House of Representatives
24 March 1965

25th Parliament · 1st Session

  1. House of Representatives
  2. 25th Parliament
  3. 1965

Mr. SPEAKER (Hon. Sir John McLeay) took the chair at 2.30 p.m., and read prayers.

page 259

QUESTION

AUSTRALIAN CAPITAL TERRITORY

Mr J R Fraser:
ALP

– I ask the PostmasterGeneral: As the Postmaster-General’s Department is experiencing extreme difficulty in recruiting letter carriers, either male or female, for duty in the Australian Capital Territory, and as mail deliveries to all suburbs in Canberra have now been reduced to one delivery a day, will the PostmasterGeneral make urgent representations to the Public Service Board so as to enable payment to female letter carriers of the rates of pay, small as they are, applicable at present to male letter carriers?

Mr HULME:
Postmaster-General · PETRIE, QUEENSLAND · LP

– There is a problem within the Australian Capital Territory in relation to the delivery of mail. But I think, basic to this problem, are the over-award payments which are being made by other employers within the A.C.T. It would seem to me that, irrespective of *he reasonable level to which some authority might feel inclined to move the rates of pay of postmen, we would still not be able to compete with those other employers and we would still not be in any better position from the point of view of enlisting people to carry out this task for the Postmaster-General’s Department. I see no virtue in going to the Public Service Board to ask for an adjustment in the rates of pay merely because of a situation which applies in Canberra at the present time.

page 259

QUESTION

MOSCOW STATE CIRCUS

Mr MACKINNON:
CORANGAMITE, VICTORIA

– My question, which is directed to the Minister for Health, concerns the visit of the Moscow State Circus to Australia. There has been some disquiet in the minds of stock owners in Australia about the possibility of the introduction of animal diseases into this country through the animals in this circus which I understand, incidentally, are in splendid condition. Could the Minister inform the House what quarantine provisions were made in this case to prevent the introduction of any disease?

Mr SWARTZ:
Minister for Health · DARLING DOWNS, QUEENSLAND · LP

– Before the Moscow State Circus came to Australia, applications were made for the entry of horses, tigers and bears. Because we have a quarantine ban on the entry of horses at the moment, we would not issue a permit for those horses to be brought into Australia. However, because tigers and bears do not carry exotic diseases which can be transmitted to other animals, permission was given for the tigers and bears of the Moscow State Circus to be brought into the country under quarantine regulations. From the time of arrival, they were under strict quarantine control. No food or any objects which had been in contact with the animals were allowed to be brought ashore. These animals have been under strict quarantine supervision since their arrival and will continue to be until their departure.

page 259

QUESTION

DEVELOPMENT OF QUEENSLAND

Mr CROSS:
BRISBANE. QLD

– I address my question to the Prime Minister. Has the right honorable gentleman received submissions from the State Government of Queensland requesting assistance for port and town development at Weipa and also port development at Townsville, Cairns and Gladstone? Were these submissions received over nine months ago? Will the Prime Minister undertake to expedite a decision in these matters?

Sir ROBERT MENZIES:
Prime Minister · KOOYONG, VICTORIA · LP

– All the requests or proposals from Queensland are, I can assure the honorable member, under active consideration, but I cannot announce any final conclusion at present.

page 259

QUESTION

AID TO INDONESIA

Sir Wilfrid Kent Hughes:
CHISHOLM, VICTORIA · LP

– I address a question to the Minister for External Affairs. In view of the announcement of the first Australian casualties in Borneo, will the Government review the Colombo Plan aid being given to Indonesia, especially such aid as telecommunications equipment for airstrips, equipment for the building of roads and other items which could be classed as strategic materials or strategic projects?

Mr HASLUCK:
Minister for External Affairs · CURTIN, WESTERN AUSTRALIA · LP

– The Government has continuously under review all matters relating to aid to Indonesia. Our general outlook on the question was set out in the statement which I made to this House last night. While one appreciates the seriousness of the fact that we have suffered bur first casualties in Borneo - and one has the deepest sympathy for those who ‘have been bereaved - I would submit that that fact in itself would not affect the broad situation with which we are attempting to deal.

page 260

QUESTION

HOMES SAVINGS GRANTS

Mr GRIFFITHS:
SHORTLAND, NEW SOUTH WALES

– I ask the Minister for Housing: Is it a fact that many applicants are being refused homes savings grant subsidies allegedly because their savings have not been legitimately saved? Is the interpretation placed on section 15 of the Act designed to disregard savings when banked in trust accounts by minors with a parent, or moneys derived from common law or workers’ compensation claims? On the other hand, is this narrow and parochial interpretation made solely for the purpose of reducing expenditure under the legislation? Will the Minister inform me by what reasoning moneys accumulated by national savings but banked in a joint account with a parent are being rejected as savings? Will the Minister amend the regulations with the object of broadening their application so that all persons, erecting homes may have the opportunity of participating in the subsidies where otherwise eligible to do so?

Mr BURY:
Minister for Housing · WENTWORTH, NEW SOUTH WALES · LP

– As I announced some time ago, I shall be bringing in a bill to make quite a number of amendments to this legislation. It will be of interest to the honorable member to know that I have already given notice of that bill. When the honorable member has had time to study it, he will be able to deduce whether the particular cases he has mentioned will be covered. Amongst other things, the bill will deal quite extensively with both trust accounts and land held in trust. It would be as well for the honorable member to bear in mind that up to now, whatever difficulties there may have been, 16,000 young couples have received grants.

page 260

QUESTION

NATIONAL SERVICE TRAINING

Mr ARMSTRONG:
RIVERINA, NEW SOUTH WALES

– I address a question to the Minister for Labour and National Service. Could the Minister say what is the position of Aboriginals under the National Service Act? Are they liable for service and are they required to register? Could he also let me know what the position is with regard to married men?

Mr McMAHON:
Minister for Labour and National Service · LOWE, NEW SOUTH WALES · LP

– The House will know that under the old National Service Act aboriginal natives were exempt from service and consequently were exempt from registration. By the Bill recently submitted to the House, we amended the legislation to provide that certain defined classes of Aborigines may be liable for service. As yet, we have not been able to draft the necessary regulations. The drafting presented us with complications of a kind that we did not anticipate. Nevertheless, I can assure the honorable member that in the meantime any Aborigines wishing to serve can volunteer for registration and service. Such Aborigines will be required to pass the same educational and physical tests as other people being taken into the Services.

Mr Griffiths:

– Do they get the same wages?

Mr McMAHON:

– Yes. The second part of the question relates to married men. Men who married prior to the date of commencement of call-up will have their callups deferred. Those who marry after the date on which call-up commences will be required to register and may be liable to call-up. I wish to add one point concerning divorced men. If they are divorced prior to the date on which call-up commences they will be liable to service if they have no children. If they have children or dependants they will not be liable. The only other matter that I wish to mention is that the date that we will fix will be 31st May. Men married before that date will not be liable for service.

Mr Calwell:

– This question related to Aborigines.

Mr McMAHON:

– The first part did; the second part did not.

page 260

QUESTION

EGG MARKETING

Mr BEATON:
BENDIGO, VICTORIA

– I direct a question to the Minister for Primary Industry. Has he received from the Minister for Agriculture in the new South Australian Labour Government a communication to the effect that that Government accepts the proposals for a Commonwealth-wide egg stabilisation plan? If so, will the Minister take action immediately to bring the necessary legislation before this Parliament in order to end chaotic marketing conditions and quickly put the industry on the road to stability?

Mr ADERMANN:
Minister for Primary Industry · FISHER, QUEENSLAND · CP

– The egg stabilisation scheme proposed by the Council of Egg Marketing Authorities of Australia is under further discussion as a consequence of the election to office of a new government in South Australia, which was the only State that had given no final decision.

Mr Beaton:

– The Press reports that the new South Australian Government has accepted the scheme.

Mr ADERMANN:

– I said that further discussions with the South Australian Government are in progress. When they are completed, I shall have something more to say.

page 261

QUESTION

GOVERNMENT LOANS

Mr HAWORTH:
ISAACS, VICTORIA

– I wish to ask the Treasurer a question, lt has been reported that Australia is considering floating a large loan on the European market. Is this correct? If it is, will the right honorable gentleman tell the House why a New York bank has been selected to sponsor the loan in preference to a London merchant bank or banks?

Mr HAROLD HOLT:
Treasurer · HIGGINS, VICTORIA · LP

– It is a fact that we have been exploring the possibilities of loan raising in Europe. Honorable gentlemen will recall that, on earlier occasions, I have told the House of the limitations of capital markets available around the world to developing countries such as Australia. Apart from loans available from the markets in New York and London, relatively small sums have been available from other centres. In recent times, however, there has been some loan raising in Europe by what are known as Euro-dollar raisings. We have been examining the possibilities in this field.

When the interest equalisation tax was announced in the United States of America I pointed out that of the loans raised in New York by Australia approximately half the volume of dollar support had come from European sources. I stated that if we could not continue to obtain that loan support through New York we would have to examine the possibility of going to Europe for it. When I am in a position to announce details of the proposals I shall of course Jo so. At present, we are not much beyond the preliminary stage of exploring the possibilities.

page 261

QUESTION

SOCIAL SERVICES

Mr DEVINE:
EAST SYDNEY, NEW SOUTH WALES

– My question is directed to the new Minister for Social Services. As there has never been a national survey of poverty in Australia, I ask whether the Department of Social Services will conduct such a survey so that the Minister will be fully aware of the tragic hardships encountered by pensioners. Will he introduce in this House legislation to increase social service benefits in order to offset the ever rising cost of living?

Mr SINCLAIR:
Minister for Social Services · NEW ENGLAND, NEW SOUTH WALES · CP

– I am not quite sure whether the honorable member said “ poverty “ or “ prosperity “, but on the presumption that he said “ poverty “ I am not altogether sure that this matter would fall within the province of my Department. However, I can assure the honorable member that I will look into the possibility of such a survey and let him know in due course.

page 261

QUESTION

MIRAGE FIGHTERS

Mr STOKES:
MARIBYRNONG, VICTORIA

– My question is directed to the Minister for Supply. 1 refer to recent reports that the failure to get more than 1 1 Mirage fighters off the assembly line has been due to a shortage of manpower at the Commonwealth Aircraft Factory. I have since learned that many man hours are being wasted due to certain components not arriving on schedule. If this is so, will the Minister take steps to speed up delivery of these parts, even if air transport must be used for this purpose?

Mr FAIRHALL:
Minister for Supply · PATERSON, NEW SOUTH WALES · LP

– 1 think I have made it plain on previous occasions that there are difficulties in ensuring the availability of skilled labour at the aircraft factory. Of course, there is a high turnover of skilled labour. Where a shortage of skilled labour has existed we have been able to compensate for this to a large extent by de-skilling certain operations, by breaking down Into sub-assemblies, by employing female labour, where that is possible, and by off-loading from the factory such projects as we can put elsewhere for production. The position in respect of the turnover of skilled labour is rather difficult because in cases where we may have a team of assemblers on a jig or a series of jigs, any turnover of labour prevents the development of teamwork and there is, therefore, a loss of time.

I believe I can set the honorable gentleman’s mind at rest in respect of the arrival of parts from France. Over a long period this has caused us difficulty, but delivery is now so well organised, both here and at the French end, that this is not a factor which holds up production. At the moment 14 aircraft are being delivered and we are holding to the schedule of production agreed with the Royal Australian Air Force. I am prepared to say that it is a tenuous hold, but it is one that we are watching constantly.

page 262

QUESTION

INTERNATIONAL AFFAIRS

Mr HAYDEN:
OXLEY, QUEENSLAND

– I ask the Prime Minister whether his attention has been drawn to reports that United States produced nerve gas is being used in the Vietnam conflict? Can he advise the House whether such reports are correct and, if so, will he express the opposition of Australia at resort to this type of warfare? As a humanist, will he seek the cessation of the further use of napalm and phosphorus bombs in this conflict?

Sir Robert Menzies:

– The Minister for External Affairs, who is in touch with this matter, will reply to the question.

Mr HASLUCK:
LP

– My Department is making some inquiries into the truth of the reports. Until those inquiries are completed I suggest that we should not take as gospel everything that is published on this subject. The nearest to authentic information, or the most authentic information we have, is contained in a statement that was made by the United States Minister for Defence, Mr. McNamara, on 23rd March - that is, yesterday - in which he said -

As far as we know they (the gases) have been used only two or three times, most recently on January 27 when, in an engagement in Phu Yen province, the Communist Vietcong took refuge among non-combatants in a village.

Rather than use fire power, thereby jeopardising the lives of non-combatants, to drive the Vietcong out of the area, the Vietnamese troops dispensed the riot control agent. Their objective, of course, was to save life.

These riot control agents which I have described and which the Vietnamese forces utilised are those that have been used on many occasions by metropolitan police forces world wide in controlling civil disturbances.

Then there is a further statement which was issued by the United States Embassy in Saigon on 22nd March. That statement reads -

In tactical situations in which Vietcong intermingle with, or take refuge among non-combatants, rather than use artillery or aerial bombardment, Vietnamese troops have used a type .of gas which disables temporarily making the enemy incapable of fighting. Its use in such situations is no different than the use of disabling gases in riot control. The gas is released from dispensers operated by Vietnamese personnel in helicopters.

From those statements I draw two conclusions. One is that the gas is of a type similar to the tear gas that is used by police forces in controlling rioting crowds. It is a disabling gas which, if it is of the type that is commonly used, makes people incapable of belligerent actions for a period of an hour or two hours, but leaves no lasting or damaging effect. The other conclusion which I draw is that the gas has been used on only a few occasions - none very recent - and that it has been used by the Vietnamese troops, not by the United States troops as distinct from them.

I have no recent information on the question of the so-called phosphorus bombs, but if information does become available I will pass it on to the House. However, I am informed from our own sources that a phosphorus bomb is one that is used to set fire to timber or timber structures; it is not one that is customarily used against personnel or would be of any greater value than other forms of weapons against personnel. A phosphorus bomb is an incendiary bomb which is used to set fire to timber or timber structures.

Mr CALWELL:

– Has the Minister for External Affairs sought from the United States authorities any information on the use of phosphorus bombs and napalm bombs? If he has, when does he expect to be able to give that information to the House?

Mr HASLUCK:

– We have sought such information. I should imagine that we will be receiving it almost any day now.

page 262

QUESTION

STANDARDISATION OF RAIL GAUGES

Mr MAISEY:
MOORE, WESTERN AUSTRALIA

– I preface my question, which is addressed to the Minister for Shipping and Transport, with the observations that government in this country is conducted at three levels - namely, local, State and Federal - and that all three levels have expressed concern at the alarming increase in the number of road fatalities. Will the Minister, at this late hour and notwithstanding the belated interest of the Western Australian Government, intervene in the standard gauge rail project in that State and provide sufficient additional funds to ensure that all arterial roads leading from eastern residential areas to the city, which are intersected by the standard gauge railway, are provided with overpasses, and that such overpasses are built into the original construction project and not at some later stage, at greater cost and as the inevitable result of fatal crossing accidents?

Mr FREETH:
Minister for Shipping and Transport · FORREST, WESTERN AUSTRALIA · LP

– The honorable gentleman raises a matter which has been the subject of a recent request by the Western Australian Government to the Commonwealth. From the nature of his question, I think he will agree that he raises a matter which primarily concerns road traffic engineering and not railway construction. The standard gauge agreement with the State of Western Australia contemplates the construction of a standard gauge railway to accepted standards. In the payments to the State the Commonwealth throughout has observed those accepted standards in respect of the weight of rail, the number of sleepers, the size of sleepers, the ballasting of the track and all such considerations. In the same way there is an accepted standard with regard to overpasses or ordinary rail crossings, which can be determined. If that is part of the agreement and we can continue to adhere to it, then if the State Government wishes to have overpasses - that is a matter for its own decision - it becomes a question of what would be the amount that the Commonwealth should contribute as part of the standard gauge railway project. That is a matter which is under consideration at the moment.

page 263

QUESTION

TAROONA QUARANTINE STATION

Mr FALKINDER:
FRANKLIN, TASMANIA

– My question is directed to the Minister for Health. The Minister will recall that at the invitation of Senator Marriott and myself he recently visited the Commonwealth quarantine station at Taroona, a densely populated suburb of Hobart. Has the Minister been able to consider the request for the removal, from this site, of the quarantine station, whose location there is most undesirable from the point of view of residents? Can he say whether any progress has been made towards making a decision on this matter?

Mr SWARTZ:
LP

– Following the inspection with the honorable member some investigations have been made to try to find an alternative site. I think I should draw attention to the fact that the first essential is to maintain Commonwealth and State quarantine facilities in both the northern and southern parts of the island of Tasmania. A second point is that if some suitable alternative site, which would not be too costly, can be found, consideration could be given to it. Investigations are proceeding along those lines, and when a decision is made I will inform the honorable member.

page 263

QUESTION

SHIPPING FREIGHTS

Mr CONNOR:
CUNNINGHAM, NEW SOUTH WALES

– Did the Minister for Trade and Industry address an assembly last weekend and inform it that in eight of the last ten years Australia has had a trading deficit because of the incidence of invisible items? Did the last figures available, those for 1962-63, show that shipping freightage amounting to £117 million was the largest single item in Australia’s balance of payments on current account? Does the Minister accept the cost of using foreignowned shipping as an inevitable drain on Australia’s foreign trading reserves? If not, will he discuss with his colleague, the Minister for Shipping and Transport, the obvious advantages of exporting Australian goods in Australian bottoms through the Australian National Line, and the similar advantages to be gained from the transport of petroleum products on the Australian coast in vessels that are manned solely by Australian labour?

Mr McEWEN:
Minister for Trade and Industry · MURRAY, VICTORIA · CP

– Speaking at a function last week I did say that in only two of the last ten years did Australia have a favourable balance on current account, and I did refer to the very substantial call upon our overseas reserves by the so-called invisible items, of which freight is the biggest. Whether it would be a net advantage to Australia to own and operate ships in the normal carriage of our goods overseas is something I have questioned in this House on a number of occasions.

Mr Bryant:

– Why?

Mr McEWEN:

– For reasons I have stated. On the evidence of coastal trade with general cargo I believe it would be likely that our costs in international trade would be greater than the costs of those who at present carry our cargo, and that if we were to demonstrate that our costs were higher we would be without argument in protesting against any increase in costs by those who in any conjectural circumstances would be carrying the overwhelming bulk of our general cargo. The point of view which I put quite frankly is open for challenge and discussion, but it is my assessment of the net advantage to the Australian economy. There is a conceivable exception to this in the carriage of bulk cargoes. In the coastal trade Australia is able to carry bulk cargo at satisfactory costs, and if we can do it there perhaps we can do it in the overseas trade; but I do not believe we can do it with general cargo, because we are certainly unable to do it in the Australian coastal trade with general cargo.

page 264

QUESTION

OVERSEAS INVESTMENT IN AUSTRALIA

Mr WENTWORTH:
MACKELLAR, NEW SOUTH WALES

– My question to the Treasurer is supplementary to a question I asked yesterday. Is it a fact that recently the Government has expressed the wish that companies owned overseas should not raise loans or debentures on the Australian market, its aim apparently being to encourage investment in Australia or, alternatively, to discourage those companies from obtaining equity ownership of Australian assets without bringing in fresh investment funds? Is it a fact that certain overseas companies, including, for instance, BP Aust. Ltd., have seen fit to proceed with large debenture issues in Australia, contrary to the Government’s expressed wishes? Does the Minister recall that in November 1960 he proposed, but did not proceed with, a measure to make debenture interest non-deductible for income tax purposes in the case of all companies in Australia, both locally owned and overseas owned? Finally, will the Minister consider the advisability of introducing without delay legislation to make debenture interest non-deductible for income tax pur poses in the case of companies owned overseas?

Mr HAROLD HOLT:
LP

– The honorable gentleman has put a series of questions, many in detailed form, asking: “Is it a fact that the Government has done such and such?” First, the honorable gentleman has not faithfully presented the views or actions of the Government on this matter and certainly question time is not an appropriate occasion for a detailed statement regarding them. Secondly, he has made specific references to a particular company. In fairness to that company it should be stated that its total investment in Australia, including oil search exploration, has been of the order of £100 million. It would be a little churlish of us to be critical of such a company when it turns to the Australian market to raise a certain amount of debenture capital so that it may carry forward its expansion in Australia. The other comment that I think would be relevant is that there has been commendation on the part of the Government and many other people for the view that there should be a greater Australian participation in the financial situation of some overseas owned enterprises. It seems somewhat at variance with those views to be critical of action which in effect does give greater Australian participation and which in the end result will avoid the remittance of interest payments on debentures raised. The matters of policy which the honorable gentleman has included in his question would call for consideration by the Government and I am not in a position to deal with them at this time.

page 264

QUESTION

OVERSEAS SHIPPING FREIGHTS

Mr WHITLAM:
WERRIWA, NEW SOUTH WALES

– I ask the Minister for Trade and Industry a question. What response have the members of the European-United Kingdom Shipping Conference made to the address given to their association last November by the Secretary of his Department in which he demonstrated how the Commonwealth Statistician’s computer had proved that, by organising their voyages more efficiently, they could save more than £6 million a year and reduce their freights by nearly 12 per cent.?

Mr McEWEN:
CP

– The address to which the Deputy Leader of the Opposition has referred was the outcome of an exhaustive study by the Secretary of the Department of Trade and Industry and a number of other officials, with the aid of the computer, of the benefits that would flow from a greater rationalisation of the shipping services of the European-United Kingdom Conference Lines. From this objective study, it appeared that there could be very substantial savings in freight, which obviously would be of mutual advantage to the ship owners, who could perhaps take a greater profit, and to the shippers in Australia who could expect substantially lower freights to result from such savings. This was the object of the exercise. The Deputy Leader of the Opposition has asked what has come of the address. In the short term, some of the senior experts of the Conference Lines, based in the United Kingdom, have been sent to Australia to confer with officers of my Department and interested bodies, such as the Australian Overseas Transport Association representing shipowner interests and the Federal Exporters Overseas Transport Committee representing Australian exporting interests. No conclusion has yet been reached. However, as no attempt has been made to contradict the general validity of the exercise, I am really hopeful that something substantial will emerge - something that will result in the lowering of shipping freights and perhaps in the expediting of shipping services.

page 265

QUESTION

SOCIAL SERVICES

Mr HOLTEN:
INDI, VICTORIA

– My question, which is addressed to the Minister for Social Services, refers to the permissible income that can be earned by widows. As the Minister would know, the maximum permissible income of widows is only £3 10s. a week. This has been the figure since 1954. Money values have changed considerably since 1954 and many widows are struggling to make ends meet. In the circumstances, will the Minister consider raising the maximum permissible income in the next Budget?

