we have been blessed with very bountiful seasons, and the prices of the great staple commodities have been high, but the most pronounced critics of Federation must admit that, in the period under review, Australia has indeed made a most .notable advance. The following figures speak for themselves : -
It is also to be remembered that a new generation has been growing up, not so deeply imbued with that former provincial feeling which, I admit, was natural under the separate State Governments. I feel sure that in years to come new generations will be proud to feel that they are Australians not only in name, but in fact.
– We shall have to get the transcontinental railway through before we can reach that stage.
– I shall say something later on about that question. Such a sentiment, which will surely grow up, will remove many difficulties between the States and the Commonwealth - difficulties which were quite sure to occur in the transition period through which we have been passing. That was inevitable during the first years of the life of our Commonwealth, as is shown by the experience of every other country that has launched out under new conditions of government. The total revenue for the year ended 30th June last was £12,832,266, of which the Customs and Excise revenue amounted to £9,648,662, including £16,776, derived from the Special Tariff of Western Australia. Honorable members are aware that this Special Tariff ceased on the 8th of October, 1906, so that the resulting figures will disappear henceforward from the Treasury statements. The revenue for the year was exceptionally large, there being an increase over the previous year of £950,342, and the principal items of increase being : - Customs and Excise, £649,177; Post Office, j£3°4>726- It is a matter for congratulation that the Post Office Department, managed as it is for the whole ‘Continent by one central office, is proving a source of revenue instead of a drain on the finances. The increase in the receipts from stimulants and narcotics amounted to £185,089, and the greater spending power of the community was shown in a very large consumption of sugar, the increase in the apparent consumption - I refer to this because it seems enormous - being 16,000 tons; also in the’ increase in expenditure upon clothing, the duties received under apparel and textiles being £163,200 more than in the previous year. There was an increase also in duties received on metals and machinery of £146,808. The activity in the building trade was shown in an increase of duties paid upon oils and paints of £17,281. Under earthenware there was an increase of £19,877 ; wood, wicker, and cane produced £32,496 more, whilst leather also accounted for an increase of £21,511. The revenue, derived from post offices, telegraphs and telephones, was £3,129,074, showing an increase of £304,726. These increases gave an opportunity to the late Treasurer to return an immense sum to the various States. The amounts actually paid to State Treasurers in 1906-7 were:’ -
being an increase, as compared with the previous year, pf -
Western Australia, I very much regret to say, received less by £92,826. Looking at the Revenue and Expenditure -of the past year in the light of the socalled “Braddon Clause” - I refer to section 87 of the Constitution - I find that the Commonwealth Treasurer paid over to the States as a whole - I want honorable members to notice this particularly - the sum of £805,766 in excess of the amount required, to be paid under that clause. Not only was more than three-fourths of the total Customs and Excise revenue handed over to the States, but each and every State received more than three-fourths of its net Customs and Excise revenue. In previous years some States have, and some have not, received more than their three-fourths. That the Commonwealth has, in the past, dealt exceedingly liberally with the States is evidenced by the fact that, since the establishment of Federation, the sum of £5,728,114, which might legally have been expended by the Commonwealth, has been paid over to the States to be used by them for any purpose thev deemed fit. The amount returned to each State to the 30th June last in excess of the three-fourths was as follows : - New South Wales, £2,361,846; Victoria, ‘ £1,518,670: Queensland, £61,519; South Australia, £527,463; Western Australia, £1,099,910; and Tasmania, £158,706. There is no doubt that the past year has been an exceedingly prosperous one. Under ordinary circumstances the Treasurer would not be justified in hoping that such a large revenue would be repeated; but from the reports I have had from various sources/ 1 have come to the conclusion that the ordinary revenue will be quite as buoyant as in the present year. In addition to the ordinary Customs revenue, we expect to receive a considerable increase from the additional duties which are proposed. I do not expect, however, that the increase will be permanent, for the tendency will be for more articles to be manufactured and more produce to be grown in Australia, and for the revenue ultimately to decrease. My estimate of the Customs and Excise revenue for the current year is £10,509,000, showing an increase of £877,114 over the revenue received last year. One of the greatest difficulties of the Treasurer, whoever he may be, is in estimating the revenue to be received from sugar duties in the various States. As a considerable quantity ofl the Australian sugar on which Excise duty will be paid during the present year will pay only £3 per ton, and as the balance of the Australian sugar will pay £4 per ton, it is exceedingly difficult to estimate the duty which will be credited to each