Mr SINCLAIR:
CP

– I point out to the honorable member that in 1960 the merged means test was introduced. To some extent, this improved the position of widows by easing the property qualification that is applied before their entitlement for pension is determined. As my predecessor may have said, the position has been considered from time to time since then and I can assure the honorable member that it will continue to be studied in this way in the future.

page 265

QUESTION

OVERSEAS INVESTMENT IN AUSTRALIA

Mr CALWELL:

– I ask the Treasurer a question. For how much longer does he intend to appeal to overseas companies to permit Australians to share in the ownership and control of Australian industry? For how much longer does he propose to delay before introducing legislation to oblige these reluctant dragons to permit Australians to have some equity in the ownership of Australian industries? For how much longer does he propose to delay before introducing legislation to prevent the takeover by foreigners of existing Australian industries?

Mr HAROLD HOLT:
LP

– The Leader of the Opposition is well aware that question time is not an appropriate occasion to seek a debate on matters of this kind. This time is set aside for questions that are intended to secure from Ministers statements of fact relating to matters that come within the ambit of their departments. The Government’s views on this subject are well known. They have been stated by Ministers from the Prime Minister downwards over a long period. It should be recognised that many enterprises in this country which have been established through the medium of overseas capital would not have attracted the savings of Australians, at least in the early stages of their development. Oil exploration is a case in point. Australian investment in oil exploration is only a fraction of the total that has come to us from overseas, but Australians are not prohibited from investing money in the search for oil. I am reminded that investors in this activity receive a tax advantage from the Government. This position also obtains with a considerable number of enterprises of a developmental character. The pressure for some Australian participation usually develops after these enterprises have established themselves and have demonstrated that they will operate successfully for a number of years ahead. Many people think that this is the time when they should be able to participate in the success of the enterprises. Other ventures have failed, the capital has remained here and those who have invested in them have taken their loss. This is not a problem which can be discussed adequately at question time. I think it would be more appropriate for the Opposition, if it so chooses, to take appropriate action in the House to initiate a general debate on the matter.

page 266

QUESTION

CENSUS

Mr Kevin Cairns:
LILLEY, QUEENSLAND · LP

– As it is understood that there is to be a census next year, can the Treasurer indicate when the final details of the 1961 census will be available? It is understood that these are in volumes II and IV of the census details for each State and Australia. It is understood also that some of those details in respect of South Australia have been published. Similar details are then urgently required for an analysis of conditions in the other States.

Mr HAROLD HOLT:
LP

– I should think that by now most of the information obtained in that census has been made available, but if the honorable gentleman can point to particular areas where this is not so I shall gladly take up this matter with the Commonwealth Statistician to see how quickly the information can be made available.

page 266

QUESTION

STANDARDISATION OF RAIL GAUGES

Mr CLARK:
DARLING, NEW SOUTH WALES

– I ask the Minister for Shipping and Transport: What progress has been made towards the standardisation of the gauge of the New South Wales section of the Broken Hill-Port Pirie railway? Has any arrangement been arrived at with the New South Wales Government about the railway from Broken Hill to Parkes?

Mr FREETH:
LP

– Final arrangements regarding construction work on this line have not yet been concluded, but I am happy to say that the New South Wales Government has agreed to a survey of the new route being conducted by the South Australian Government to assess the economics of the route as against the existing route operated by the Silverton Tramway Company. When all the advantages, disadvantages and relevant costs have been assessed a decision will be made as to which route will be followed, and the work will be put in hand.

page 266

QUESTION

MEDICAL BENEFITS

Mr BUCHANAN:
MCMILLAN, VICTORIA

– My question is directed to the Minister for Health. Have all medical benefit funds been advised that the new tables to come into operation on 1st April have received his approval? If so, are all funds operating within each State required to observe the same rates and conditions? In particular, where a fund has its head office in one State, but operates in another, will such fund be given approval only on the same conditions applying to the other funds in that State? Finally, will all the funds be required to charge yearly subscriptions at the weekly rate multiplied by 52, and will concessional rates be refused?

Mr SWARTZ:
LP

– The answer to the first part of the honorable member’s question is “ No “. There are still some applications awaiting approval, and I expect that the final procedures will be concluded within a few days. Advice will then be received by all the funds that have applied to introduce new or reconstructed tables. The question of approval of basic tables is a decision that is made by me on the recommendation of the committee set up within my Department. This applies to funds operating on an Australia-wide basis. We do not give approval for funds to operate on a different basis in each State. The funds can operate on the approved basis in all States, but there is an agreement, or an understanding, within the Commonwealth Health Insurance Council itself - which has representatives of all the State benefit fund associations on it - that if a fund moves into another State, it will operate in that State on the same basic tables as those on which the funds there will operate after 1st April of this year. The Government has no control over that, but I understand that the funds themselves will adhere to that principle.

page 266

QUESTION

ORD RIVER SCHEME

Mr COLLARD:
KALGOORLIE, WESTERN AUSTRALIA

– I ask the Prime Minister whether the Government holds the same views in relation to the Ord River scheme as those expressed last week by the Minister for Defence. If so, does this mean that a decision to commence the second stage of the project will possibly be made towards the end of this year but is more likely to be deferred until at least the end of next year? Finally, was this what the Prime Minister had in mind when he said, just before the last Senate election, that a decision on the Ord River project would be treated as a matter of urgency?

Sir ROBERT MENZIES:
LP

– As I do not know what the Minister for Defence said, I can make no comment on that point. But from my experience of the Minister, I know that whenever he speaks he speaks a lot of good sense. This matter is under examination. The Government is not going to be precipitated into making some decision.

Mr Bryant:

– I wonder how the Prime Minister would look precipitated.

Sir ROBERT MENZIES:

– If the honorable member were precipitated, he would be a faint pink crystal. However, when we have made a decision we will announce it.

page 267

TERTIARY EDUCATION IN AUSTRALIA

Ministerial Statement

Sir ROBERT MENZIES:
KooyongPrime Minister · LP

– I present the following report -

Tertiary Education in Australia - Report of the Committee on the Future of Tertiary Education in Australia to the Australian Universities Commission (Volumes I and II).

I ask for leave to make a statement in connection with the report.

Mr SPEAKER:

– There being no objection, leave is granted.

Sir ROBERT MENZIES:

– What I have now to say is being said this afternoon in another place by the Minister in Charge of Commonwealth Activities in Education and Research (Senator Gorton) who has the direct administration of these matters in my Department.

Honorable members will know that in August 1961, the Government appointed a distinguished Committee under the chairmanship of Sir Leslie Martin to consider the pattern of tertiary education in relation to the needs and resources of Australia and to make recommendations to the Australian Universities Commission on the future development of tertiary education. May I express the Government’s gratitude to the members of the Committee for their work, which has resulted in a report that will play an important part in the development of tertiary education and hence in the development of our country during coming decades.

When we appointed this Committee, we knew we had given it a very large task but I doubt that we realised just how large the task was. The Committee had the enthusiastic co-operation of Governments, institutions and sectors of the public with an interest in tertiary education. It was not until September 1964 however, that it was able to present its report to the Government - or, to be strictly accurate to present volumes I and II with a promise of a third volume later.

Volume I sets out the Committee’s central argument and its proposals for the future pattern of Australian tertiary education. Volume II begins a survey of academic disciplines, particularly those with an important professional content. Volume III, which is not yet available, will conclude this survey and deal with certain other aspects of tertiary education but, we are assured, will not affect the recommendations contained in the first two volumes. Immediately apparent to members will be the wide range of subjects covered by the report and the importance of its recommendations not only to the Commonwealth Government but also to State Governments, universities and the public generally. Many of the Committee’s recommendations require action by the Commonwealth if they are to be implemented and in releasing the report as we now have it I will announce the Government’s attitude towards the principal recommendations.

In doing so I wish to emphasize two important points. The first is that the aspects of education discussed in the report are ones for which the States have normal constitutional responsibility. Therefore, while it is necessary for the Commonwealth to determine its attitude and to announce what it, for its part, stands ready to do, it will also be necessary for each State Government, in the knowledge of what the Commonwealth is prepared to do, to decide what it is prepared to do - and for consultation and discussion between the Commonwealth and each State to take place. The second point is that the Commonwealth is not to be regarded as having adopted any position in regard to any specific issue dealt with in the report except those on which I shall now state our views.

Amongst other things, the report makes recommendations as to additional aid to existing, and embryo, universities, as to assistance to students by way of scholarships, and as to a possible method of reorganising the control and content of teacher training. But the most important section of the report deals with what is virtually a concept new to Australia - the development of a broad comprehensive system of tertiary education, with an emphasis different from but complementary to, tertiary education at present provided by the universities. Because they are relatively simple, I propose to discuss first the less novel proposals of the Committee covering assistance to students and immediate assistance to universities, and to announce our decisions in these fields before moving on to consider the new proposals of major importance stemming from the work of the Committee.

In the field of assistance to students the Committee has recommended that the number of Commonwealth university open entrance scholarships should be kept under periodic review, but also states that such scholarships ought not to be awarded at a standard lower than that obtaining at the end of 1963. The Government accepts, as it has in the past accepted, the necessity for periodic increases in these scholarships. The number available was last raised by 1,000- from 4,000 to 5,000- at the end of 1963, and we have decided that the number will be raised by a further 1,000 -from 5,000 to 6,000- at the end of the present year. Such periodic reviews will continue in the future.

The Committee further recommends that all students at universities who successfully complete the first year of their university course at the first attempt, and who are otherwise eligible, should be automatically awarded Commonwealth later year scholarships. At present the number of these awards available covers rather more than two-thirds of the full-time students who meet these conditions. The Government does not feel it should accept this suggested unknown charge on future Budgets but it has decided to increase the number of later year awards by 250 at the end of the present year.

Mr Bryant:

– That is a fizzer.

Sir ROBERT MENZIES:

– To me it is a novel idea that getting through your first year at the first attempt should qualify you for a scholarship. This is quite new to me.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– The Prime Minister is still in the nineteenth century.

Sir ROBERT MENZIES:

– I was born in the nineteenth century. I used to know a good deal about scholarships having won quite a few in those rather harder schools of competition.

Dr J F Cairns:
YARRA, VICTORIA · ALP

– We are not all as brilliant as you are, you know.

Sir ROBERT MENZIES:

– Well, you must speak for yourself.

These later year awards, which at the inception of the Commonwealth university scholarship scheme were less than a hundred, have grown steadily since. The number available each year was last raised, from 780 to 1,280, at the end of 1963, and at the end of this year the number available each year will be raised from 1,280 to 1,530. Here, too, periodic reviews will continue.

In the field of the new look tertiary colleges to which I have referred, the Committee has recommended that there should be 2,500 new scholarships awarded to students who have passed matriculation or an equivalent examination and that these should carry the same financial benefits as do Commonwealth university scholarships, plus a means test free allowance of £100 to each scholarship holder. We do not feel able to agree with the recommendation as stated but we have decided to make available in this field 1,000 new scholarships, awarded on the conditions suggested, but carrying the same financial benefit as Commonwealth university scholarships. The net result of these decisions is that, as from the end of this year, there will be 2,250 more tertiary scholarships available each year than has been the case in the past, the number available rising from 6,280 to 8,530 - 7,530 at universities and 1,000 at the new technical institutions.

These scholarships are recommended by the Committee to be available to students for full-time study only but the Government does not accept this recommendation. We believe there may well be many valid personal reasons why a student chooses to do a part-time course, and that no student who does wish to do such a course, and who has earned a Commonwealth Scholarship, should have his preference subject to a veto. Furthermore, the new Institutes of Colleges - I will say more about those in a moment - and the industrial leaders with whom they will no doubt confer, may desire to include part-time courses as part of their curricula, and in some States considerable emphasis may be placed on part-time as distinct from full-time courses. If this happens students should not be prevented from winning a scholarship to take up such courses. Our scholarships for tertiary education will therefore in the future, as in the past, be available for either full-time or part-time study as the scholarship winner chooses.

In discussing the financial benefits which such scholarships should carry the Committee confines itself to recommending that the living allowances and the means test applied to these allowances should be periodically reviewed. It recommends also that a text book allowance should be given to scholarship holders. We, of course, have always accepted the principle of periodic reviews of allowances and indeed, as a result of the last review, living allowances were increased as from January this year, and the means test applied to such allowances was liberalised. We shall continue to apply this principle. A text book allowance, however, poses very considerable administrative problems because it would be necessary to ensure that any allowance did, in fact, go to books and equipment, and because requirements would vary considerably between universities, between faculties, and between years in any given faculty. Therefore all I can say as to this proposal at the moment is that we intend to ask the Vice-Chancellors of the universities to discuss with us the problems raised by the recommendation, and by the comment I have just made.

The Committee suggested that the universities study and report upon the feasibility of their having funds available for making loans to students in special cases of hardship. While recognising the desirability of loan schemes, we regard these as matters for the universities’ internal administration. The Commonwealth therefore will not make special financial provision for student loan funds.

Moving to specific and immediate financial proposals regarding universities, the Committee has recommended that some additional capital funds should be made available to some universities, which it designates, during this 1964-66 triennium. These grants are designed to ensure that the new Universities of Macquarie in New South Wales and La Trobe in Victoria will be ready to begin operation at the beginning of 1967 as planned; that Bedford Park in Adelaide will be able to open in 1966 as planned; that site works will take place at the University of Newcastle and the Townsville University College; and that a start will be made in taking the preliminary steps for the establishment of a second university in Brisbane by 1970. In the cases of Macquarie and La Trobe, the grants are additional to the establishment grants of £1.1m, each for Macquarie and La Trobe. The Commonwealth share of these grants was appropriated by the Parliament for these universities in October 1963. That is the £1.1 million in the case of each. All of these are grants for definite projects which have been examined in detail, and recommended on, by the Universities Commission and are in a field which is familiar.

The sums recommended for each university are given in a list which, with the concurrence of honorable members, I now incorporate in “ Hansard “.

They total £2,450,000, of which the Commonwealth share on a £1 for £1 basis, is £1,225,000. We stand ready to provide our share of this finance at once and will introduce legislation during the current session asking Parliament to appropriate it.

I turn now to consider the new concept which is the heart of this report. It is that Australia, during the next decade, should develop advanced education in virtually new types of colleges. These colleges would provide for those students who, though qualified, do not wish to undertake a full university course, or whose chosen course is not considered appropriate for a university, or whose level at passing matriculation indicated a small chance of graduation from a university in minimum time or minimum time plus one year. The recommendation for the development of these colleges and the recommendation that new universities should not be established - honorable members will see this in the report - taken together with other observations of the Committee, indicate a belief on its part that universities should grant entrance only to those matriculants whose standard of pass was good enough to indicate a reasonable likelihood of graduation in minimum time or minimum time plus one year.

The Committee .suggests that the new colleges, to give advanced education, should be developed from, and around, the existing tertiary segments of existing technical colleges. But it is clear that what is envisaged is not merely a bigger and better college for teaching technical subjects, for the suggestion is that technology should be only one of the education fields in which these colleges should provide advanced instruction. In them there should be, says the Committee, appropriate courses in the liberal arts for “ young men and women taking up administrative positions in commerce, industry, and .government”. There should be a common core of studies at tertiary level aimed at providing for all students attending the college “ breadth in education “, and the development of “ critical imagination and creative abilities “. Students engaged in such common studies would major in technological courses or in other courses provided by the colleges to fit them for particular careers after they had gained their diploma.

These colleges should, recommends the report, be provided with funds for capital and recurrent purposes sufficient to permit expansion and improvement in buildings, in equipment, in the teaching staff required, and in general educational facilities. The funds are recommended to be provided, half by the Commonwealth and half by the States as to capital, and in the ratio - it is the existing one - of £1 Common wealth to £1.85 State as to recurrent expenses.

We, for our part, accept the broad concept and stand ready to provide, during the 1967-69 triennium, the £1 for £1 grant for capital and the £1 to £1.85 grant for recurrent annual expenses up to the limits envisaged in the Committee’s report. These appear to be approximately £4 million a year for capital from the Commonwealth and £4 million a year for recurrent expenses from the Commonwealth during that triennium. These grants, if matched, would mean a total of approximately £24 million for capital and £34 million for recurrent expenses for the colleges during that triennium.

Commonwealth financial support for these colleges will be confined to capital and recurrent expenses for the development of tertiary education only, and we define tertiary education as consisting of courses before entry upon which a student must pass matriculation or an equivalent examination. It will be confined to new development - that is, as regards recurrent expenses, to expenses incurred over and above what is, in the 1964-65 financial year, being incurred in this field by a State. And it will be confined to assistance for strengthening, and expanding, and introducing, diploma courses. We have noted the Committee’s suggestion that at some time in the future the new Institutes of Colleges that it envisages may build on present proposals in order to provide post-diploma courses leading to degrees. But the support now pledged by the Commonwealth will not go beyond supporting the basic concept of the Committee as to new type colleges with a variety of advanced courses leading on completion to a diploma. We wish to emphasise this point, Mr. Speaker, for we entirely agree with the Committee’s statements that these new type institutions should “ resist the temptation to copy the educational processes and curricula of universities “ and that the responsibilities of these colleges to the community are “ of a different kind “ from those of universities. Our support is founded on acceptance of this principle, and we do not make our support available for the development out of these colleges of new universities. We do not look so far ahead as that. We see these colleges as designed primarily for teaching at the tertiary level and as catering for the diploma not the postdiploma student.

I now turn to the machinery which the Committee suggests might be set up in order to provide the means whereby Commonwealth and State support might be channelled to these new institutions. The Committee’s suggestion is that each State should set up an autonomous Institute of Colleges which would admit a college to membership when, in its opinion, that particular college had achieved an appropriate standard. This Institute would be charged with the responsibility of supervising the expansion and development of technical and other tertiary education in the member colleges and with co-ordinating their work to prevent waste and overlapping. It would be this Institute which would suggest allocation of available funds between colleges in its own State. Subject to this supervision the member colleges themselves would each by governed by its own independent governing body. We are attracted to this proposition and are prepared, for our part, to endorse and accept it. But we think that acceptance and implementation of the proposal are matters for which the State Governments are responsible. We do not, therefore, make establishment of the Institutes a condition of assistance, though we do endorse the idea, and we will therefore be prepared to deal either with such Institutes or with a State Government direct should a State decide not to set up an antonomous Institute.

The Committee on the Future of Tertiary Education further suggests that the Institutes should make submissions, in the way in which universities now make submissions, to an expanded Australian Universities Commission which would deal not only with universities but with the new Institutes as well. We do not endorse this suggestion. We feel that it would be better that we should leave to the Universities Commission its present responsibilities of advising the Government on proposals from universities and that we should arrange other methods of distributing grants to the new colleges. We therefore propose to have a separate advisory committee to which proposals from Institutes of Colleges - or from the State Education Department in any State which does not set up an Institute - will be referred, and which will make recommendations to the Commonwealth as to the distri bution of Commonwealth funds after it has considered those proposals. As is the case with funds for universities, the funds available would be distributed throughout Australia on the basis of assessed need in any particular area.

I have no doubt that within the boundaries set out there will be great variations of methods of development among the States and indeed, if the Institutes and colleges are given autonomy, among the various colleges in a State. It may be that we will see develop colleges which, in this discipline or that, provide courses which are analogous to similar courses in the earlier years at a university, and which are either an end in themselves in that they lead to a diploma recognised as a really significant qualification, or which may lead - depending on the standard achieved by the student - to postdiploma transfer to a university, with credit for work done, and progress to a degree. It may be that we will see in the technical disciplines a diploma course which is still, as it is now, a course leading in itself to a significant qualification but which can lead to post-diploma study not in an existing university but in a foundation in each State which takes the best diploma graduates and conducts them to a Bachelor of Technology, or Master of Technology, degree in the single location where there can be concentrated the best teachers and the best facilities for practical research in conjunction with industry. Such developments, which can be determined only by discussion and agreement between the Commonwealth and each State Institute, are matters for hammering out in the workshop of ideas which will be contributed by academic circles, industrial circles, public bodies, and the community and their representatives. But I repeat that the Government does endorse the general broad concept and for its part will provide £1 for £1 for capital and £1 for £1.85 for recurrent expenses to develop that concept within the bounds which I have specified.

Before leaving the subject, I must refer to an immediate specific recommendation which the Committee makes concerning Institutes of Colleges, lt recommends grants, of which the Commonwealth’s share is £2.5 million to be available in 1965 and 1966 in specified amounts to specified colleges. Honorable members will find their list of these Colleges, and the amounts recommended for each, in the appendix attached to this statement.

With the concurrence of the House. I shall incorporate the list in “ Hansard “.

The actual purposes of these grants have not been examined in detail and are not known to us, or to the States, in the way in which the actual purposes of the interim grants to universities are known, and they will require further discussion. We cannot therefore specifically endorse them as we do in the case of the interim grants to universities. But we, for our part, now stand ready to receive from the relevant States, or from autonomous Institutes of Colleges where States set them up, propositions for the expenditure at the named colleges of the amounts recommended for each college, and to carry on discussions with them on the approval of, and the application of, such amounts in those colleges. We do not, however, stand prepared to make interim grants to the proposed boards of teacher education or to the “ other institutions “ recommended by the Committee.

We do not, ourselves, intend to establish a Commonwealth institute of colleges, for the three colleges operated by the Services have a specialised role, as has the Australian School of Pacific Administration. Nor do we propose to establish an Australian college of external studies to be responsible for all external studies throughout Australia, since we believe that the existing universities can best provide courses for external students who need to study at university level and that other existing insti tutions can cater for those who wish to study at other levels.

The next important recommendation of the Committee is that the Commonwealth should enter the existing field of teacher training, both by way of an interim capital grant of £1.25 million and by way of £1 for £1 grants for capital and £1 for £1.85 grants for recurrent expenses in the 1967-69 triennium and after. Important as this field is, the Commonwealth is not prepared to enter it. It is one which has been the exclusive responsibility of the States and is, in each State, closely bound up with the State Education Department’s judgment as to the training it wishes teachers in its schools to have, and as to the manner in which it decides to run its primary and secondary schools. Moreover, on the evidence of the State Education Ministers themselves, the amount of capital required in this specialised field, in order to bring standards up to what they would regard as satisfactory, is not large - amounting to a total requirement covering the needs of all six States of £1.25 million annually over a period of four years. And the recurrent expenses of the teachers’ colleges - excluding salaries paid to trainees - are also, compared to the requirements of universities and colleges, not great. The impact of the Committee’s recommendations as to the length of a teacher training course, and as to the standard required of a student before he embarks upon it, would vary widely between States and theremoval of teachers’ colleges from the control of State Education Departments is clearly one which is primarily for the States to determine. Therefore, while we do not in the least denigrate the importance of the Committee’s recommendation in this field, we believe that it is one where action can be, and should be, left to the State Governments which have before them the Committee’s recommendations for adoption and action should they so decide. It follows, also, that we have not accepted the Committee’s proposals for a separate scheme of scholarships for teachers’ college students.

I now turn to some general recommendations as to universities, on which, at this stage, I wish to make our views plain. First, the Committee makes the firm recommendation that no new universities, other than those for which provision is made in this report, should be established during the period up to 1975. While we agree that during this period most of our effort as to new establishments should be concentrated on the proposed new type tertiary institutions, we feel that a firm decision against establishing any new university, looking so far ahead, should not be taken. The growth and distribution of population throughout Australia might, in the period under discussion, be such that a new university would be justified in this area or that. Consequently, while we endorse the general approach inherent in the Committee’s recommendations, we are not prepared to say firmly that during the period no new university should be established. Secondly, the Committee recommends the reduction and gradual elimination of part time and external studies at universities. As I have indicated, the Government does not agree with this recommendation and does not wish the Universities Commission to adopt such an approach in its discussions with, or its recommendations concerning, universities. We believe, as I have said, that there are many reasons for not discouraging the parttime undergraduate and we feel that parttime courses and external studies have a valuable part to play in providing refresher courses for graduates and in providing instruction at university level to graduates or non-graduates whether such people are seeking to obtain a degree from such parttime study or merely to master some one subject which they feel will be of assistance or benefit to them.

How much effort a university puts into part-time studies, or external studies, will be for the governing body of that university to decide but, for our part, we do not believe that any university which wishes to to do so should be discouraged, and we are ready to continue to provide financial assistance for these purposes. Thirdly, the Committee suggests that universities should have enrolments which are not smaller than 4,000 or greater than 10,000. We agree that a university should have, or should have the reasonable prospect of achieving, an enrolment of at least 4,000; but we do not endorse the proposition that enrolments should not be more than 10,000. There is a substantial body of opinion which holds that much larger universities than one with an enrolment of 10,000 are occasionally necessary and desirable. We feel that the size of the university must be related, amongst other things, to the area it occupies and to the opinions of its governing body and we are not therefore prepared to endorse any arbitrary upper limit as to the size beyond which a university should not grow.

The Committee has recommended that the triennial grants to universities and also to technical colleges should be subject to review so that supplementary grants may be made when changes in salaries and wages justify them. We interpret this recommendation as being limited to reimbursing a university or college for increases in salaries paid directly by it to its employees. Such supplements have been the practice in regard to variations in academic salaries and the Government is prepared to consider recommendations for supplementary recurrent grants to offset increased costs arising from variations in awards affecting wages and non-academic salaries. However, we will need to be satisfied in each case that the increases cannot be provided from the normal recurrent grants. In other words, we do not want to break down the triennial system which has been so significant. We will make this our policy both for universities and for technical colleges in the 1967-69 triennium. These are all matters on which we wish our attitude to be clear both to universities and to the Commission for we would not wish future recommendations as to universities to be influenced by a mistaken idea of our attitude.

The final matter I refer to in this very long review - I apologise for its length - is that of allocations of funds to universities for purposes of research, and to scientific research generally. Honorable members will recall that the Second Report of the Universities Commission recommended that during the calendar years 1964, 1965 and 1966, a total of £5 million should be provided for universities to support research activities at post-graduate level. Of the £5 million, half was to be provided by the Commonwealth, and half by the States. The Commission had not, at the time of the report, reached a stage where it felt it could make recommendations for the distribution of these funds among universities and therefore confined its recommendation, in the first instance, to the distribution of £1 million in the year 1 964. When introducing the Universities (Financial Assistance) Bill in

October 1963, 1 accepted the recommendation for this initial distribution and said that I hoped the Government would shortly take an opportunity to look at the whole question of Commonwealth involvement in research in Australia. This we have now done. The universities were told, last year, that a further £1 million, or our share of it, would be available in universities during 1965 for the same purposes as in 1964, and I now announce that our share of another £1 million will be available in 1966, on the same basis as to distribution. After that date, we feel, the Commission should include provision for this form of research grant, bound up as it is with post-graduate teaching, in the general recommendations which it makes for capital and recurrent grants to universities.

Of the £5 million recommended for research activities in the 1964-66 triennium, this would still leave undistributed £1 million of Commonwealth funds and a matching amount from the States. We believe that this sum should be available for particular selected research projects to be carried out by individuals or research teams. We therefore propose to make £1 million available for such particular research projects and to set up an advisory committee to which we shall refer requests for assistance from such individuals or research teams. We will look to this committee for advice as to allocations, within the limits of the money available, for such proposals. The committee will receive proposals, in the main, from research workers in universities, although applications from persons working outside universities will not be debarred unless such persons are working for Government authorities. Commonwealth money from this fund will be available on the advice of the committee, subject, in each case involving a university, to a matching grant from the State in which the research is to be carried out. As I have said, these research grants are not intended for use exclusively in scientific disciplines, nor need the total amount be spent in the 1964-66 triennium.

While on this subject I take the opportunity to announce that we have decided that there ought to be a body to advise the Government on the most effective methods of co-ordinating, and achieving results from, expenditure on research through the universities, through the Government’s own agencies, and through any other bodies to which grants are made by the Government. What we seek is a situation in which, the Government having decided what proportion of national income can go to scientific research, and having indicated its views of the general fields in which advances would, economically, most benefit the nation, some competent advisory body would recommend the allocation of available money among the various governmental research bodies, the universities, and others. We will therefore study the various methods which have been developed for this purpose in overseas countries.

The end desired to be achieved is clear, but it is also clear that the means to that end adopted by other countries vary considerably. But the best machinery far Australian conditions is not easily to be decided, and the study I have announced will therefore take place to try to arrive at the best answer for us. In conclusion I state that we are ready now to receive proposals from the States in those fields where agreement is necessary for action and, they now knowing both the extent and the limits of our assistance, to carry on the discussions necessary for agreement to be reached, and action to be taken.

I present the following paper -

Tertiary Education in Australia - Report of Committee - Ministerial Statement, dated 24th March 1965 - and move -

That the House take note of the papers.

Debate (on motion by Dr. J. F. Cairns) adjourned.

page 274

HOUSING LOANS INSURANCE BILL 1964

Second Reading

Debate resumed from 23rd March (vide page 230), on motion by Mr. Bury -

That the Bill be now read a second time.

Mr HALLETT:
Canning

.- It gives me much pleasure this afternoon to support this Bill, which is designed to make provision with respect to insurance against losses arising out of the making of loans for the purpose of financing housing. I was interested to hear that the Minister for Housing (Mr. Bury) is bringing forward amendments to the Homes Savings Grants Act which we passed last year. That Act has been a tremendous success. It has been an inspiration to the young people of Australia to save for the future. I believe that in the years to come Australia generally will receive an enormous amount of benefit from that Act. The importance of home building, not only in Australia but also in other nations, has been put before the House on many occasions. The Governments of other nations have adopted various methods, within their constitutional powers, to alleviate the housing situation which arose during the war years. Australia has made considerable progress towards overcoming its housing shortage. The Commonwealth, of course, has certain limitations imposed on it in the field of home building, and I believe that any housing measure at all which the Minister can bring to the House, and which is within his powers, will be supported by the House.

The building industry is certainly a very complex one. It is subject to fluctuations. It reacts to economic fluctuations more than perhaps any other industry in Australia. The demand for skilled labour at present is extremely high. We must take note of that fact. Unfortunately, when there is big pressure for home building, as there is at the moment, this applies tremendous pressure on available labour and there is movement of labour from job to job. We must try to overcome that instability ‘>y training more personnel. Everything that the Commonwealth Government and the State Governments can do to alleviate the present position will be appreciated and will be of advantage to Australia generally. Clause 23 of the Bill refers to sound standards of home building. This is an extremely important point. I believe that this clause will improve the standard of home building to some extent. I am not suggesting that the standard of home building in Australia generally is lacking in any way, but on some occasions the standard could be improved.

This Bill should attract a greater volume of money into the home building industry. All the statistics indicate that at the moment very few losses are incurred on housing loans. This Bill will engender greater confidence in the building industry and I believe that members of the general public will be more willing to invest their available money in the building industry. The Minister, in his second reading speech, said -

The main purpose of this scheme is to assist people to obtain as a single loan and at a reasonable rate of interest the money they need, and can afford to borrow, to buy or build a home.

He was emphasising the important point of the single loan. Later in his speech he made a similar statement, namely -

The scheme aims to assist people to borrow, by means of a single loan secured by a first mortgage . . .

The general principle of home building finance in Australia today is that loans are made available from various sources for the specific purpose of home building. That process will be simplified by this Bill, which will assist people to borrow on first mortgage all the housing finance they require and, because the lender will be able to insure against loss, housing loans will be very sound investments. This will help to stabilise the building industry.

The Bill will apply to a large section of the community in the cities and towns of Australia, but it will not apply to all sections of the community. The Commonwealth, over the years, has made available to the States, under section 96 of the Constitution, almost £1,000 million of loan money specifically for housing. The money for the war service homes scheme is also Commonwealth money, which is made available for the specific purpose of building homes for returned servicemen. That is a very worthwhile scheme. Building societies throughout Australia also make money available, at varying rates of interest, for the specific purpose of building homes. All those sources of finance will fit into this Bill. But all Australian residents will not be able to take advantage of the sources of finance that I have mentioned or of other sources of finance.

As I see it, this scheme will not apply in agricultural areas as we would like to see it apply. I have raised this question with the Minister. He is well aware of my thoughts on it, but I believe that on this occasion I should express them. The agricultural section of the community has done a tremendous job for Australia for many years. Agricultural production is still developing. Perhaps it is developing more in the larger States than in the smaller States. The agricultural section is producing greater and greater wealth for this country. It has been said on many occasions that this section is tremendously important to the entire economy - not only to the internal economy but also to our export income. As a matter of fact, if we do not increase our exports and improve our balance of payments all Australian industries will start to dwindle, as has been stated by the Government frequently. So anything we can do to assist in this field we should do. Our standard of living is such that I believe that this Government and the State Governments, in their spheres, have an obligation to see what can be done.

I do not believe it is good enough that anybody should go into the outback areas - into the mulga, as the saying is - and set up a home which may be caravan, shed also containing wheat, or any sort of structure, and start to build a farm. Such people are very conscientious, and they want to put every available penny from normal sources into the development of their properties. I am not complaining about this, but I get back to my first point, namely that loans are made available specifically for homebuilding purposes. Unless we can find ways and means of making loans available to this particular industry we are falling down on our job. There must be ways of overcoming the problem. I realise it is a question of security, but surely the farming industry generally is one of the best securities offering in Australia. Machinery provisions must be provided to enable societies, including the War Service Homes Division, to provide, from the funds made available by the Commonwealth to the States for home building, sufficient money for a first mortgage, thus enabling the normal allocation of finance through general loans to be devoted to farming. I can see no difficulties in this, and 1 believe we have a tremendous responsibility to do it.

In my electorate of Canning there will be a tremendous variation in the types of homes which will be built under the provisions of this Bill. My electorate extends into the Kwinana area, which is highly industrialised and which is growing rapidly. The people of Kwinana, and other constituents of mine in city areas, will no doubt receive benefits from this legislation as will the residents of the bigger country towns in the electorate. However, there are hundreds of people who will not receive any benefit from the Bill. They do not receive benefits from other legislation to the same extent as persons in more thickly populated areas. We must devise ways and means of implementing a general policy to enable all Australians to borrow on long term and at low or reasonable interest rates.

Not only is the Government reluctant to lend money to persons in country areas, but so are lending societies which can obtain sufficient clients from city areas for the money which is available. They are reluctant to move out even into country towns where security is sound, or certainly would be sound under the provisions of this Bill. The whole trend in Australia today is to spend more money on homes in the cities rather than in the country towns. This just is not good enough. There is no better place in which to bring up a family than a country area. There is no better investment in Australia today than there is in increasing our primary production. I am not suggesting for one moment that we should not increase the production from all industries, but our primary industry is a sound and important industry which we cannot do without. We must continue to improve the standard of living of people who are willing to take their families into the country, because if we do not do so there will be a continual drift to the cities and ultimately the majority of our young people will live in the cities and we will reach the stage when our exports will not be sufficient to pay for the requirements of our secondary industries - the raw materials and the tools of trade. This is important, and I impress on the Minister and the House generally that we should take note of the position. We should endeavour to devise machinery to overcome this problem, and present it to this Parliament and to the State Parliaments if possible. [Quorum formed.]

Mr CONNOR:
Cunningham

.- I had only examined this measure when I came very quickly to the conclusion that it is a typical product of a portfolio which is a political afterthought. A mountain has been in labour and has brought forth the proverbial mouse. The best that can be said for the Ministry is that it is one for the minimising of election housing promises. The best that can be said for the Bill is that it is an academic exercise in mortgage insurance and discount; the worst, that it is a piece of political face saving - the product of political expediency and financial futility. The Bill typifies the ramshackle controls which this Government has over the Australian financial system.

We may classify persons who require houses into three distinct groups. First, those with a family income of less than £24 a week who obviously can be catered for only by the various statutory housing authorities in the States. Secondly, a slightly more privileged group - a group which includes those who receive the average national income, of between £24 and £31 a week and who, up to now, have been the recipients of the orthodox loans to the limit of £3,750 for medium or low medium quality housing. Thirdly, those persons who are above the £31 a week income bracket and who are the intended beneficiaries of this legislation.

It is, of course, to be remembered that three notable promises were made by the Prime Minister (Sir Robert Menzies) for the purpose of swinging the 3 per cent, of votes which he required to win the general election in 1963. Two of them related to housing. We now have a piece of laggard legislation from a smug, indifferent and contemptuous Government which has produced a museum piece for financial connoisseurs. The last thing we can expect from this Ministry is a national housing policy. A bill of this nature should be examined only within the context of a national housing policy, otherwise it is too little, too late, and for too few. The Bill is a “ think-piece “ for the economic connoisseurs, conceived at the dictates of party political expediency and designed to give as little as possible to those most in need. After all, it was the Minister for Housing (Mr. Bury) who made the celebrated gaffe shortly after discussion of the Homes Savings Grants Bill when he said: “ I would not have understood a word of this myself if I were not the author of it and its principles.”

Mr Bury:

– The only trouble is that I did not say that.

Mr CONNOR:

– I am glad to have the Minister’s assurance. Such a statement would have been a rare excess of candour on his part.

The Bill is complementary to the Homes Savings Grants Bill and in this case the fault is not ignorance but obfuscation. No other explanation is tenable for a gentleman who has had experience as an Executive Director of the International Monetary Fund. This is a supplementary bill introduced to tie in with the Senate election campaign. One can well visualise the Prime Minister (Sir Robert Menzies) saying to the Minister for Housing: “ Get cracking. We do not want criticism. You must produce the legislation otherwise there will be criticism during the Senate election campaign. Do not promise them anything definite. Tell them as little as possible. Above all, do not get yourself and the Government into trouble.” The Minister, of course, will have rueful memories of getting into trouble.

The Minister’s speech in introducing the Bill was a masterpiece of evasiveness and reticence. It is notable for the things it does not say rather than for those that it enumerates. For instance, no proper assessment has been made of the legitimate needs of the Australian community for mortgage finance of this kind. We do not know how many people who are already paying exorbitant interest rates on second mortgages would benefit from this legislation. No assessment has been made and no information has been given as to who would benefit in the future borrowings from this Bill or the amount of finance that will be required. Of course, the identity of the groups lending this type of money would not be revealed because many of the Government’s best supporters are included in their ranks. The extent to which additional money will become available remains to be seen in the context of the present economic circumstances, when this Government has its back to the wall and is in more serious financial trouble than at any time since it took office.

A notable lack in the Bill - perhaps the most notable one - is the absence of any indication of the insurance premiums that will be charged. We have had a vague generalisation from the Minister as to the maximum amount of loan and the ratio of the recipient’s income to the amount of loan. The Minister has failed to divulge the rate of interest that lenders will charge, although he has referred fleetingly to a mere assumption of his. He referred to a figure of 6 per cent. I assume that that figure has already increased to 6i per cent, in the light of recent adjustments to interest rates.

What are the real prospects of the money required by this legislation being made available from our present ramshackle financial structure? The Minister has told us as little as possible. This is typical of the arrogance with which the Government treats Parliament and the Opposition. The Minister asks for a blank cheque so that he may stop, go, twist, turn or retreat at his discretion and convenience and according to the political whim of the Government and the vagaries of available finance. To whom does the Minister think he is addressing himself - to a political kindergarten or to responsible adult elected representatives of the public? We are entitled to know. It is a national scandal that we have been told so little.

The Minister’s second reading speech was a masterpiece of evasiveness and reticence. Perhaps the most notable of the Minister’s statements was his climb down. The very essence of the Prime Minister’s approach to the Australian electorate was that a deposit of 5 per cent, would qualify a person for a loan. In the tones of a calliope, the loudest of all musical instruments, the Prime Minister proclaimed this to the people of Australia, but, if I may change the metaphor, he has had to weazel out and, in a whimper, he now says: “ In relatively few cases of unusually high capacity to pay, people will qualify for a 95 per cent, loan.” As for the rest, they will qualify for loans of from 80 per cent, to 90 per cent, and there will be as few of them as possible. The need for such loans will be relatively light, as the Minister well knows from the experience of the State housing authorities.

I think the New South Wales Minister for Housing summed up this Government’s approach to the problem in a nutshell when he referred to the Homes Savings Grants Bill and said that only the most determined would fight their way through to the pot of gold. There was a pot of gold in the case of the Homes Savings Grants Bill, but in the case of this Bill there is not even a pot of gold to fight for. This legislation, to use Mr. Landa’s words, is a most lamentable fizzer.

What premium rates will be charged on loans? We have heard many ideas on this subject bandied around the House. The most generally accepted suggestion is that the rate of interest will be 2 per cent. Will the rate be 2 per cent, on the typical loan of £4,000? Will there be a premium of £80 charged in a lump sum to the people who obtain the loan? Will there be a premium of £80 on an advance only £250 higher than the limit allowed by the cooperative building societies which are guaranteed by the States? Did the Minister ever take a risk? It has been truly said of bankers that they never want to lend you money until you have no need to borrow it. I think this is typical of the Government’s approach in this Bill.

Let us examine the experience of the various State housing authorities. I obtained certain information only last Monday by courtesy of the Secretary of the New South Wales Housing Commission and the New South Wales Registrar of Cooperative Societies. This indicates the trifling risk that is involved in giving ordinary decent people on low incomes the chance to own their own homes. Since 1936, when the New South Wales Government first guaranteed co-operative building society loans, £190 million has been advanced for that purpose, with loans up to 80 per cent, of security. In . the whole of that time there has not been one defaulting society. In the last 26 years the New South Wales Government has entered into contracts of indemnity for advances over 80 per cent, and up to 95 per cent., with the present limit of £3,750. There have been 42,000 such indemnity agreements signed. The total security relating to them has been more than £60 million. The amount subject to indemnity has been £56 million. Of those 42,000 loans there has not been one default. So much for the risk factor when you are dealing with the ordinary working man on an ordinary income. Now let us look at the experience of the New South Wales Housing Commission, in selling houses to existing tenants under the No. 1 agreement - the 1946 agreement negotiated between the States and the Commonwealth when the late Ben Chifley was Prime Minister. The average deposit for such homes would have been less than 5 per cent. The deposits, of course, would vary. Credit is given for the accumulated rentals that have been paid. However, I am assured that the average deposit is less than 5 per cent. There have been 5,000 homes in that category and there have been exactly six defaulters. Let us take the sales in another field, under the No. 2 Housing Agreement which was entered into in 1956. Sales have been made on a deposit of £50. I was one of those who were instrumental in propounding this scheme and I am proud of the results. In this field, 16,000 people have applied to the Housing Commission to be included in its approved list of purchasers. The deposit on a house worth more than £3,000 has been £50 and there have been exactly i per cent, of defaults in a total of 16,000 sales.

I come now to persons receiving more than £31 a week. According to the latest figures available, th:y represent 17 per cent, of the community. These are the only people who would really qualify for the benefits of this Bill, because no man in his sober senses who wants a loan of less than £3,750 would consider for a moment paying the premium that will be charged on loans under this insurance scheme; he already has the advantage of full cover without the premium from the various State co-operative building societies. So much for this munificent Government and its generosity. This is typical of the present Administration.

Let us come now to mortgage discounting and the pious hope expressed by the Minister that someone somewhere, somehow and at some time will set up a mortgage discounting scheme. One of the major defects of the legislation is the absence of a counterpart to the organisation that operates in the United States. In that country, the Federal National Mortgage Association was established in 1938 and its functions are to aid in the establishment of a secondary market for Federal Housing Administration insured mortgages. Without some such body in Australia, it is impossible for a mortgage discount market to be set up. The reasons are simple. Let us take an individual mortgagee, who already has the insurance certificate issued by the Corporation and who proposes to sell to another person. There should be a statutory body or some competent authority that can scrutinise the terms of the mortgage, establish the present status of the borrower under it and investigate the position of the various statutory charges. I have in mind such matters of ordinary consequence as arrears of rates, alterations of local government zoning, bankruptcy, writs of execution and the establishment of equitable interests that are not registerable according to the laws of the various States. Can it be imagined that the individual who holds a mortgage and who seeks to transfer it to another person would face up to the consequences that would involve him in asking for another £60 or £70 for solicitor’s expenses for what would still be the orthodox investigation of title on the transfer of a mortgage? Of course he would not.