State. Perhaps I will make myself clear. when I say that it is almost impossible to know in which State the sugar paying £3 per ton will be used. There is an additional difficulty in estimating the quantity of sugar which will be imported, and the particular States in which it will be consumed. It is expected that the revenue’ from imported sugar will be £47,000 in the present year, as compared with £122,298 in the previous year; while the Excise duty on sugar is estimated to produce £746,000 in the current year, as compared with £546,653 collected last year. Honorable members who desire information on this interesting item of revenue will find particulars on pages 11, 12, and 13 of the Budget Papers which I have circulated. It will be seen that an increase of 32,000 tons is estimated in the production by white labour during the season 1907, and a decrease of 37,000 tons in Queensland in the production by black labour. It is also to be noticed that in 1906 92,414 acres were cultivated by white labour in Queensland, while in 1907 116,520 acres are under cultivation by white labour. Owing to the increase in the amount of the bounty, it is estimated that the very large sum of £573,000 will be payable during the current financial year. In 1906-7 only i£328,2io was expended. As honorable members are aware, the bounty was increased from £2 to £3 per tori on the ist January, 1907. The effect of the Federal policy on the industry in Queensland is shown in the fact that in 1902 1,521 sugar-cane farmers employed white labour, while in 1907 4,080 farmers used white labour. Again, in 1902 black labour was used by 975 farmers, whereas in 1907 only 500 farmers used black labour. I refer honorable members to the following tables in reference to sugar : -
– Is that the industry which it was said a few years ago was going to be killed?
– That is the very industry which it was predicted would die very rapidly. From the Post and Telegraph Department I expect to receive a revenue of £3,190,000 this year, as compared with £3,129,074 in . 1906-7. In making this estimate I allow for a reduction of £117,000, on account of the loss for the half-year commencing 1st January next, which will result from the introduction of penny postage should Parliament approve of bringing it into effect. The total revenuefrom all sources expected during the present year is £13,745,200, as compared with £12,832,266 collected during last year. Honorable members are aware that the revenue from Customs and Excise duties is in the first instance credited to the State in which it is received, but that if any goods on which duty has been paid are transferred to another State the consuming State is credited and the exporting State debited with the amount of such duty.
– Is there not some leakage ?
– Tasmania has stated that there has been a leakage, but I do not know whether the statement is correct or not.
– Tasmania loses revenue from her people buying Australian goods.
– I propose to make a few remarks in reference to a matter which has been hinted at by honorable members, and that is the interchange between
Tasmania and Australia. On page 21 of the Budget Papers will be found a statement showing the amount of these debits and credits. The States from, which the goods are transferred are shown as debtors, and the States to which the goods are sent as creditors. It will be seen that New South Wales and Victoria are still maintaining the lead as distributing States. In 1906-7 the net debit to New South Wales was £150,214, and to Victoria £424,827, as compared with £133,396 to New South Wales and £366,411 to Victoria in 1905-6. Honorable members will see what a great distributing State Victoria continues to be. I have no doubt that a great deal of that distribution takes place to Tasmania, and perhaps to Western Australia. Queensland was credited in 1906-7 with £247,319, as . against £214,358 in 1905-6. Western Australia, although suffering from a certain amount of depression, as shown by the smaller revenue collected, is increasing her purchases from other States, being credited with £161,922 in 1906-7, as compared with £135,917 in 1905- 6. Tasmania also purchases more largely, being credited with £127,677 in 1906- 7, as against £112,592 in 1905-6. Honorable members will find on page 21 of the Budget papers an account of the Inter-State Customs and. Excise Adjustment. An attempt is now being made to arrange an average or total sum to be paid to the State of Tasmania to prevent the necessity for the continuance of Inter-State certificates. Communications have been entered into, and are now proceeding, with New South Wales and Victoria to this end. The Federal Government cannot agree to the proposals of Tasmania, or. anything approaching them, without the consent of the two States - New South Wales and Victoria. I took the opportunity while I was at the head of the Customs Department to communicate, through the Prime Minister, with those two States, in order to try to get them to agree to some adjustment of the kind. I may add that in my opinion they may fairly be liberal. I hope they will be as liberal as they possibly can be, as it will be shown that Tasmania is losing something this year on account of these adjustments. The following table shows the debits and credits to each State during several years -
Before leaving the subject of revenue, I submit the following table showing the Customs and Post Office revenue received in each State during 1906-1907, and the. revenue estimated to be receivedin 1907-1908 -
Cite as: Australia, House of Representatives, Debates, 8 August 1907, viewed 6 July 2017, <http://historichansard.net/hofreps/1907/19070808_reps_3_37/>.