Again, where is the money to come from? Let us consider the system of housing finance that operates in the United States, where a Federal home loan bank system was established in 1932 to provide a reservoir of reserve credit for institutions investing in residential mortgages. We have no counterpart in Australia of the various mutual savings and lending institutions which in the United States receive by way of deposit more than two-thirds of the personal savings of the people. Those institutions are the main reservoir of housing finance in the United States. Interest at the rate of 4 per cent, is paid to the depositors and cheap money is lent, mainly at rates of 5 or 5i per cent. for periods up to 35 years. I know the Minister has a pipe dream of building up permanent building societies in Australia which would be able to discharge the same functions. But let me remind him that already the typical permanent building society in Australia is offering to pay its depositors interest at the rate of 6 per cent., in most cases with withdrawal permitted after 30 days on notice. These societies, according to the efficiency of their administration, are lending this money at rates of interest varying from 7 per cent, to 7± per cent. So much for the Minister’s pipe dream of insured loans at 6 per cent. It is impossible, it is fantastic, and the Minister well knows it. Does he expect these societies to reduce the rates of interest they offer to depositors? Does he expect that the depositors will follow his dictum that they should accept a lower rate of interest, at a time when the whole interest market is unstable - more unstable than it has been for 20 years, thanks to the shortcomings of this Government? Does he expect in such a period that investors will tie up money without variation of interest for periods of up to 25 years at rates of interest lower than those currently prevailing? Stuff and nonsense; it is an absurdity.

I do not doubt that permanent building societies can discharge a function, and a very useful function. 1 do not in any way want to reflect on the administration, the conduct or the integrity of those bodies, but let us come down to realities. Let us see exactly where the money is to come from. Let us have a look at the overall economic position today. What a stinging rebuff this Government has had from the United States Administration. What an economic backhander it has had with the well known and publicised directions given by President Johnson to American investors. As the Minister for Trade and Industry (Mr. McEwen) admitted earlier today in this House, the Government has depended over the last 10 years on overseas investments to get it out of the woods economically. This Government is a babe in the woods. It is true that we have a derivative culture and a derivative banking policy. What we really lack is self-reliance. We lack the ability to stand on our own feet, the ability to think for ourselves and the ability to act in the best interests of Australia.

I understand that for the current year we will have a trade deficit of the order of £100 million. Will that help to make money available? Today we have a bank overdraft rate of lb per cent., the highest bank overdraft rate since Federation. Will this make money available to this precious Housing Loans Insurance Corporation? I know that the Corporation will not lend anything, but it has to stimulate the market and build up the confidence of investors. We have the restriction of capital inflow. Again I cite what the honorable member for Mackellar (Mr. Wentworth) had to say today about overseas borrowings on debentures. B.P. Australia Ltd. very quickly came in out of the wet. There is quite an amount of speculation in the stock exchanges today as to whether the market can fully absorb the debentures offered by this company as well as the new flotation of shares by Conzinc Riotinto of Australia Ltd. What a financial climate for this luckless Minister to experience with his precious, useless legislation. Let us have a look at the share markets. Generally prices are low and speculators are scuttling for cover. Let us have a look at Great Britain. I do not want to embarrass the present Labour Government there, but realities must be faced. Britain is toying again with the idea of entering into the European Common Market. That, of course, is a matter for Britain to decide. It is also a matter of some interest to the Minister for Housing unless he has been brainwashed and is prepared to repudiate his former beliefs.

We have had also no fewer than two Commonwealth loans fail quite recently. For this reason the Governor of the Reserve Bank wants to sweeten up the loan market and in order to do that he has allowed the bank deposit rates for fixed deposits to be increased. For the same reason overdraft rates must be raised. The purpose is to attract money from the savings banks, which today have record deposits amounting to £2,300,000,000, in the aggregate and now equalling the total of interest bearing and non-interest bearing deposits in ordinary trading banks. It is obvious that that money is being directed into the trading banks so that it can be used to ensure the success of the flotation of the next Commonwealth loan. If it is not used for that purpose it will go into what is commonly known as the freezing chamber, the statutory reserve deposit. So much for this Government and its hopes of getting finance.

Let me take the matter a step further. What are the various corporations doing at the present time? I refer to finance companies, all members of the black market - the alternative banking system which this Government has allowed to be created, which it has tolerated, which it has done absolutely nothing to curb or control. The Government has had the means to control them, because there is on record quite a number of legal decisions that any organisation which invites funds on deposit, which issues a deposit book and allows withdrawals at will is discharging the functions of a bank. It is possible, even within the existing legislation, for the Government to bring a number of finance companies under its control, but it certainly will not do so because it well knows that in a time of scarcity people can go only to one source, namely the money lender. Today the money lender is not merely the usurer of old, because we now have the unique position in this country that every major trading bank is the owner of or at least has a controlling interest in, a subsidiary company which is a hire purchase organisation.

Unfortunate individuals who go to banks for a loan - people who are credit-worthy, decent citizens - are told that they cannot obtain a personal loan, and in many cases they cannot even be given a loan on normal mortgage security. They are told, however, to go down the street to the so-and-so company, which is sure to fix them up. The company mentioned is, of course, a subsidiary of one of the trading banks. That is the situation today. The financial interests are among the backers of this Government. They will not be making money available to this Housing Loans Insurance Corporation. Can you expect the leopard to change its spots or the wolf to change its ways? Do you expect these people, in an access of charity, to come forward, because of the specious pleadings of the Minister, and make money available? Of course they will not. The suggestion is absurd, unreasonable and ridiculous, and an affront to the intelligence of this House.

In the time that is left to me I wish to make passing reference to the housing situation in my own constituency. I represent an area in which a torrent of wealth is being produced for the nation. At the same time, the sub-standard level of wages is reflected in the housing dffficulties of my constituents. I said earlier that there are three categories of persons to be catered for in a home ownership scheme. More than 80 per cent, of my constituents have no hope of owning a home on the wages they are receiving and the savings which they can make as employees of heavy industry. In most cases their wives have to go out to work. Because of this we have 5,600 women and girls forming 26 per cent, of the total work force of the City of Greater Wollongong. The national ratio of female workers is 2 per cent. Of those 5,600 people no less than 78 per cent, are married women. Because of the shortcomings of this Government we have what may be called a two-job economy. The old Australian concept and tradition that a working man should be paid an adequate and just wage to maintain himself, his wife and his family has gone by the board, and the wife is expected to go out to work. Because of the special problems of a fast-growing city such as Wollongong there is no economic balance and stability. A balance has not been struck between primary, secondary and tertiary industries. Service industries, commerce and the like, which provide the normal outlets for female employment are, I will not say non-existent, but at least atrophied. Unless and until a proper, honest and fair wage is paid to the men who are turning out the wealth for the national economy, it will not be possible for them to spend the money which in turn should stimulate the tertiary and service industries.

I repeat that this Bill is merely an academic exercise. It is a stopgap, an economic afterthought, and it deserves only the mirth and the contempt of the Australian people.

Mr BURY:
Minister for Housing · Wentworth · LP

– in reply - If I may, I will put aside, for the time being, the remarks of the honorable member for Cunningham (Mr. Connor), that gloomy prophet of woe, and begin by referring to the opening remarks in this debate made by the Deputy Leader of the Opposition (Mr. Whitlam). He referred, firstly, to the recent rise in interest rates. This matter is naturally an integral part of a much wider question than housing, namely that of guiding the economy at large and the relative uses to which our limited supply of capital should be put. I presume that even the Deputy Leader of the Opposition would agree that in the current state of strain in the available supply of labour there is a sound case for at least some marginal restraint upon efforts to expand demand still further. A small rise in interest rates at the present juncture is the alternative to more direct interference by direct control of a bureaucratic nature - which the Labour Party might welcome but which we on this side certainly would not.

The main body of interest rates at which this Bill is aimed, however, are those charged for the second mortgages which so many home buyers now have to bear. These are commonly several times as high as the interest rates referred to by the Deputy Leader of the Opposition. If the overall cost of home mortgage finance can be brought down, this Bill will have made a useful contribution to the community. Its aim is directly related to the first of two specific questions which the Deputy Leader of the

Opposition addressed to me, namely: What level of interest rates do 1 believe the projected Corporation will regard it as reasonable to insure? Clearly, there are many factors to be borne in mind in fixing the maximum rate, all of which will at times be highly susceptible to change. First, the nature of the transactions to be covered will differ. A reasonable rate for the purchase of a new cottage might well differ from that for the erection of a large b!o;k of home units, or from a second mortgage on an old home to pay for the installation of electricity or sewerage. It is obviously desirable to keep the borrowing rate 5 for home buyers as low as practicable. But the maximum rate must be high enough to encourage the flow of funds into housing, bearing in mind that the removal of risk and a government insured document should be an inducement to lend money for housing at lower rates than are obtainable at other more risky forms of investment. If the maximum rate is set too low for the main potential lenders, most of whom have to borrow from the public, the Corporation would clearly make very little contribution of a practical nature to our housing problems.

Another suggestion which has been put forward in a number of quarters is that the maximum rate should be related to some fixed point such as a long-term interest rate on Commonwealth bonds. This, again, would import a most undesirable inflexibility into the operation. Interest rates must change relatively as well as absolutely from time to time depending on economic circumstances. The Corporation will be a business undertaking charged with a strong social purpose. It has to engineer to conduct its affairs not in some theoretical Utopia but in the market place. Whatever my own present thoughts on the matter may be, therefore, I do not propose to say anything now which would commit the Corporation some time in advance of operations before its members have been able to tender me appropriate advice.

Similar considerations, Sir, apply to the second question asked by the Deputy Leader of the Opposition in regard to the premium the Corporation will charge on its insurance policies. It will be covering varying types and degrees of risks and must be left free to tailor its premiums accordingly. As I mentioned in my second-reading speech, what is in my mind at the present is that the Corporation will normally charge an initial once for all premium along lines similar to the Canadian scheme rather than the United States system which involves a regular interest charge. The Canadians operate mainly on a 2 per cent, once for all charge, which is usually added to the loan and amortised over its life. We envisage a varying scale of premiums according to the measure of risk involved. It would seem reasonable, for instance, to charge a lower rate of interest on a loan of say 80 per cent, of property valuation with a short period of repayment than where the loan is for 95 per cent, over a much longer term. But the Corporation - and let me emphasise this - will not be tied down in these matters.

The Deputy Leader of the Opposition suggests that, by now, my study of the schemes in the United States and Canada and our own war service homes operations should have enabled me to give precise answers to his two main questions. Conditions in Australia, however, differ very widely from those of North America, especially in such crucial matters as the institutional and legal framework, the availability of capital and the pattern of interest rates. All the information I have about other schemes convinces me of the desirability of allowing the Corporation the maximum freedom of action restrained only by business prudence and the broad limits of overall government policy. When this Parliament established elements of the Commonwealth banking complex, it did not expect the Treasurer to nominate what rate of interest would apply to deposits and advances. Nor do I think it likely that when the Government of New South Wales established its own insurance office, the Minister concerned announced the scale of premiums that would be charged during the passage of the bill through the Legislative Assembly. When the Export Payments Insurance Corporation was first established, I do not recollect the Minister in charge of the relevant bill saying what the charges would be.

Mr Crean:

– I think he gave a rough idea, though.

Mr BURY:

– I have given some broad indication. The new Corporation will be called upon to operate in a new field amid very complex forces. It must be free to deal with successive situations as they arise.

The Deputy Leader of the Opposition went on to make a number of general remarks about housing with which many members on this side of the House would not substantially disagree as the honorable member for Deakin (Mr. Davis) indicated during his eminently sensible, constructive and well informed speech on the subject. In dealing with the Commonwealth and State Housing Agreements, however, there were a few of what one might justly terra errors of perspective in the speech of the Deputy Leader of the Opposition. The States are really by no means as helpless as he indicates, even in the banking sphere. He seems to overlook such powerful and important institutions as the State Savings Bank of Victoria, the Savings Bank of South Australia and their counterparts in Tasmania and Western Australia, and even the Rural Bank of New South Wales which, although not large scale lenders, have resources enough to play an important part. On the other hand, one must grant him the fact that the most potent single instrument in determining the rate and volume at which loans for housing are made, and thus indirectly the level of activity of home building, is the rate of lending of the Commonwealth Savings Bank. Likewise, the Reserve Bank of Australia holds sway over banking investment generally, and thus on the volume of funds lent for housing, albeit uncertainly and in the face of many unknown and uncontrollable forces. But these factors do not add up to a decisive Commonwealth power. Even the quantum of funds to be made available under Commonwealth and State Housing Agreements is determined not by the Commonwealth but by the States, as honorable members are well aware.

The current division of effective power in housing matters between the Commonwealth and States in fact places each in the position to frustrate the policies of the other unless they work in close harmony. I say this not to suggest that, on the whole, our affairs do not run smoothly resulting in Australians probably being on the average the best housed people in the world. I am not suggesting by that statement that there is not a great deal of room for improvement; I merely wish to remind honorable members opposite that many of the issues involved in these questions are by no means simple. For instance, the Deputy Leader of the Opposition emphasised that this Bill will make no contribution to the reduction of the cost of land which, together with the cost of labour and the demand for bigger and better quality homes, has been a major influence in raising the cost of new homes in recent times. This is hardly surprising as this Bill is aimed at something quite different as he knows. It is not an omnibus measure to cover the whole wide world, but one with the specific purpose of insuring housing loans. But since the Deputy Leader of the Opposition has raised the question, it deserves some answer.

The price of land is determined mainly by the effective demand for it and its inherent scarcity. In respect of new land being opened up and sub-divided, the price is determined also to a large degree by the cost to developers of providing essential services such as roadmaking, kerbing, guttering, water supply and sewerage, upon which most local authorities now insist before subdivision and which used to be the custom for public authority to provide and charge for over a period of years in the form of rates. The full capital cost of providing essential services nowadays is thus loaded directly on to the home buyer at the outset. The lack of planning for the effective use of land within and on the outskirts of our large cities, which results in so many of the chaotic, unwieldly problems which confront them in the field of transport and housing, can scarcely be laid at the door of the Commonwealth Government. A good plan followed consistently over the years need not even necessarily involve larger sums of public money than are now sometimes committed piecemeal in rather aimless fashion. For instance, the staggering cost of providing water supply and sewerage in the neighbourhood of Sydney with which the Deputy Leader of the Opposition would be very familiar has in considerable part been due to the lack of any effective land use scheme consistently followed over the postwar years.

Improvement in these matters requires a partnership between public authority and private development. Only public authority has the authority and resources for coordinating all the factors involved - factors such as transport, roads, public utilities, industrial and commercial development, hospitals and schools. Free enterprise, on the other hand, alone can provide the flexibility of funds to cater for the varying requirements, tastes and purchasing power of hosts of different individuals.

I agree entirely with the Deputy Leader of the Opposition that much more emphasis should be placed on environment. This, in fact, is what many of the larger and more enlightened developers are already doing; but, of course, they can do it only in a very limited way without the support of the State Governments and the local authorities involved. The Commonwealth Government has demonstrated in Canberra the virtues of enlightened city planning, but in other parts of Australia the initiative has to be taken by those bearing the responsibility, and they are chiefly the State Governments. In suggesting that Commonwealth funds might be used by State Government to acquire land for urban renewal or outer suburban development, I would indeed hope that what the Deputy Leader of the Opposition has in mind is that this would only be done in response to some carefully thought out long-term programme such as prevails in Canberra, not to finance piecemeal real estate deals put up in response to parochial political pressures.

Later in his speech, the Deputy Leader of the Opposition took up a particular example that I used in my second reading speech and quoted from some work by that very useful body, the Housing Research Committee of Victoria, as did other honorable members after him. I might say that those associated with this body have done some very useful work in evolving a good type of cheap housing for those in the lower income groups.

The honorable member for Melbourne Ports (Mr. Crean) even went on to convince himself, on the basis of various hypotheses which he conjured up, that only about one-quarter of the people seeking homes could benefit by this scheme. Let me say that it is complete nonsense to suggest that the credit worthiness test will mean that the scheme will not in practice be available to three-quarters of the population. My own experience is that such a diversity of circumstances prevails that any hypothesis about income and repayment capacity has little application except in specific cases as they are examined individually. It is worth noting, however, that, assuming that one-quarter of a person’s income is available for expenditure on housing, a person on the basic wage could afford to repay a loan of about £3,250 at an interest rate of 5 per cent, if he were given 30 years to repay it. If he were earning £20 a week, he could repay a loan, under the same conditions of some £4,100. If his weekly income was £25, the loan he could repay would be more than £5,000. At £30 a week, the loan he could repay would be £6,000.

Mr Crean:

– Those examples are based on an interest rate of 5 per cent., which is a pretty unreal rate at the moment.

Mr BURY:

– You can take different hypotheses. Take an interest rate of 6 per cent. The average wage is just under £27. If you take the average wage and the average house-

Mr Whitlam:

– Would the Minister like leave to incorporate in “ Hansard “ the table from which he is quoting?

Mr BURY:

– I do not know whether all of it would be relevant to this point Take a man earning £26 a week, which is a little below the average wage, and a loan spread over 30 years at 6 per cent. A man on that wage who could afford to spend one-quarter of his income on housing could finance a mortgage of £4,727. If the rate were 7 per cent., the loan would be reduced to £4,251. That is reasonably close to the cost of an average house at the moment, which is about £5,100. Many examples were quoted and I chose to mention these, but I do not attach any importance to them, except in a very general way.

The honorable member for Melbourne Ports also spoke of the burden imposed upon borrowers by the premium. I understand his position. After all, he is not here to praise the Bill. However, in stressing that point he overlooked what the borrowers could expect to gain in return. If an insured loan of £3,000 over 25 years were available at 1 per cent, less than the normal interest rate, the interest payments by the borrower would be reduced by £650. The main advantage, however, is that by reducing the amount of the deposit required borrowers should be able to raise loans which otherwise would be out of the question.

A number of honorable members, the honorable member for Bass (Mr. Barnard) in particular, introduced the subject of war service homes. I would like, therefore, to remind the House that this is essentially a Bill to insure loans, not to cover every form of housing problem existent, both State and Federal, although some of those problems got a fair run in the course of this debate. War service homes loans are made by the Commonwealth, and since the Commonwealth bears the risk anyway, it is hardly relevant for the Commonwealth to insure itself. This, of course, applies generally to governments. If a government makes a loan,” one would expect it to bear the risk and not to go through the paraphernalia of insuring and making a charge for that.

Mr Whitlam:

– The honorable member’s objection was that under this Bill it was impossible to s .ure an insurance policy on a second mortgage, which many borrowers from the War Service Homes Division find it necessary to give in order to raise the full amount required to buy a house.

Mr BURY:

– My impression is that that point must have risen subsequently; it is not quite the point that I think he made. However, he proposes to move an amendment later, so I shall be able to deal with the point when the Bill is being discussed in Committee. I wish to emphasise that this is essentially an insurance measure and could not be expected to cover those other matters.

The honorable member for Bennelong (Sir John Cramer) dealt very effectively with a number of points, as one would expect him to do, being a man of wide knowledge and practical experience in this field. I would like to underline in particular his remarks about the importance of developing the permanent building society movement, and again to record my hope that this Bill will help to stimulate its growth as well as that of other forms of co-operative building and housing societies.

The honorable member for Gippsland (Mr. Nixon) and the honorable member for Canning (Mr. Hallett) pointed to the peculiar problems associated with loans for the erection and improvement of farm homes outside urban areas. These arise mainly because of the lack of security for lenders on homes already subject to mortgage which have little sale value apart from the properties on which they are situated. I shall certainly study the points that those honorable members have made, as they have asked me to do, particularly having regard to the Commonwealth and State Housing Agreement. The honorable member for Henty (Mr. Fox) raised the question of rebates. This will be a matter that will be looked at by the Corporation in relation to what is reasonable business practice.

I come now to the honorable member for Parramatta (Mr. Bowen). I would like to congratulate him, in his absence, on what I am sure everyone in the House will agree was a most impressive and able maiden speech. He very aptly pointed out the real lack of legislative power in the Commonwealth Parliament to deal with housing, and he noted that in the Federal systems of the United States of America and Canada there is very extensive power. This readily explains why it would be quite impossible for the projected Corporation to carry out anything like the full range of functions of the Canadian Central Mortgage and Housing Corporation, as suggested by the honorable member for Wilmot (Mr. Duthie).

The honorable member for Maribyrnong (Mr. Stokes) will note from the proposed amendment to clause 20 that I have circulated that, if the Committee agrees, subclause (5.) of that clause will be deleted. He asked me also to explain the nature of the security that could be approved, and he expressed concern whether a lien would be accepted when first and second mortgages had already been given. The Government’s very firm intention is that the normal loan insured to build or buy a home shall be secured on first mortgage. In the case of repairs, additions, improvements and the like, such a course often will not be practicable. The proposed Housing Loans Insurance Corporation will be given power, therefore, to insure loans made on other security in relation to land. The Corporation naturally will be expected to act in these matters on sound business lines.

I appreciate also the point that the honorable member made concerning clause 24, under which the power to make payment in case of default will be permissive rather than mandatory. This is a matter for determination by the Corporation, which, presumably, will not normally insist on a lender exercising his full rights under personal covenant before meeting its insurance obligation. However, there must reside in the Corporation power to insist on the exercise of the lender’s full rights in cases of fraud and all kinds of other cases in which it may be reasonable to follow up a personal covenant, though this is something that most lenders do not normally do.

The tenor of the criticism of this Bill by Opposition speakers has been directed not so much at what it provides for as what it does not provide for. I have already referred to the narrow constitutional limits within which the Commonwealth Government is obliged to operate in the housing field. But even within this field, the Bill is not intended to be the beginning and the end of the Governments housing policy. Within the confines of its limited aims of removing the need for second mortgages and reducing the deposits needed by home seekers for home purchase by encouraging higher ratio loans through the insurance of loans against loss, it is confidently expected, over a number of years, to bring useful benefits to the people of Australia, especially to young married couples seeking to establish family homes. I realise that honorable members will ask: “ When is this to happen? “ We must be realistic, and it would be unrealistic to expect to achieve these results overnight. However, I believe that the passage of this measure will sow seed that will bear more and more fruit in the years to come.

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

In Committee.

Clauses 1 to 3 - by leave - taken together, and agreed to.

Clause 4. (1.) In this Act, unless the contrary intention appears - “approved security” means a first legal mortgage or a mortgage that will, upon registration under a law of a State or Territory of the Commonwealth, constitute a first legal mortgage and, in relation to such prescribed interests and for the purposes of such classes of loans as the regulations specify in repect of a particular kind of security, includes a security of that kind;

Mr BARNARD:
Bass

.- I move -

At the end of the definition of “ approved security “ add “ and if the land is subject to a first legal mortgage to an authority of the Commonwealth or of a State, also includes a second legal mortgage “.

The Minister for Housing (Mr. Bury) has just made it perfectly clear to honorable members that one of the principal purposes of this measure is, if possible, first to reduce interest rates and, secondly, to eliminate the need for home purchasers to obtain second mortgages. No one would understand better than the Minister himself that in recent years ex-servicemen who are eligible for assistance under the War Service Homes Act have been forced to obtain second mortgages. The reason for this is very simple. I believe that I made my position quite clear the other evening when I spoke at the second reading stage. I pointed out to the Minister two anomalies that I believe will arise in relation to the War Service Homes Act after the passage of this Bill as it is drafted. The first stems from the right to be conferred by this measure to transfer an existing mortgage. This kind of right will continue to be denied to eligible ex-servicemen under the provisions of the War Services Homes Act.

The second anomaly that I mentioned in relation to the War Service Homes Act relates to the maximum limit on advances. Under the terms of that Act, the maximum advance is limited to £3,500. Therefore, if we accept the Minister’s own figure of £5,000 as the average value of new homes in Australia, it will be necessary for exservicemen to obtain from other sources an additional £1,500 for the payment of deposits under the war service homes scheme. The Minister gave this figure of £5,000 in his second reading speech, and I referred to it at the second reading stage. He knows that many ex-servicemen who have been forced to pay £5,000 or more for homes have been forced to enter into second mortgages.

The Minister is aware, also, that the War Services Homes Division will not immediately discharge mortgages on old dwellings.

So, for the discharge by the Division of a mortgage on an old house, there is a waiting period, which, according to the total sum made available by the Commonwealth annually under the war service homes scheme, has varied from year to year recently. I think that the waiting period at present ranges between 15 months and 18 months, according to State. It varies from State to State. Because of this waiting period many ex-servicemen have been forced to obtain loans at exorbitant rates of interest. Under the terms of this Bill, there is no question of guaranteeing such loans, lt is all right for the Minister to say that the Commonwealth guarantees the loan. It is true that, after 18 months or so, the Commonwealth, through the War Service Homes Division, will discharge the mortgage. But there is no guarantee that the Commonwealth will assist an exserviceman in respect of high rates of interest between the time when the Division accepts his application for assistance and the time when the mortgage is actually discharged.

I believe that an injustice will be done to ex-servicemen as this measure stands. Any citizen of Australia who can satisfy the proposed Housing Loans Insurance Corporation that he has reasonable security and that his income is sufficient to enable him to enter into a mortgage on an existing dwelling or a new house should be entitled to have his loan guaranteed by the Commonwealth. In the Minister’s opinion, many persons will be guaranteed loans of up to 95 per cent, of the value of the properties that they wish to purchase. But what guarantee does the Commonwealth give to ex-servicemen? They are not guaranteed up to 95 per cent, of the cost of a home, if we consider the value of a home to be £5,000; they are guaranteed only to the extent of about 60 per cent, of the cost.

The purpose of this amendment is to ensure that the Commonwealth will accord to an ex-serviceman the same protection as it gives to any other citizen who borrows through the Corporation under the terms of this legislation where an ex-serviceman desires to borrow the difference between £3,500 and the purchase price of a new home or existing property, say, £5,000. Honorable members on this side of the chamber believe that it is right and proper that ex-servicemen should have this benefit. Although the Minister referred to this matter only a few moments ago he did not, in my opinion, state any valid reason why the Government should not at this stage accept the amendment. He did not say why exservicemen who take advantage of the terms of the War Service Homes Act should not be entitled to the privileges that will be accorded to other citizens in Australia under the terms of the Housing Loans Insurance Act.

It is not only those who are eligible under the War Service Homes Act who will be deprived of the benefit of this legislation; as the honorable member for Cunningham (Mr. Connor) mentioned earlier, there are also those people who have been given assistance by State instrumentalities or by the various housing instrumentalities throughout the Commonwealth. Is there any reason why those people should not be protected in the same way when the cost of their home exceeds £3,500 or the amount that is normally made available by those lending institutions? The Minister has said that if a person can secure £3,500 from one of the approved lending institutions - the Commonwealth Bank, a private bank or any other approved lending institution - he is entitled to find the difference between that amount and the purchase price by way of a second mortgage; but if the person happens to buy a housing trust home the Commonwealth will not accept any further responsibility. The Minister’s attitude is that the Commonwealth will guarantee up to £3,500 of a loan required for a housing commission home, but the purchaser himself must guarantee the remainder of the loan. I believe that this is anomalous.

I have already referred to two anomalies. The first relates to the War Service Homes Act under which eligible ex-servicemen obtain assistance. Ex-servicemen who have taken advantage of that legislation are today paying high rates of interest on second mortgages. That is well known to the Minister, as the figures have been quoted in this place. Interest rates vary from 7 per cent, to 13 per cent, simply because, in the first instance there is a waiting period for the granting of a loan on a war service home and, secondly, because the maximum advance does not exceed £3,500. I believe that the Minister should accept this amendment which will merely guarantee to an ex-serviceman who desires to find the difference between the maximum advance made available by the Commonwealth, that is £3,500, and the average cost of a home, which has been stated by the Minister to bc £5,000, that is, £1,500, the same security that will be applied to any other citizen who secures a loan through the Corporation.

Mr L R JOHNSON:
Hughes

.- I am happy to say just a few words in support of my colleague, the honorable member for Bass (Mr. Barnard), who has made out a case for the ex-serviceman who has occasion to apply for a war service loan. His amendment extends also to people who become beneficiaries under State housing authority legislation. I want merely to make some points about the war service homes content of the case which has been submitted.

I was interested to note that the 48th National Congress of the Returned Servicemen’s League resolved that an approach should be made to the Minister for Housing (Mr. Bury) about a number of matters pertaining to housing. The first matter was that borrowers under the War Service Homes Act should receive further assistance under a mortgage insurance scheme on loans up to 95 per cent. of the value of a home. This is to say, the matter which has been put forward by the honorable member for Bass has the full backing of the R.S.L.

It has been interesting for me to establish that on 12th May 1964 the Repatriation Sub-committee of the National Executive of the R.S.L. met the Minister and discussed with him the League’s request. The Minister replied subsequently in the following terms, and I shall read part of the letter that he apparently wrote to the R.S.L. - 1 discussed these matters with members of National Executive and I have since had an opportunity of examining your proposals more closely and the following comments may assist your Executive in its further deliberations on War Service Homes arrangements.

The proposal that an insurance scheme should be provided for second mortages on War Service homes will receive careful consideration in conjunction with the Government’s proposal to provide a scheme for the insurance of housing loans made by approved housing lenders.

Mr Barnard:

– Who said that?

Mr L R JOHNSON:

– This is part of a letter addressed by the Minister to the R.S.L. in reply to its submissions which were initiated by the 48th National Congress. I hope that I have not mis-stated the situation in any way, for I am relying on what was reported in an ex-serviceman’s magazine.

If what I have said is true, the contention of the honorable member for Bass has the backing of the R.S.L. and the Minister has been aware of its interest for a considerable time. I noticed in the second reading speech that the Minister said -

The time will doubtless come when some lending institutions will be in a position to say that all their loans are insured by the Corporation.

If this is his hope and his aspiration, it is very difficult to know how he will achieve this by excluding ex-servicemen who, at the present time, have a loan limitation from the War Service Homes Division of £3,500. The Division has admitted that it costs much more than that to build the average war service home. I refer to the 1963-64 annual report of the Division which states at page 27 in appendix L that the average cost in New South Wales is £5,053, in Victoria £5,099, in Queensland £4,692, in South Australia £5,376, in Western Australia £4,925, in Tasmania £4,411 and in the Australian Capital Territory £7,388. Imagine the second mortgage involved in this case. The Northern Territory figure was available for the year 1962-63 and that was stated as £5,01 1. In every case and in respect of every State of Australia there is a need for a substantial second mortgage.

The Minister’s aspiration, declared as it has been in relation to this Bill, that the time will doubtless come when some lending institutions will be able to claim that every mortgage is insured, is indicative of pie-in-the-sky kind of thinking. Let me remind honorable members of how many people are involved. Applications for assistance received by the War Service Homes Division in 1963-64 numbered 13,930. We have been told, and I quote now from the report -

Approximately 25 per cent. of persons who could be eligible for assistance under the provisions of the War Service Homes Act by virtue of service in the 1939-45 war, in Korea, Malaya and South Vietnam, have now been provided with a home under the scheme.

If 25 per cent. of those eligible have been provided with a home under the scheme, approximately 600,000 ex-servicemen could still be eligible for war service homes. So a very large number of people are involved in the amendment that has been moved by the honorable member for Bass, on behalf of the Opposition. We believe that it is wrong to deny ex-servicemen a benefit which the Minister for Housing and the Government seem to be so anxious to extend to everybody else.

When all is said and done, it is quite likely that when these people apply for loans they will be discouraged or will have difficulty as a result of the element of risk involved. We have been told that applicants for war service homes loans have difficulty in bridging the gap between the maximum loan and the cost of a home. I could turn up numerous statements to that effect, particularly by the former Minister for National Development, Senator Sir William Spooner. He often made that point and contended that that difficulty deterred applicants. I believe that a very good case has been made out for the insurance extending not only to the first mortgage but in the case of an ex-serviceman whose first mortgage is held by the War Service Homes Division, to the second mortgage which is needed almost invariably in order to enable an ex-serviceman to take advantage of his war service homes loan and to become the owner of a home.

Mr BURY:
Minister for Housing · Wentworth · LP

– All honorable members recognise the close interest that the honorable member for Bass (Mr. Barnard) has long taken in war service homes. Over the years many other honorable members also have taken a very deep interest in this matter. I am now in a position to know who does take a close interest in it. The honorable member for Bass referred to the transfer of second mortgages and other problems. The first point that I emphasize is that these war service homes matters are really separate from this Bill. Whatever their merits or demerits may be, they do not fit into this situation at this time.

One of the major aims of this Bill is to get rid of second mortgages altogether. It is true that the Housing Loans Insurance Corporation will have power to take a second mortgage, but that is not in connection with the first acquisition of a home or to finance the major deal. The picture that this Bill presents is of one loan representing a higher proportion of the cost than in the past - covering almost the whole cost and enabling us to get away from the idea of second mortgages. So this amendment, which is related to a particular sector, certainly would not fit neatly into this Bill. As far as the State housing authorities are concerned, the honorable member for Bass may be aware that, in most of the States in which the housing authority makes the first loan and permits a second mortgage, there is provision in the State legislation for the person who lends money under second mortgage to seek from the State an indemnity against the loss of his money.

There are one or two other points that I wish to make in connection with this amendment. On the whole, we want to encourage investors in housing to put their money into first mortgage loans with moderate rates of interest and not into second mortgage loans with high rates of interest. Almost invariably second mortgages involve high rates of interest. We hope that, if we can get the mortgage market moving, some of the lenders of money which now flows into second mortgages with very high rates of interest will be content to take much lower rates of interest when their investment is guaranteed by the Government.

As the general aim of the scheme is to get away from second mortgages, I would not like to import into this Bill right from the beginning provision for second mortgages. As I have said, war service homes matters are in a specific field. The honorable member for Hughes (Mr. L. R. Johnson) referred to what I have done. I have said that the question of second mortgages will be considered, and that question and many others are being considered. I believe that the matter raised by this amendment should be dealt with in the context of war service homes or other legislation; it should not be imported into this Bill. I am afraid that the inclusion of this amendment would drive a coach and team of horses through the general structure of the Bill, which is designed to achieve high ratio first mortgage loans. I am not prepared to accept an amendment which imports provision for second mortgages into this scheme.

Mr HANSEN:
Wide Bay

– Although the Minister for Housing (Mr. Bury) has said that the main purpose of this Bill is to do away with second mortgages, he does not agree that it should cover war service homes. I want to refer to how State housing authority homes would be affected if the amendment proposed by the honorable member for Bass (Mr. Barnard) were agreed to. The amendment would not be necessary if all States agreed to do as New South Wales has done; that is, not have a limit.

Mr Bury:

– And South Australia.

Mr HANSEN:

– I believe that South Australian Housing Trust homes could also be covered. The Trust transfers many of its loans to other lending authorities and, as I understand the position, the proposed Housing Loans Insurance Corporation could insure such loans once they had passed from the hands of the Trust.

I understand that the maximum loan available in South Australia is £3,500. Other States also have limits. Queensland has a limit of £3,500 on loans for the purchase of homes from the Queensland Housing Commission. On loans from the Victoria Home Finance Office, the first mortgage must not exceed 95 per cent, of the value of the home and also must not exceed £5.000. A person borrowing from that Office may not need to give a second mortgage and therefore may not need the assistance that could be given under this insurance scheme. In Western Australia the limit is £2,500. In Tasmania there are limits of £3,300 in respect of a brick or concrete home and £3,000 in respect of a timber home in certain localities.

So, on the basis of the cost of homes as quoted by the honorable member for Hughes (Mr. L. R. Johnson) from the annual report of the Director of War Service Homes - the cost of war service homes would be no different from the cost of homes constructed through the State housing authorities - except in New South Wales, a person wishing to purchase a home, even through a State housing authority, probably would need to have recourse to a second mortgage. Such people should be covered by the inclusion of the amendment moved by the honorable member for Bass.

Mr FOX:
Henty

– I wish to make some observations on the amendment moved by the honorable member for Bass (Mr. Barnard). I have not given it a great deal of thought, but I am sympathetic to it. I do not like to see ex-servicemen paying any more in interest than is reasonable. One or two things have occurred to me which some honorable members may not have gone into properly. The honorable member for Hughes (Mr. L. R. Johnson) said that the maximum loan granted by the War Service Homes Division is £3,500. He gave figures to show that the average cost of building a home is about £5,000. This would mean that the ex-serviceman has to have £1,500 of his own for a deposit or he has to borrow it on second mortgage.

Mr L R Johnson:

– He also has to have the deposit for the war service home loan.

Mr FOX:

– That is right. It is quite a strain. The honorable member said there were 600,000 possible applicants for war service home loans. I suggest that that figure could be increased. Many ex-servicemen are not interested in war service home loans because a home of £5,000 does not meet their requirements. A person does not have to be a capitalist or a millionaire to want to spend £6,500 or £7,500 on a home today, particularly with land the price it is. With a maximum loan of £3,500 an exserviceman who wants to build a £6,500 home has to find a further £3,000. If he wants a £7,500 home he must find £4,000. If we are going to try to provide a guarantee for second mortgages we may be encouraging ex-servicemen to borrow more than they should on second mortgage, on the basis that they will get a lower rate of interest. But they will still have to repay the amount they borrow.

Mr Barnard:

– Is not that a job for the corporation to watch; or for the War Service Homes Division to watch?

Mr FOX:

– The honorable member suggests it is something to be watched, but eventually a limit must be fixed. At present the limit is £3,500.

Mr Barnard:

– It should not be that.

Mr FOX:

– All right. If we increase rt to £3,750, £4,000 or £4,500 we do one of two things: We either satisfy fewer people by retaining the present annual allocation of £35 million for war service homes or we increase the £35 million. If we do the latter, where do we stop? At what stage do we determine what is a reasonable amount a man can expect to borrow for the home he wants? Do we set £5,500, £6,500, £7,500 or £8,500 as the limit of borrowing for a home? I suggest that many ex-servicemen are not interested in applying for a war service home loan because the most they can get is £3,500. By increasing the amount of the loan more than 600,000 people will be interested in securing loans, but a big proportion of this number still would not be interested even if they could get £4,500, because they want to build something for £7,500 and they would still have to find £3,000 one way or another.

Taken all round, whilst I am extremely sympathetic and would like to see some means of helping returned men - after all, the ex-serviceman, as mentioned by the honorable member for Bass (Mr. Barnard), at present has to pay a high rate of interest on the amount he gets on second mortgage for only 18 months, and then it is guaranteed by the Government - I hope that as time passes that waiting time will be reduced. He has to pay the high rate of interest on the second mortgage for 18 months, but against that he gets a loan for a period of 45 years, whereas under this bill people will be able to borrow for only 25 or perhaps 30 years. In addition, the ex-serviceman gets his money at 3i per cent, interest whereas under this scheme people will pay anything from 6 to 7 per cent., and I suppose they will be lucky to get it at 6 per cent.

All in all, I think the ex-serviceman is not at a terrific disadvantage, and I would prefer to see him put up with a temporary disadvantage for 18 months than encourage him to borrow a higher amount which it eventually becomes a struggle for him to repay. I suggest that honorable members opposite give this some thought before suggesting that we increase the amount of the advance, which would be the logical thing to do. I think it is far better to get the loan in one advance rather than have to borrow some on first mortgage and the remainder on second mortgage. However, the question is how much we can reasonably expect a man to be able to borrow under war service loan conditions, and how much will satisfy the majority of ex-servicemen for the type of home they want to build. I do not think we can reasonably expect to satisfy the majority of them unless we advance them sufficient to build a home costing, in the capital cities, about £7,000 to £7,500 and this would not be a mansion. Even at that, I do not think we could arrive at a reasonable figure which would not put them into difficulties in repaying what they have to borrow to make up the difference.

Mr CREAN:
Melbourne Ports

.- It seems to me that neither the Minister for Housing (Mr. Bury) nor the honorable member for Henty (Mr. Fox) realises that an anomaly will be created by the very passage of this Bill, which is what the Opposition’s amendment seeks to draw attention to and to remedy. One of the purposes of this Bill is, in some circumstances, to lend up to 95 per cent, of the capital value of a house and land. Let us take the proposition that a house will cost £5,000. Technically this would mean that if a mortgage could be secured under the provisions of this Bill an amount of up to £4,750 would be insured. It is true that the war service home loan borrower borrows his initial money on more favourable terms, but he can borrow only £3,500. What the amendment suggests is that to the extent of the difference between the £3,500 and the £4,750, the latter being 95 per cent, of the capital value, the legislation should allow what technically might be a second mortgage but which, in the case of someone not an ex-serviceman would be really a first mortgage. The risk surely is less in the case of the war service home loan borrower, because the instalments on the residue are lower as the rate of interest is less. This is an anomaly which has been created simply by the passage of the Act.

I can appreciate the difficulty of the Minister to some extent. Perhaps this ought to be better encompassed by amendments to the provisions of the war service homes legislation. Perhaps we should either increase the £3,500 maximum loan - and surely there is a case for that in 1965 - or we should make some provision whereby the additional amount of £1,250 would be provided at equivalent to first mortgage and not second mortgage terms. That seems to us to be the answer, and even if at this stage we get some assurance from the Minister that he recognises that this anomaly has been created we can perhaps accept his view that there is some difficulty in intruding into this legislation some refinements about war service loans. Surely the Minister and the honorable member for Henty can see the difficulty.

I may agree about not encouraging people to borrow more than they can afford to repay, but let us take the example I cited of an ex-serviceman and a person not an ex-serviceman both looking at a new house and land costing £5,000. Under the provisions of this legislation, provided approval is given, the non ex-serviceman could arrange a loan of up to £4.750 on first mortgage terms but the ex-serviceman could receive only £3,500 from the War Service Homes Division, which is his maximum entitlement. And the Minister is reluctant to allow him to take a second mortgage of £1,250, which would bring him to exactly the same loan ceiling on the same house as applies to the non ex-serviceman. Our view is that technically the second mortgage that the ex-serviceman has to take is due to the limitation of the loan provisions under the war service homes legislation. Nevertheless, the security for what technically becomes a second mortgage is just as good as that which the Housing Loans Insurance Corporation apparently will accept in respect of a first mortgage in the case of a non-serviceman. Surely that is an anomaly - one created by the passage of this legislation for which the Minister claims so many virtues. We point to this anomaly and say that it may be overcome in the way we have suggested. The Government should bend a little and say that this second mortgage is not really a second mortgage but a mortgage made necessary by the limitations of the war service homes legislation. If the Minister feels that he is imparting something dangerous into the delicate embryo stages of the Corporation, that is all right, but let him confer with the Minister in charge of the War Service Homes Division and see whether together they cannot introduce an amendment of the kind sought by the Returned Servicemen’s League. Irrespective of whether the amendment is made to this legislation or to the war service homes legislation, at leas’ the anomaly created by the passage of this legislation, adverse to ex-servicemen, should be corrected. That is what we think our amendment would accomplish. If the Minister has a better proposition, let him tell us, but all he is doing at the moment is refusing to accept our amendment and not offering any remedy for the situation.

Mr Fox:

– I would like to correct a statement that I made in my speech a few minutes ago. My attention was drawn to this matter by one of my colleagues. It is a wonder that honorable members opposite did not take me up on it. I said that exservicemen would have to pay a high rate of interest on a second mortgage for only 18 months. I was confusing second mortgages with the time given to repay temporary finance at higher rates of interest, after which period the loan was guaranteed by the Government. Obviously, the period for the second mortgage would cover the period for which the loan was arranged in the first place.

Mr BOWEN:
Parramatta

.- May I make two points? First, before this amendment could be accepted I suggest that two matters of drafting would require further consideration. The amendment does not cover the situation where a mortgage requires registration under the Torrens system in force in any State, whereas the definition, as it stands, draws this distinction. Then, the reference to “ an authority of the Commonwealth or of a State “ is, I suggest, ambiguous to a lawyer. That phrase refers in the alternative either to a State instrumentality, which is virtually the Crown, or to a body such as a corporation, like the Commonwealth Bank, established by the Commonwealth: - it does not generally refer to both. It would require definition.

Secondly, and coming to the principle of the amendment, may I suggest that the man who has a war service loan or the man who has a housing commission loan has a loan of government money at a very low rate of interest. This Bill is directed to a different field. It is directed towards the attraction of private capital. In order to attract private capital, a rate of interest higher than is charged for war service loans or housing commission loans will have to bc paid, even on a first mortgage. It is true that the Bill visualises that you can refinance where you have a first mortgage loan and a second mortgage loan. However, that would be attractive only where the private rate of interest that it is possible to obtain on a government guaranteed loan was better than the combined rate of the first and second mortgages. This would not ordinarily be the case with a borrower who had a substantial amount from (he War Service Homes Division or from a housing commission at a very low rate. If this amendment were accepted it would represent an attempt to marry these two somewhat different fields of lending - the field where government money is being used at a very low rate of interest and the field where you are trying to attract private capital at a relatively higher rate. I suggest that this raises problems which really are not to be solved by an amendment to this Bill. They are problems that would be better solved by looking at the maximum limits applicable to war service loans and housing commission loans. This is where the difficulty is created, and not by this legislation, which is directed to a different subject matter.

Mr BARNARD:
Bass

.- It seems a complete fallacy and a completely wrong argument to introduce at this stage of the debate the fact that the interest rate for war service homes is only 3i per cent. May I point out for the benefit of the honorable member for Parramatta (Mr. Bowen) that the interest rate on war service homes has remained at 31 per cent, ever since the legislation was introduced into this Parliament and it is a great pity that other interest rates have not remained at that level. But all this has nothing to do with the amendment. The honorable member for Melbourne Ports (Mr. Crean) has pointed out most effectively that there is a very grave anomaly affecting ex-servicemen in this country. The honorable member has presented an argument that the Minister for Housing (Mr. Bury) cannot answer.

I had great difficulty in following the argument presented by the honorable member for Henty (Mr. Fox). He rambled all round the subject and gave a number of reasons why ex-servicemen should not receive the concession that the Opposition seeks to grant by its amendment. The honorable member said that ex-servicemen already received a loan at an interest rate of 33 per cent, and that the maximum advance available to them is £3,500. The honorable member completely ignores the fact that any other citizen will be able, once this legislation becomes law, to secure a loan of up to £4,750, as the honorable member for Melbourne Ports has pointed out, using the reckoning of the Minister himself. That loan will be guaranteed by the Commonwealth. An ex-serviceman who applies for a loan at the same time will receive a maximum advance of £3,500. So if the exserviceman and the ordinary citizen apply for loans at the same time, one will receive a maximum of £3,500 and the other will receive as much as £4,750. The latter loan will be at a rate of interest which the Minister hopes will be reasonable. The Minister does not suggest what the rate should be but the whole purpose of this exercise has been to show that this legislation may in the future reduce interest rates. But, as the Opposition has pointed out, the interest rate applicable to war service loans has always been 3t per cent. The exserviceman who is able to obtain a loan of no more than £3,500 is forced to obtain a second mortgage loan, but at what rate of interest? The citizen who obtains a loan through the Housing Loans Insurance Corporation is protected by the Commonwealth so far as his interest rate is concerned but the ex-serviceman who is forced to obtain second mortgage finance because the War Service Homes Division always lends its money under the security of a first mortgage has to pay exorbitant rates of interest. The honorable member for Henty must be aware that ex-servicemen are obtaining finance on second mortgage at exorbitant rates of interest because this Government has applied a waiting period for loans for war service homes. He referred to the waiting period of 18 months. I do not think there is any need for me or for any other member of the Opposition to labour this point any further. It has been dealt with most effectively by the honorable members for Melbourne Ports, Hughes (Mr. L. R. Johnson) and Wide Bay (Mr. Hansen). They have shown that there is a serious anomaly in this legislation and that it affects a not insignificant section of the community. The Returned Servicemen’s League requested that, when this legislation was brought down, consideration be given to bringing exservicemen within its provisions. The Minister has missed this point and I believe that even at this late stage he ought to be able to accept this amendment. If he does not want to accept it in this form, he should at least have a look at it and see how the anomaly can be removed from the legislation. I appeal to the Minister even at this late stage to give further consideration to the Opposition’s amendment.

Mr L R JOHNSON:
Hughes

.- I do not want to delay the House for very long, but I believe it is well worth persisting with this matter since some 600,000 exservicemen are eligible for loans through the War Service Homes Division and they may be put at a disadvantage if this matter is treated light heartedly. As has been said, this amendment embodies the official view of the Returned Servicemen’s League. I do not blame my colleagues for hoping that they will be given some satisfaction. The honorable member for Parramatta (Mr. Bowen) has purely an academic interest in this matter. He does not want to see a marriage between the two measures, the War Service Homes Act on the one hand and this Bill on the other. We do not care whether they are married or whether they have a de facto relationship, so long as the ex-servicemen get a fair go. As the situation is at present, there is no indication that they will get a fair go.

I would be quite happy, and I am sure the honorable member for Bass (Mr. Barnard) would be quite happy, to go easy on this matter if we could have at this moment a firm assurance from the Minister that he will at the first opportunity have a look at the War Service Homes Act and see whether it would be possible to make a loan of more than £3,500 available to exservicemen. Let us look at the position of the average ex-serviceman in Canberra who seeks and obtains a loan under the War Service Homes Act. We know that the average value of a war service home in Canberra is £7,388. This means that an ex-serviceman is forced by the present provisions to take a second mortgage of £3,888. Therefore, any advantage that the exserviceman of Canberra may receive in obtaining a loan at 3J per cent., is obviously offset by the fact that they must obtain a second mortgage at a high rate of interest.

The official figures show the interest rates charged on the temporary loans that applicants for war service homes loans must obtain. Of these applicants, 11 per cent, had to pay interest of between 8 and 9 per cent, and 7 per cent, had to pay between 9 and 10 per cent.

Mr Reynolds:

– That is a flat rate.

Mr L R JOHNSON:

– Yes. We can imagine what kind of repayment is involved in such a loan. The clear fact of the matter is that the Minister has gone off half cocked on this issue. This emerges from his second reading speech. For example, he said -

It is not proposed that the Corporation be permitted to insure housing loans made by the Commonwealth or a State, or by an authority of the Commonwealth or a State, other than a bank. It is the usual practice of Governments themselves to carry their own risks of loss.

This is obviously the thought that motivated him when he excluded applicants for war service homes loans from the provisions of this Bill. He obviously had in mind that Governments themselves carry their own risks of loss. Of course, that is true, insofar as it relates to the first mortgage or, in the case of ex-servicemen, the loan of £3,500.

Sitting suspended from 6 to 8 p.m.

Mr L R JOHNSON:

– I think that before the suspension of the sitting most members of the Committee were impressed by the fact that the Minister for Housing (Mr. Bury) had at least conceded that this matter was worthy of consideration. I am talking, of course, about the endeavour of the Opposition to bring applicants for war service homes under the provisions of this Housing Loans Insurance Bill. The dilemma of the Minister, to put it in the words of the honorable member for Parramatta, is that he does not want this legislation married to the War Service Homes Act.

I make it quite plain that members of the Opposition will not persist with the matter if the Minister makes it clear that his intention is to concede the request of the 48th annual congress of the Returned Servicemen’s League, which asked the Government to extend the legal provisions so that an ex-serviceman applying for a war service homes loan would be able also to seek insurance in respect of a second mortgage. Just before the suspension I was instancing the dilemma of ex-servicemen in Canberra, where the average cost of a war service home is £7,388. If an ex-serviceman wants an average priced war service home in Canberra he has to get a second mortgage of £3,888. As this Bill stands at the moment it is not possible for faim to obtain assistance under this legislation. I pointed out, and I think it is worth pointing out again, that from the Minister’s secondreading speech it is clear that this was just an oversight. In fact, the Minister has acknowledged that. He would like to solve the problem. He, like the rest of us, is not enthusiastic about putting 600,000 exservicemen who are still eligible to receive war service homes loans at a disadvantage compared with the rest of the community. That is what we are faced with. People do not go away to fight in order to get a second class deal in legislation of this kind. Unless the Minister is prepared to correct this anomaly, that unfortunate state of affairs will prevail.

Mr Barnard:

– He is obviously unhappy about the situation.

Mr L R JOHNSON:

– He is obviously unhappy. If the Minister is prepared to say that the war service homes legislation will be amended to increase the maximum loan to an ex-serviceman from £3,500 to something more consistent with the price of a good war service home, we will not need to trouble the Commitee further.

In the second-reading speech the Minister said that it was the usual practice of governments themselves to carry their own risk on loans. It was on this premise that he excluded war service homes applicants from this measure. Unfortunately, he fails to understand the importance of the second mortgage factor. I think it is important for the Minister to think of the ex-serviceman from the standpoint of an ancillary or second loan which he may have reason to incur. In the second-reading speech the Minister did speak about this particular matter. He said -

There may be cases where a borrower defaults under an insured loan and the mortgagee wishes to exercise his rights under the mortgage . . .

Of course, we know that if that did happen in respect of a war service home the Commonwealth could not lose at all. If the borrower defaults, the security is assigned to the Corporation or the War Service Homes Division. I ask the Minister to give very serious consideration to the points that have been raised by speakers on this side of the chamber.

It is important also to point out that loans can be insured when granted to carry out additional work to an established home. I think that the Minister made a very clear enunciation on this. He indicated that it is possible to insure a loan when an applicant wants to use the proceeds for the purpose of putting in sewerage or of making other improvements. This opportunity, of course, will be denied to the war service homes applicant. The Minister said -

There are many people who wish to borrow to extend or improve their homes, but have already given a first mortgage over their properties, tn these cases, it is not proposed to rule out the insurance of a home extension or a home improvement loan secured by a second mortgage, or some other type of security over the borrower’s interest in the land, but a first mortgage, including a renegotiated first mortgage, will be preferred.

I ask the Minister whether this particular consideration is to be extended to the exserviceman who has secured a loan for a war service home. I believe that the points that have been raised need to be answered. The Government’s policy needs enunciation, since at present 600,000 people who qualify for war service homes assistance will not receive the benefits of this proposed legislation.

Sir JOHN CRAMER:
Bennelong

– I have not heard the whole of the debate, but the part that I have heard has been related to the point that war service homes loans are excluded from the provisions of this Bill. However, the amendment which I have in my hand does not mention war service homes. I presume that the argument is that war service homes are included among “other Commonwealth and State authorities”. The amendment is to the effect that the Committee should accept the principle that second mortgages should be insured. I take it that the idea is that that applies to the Commonwealth.

It was properly pointed out by the honorable member for Parramatta (Mr. Bowen), who is an authority on matters of this kind, that the War Service Homes Division is not, in fact, a Commonwealth authority in that sense. I can well understand the argument that has been put forward. From a political point of view it is very appealing, but I do not think that the Opposition has taken into consideration the wide ramifications of an amendment of this character. In the first place, to deal exclusively with war service homes, no-one appears to have mentioned, or appears to understand, that a mortgage taken up by the war service homes authority is a different kind of first mortgage from the average first mortgage taken up by other authorities. You cannot obtain a second mortgage on a war service home except with the permission of the War Service Homes Division, because certain conditions apply. You cannot register a second mortgage loan without the permission of the Division. If you do lend on an unregistered second mortgage you cannot recover your money without the permission of the Division. The Opposition’s argument might be good if the second loan were an extension of the first loan from the same authority, but that is not the case. The war service homes legislation is a repatriation measure which provides for loans which are entirely different from those raised in other forms of lending.

No one can foreclose on a war service homes mortgage unless permission to register the second mortgage has been given by the War Service Homes Division. This creates an obligation that is not present in respect of many other types of registration of mortgages. I have had some experience in these matters and I know that that is so. When permission is granted, it is given only on the basis of the ability of the borrower to meet the conditions laid down in the second mortgage. So, it is quite a different matter from that which would pertain to second mortgages in other fields of lending. The Minister is right in saying that he can think about this question as it applies to war service homes, but if the suggestion were approved, what would it in fact do? It would open up a completely new field that is not envisaged in this Bill at all. An insurance fund would be created to insure second mortgages as such from all approved lenders, because one cannot be segregated from another. If we approve of one second mortgage lender, then we must approve of the other. Therefore, even in its present form, this amendment, when applied to a State housing authority, would mean that anybody could lend money on a housing commission loan - the first mortgage - and have it guaranteed under this scheme. Who would contemplate that? It would not be possible. It would not be proper to do it in that way with State Government money. There are many other authorities where it would not be proper to do it, too, once you approve of the insurance of second mortgages of two different lenders on the same security.

Honorable members opposite can argue, if they like, to increase the amount of the total loan in the first mortgage. Of course, if the War Service Homes Division likes to increase this amount, that is all right. So can other lenders, as far as I am concerned. But once the matter is divided into two different approved lenders relying for the repayment of their money upon the same security, the whole basis of the Bill that is now before the Committee is destroyed. This Bill, as the honorable member for Parramatta (Mr. Bowen) rightly said, is setting out to encourage private money pf a kind that has never been available in recent years to come into this field of lending for housing and been insured. If the first mortgage and the second mortgage are segregated into two separate parts, the premium rate on the second mortgage will be very seriously affected. Each second mortgage will have to be considered upon its own merits. It would be very difficult in this way to lay down the premium that people would pay for the insurance cover. This raises a host of difficulties. I am quite sure that the Minister for Housing could not, on the face of it, agree to this proposal in principle at this point of time. I think it is quite proper that he should say: “ I will have a look at this matter so far as it pertains to war service homes in the long run “. That might well be, because the Minister is also the Minister in charge of the War Service Homes Division.

There is another matter. This Bill sets out certain principles. If the Minister were to accede to this amendment in the way it is proposed, the whole basis of the Bill as at present envisaged, as I see it, would be destroyed. There are lending authorities which are not hidebound, so to speak, in the amount that they are going to lend. If second mortgages are allowed in regard to war service homes, I presume that second mortgage loans will be allowed also for rural bank loans and the loans of all sorts of authorities such as housing commissions and housing trusts. This second mortgage will then be covered by insurance. It is not right that this matter should be considered at this time in my opinion. I know that it is a good political move when a bill such as this comes forward for Opposition members to say: “Why do you not apply the advantages of this Bill to the man who is eligible for a war service home? “ This may be all right but remember, as this was pointed out before, that the money loaned for war service homes comes, as a repatriation measure, at an interest rate of 3$ per cent., which is lower than any other housing loan interest rate. I am not objecting to the low rate of interest. That is quite all right and quite proper, too. But the purpose of this Bill is not to deal with a segregated section of the community particularly at this time. This Bill deals with the whole bulk of people who want to acquire a home, and be able to borrow with the minimum deposit. This Bill seeks to offer the maximum security to entice private capital from sources which do not now exist in the housing field. This is a very important feature of the Bill.

As I pointed out the other day when I spoke on the second reading stage of this Bill, this provision is of particular importance to permanent building societies which have not the same ceiling on their loans as the terminating building societies, which are controlled by State Governments, have. The permanent building societies fix their own ceiling in relation to these matters. They are organisations that can entice new money from the investing public to them. They, being approved lenders, can lend at a moderate rate of interest and give security to people who cannot possibly acquire a home in any other way. So, I suggest to the members of the Opposition that they should give another thought to this matter and realise that the acceptance of an amendment of this character at the present time would upset the whole basis of the Bill itself. I am not opposed, when I say that, to the Minister giving consideration to the particular problem that honorable members opposite have raised.

The CHAIRMAN (Mr Lucock:
LYNE, NEW SOUTH WALES

– Order! The honorable member’s time has expired.

Mr BRYANT:
Wills

.- Mr. Chairman, I feel that I must answer the honorable member for Bennelong (Sir John Cramer) in case he has misled the Minister for Housing (Mr. Bury) with what I consider are devious arguments. A house is a house for all that. The idea that the problems that face the owner of a war service home are not identical with those that face every home owner in the community is rather specious. The fact that the owner of a war service home is paying a small interest rate has nothing to do with the short fall in the borrowing capacity in relation to war service homes. The besetting sin of Australian housing lending is the fact that valuations are lower than they ought to be and also that the maximum amounts available under most borrowing schemes is lower than it ought to be. There would be very few people contemplating the building of a home who would not find themselves faced with this short fall and the other problems, worries and anxieties that flow from it. So, a very large percentage of the community have to obtain second mortgages.

What are the problems that the Minister for Housing raises in regard to this amendment? He said that it will be difficult to administer this scheme where there are two mortgages on the one home. What sort of nonsense is that? I will say this for the Commonwealth Government and its administrative authorities: They are first class in the handling of most of the administration of this nation. They have had a great deal of experience, and they have no difficulties in handling problems of this nature. So, I think that the argument that this amendment will cause confusion or create difficulties is not sound.

The important thing - and I presume that this was the reason for the introduction of the Bill - is that this legislation will assist people to obtain satisfactory loans for housing. Therefore, it is important that we extend the operation of this Bill to as many people in the community as possible. It is a fact, of course, that the War Service Homes Division is a rather meagre lender. As the honorable member for Hughes (Mr. L. R. Johnson) pointed out, in this capital city the difference between the loan for a war service home and the cost of a home is of the order of £3,000 or £4,000. So, people are driven to seek a second mortgage. The point that the honorable member for Bennelong raised - to the effect that there are special difficulties associated with second mortgages for war service homes - is no argument at all. He was in the Cabinet long enough to have these difficulties ironed out. The Minister for Housing has been here long enough to start to iron some of them out.

It is a fact that the War Service Homes Division is unduly paternalistic in its approach to the people who live in its homes. Have a look at the statistics and see how many people have to surrender war service homes. How many people do not live up to their commitments? How many people have to battle with all sorts of bureaucratic and paternalistic attitudes before they can get permission for a second mortgage? If a person living in a war service home, having considered his domestic affairs, decides that he needs to make his house larger, or, if he lives in the backward State of Victoria, has a road made, for which he gets a bill, as happened in my area, for £1,200 or £1,500, he will want to raise extra money. The War Service Homes Division, under the previous Minister in charge, would not let him have it. I do not know whether there has been a change of policy since then, but I put it to the present Minister that this is one of the things that he ought to examine. Many people living in war service homes are driven to seek some form of second mortgage assistance, but under this Bill they will be excluded. I assume that, as the honorable member for Hughes (Mr. L. R. Johnson) has said, this is an oversight, but the Government has had long enough to bring down this Bill. It is now 15 months or so since the election -when the promise concerning it was made.

I add my appeal to the others made from this side of the House. There are many problems associated with housing finance in this modern age. Some people have the privilege of raising loans from the War Service Homes Division. Looked at from the point of view of security, long terms of repayment, low deposit and low interest rates, the war service homes scheme is certainly one of the best housing schemes that we have; but the great pity is that the Government has not managed to extend the scheme to cover every citizen. I consider that the provision of housing finance is one of the fundamental social activities of a government, yet here we are placing inhibitions upon the war service homes scheme.

The question has been raised of State housing commission homes and the problems in that connection. Our information is that South Australia has adopted the practice of arranging for outside lenders. South Australia has been able to overcome some of its problems through the State savings bank, the co-operative societies and the State Housing Trust. They carry outstanding balances. It appears to me that none of these administrative difficulties ever stands up to close examination. Somebody drafted this Bill, carrying out Government policy, and it has been put before the House. Now it is regarded as holy writ. In the 10 years that I have been in this Parliament, hardly any amendments proposed by ‘the Opposition have been accepted. Obviously all the brains are not on the other side of the House. Obviously all concern for social welfare does not lie in the Ministry. It is a fact that housing finance in this country needs a proper doing over.

The honorable member for Bennelong (Sir John Cramer) has suggested that to encourage the insuring of second mortgages would increase the risks involved, but surely that is the very essence of the Bill before us. It deals with insurance. The argument that there is more risk carries no weight. I hope the Minister will turn the searchlight of his high intellect - if that is not a mixed metaphor - upon this problem and examine the difficulties confronting borrowers from the War Service Homes Division, I am one of them. Therefore I suppose I am putting in a special plea, but 1 speak from personal experience and from the experience of thousands of other people whom I know quite well. We must remove the inhibitions from the war service homes system before it can be made the full repatriation benefit system that it was supposed to be.

Mr STOKES:
Maribyrnong

.- I cannot understand the Opposition’s desire to include second mortgages in this legislation. In the second reading debate, I pointed out that in clause 4, the definitions clause, the Bill states- “ approved security “ means a first legal mortgage or a mortgage that will, upon registration under a law ot a State or Territory of the Commonwealth, constitute a first legal mortgage and, in relation to such prescribed interests and for the purposes of such classes of loans as the regulations specify in respect of a particular kind of security, includes a security of that kind.

That does not include a second mortgage. I was surprised when the Minister, in his second-reading speech, said that the Bill defines an approved security as meaning a first legal mortgage, and then went on to say -

  1. . but it will also permit an approved security to be a second mortgage or, indeed, any form of security over the borrower’s interest in the land that is declared by the regulations to be an approved security . . .

That is something I cannot understand. From my reading of the Bill, it does not cover the extension which the Minister has said may be permitted. I took exception to that at the time, and I pointed out that you could have not only a first mortgage but a second mortgage in the hands of a different party. I pointed out that under the Minister’s interpretation there could be even a third mortgage, or a lien or some other form of security well down the line of approved securities held by people ahead. Everybody who deals in real estate knows that the person who goes down the line beyond the second mortgage point has very little hope of recovering his money if anything goes wrong, even though, under normal lending methods, the first mortgagor has only lent 50 per cent, or 60 per cent, of the value. Under this Bill, we are asking the Corporation to insure loans where the margin has already been exceeded. If the margin of the first mortgage has been exceeded and you insure loans on second mortgage, you are increasing the risk greatly. If you go further down the line, as suggested by the Minister, the matter becomes farcical.

Honorable members opposite have supported their argument by reference to war service homes. I tell the honorable member for Wills (Mr. Bryant) that it is my opinion that most of the people who have had the benefit of war service homes loans have received preferential treatment from the Government with regard to housing. Nobody can gainsay that. I did myself. I think those people have had enough already so far as benefits are concerned. There is no validity in any argument which seeks to base this second mortgage proposition on the question of war service homes. Mr. Chairman, am I permitted to discuss clause 20 now?

The CHAIRMAN:

– The honorable member can discuss only clause 4, which is the only clause before the Committee.

Mr STOKES:

– Then, still dealing with clause 4, let me say that in his second reading speech the Minister amplified the terms “ alter, improve and extend,” by saying that loans made to alter, improve or extend a dwelling house would include loans for, amongst other things, the permanent provision of water supply, electricity and sewerage. I suggest that those items should be included in clause 4 so as to leave no doubt that that is the position. We are already getting mixed up with interpretations of “ approved security “. I believe that no legislation is perfect until everything intended to be covered is specifically mentioned and is not left to interpretation by the legal fraternity. I oppose the amendment. I do not believe that this Corporation should get off to a shaky start. I do not think it should be saddled at the outset with the risk of insuring second mortgages, as is proposed by the Opposition’s amendment.

Mr CREAN:
Melbourne Ports

. -I take it that when we discuss a bill in committee, we discuss how it will operate. The Opposition has drawn attention to the fact that to pass the Bill in its present form would create an anomaly as between a person who is an ex-serviceman and a person who is not an ex-serviceman. That anomaly is created by the fact that there is a limit on the amount that is available to an exserviceman under the provisions of the war service homes legislation.

Mr Stokes:

– That limit applies to everybody.

Mr CREAN:

– Just a moment. The limit does not apply to everybody. That is what we are trying to draw attention to. A borrower from the War Service Homes Division is limited to a maximum of £3,500. The virtue claimed for this Bill is that it will enable any individual - with the exception of an ex-serviceman, 1 emphasise - to borrow up to 95 per cent, of the capital value of land and house.

Mr Stokes:

– On first mortgage.

Mr CREAN:

– The honorable gentleman was not present this afternoon. If he had been, he would have heard what we had to say. 1 suggest that he is now talking more as an estate agent than as a spokesman in the interests of ex-servicemen. 1 should like what we on this side of the chamber said this afternoon to be heeded by all honorable members on the Government side, including members of the Australian Country Party who were not in the chamber this afternoon. Let us consider the respective positions of two individuals, one of whom is an ex-serviceman and one of whom is not. Suppose each decides that he wants to buy a particular property. In Canberra, Melbourne, Sydney, Adelaide, Perth or anywhere else, it is very difficult to buy for much below £5,000 the sort of house and land that the average person wants. The Minister says that the virtue of this measure is that, on a capital value of land and house totalling £5,000, up to £4,750 may be advanced on terms that will obviate the need for a second mortgage. A borrower from the War Service Homes Division, as I have said, is limited to a maximum advance of £3,500.

In support of the amendment, the Opposition claims that there is surely no greater risk with respect to the ex-serviceman than there is with respect to any other borrower. In fact, there is less risk, because ‘.he terms on which he can obtain £3,500 from the War Service Homes Division are better than terms available elsewhere. However, nobody is arguing that at this juncture. What honorable members opposite who claim to be defending the interests of ex-servicemen are doing, in effect, is to deny to the exserviceman some of the advantage of the better terms available from the Division. Nobody is arguing about whether advances are available to most other sections of the community on terms as favorable as those offered by the Division, which will advance to an ex-serviceman at 3f per cent, up to £3,500. What we on this side of the chamber are saying is that this Bill has the virtue - if it has any virtue at all - that it will enable everybody with the exception of exservicemen borrowing from the War Service

Homes Division to obtain up to £4,750 on first mortgage terms. Indeed, the maximum need not be limited to £4,750. It could he much higher, as my colleague, the honorable member for Hughes (Mr. L. R. Johnson), pointed out this afternoon. Why should an ex-serviceman have to obtain finance on second mortgage to make up the difference between 95 per cent, of the capital value of house and land and the maximum of £3,500 available from the Division?

I have heard some pretty facile defences of the Bill this afternoon and this evening, but I have not heard a genuine one. I doubt whether the merits of the measure are as great as is made out, but why deny to exservicemen the benefit of any merit there may be in the measure? I ask the Committee to consider very deliberately what I am saying. Is there any greater risk attached, to an ex-serviceman who borrows from the War Service Homes Division up to £3,500 at 31- per cent., and who wishes to obtain an additional £1,250, or even more, than attaches to any other borrower, especially if that other borrows on less favorable terms, perhaps on first- mortgage at 5 or 6 per cent., and perhaps partly on second mortgage at rates as high as 7, 8 or 9 per cent.? I ask the honorable gentlemen opposite who claim to represent the interests of ex-servicemen: Why should not the difference between the maximum war service homes loan and 95 per cent, of the value of land and house not hypothetically be treated as a first mortgage? That is the point that honorable members opposite, with all their astuteness in real estate transactions, have not seen, and that is the matter to which the amendment is directed. With a similar house and a similar ultimate risk, if you like, why should the borrower from the War Service Homes Division be denied, only because of a quibble, the benefit of the difference between the maximum loan obtainable from the Division and 95 per cent, of the value of house and land as provided for in this measure? As the honorable member- for Wills (Mr. Bryant) remarked this afternoon, surely the point at issue is only a quibble.

The Opposition is prepared to withdraw this amendment if we can obtain some assurance in the matter. I thought this afternoon, in my ignorance of the manifest variety of this Ministry, that the Minister for Housing and the Minister in charge of war service homes were two distinct persons, but I have been told this evening that the Minister for Housing, who is in charge of this Bill, is also the Minister in charge of war service homes. Why cannot he give an assurance on the question that we have raised? This afternoon, I said that an anomaly will be created by the passage of this measure. The benefits of the Bill, if it has any virtues, ought to be available to everybody in the community. But, as it is drafted, read in conjunction with the terms of the War Service Homes Act, its benefits will be partly denied to ex-servicemen, who will not be able to borrow up to 95 per cent, of the capital value of land and house. I do not think there is any gainsaying this. What has occurred is simply another illustration of what happens at times when one measure is drafted without proper consideration in conjunction with associated legislation: An anomaly or gap such as this is created.

All that we said this afternoon was that an anomaly or what may be described as a hiatus due to a technicality exists. I ask the Minister to consider honestly what we have said, to recognise that the anomaly exists and to assure the Committee that something will be done about it. If he will not do that, for heaven’s sake let us get away from the humbug that we heard this afternoon. The Opposition is prepared to withdraw the amendment, if an assurance is given, or otherwise to press it to a vote. We realise, as the learned gentleman from Parramatta (Mr. Bowen) said, that the amendment as drafted may not be technically perfect. But at least there is no doubt about the intentions behind it. All I ask the Minister to do is to admit that at present the maximum advance available from the War Service Homes Division is £3,500, that in certain circumstances, under the terms of this measure, an advance on first mortgage of as much as 95 per cent, of the capital value of land and house may be obtained, that this advance may total as much as £6,000 or £7,000, and that therefore borrowers from the Division will be at a disadvantage unless the provisions of the Bill are extended to cover what may technically be second mortgages although, in terms of security, they are just as safe as first mortgages on which advances to other borrowers are secured.

We close our case there. I should like to hear the Minister at least say that he recognises that the anomaly exists and that, as he is the Minister involved in both capacities, he is prepared to assure us that the matter will be considered now that we have directed attention to it.

Mr STOKES:
Maribyrnong

.- Mr. Chairman, the Opposition’s amendment is designed to have legal second mortgages accepted as approved security. The argument of honorable members opposite is based on a specific provision in the War Service Homes Act and takes no account of the fact that, if the amendment were agreed to, all legal second mortgages would become approved security, regardless of the terms and surrounding circumstances. I want the honorable member for Melbourne Ports (Mr. Crean) to heed what I have to say on the next point. He proposes that an ex-serviceman should be able to have the benefit of the terms of this Bill, even with respect to a loan obtained on second mortgage from a source other than the War Service Homes Division to make up the difference between the maximum advance allowed by the Division and the sum required.

Mr Crean:

– Only where the second mortgage is given to an approved lender as defined in the Bill. The Commonwealth could be an approved lender, and the honorable member knows it.

Mr STOKES:

– If, instead of the exserviceman obtaining a second mortgage and that second mortgage being insured, the War Service Homes Division is to become an approved lender under the terms of this measure, we shall cut right across the present maximum limit of £3,500 imposed on advances made by the Division. The Opposition proposes that the Division be empowered to lend more than £3,500 and up to 95 per cent, of the value of land and house, and that such loans be insurable with the proposed Housing Loans Insurance Corporation.

Mr Crean:

– If made on first mortgage terms.

Mr STOKES:

– The Government is lending money to an individual and the Governmnent does, by the Corporation, insure the War Service Homes Division against loss. I am terribly sorry, but I do not see it that way.

Mr Crean:

– I know you do not.

Mr STOKES:

– It is completely beyond my comprehension. The other point relates to second mortgages. The honorable member for Bennelong (Sir John Cramer) put his finger on the answer when he said that the type of mortgage taken by the War Service Homes Division is entirely different from the normal instrument of mortgage. As a matter of fact, in the early days of the operation of the War Service Homes Act, as men who served in the First World War know, people taking advantage of that scheme did not have the title of the property in their own name; the War Service Homes Commission, as it then was, took a transfer of the title and gave them in return a deed of equity and redemption. So once a person had a war service loan there was no possibility of his getting a second mortgage as the title was in the name of the War Service Homes Commission. This system is not followed today, but the same type of contract and obligation is included in that type of mortgage, and it is very difficult to obtain a second mortgage oh a property which already has a War Service Homes Division mortgage. I believe that honorable members opposite have tried to use the argument that the provisions relating to a second mortgage should include this specific matter. If the intention were merely to include the provision that the War Service Homes Division could be an approved lender, I could see sense in that, but I cannot see sense in the amendment that has been proposed.

Mr E JAMES HARRISON:
Blaxland

– The honorable member for Maribyrnong (Mr. Stokes) seems to have lost sight of the real issue involved in second mortgages on war service homes. Ever since ex-servicemen have encountered delays in obtaining money from the War Service Homes Division, high interest rates have been tormenting them. Whether or not a purchaser of a war service home shall have his loan guaranteed by the Housing Loans Insurance Corporation will mean the difference between whether he can obtain a loan from a banking institution or must go to a moneylender. In my view, the old policy of the War Service Homes Division of opposition to any form of second mortgage for any purpose has outlived its usefulness.

Looking at this matter from another angle, I have been concerned about returned servicemen who have been in their homes for some years but have wanted second mortgages for specific purposes. I shall give an example. The purpose in this instance was to take over a taxi business in which the ex-serviceman had been interested with another person for a number of years. It was a good business and a bank was prepared to advance him at bank interest rates the sum of £3,000 that he needed. The property on which he required the second mortgage is worth, on a current valuation, much more than the amount that he owes the Division plus the £3,000. The difference between his being able to get a second mortgage on that property and having to go elsewhere for a loan was the difference between getting money at- bank interest rates and obtaining a loan elsewhere at 15 per cent, interest. An interest rate of 15 per cent, would break him. The loan would enable him to continue his business; otherwise he would perhaps go to the wall altogether because his partner was determined to sell out because of health reasons.

When I raised this matter with the Minister for Housing (Mr. Bury), and referred specifically to second mortgages, he replied by letter on 18th February 1965. In my opinion the Minister’s present view stems from this very matter. I shall read from the Minister’s letter of that date the two paragraphs that are vital. It states -

I note that the purpose of the proposed second mortgage is to secure a bank loan which will be used by Mr. Evans to purchase a half interest in a taxi business.

I remind honorable members that the bank was ready to advance him the money at bank interest rates. But then the real problem arises because the Minister said -

The general policy is not to approve of second mortgages to secure money borrowed for business purposes. This policy has been in existence since the inception of the War Service Homes scheme.

In other words, we are still living in 1918. Surely in 1965 there should be a different approach to second mortgages on war service homes and to ex-servicemen from that of 1918, yet this reply from the Minister was dated as recently as 18 th February this year.

One of the problems that strikes me is that the Minister, the Department of Housing, the Division of War Service Homes, the Government or those responsible for making decisions in respect of war service homes are still living in a 1918 atmosphere. I ask the honorable member for Maribyrnong, who has tried to do so much for ex-servicemen, to consider what this means. A guaranteed loan for ex-servicemen will make the difference between a loan at bank interest rates and one at a flat interest rate of 15 to 17 per cent. It is that 15 to 17 per cent, which kills ex-servicemen who are trying to put their all into a home. Why should they be treated differently from someone else? Why should they be treated according to 1918 conditions? Why should they be tied down to something that might have been all right in 1918 but is not good enough in 1965? The whole feature underlying this matter is the difference between a loan at 15 to 17 per cent, interest and a loan at bank interest rates, whether the amount is required for extensions to a home or for something else for which a bank is prepared to advance the money. I remind honorable members that I am referring not merely to a lending institution but to a bank which is prepared to advance the money, as was the case in the instance to which I referred.

I was surprised when I was told by the Minister in his letter of 18th February 1965 that this was his policy because I had thought that he would bring a new breath of life to the department that he controlled. When I received his letter and saw that he was still standing by a policy that operated in 1918 I was astounded to learn that in 1965 we were treating ex-servicemen in the same way as they were treated in 1918. At that time they were not worried about the moneylenders and the types of sharks that we have today, people who are bleeding everybody who wants to buy a home but who cannot get from the bank or War Service Homes Division one loan of sufficient size. I say to the Minister and to the Government: For goodness sake, let us forget about the policies that have existed in relation to war service homes since 1918 and let us look at the ex-servicemen’s requirements in 1965.

The whole trouble underlying this problem, in ray view, is that we have not departed from the type of thinking that existed in 1918. Whether the amount required by an ex-serviceman as a second mortgage is for the purchase of a business or for extentions to his home makes no difference in the long run, especially when the loan will be backed by a bank. After all, when the man has his home he still has to live. I am pleased that this debate has given me the opportunity to bring out these matters, because if this is the type of thing underlying the Minister’s views and if in point of fact the War Service Homes Division sets ils face completely against second mortgages, then we should have a review of the provisions of the war service homes entitlements.

It is true that those who obtain a loan from the War Service Homes Division get the money under better conditions than those who borrow elsewhere, but that is why the Division was created after the first World War. The Division was established to look after those who were prepared to give their lives so that they could have a home. That was the basis of the proposal, but surely in 1965 we should not, having regard to the monetary changes that have taken place in our system, still be looking back to that time. Surely we have advanced by now.

Mr Stokes:

– But the limits have gone up.

Mr E JAMES HARRISON:

– Yes, the limits have gone up, but it is not the limit that worries the man who wants a home but the interest that he will have to pay on the money he borrows. The difference between a guarantee from the War Service Homes Division and not having a guarantee is the difference between a loan at bank interest rates and a loan at an interest rate at about 17 per cent. flat. Any honorable member who is prepared to sit quietly or plead for a retention of the conditions that existed in 1918, or who is not prepared to do everything possible to prevent a continuation of those conditions or second mortgages at 1.7 per cent., whether he is a returned serviceman or one of our present young Australians, is un-Australian in his outlook. When I received from the Minister this letter dated 18th February 1965 I thought, as I have thought as I have listened to the debate tonight: Are we still living in 1918 and, if we are, is it not time that we made a change?

Mr BURY:
Minister for Housing · Wentworth · LP

.- First of ali, I shall refer to the remarks made by the honorable member for Blaxland (Mr. E. James Harrison), although they are somewhat irrelevant to this debate. The philosophy that governed the decision to which he referred is a very sound one. It is that the War Service Homes Division has a responsibility not only to finance a man into a home but also to ensure his security of tenure when he has borrowed money. If the war service homes scheme were extended so that an exserviceman could pledge his home as security in a business venture, that would drive a coach and team of horses through the policy. The honorable member may say that the policy is out of date and that it is 1918 philosophy; but it is still my philosophy. I have looked at this matter again and I still attach great importance to ensuring that nothing shall be done to disturb the security of tenure of war service homes borrowers. That is the reason for the policy. I certainly will continue to uphold that policy, because it is very soundly based. Whether the year is 1918 or 1965, the same considerations apply. The important consideration is that everything should be done to safeguard the war service home borrower in his home.

As I said before, this Bill covers a different field from war service homes. I might mention in passing that any benefits which accrue to the community generally from this Bill will apply also to any exserviceman. Those benefits are still available to him. As a separate exercise, I have undertaken and am still undertaking a review of war service homes conditions. I say this because much has been made of the question of second mortgages and I want to put the matter in perspective: In the course of that review I have found that in the last six months of 1964, in five States, of all the war service homes loans that were approved, 12.7 per cent, required a second mortgage. We have not the figures for Western Australia. As honorable members know, we work through agents in. that State and, therefore, the figures may be a little slower in coming through; but they would reduce that percentage. So let us get what we are talking about in perspective. In the last six months of 1964, one in eight war service homes applicants required a second mortgage to finance his purchase.

Mr Barnard:

– Do you regard the one as being unimportant?

Mr BURY:

– I am not saying that the one is not important. Currently we are looking at the whole situation in order to see what interest rates are being paid. But conditions change all round all the time. Honorable members should not go away with the idea that every war service homes applicant requires a second mortgage, because that idea does not accord with the facts.

Mr Whitlam:

– Does it not mean that 1,500 ex-servicemen required a second mortgage last year?

Mr BURY:

– Whatever the figures were - I have them here - the fact is that the whole scheme is being reviewed.

It remains true that the main object of this Bill is to establish a pattern under which people will not need second mortgages for the ordinary purchase of a house. We come to the second mortgage or other security field when we insure loans for repairs, renovations and so on. In those cases some other security, such as land, might be applicable. The honorable member for Maribyrnong (Mr. Stokes) mentioned this matter. He expressed some concern lest the security that was accepted would not be satisfactory. These situations have to be considered separately. In respect of the outright purchase of a house - the main deal which will establish a man in a house - the whole aim of this Bill is to get rid of second mortgages and to establish one first mortgage loan representing a higher proportion of the value of the house than in the past.

Let us face the fact that this amendment is a neat political attempt to import something into a bill which has nothing to do with it. The amendment is designed to deal with war service homes, which is an entirely separate thing. We will review the war service homes scheme. This problem will be considered in relation to war service homes and repatriation measures. As the honorable member for Bennelong (Sir John Cramer) pointed out very aptly, it is quite unsound and does not make sense to mix up this kind of legislation, which is for the population at large, with what is fundamentally a repatriation matter. That is the reason why we cannot accept the amendment. The amendment would import the idea of second mortgages into this legislation, whereas one of the main objects of the legislation is to get rid of second mortgages in respect of the acquisition of houses. This amendment does not fit into this legislation.

The honorable member for Maribyrnong raised the question whether all the kinds of improvements and other things - including electricity, which he mentioned particularly - which should be insured should be specified. The relevant clause is drawn in general terms. The danger in doing what he suggests - that is, specifying the sorts of things which are covered - is that it implies that things outside the ones specified are not covered. I hope that the honorable member will agree that, as I said in my second reading speech that it is quite clear that these other things are covered, we should not limit the generality. We have the matter to which the amendment refers and many other matters under review. The amendment just does not fit into this Bill. I am afraid that the Government cannot accept an amendment which imports into this legislation the idea of second mortgages for initial transactions.

Question put -

That the amendment (Mr. Barnard’s) be agreed to.

The Committee divided. (The Chairman - Mr. P. E. Lucock.)

AYES: 48

NOES: 62

Majority . . . . 14

AYES

NOES

Question so resolved in the negative.

Clause agreed to.

Clauses 5 to 7 - by leave - taken together.

Mr CREAN:
Melbourne Ports

.- I ask the Minister for Housing (Mr. Bury) for illumination about clause 5 which, in sub-clause (I.), states -

The Minister may, by instrument in writing, declare a class of persons specified in the instrument to be an approved class of lenders for the purposes of this Act.

In the course of his second-reading speech the Minister indicated that he had in mind as approved lenders banks, insurance companies and building societies of one kind or another. He also implied that in some circumstances the ambit of the legislation could be extended. During the debate the Opposition suggested that whilst technically there might be some advantages in this scheme, it tended to be confined to about one-quarter of the total potential house building and house mortgaging groups in the community. I cited the experience of the United States of America, upon whose legislation this legislation is to some extent modelled, where about 70 per cent. of mortgages are still taken outside the ambit of the insurance scheme. They can be taken outside the ambit of the scheme, of course, because of the limitations which prudence suggests ought to be observed in respect of the amount advanced.

Some borrowers and lenders apparently are satisfied that in terms of existing commitments there is no point in insurance at all. After all, if a person is mortgaged to the extent of only 65 or 70 per cent, of the total value of a house and land there is still sufficient in hand in the event of a foreclosure for the lender not to be greatly disadvantaged. I should think there would still be mortgages of that type where there is not much advantage in being insured. At least, that is as I see it and that is why I doubt whether the ambit of this scheme is going to be anywhere near as great as some of its advocates claim. We have not denied that some sections of the community will be advantaged. That is why we suggested that a certain group was being pushed out by a technicality.

With clause 5 (1.) I would like to associate clause 5 (3.), which reads -

The Corporation shall cause notice of the approval, or the revocation of the approval, of a person as a lender under this section to be published in the Gazette.

So far the Minister has been pretty cagey about what the Corporation will or will not do because he takes the purist attitude that the Corporation should be free to do as it determines. But surely the Minister, who has had something to do with the bringing into being of the Corporation, has a rough idea of its objects, its powers and its limitations. Reading sub-clause (3.), some of us get the idea that here is a tap that the Minister can turn on or off to determine the total level of housing construction in the community. I would like to know if that is the purpose of the sub-clause. I would like to know the circumstances which would lead the Corporation to approve of a person as a lender or to revoke that approval. The Parliament is entitled to know the terms on which approval will be made or revocation of approval announced. The Minister has said that initially he sees the scheme as applying to what might be called the more legitimate lenders in the community, such as banks, insurance companies and building societies.

If clause 5 is read in conjunction with clause 20 we see that here the Government has an opportunity to cut down some of the rackets that exist now in the interest field. I would like the Minister to indicate in what circumstances he envisages approved classes of lenders will extend beyond banks, insurance companies and building societies. I would like him to say also whether clause 5 (3.) is designed as a kind of economic tap with which to regulate the total level of building activity in the community by approving lenders if things are bad or revoking approval if things are good in the sense of overall activity. I would appreciate answers to the matters I have raised.

Mr BURY:
Minister for Housing · Wentworth · LP

– Dealing first with clause 5 (1 .), I mentioned banks, insurance companies and building societies as the first instance of approved lenders for the practical reason that it will be some time before the Corporation can acquire staff on a large scale everywhere. In addition, we do not want to delay operation of the scheme. It is our wish to bring it into being as soon as possible. The idea is to get the scheme under way without delay, using the existing institutions that have their established patterns of valuation and so on. The Bill is designed to embrace an increasingly wide field of lenders. After the initial stages we will seek to embrace more people and more institutions as approved lenders.

It is not intended to use clause 5 (3.) for enonomic purposes as an instrument to revoke the approvals granted to individuals or concerns. It .is a kind of precautionary power. One would hope that once a lender is approved, all will go well, but one still must reserve the power to revoke approval if a lender, does not come up to expectations or if other contingencies arise. For example, there may be a change in financial outlook. As far as the general economic picture is concerned, the loans are the type which could be insured at any time. It is not intended to use clause 5 (3.) for economic purposes.

I perhaps misunderstood the honorable member for Melbourne Ports (Mr. Crean) when he said that only 25 per cent, of people would benefit from this legislation. I thought he was suggesting that 75 per cent, of home seekers would be excluded by reason of income. It is true that nowhere near all eligible borrowers will seek to borrow 80 per cent., 90 per cent, or 95 per cent, because experience has shown that many borrowers like to keep their debts low. Some like to repay earlier than they need to. So the honorable member is probably right in saying that only a small proportion of .people will use this legislation, but it will be available to all of them. Nobody will be excluded. I hope I have explained the position so far as sub-clauses (1.) and (3.) of clause 5 are concerned.

Mr WILSON:
Sturt

.- I refer the Committee to clause 5 of the Bill. First I would like to say that I think the Bill is an excellent one. It should enable a substantial number of people to obtain increased loans for housing at a rate of interest lower than that which applied prior to the bringing down of this legislation. But the big query to the Bill is: Will the Corporation be able to get the money that it requires to the many lenders who will require assistance under the guarantee provided by the legislation? Even with the Government guarantee, I cannot see that this proposal will be very attractive to banks, insurance companies or even to co-operative societies. Those organisations already have ample fields for safe investment of their funds, lending only 66 per cent, of the value of the house and land. I cannot see that they will be a very fertile source of new money for housing. I cannot see why lending authorities are limited to the classes of persons or organisations referred to by the Minister for Housing (Mr. Bury). I suggest that the most fertile ground for new money is the trustee companies. They have millions of pounds which they must hold, very often during the lifetime of a widow or until the youngest child in a family has reached 21 years of age. At present they lend on mortgage up to 50 per cent, or 60 per cent, of the value of the house or land. I believe that with the Government guarantee and some alteration to trustee legislation, which could easily be secured by the States, you would find that the trustee companies would very happily lend a substantial amount of their trust funds. In addition, there are many thousands of private trustees all over Australia with trust moneys which they must hold until the provisions of a will are complied with. Usually the money is held during the life estate of a widow or, perhaps, until a youngest child is 21 years of age. They too would be extremely happy to lend up to 80 per cent, or 90 per cent, of valuation, on the security of a first mortgage over the house and land, provided the loan were guaranteed by the Government. As trustees, they cannot take any risk so, at the moment, they can lend only up to 50 per cent, or 60 per cent, of the value of the house and land. I would have thought that the purpose of the Bill was to endeavour to secure money that is not available at present because the risk involved in lending money belonging to other people is greater than a trustee is prepared to take. I have discussed this matter with the Minister and I understand that the present restriction to a class of lender is simply a first step. I sincerely hope that very shortly after the Bill becomes law steps will be taken to widen the classification of persons to be approved to include private trustees, executor and trustee companies, because I feel sure that that will be the source from which most of the money will come if this legislation is to be a success.

Mr BURY:
Minister for Housing · Wentworth · LP

– I would like briefly to assure the honorable member for Sturt (Mr. Wilson) that it will be the aim of the Corporation to widen the field as early as practicable.

Mr WHITLAM:
Werriwa

.- I refer to clause 7, which reads in part as follows - (1.) The Corporation shall consist of five members, namely: -

  1. a Chairman;
  2. a Deputy Chairman; and
  3. three other members. (5.) One of the members shall be a person who has had experience in banking carried on by an instrumentality of the Commonwealth.

I move -

At the end of sub-clause (5.) add, “ and another shall be a person who has had experience as an architect and town planner”.

I imagine that the prescription of a person who has had experience in banking is made in order to ensure that the general policy of the Corporation is financially sound; that the houses upon which insurance policies are issued are adequate as a security. I have moved my amendment because I believe that in our housing legislation we must go beyond the stage where we are concerned purely with individual houses or even with the general financial stability of housing. We should promote the idea that houses in themselves are not enough, that houses are only adequate insofar as they are situated in a proper housing environment, that they are habitable houses and that they are suitably located.

I appreciate that the Commonwealth’s powers in the housing field are limited and that, insofar as the Commonwealth wishes to lay down standards for housing, it can do so only by a financial inducement to the States, which can make such laws. But the amendment I move is quite within the Commonwealth’s powers. The Commonwealth can lay down such conditions as it wishes for its own financial appropriations or guarantees. In this Bill, the Corporation very properly is being given the power in clause 23 to require standards of construction. I should imagine that equally the Corporation could be empowered to take into account standards of location.

Mr Stokes:

– Why do you not include a valuer?

Mr WHITLAM:

– I would not object to that, but it is possible that the member with experience in banking would be thought to have experience in valuation for banking purposes.

Mr Stokes:

– I think valuers would disagree with that contention.

Mr WHITLAM:

– At all events, I do not disagree with the suggestion made by the honorable member, but I think that a very necessary additional point is covered by including a person who has had experience as an architect and town planner. The sort of house we build would be the province of the architect. The place where we build the house would be the province of the town planner. It would be completely within its power for the Commonwealth to lay down standards as to location and style as well as standards of construction and standards of value.

Mr Stokes:

– The Corporation will not lend money.

Mr WHITLAM:

– No, but in this Bill the Parliament is laying down the standards that the Corporation should follow in issuing insurance policies. The objective of the legislation is not so much compulsion as encouragement. The legislation is designed to encourage people to lend money for housing knowing that the housing loans they make will be as safe as Government bonds. The whole intention is that more and more individuals and more and more institutions will be encouraged to lend for housing. The institutions are not only the existing types of institutions but are, very significantly, new types of institutions to this country, and are in particular the permanent building societies. I hope the Minister will accept the proposition that the Corporation should encourage high standards of style and location of houses. Most of the urban social problems that we now have stem from the fact that we have not dealt with housing environments. Vandalism and delinquency, the difficulties of travel to work and the difficulties of keeping a family together stem very largely from the fact that houses are being built and no community centres, communications or recreational facilities are being provided in the new housing areas. The areas consist of houses alone.

Many honorable members have drawn a comparison with the Canadian and the United States legislation. It has been properly pointed out that the powers of the Canadian Parliament and ,bf the United States Congress are wider than ours when it comes to direct housing legislation. Nevertheless I propose to quote from the precedent of the United States Federal Housing Administration in matters where the Australian Parliament has just the same powers. The properties for which insurance policies are granted by the Federal Housing Administration must at least meet the Administration’s minimum standards of liability, sound construction and suitable location. The sound construction will bc dealt with by clause 23 of this Bill. It will be dealt with, among others, by the banking member of the Corporation. The standards of livability and of suitable location can be dealt with adequately only by persons who have skills in architecture and in town planning.

I give further details from the American legislation. Under section 213 of the National Housing Act, loans can be made on co-operative housing projects of five or more units and supplementary loans for improvements, repairs or the provision of community facilities to serve the projects. Under this section, the Administration can furnish technical advice and assistance in the organisation of the co-operatives and in the planning, development, construction and operation of their housing projects. Under section 220, loans can be made for the construction and rehabilitation of homes and multifamily housing located in urban renewal areas. The Administration can make loans, and can issue insurance policies therefor, on projects and on housing areas. Community facilities, as well as the houses themselves, are taken into account. I know that grants of money are not being made under this legislation. They would be made, I hope, under the housing agreement with the States which will be made during the next financial year. We can in this legislation give encouragement in respect of the livability and the location of suitable houses. I hope that the Minister will promote this objective by seeing that another of the five persons to comprise the Corporation has the professional skills ordained by the measure, and I suggest that they should be those of an architect and town planner.

Mr BURY:
Minister for Housing · Wentworth · LP

– It will be clear from my remarks this afternoon that I have great sympathy with the general corpus of the ideas which have been put forward by the Deputy Leader of the Opposition (Mr. Whitlam). The fact is that in developing our housing in future we need to bring architects and town planners in to probably a much greater extent than in the past. Particularly should we use those who combine the talents of both. However, I do not consider that that applies in the case of this Corporation. If the Corporation were a large lending body which had to decide a lending policy over a large area of activity the amendment would be perfectly appropriate. But this will have to be a working board. It is intended to bring in only those who will have something very solid to contribute to its operation.

One has to consider what those operations will be. The Corporation is to insure loans that have already been made. It is true that in clause 23 there is a very strong germ of power, I hope, to import standards into its considerations,, but I would not think that at this stage we should have, as one of five members, an expert in this particular field. The matter of standards is something rather for the other bodies concerned, even my Department, or for others who would be dealing with the broader issues into which this Corporation has to fit.

In short, although I sympathise with the idea behind the amendment moved by the Deputy Leader of the Opposition, I do not consider that it would be appropriate to specify that a person with these qualifications should be one of the five members of the Corporation.

Question put -

That the amendment (Mr. Whitlands) be agreed to.

The Committee divided. (The Temporary Chairman - Mr. W. J. Brimblecombe.)

AYES: 46

NOES: 62

Majority 16

AYES

NOES

Question so resolved in the negative.

Clauses agreed to.

Clause 8. (1.) A person is not capable of becoming a member while he is an employee of a person who, or a director, officer or employee of a company or other corporation which, carries on the business of lending money for the purpose of financing the erection, purchase or improvement of homes or the discharge of mortgages on homes. (2.) A person is not capable of becoming a part-time member while he is an officer of the Public Service of the Commonwealth.

Mr BURY:
Minister for Housing · Wentworth · LP

– I move -

Omit sub-clause (1.), insert the following subclauses: - “ (1.) Subject to the next succeeding sub-section, a person is not capable of becoming a member while he -

  1. carries on;
  2. is an employee of a person who carries on; or
  3. is a director, officer or employee of a company or other corporation that carries on, the business of lending money for the purpose of financing the erection, purchase or improvement of homes or the discharge of mortgages on homes. “ (1a.) A person is not incapable of becoming a member by reason only of his being an officer of the Reserve Bank Service, being the Service constituted under Part VII of the Reserve Bank Act 1959.”.

The proposed amendment will give full effect to the Government’s intention that any person who lends for housing purposes or is associated with the business of lending for housing should not be appointed to the Corporation. However, I think it would be wrong to debar an officer of the Reserve Bank of Australia from serving for a period as a member of the Corporation unless he was to resign from the service of the Reserve Bank. The proposed clause (1a.) as circulated will permit such an officer to be appointed to the Corporation on secondment from the Reserve Bank.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 9 to 16 - by leave - taken together, and agreed to.

Clauses 17 and 18 - by leave - taken together, and agreed to.

Clause 19.

(1.)……

(5.) Where in pursuance of sub-section (1.) or (2.) of this section, the Corporation disposes of its rights under a security to a person, the Corporation is empowered - (a)……

  1. if that person is not an approved lender but has entered into an approved agency contract of the kind referred to in paragraph (a) of sub-section (2.) of section forty-two of this Act in relation to the loan - to enter into a contract of insurance under section seventeen of this Act with that person in respect of so much of the loan secured by the security as is then outstanding as if that amount were the amount of an insurable loan made, or proposed to be made, by that person and that person were an approved ender, provided that the contract of insurance contains a provision empowering the Corporation to cancel the contract if, at any time when the rights under the contract are vested in a person who is not an approved lender, there is not in force such an approved agency contract.
Mr BURY:
Minister for Housing · Wentworth · LP

– I move -

Omit “ a person who is not an approved lender “, insert “ that person “.

Paragraph (b) of sub-clause (5.) of clause 19 is intended to relate only to a particular person with whom the Corporation may enter into a contract of insurance in certain circumstances. The words to be omitted imply that the paragraph may also relate to a person other than that particular person and are therefore out of context. The proposed amendment will remedy this state of affairs.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 20.

(1.)……

(5.) The Corporation shall not enter into a contract of insurance in respect of an insurable loan the amount of which exceeds Two thousand pounds unless the Corporation is satisfied that the terms and conditions upon which theloan is made make provision for the repayment of the amount of the loan, or the repayment of the amount of the loan and payment of interest in respect of the loan, by equal instalments, or by instalments that, except for minor adjustments, are equal, payable at regular intervals not exceeding twelve months.

Mr. BURY (Wentworth - Minister for

Omit sub-clause (5.).

This sub-clause would have prevented the Corporation insuring a loan exceeding £2,000 if it were not satisfied that the loan would be repaid in approximately equal instalments of principal or principal and interest, at regular intervals not exceeding 12 months. However, some doubt has arisen as to whether the sub-clause as worded, or any simple amendment of it, would permit the Corporation to insure certain housing loans made on reasonable terms and conditions by some institutions. The Corporation will not, of course, be prevented from applying the broad provision in deciding whether or not to insure loans. Provision for the progressive reduction of the amount of the principal outstanding is sound commercial practice in making housing loans.

Mr CREAN:
Melbourne Ports

.- The Opposition has no objection to the amendment. 1 have noted a very large question mark beside this sub-clause in my copy of the Bill. 1 intended to ask the Minister to explain what the sub-clause meant, but since he is deleting it, I suppose that does not matter.

There are one or two other aspects of clause 20 on which I would like elucidation because I think it will be agreed that the provision is one of the fundamental clauses of the operation of the Corporation. I can understand, as I said earlier, the reticence of the Minister as far as prescribing the circumstances in which the Corporation will work although I think he, too, will agree that it can only be flexible. I think some overall limits have to be laid down. Surely, when we set up a Corporation we have in mind certain things that we hope it will achieve.

Sub-clause (4.) of clause 20 states that in some circumstances 95 per cent, of the capital value of land and house may be accepted as an insurable loan. The earlier parts of the clause take away some of that advantage. I do not think that is unwise, either, because I agree that it is a fallacy to encourage people to obtain loans that are beyond their capacity to repay.

The Corporation does not cover two problems. Surely, at this stage, we are arguing about what the Bill does rather than what the Bill does not do. Nevertheless, there are some practical limitations on which

I would like at least some guidance from the Minister and an explanation of how he thinks these provisions are likely to be interpreted.

Paragraph (b) of sub-clause (3.) reads -

The rate of interest payable in respect of which exceeds the rate of interest determined by the Corporation, with the concurrence of the Minister, as the maximum permissible rate of interest in respect of loans of the class in which the loan is included;

We have suggested all through this debate that the Minister ought to give some indication, within reasonable limits, of what he thinks the maximum permissible rate of interest is. This clause, if it were used properly, could be a very useful device for cutting down some of the interest rackets that undoubtedly exist. If this Corporation does its work in the way in which the Minister hopes it will, it will cut out second mortgage racketeering to some extent by bringing the whole loan within the province of a first mortgage at a reasonable rate of interest. We can all agree or disagree on what are reasonable and unreasonable rates of interest, but surely the Minister has some idea of what he would regard as the maximum permissible rate of interest. It rests with him to tell the Corporation what he thinks that rate is. All I ask is that he give us some idea of what he would think the maximum permissible rate of interest ought to be in, say, March and April of 1965, when the Corporation begins its work.

I should like to know, too, what he considers is a reasonable period for repayment. In his second reading speech, he did say that, as a matter of prudence, it would be unwise for individuals to have to pay more than one-quarter of their total annual incomes in interest and principal payments. I suppose that is reasonable, but I suggest that he must concede that this limit would remove many people from eligibility for an advance of 95 per cent, of the appraised value of a property. If an income test is to be applied in deciding whether an advance of 95 per cent, of the appraised value is to be made, it will be a definite limiting factor. If it is proposed to advance only from 70 to 75 per cent, of the appraised value of the land and house, I cannot see that it matters a great deal whether the Corporation is established or not.

I am not denying that in some circumstances advantage will flow from the existence of the Corporation, but that advantage will be restricted to a comparatively small section of the community. If, however, the Corporation could be used in some way to regulate the maximum rate of interest for those who will be advantaged by this legislation, I could concede that the advantage of that regulation of interest might flow over to people outside the ambit of this scheme, lt is nice to know that the Minister thinks that in some circumstances an interest rate can be too high, because he talks about a maximum rate. Taking into consideration the sort of security that he thinks this Corporation will afford to both lenders and borrowers, what does he consider the maximum rate should be in present circumstances?

After all, amortisation and other payments are governed by the rate of interest That is why I would have liked the Minister to incorporate in “ Hansard “ this evening the table that he had showing just what difference it makes to a borrower if the rate at which he borrows money is 6 per cent, instead of 5 per cent. A difference of 1 per cent, may seem small, but when you consider amortisation and interest payments over a period of 15, 25 or even 40 years, a variation of 1 per cent, in the interest rate can make a difference of something like 15 per cent, or 20 per cent, in the total amount repaid. Therefore, the question of a reasonable rate of interest is one of great significance. As I see the position, it is a matter of signal significance to the operations of this Corporation.

Paragraph (b) of sub-clause (3.) of clause 20 does give the Minister some discretion. Indeed, I should think that he would have a final say as to the rate of interest to be charged because his concurrence has to be obtained on the question of the maximum permissible rate of interest. I shall be interested to hear what he has to say about this point.

I should be pleased also if he would amplify, clarify or even make static his statement in his second reading speech that in his view 25 per cent, of income was a reasonable proportion for borrowers in some income ranges to have to pay by way of principal and interest payments.

Mr BURY:
Minister for Housing · Wentworth · LP

– During the course of the second reading debate, the Deputy Leader of the Opposition (Mr. Whitlam) asked for particulars relating to the maximum rates of interest, and I replied to him this afternoon. Perhaps the honorable member for Melbourne Ports (Mr. Crean) was out of the chamber at the time. I went into the matter fairly fully then and I do not wish to detain the House by dealing with it any further now. I really have nothing to add to what I said this afternoon. Naturally, of course, the lower the rate of interest and the longer the period of repayment, the greater is the opportunity for borrowing on a limited income.

As to the 25 per cent, of income, I hope I emphasised this afternoon that this must be considered in relation to the particular circumstances of each case. For instance, regard must be had to whether the property involved is a new house or an old house and whether the borrower is a young man or an old man. If the borrower is a young person he can well undertake a loan spread over a long period, and his capacity to repay would be vastly different from that of an older person. Again, although it seems to be sound practice to look mainly to the main income earner of a family, circumstances differ with individual families. For instance, the amount that a person may be able to repay early in his married life may vary considerably from what he can repay later on. The fact is that circumstances do vary considerably.

I did not table the paper I had this afternoon because it contained all kinds of miscellaneous information and it would have been unintelligible by itself, but I am quite prepared to help the honorable member for Melbourne Ports to see how these variations do work out.

Amendment agreed to.

Clause, as amended, agreed to.

Remainder of Bill - toy leave - taken as a whole.

Mr CREAN:
Melbourne Ports

.- I wish to refer to clause 26 which reads in part - (1.) The Corporation shall charge a premium in respect of each contract of insurance entered into by die Corporation and may make charges for other matters in connection with its business.

This is another fundamental ‘ part of the legislation. Whether the insurance device is of advantage or whether it is of disadvantage is governed to a great extent by the amount of the charge made. I can understand the Minister’s reticence and his reluctance specifically to prescribe charges. This afternoon, in what was, in my view, a rather vague reference to rates of premium, he did say that they could vary according to the type of property and the term of the transaction involved. I accept that as reasonable enough up to a point. Nevertheless, I suggest that he ought to have given some indication of the likely premium for the more usual or more typical mortgage that will be insured by the proposed Housing Loans Insurance Corporation. Surely that would be a mortgage on an average home valued at, say, £4,000 to £5:000, though, these days, possibly nearer to £5,000, in a residential area in one of the capital cities. Let us suppose that the borrower obtains from the lender a loan of £5,000, and that the Corporation approves this loan for insurance in terms of the standards that are envisaged. Let us assume, also, that the rate of interest is 6 per cent., if that is fundamental at this juncture, and that the loan is for a term of 25 years. Surely, in respect of a transaction such as that, the Minister could give a reasonable estimate of what the insurance premium ought to be. As I see it, unless we have some approximate idea of what the premium will be, all we can say at this stage is that it will be an additional charge imposed on a person trying to buy or build a home.

I know it has been stated in literature describing the Government’s proposals that, in countries like Canada and the United States of America, the average premium is between 1 per cent, and 2 per cent, of the amount of the loan. There is a significant enough difference even between 1 per cent and 2 per cent., but is it 1 per cent, of 2 per cent, flat, or, if one borrows £5,000 and the premium is, say H per cent.- a point halfway between 1 per cent, and. 2 per cent. - making a premium of £75 will the borrower receive only £4,925 instead of £5,000 and have to repay £5,000 plus interest over the period of the loan? if the latter were the case, the average premium would be at least double the original 1 per cent., when reckoned in terms of the total payment made.

I am not asking the Minister to lay down a precise schedule, but I would have thought that, in fairness to the Committee, he could have given some examples of premiums that would be charged. Indeed, I understood that he intended to supply us with some examples of sliding schedules that he thought might show typical premiums. However, I have not seen them. I do not know whether they have been supplied and I have missed them. I would certainly appreciate it if the Minister could indicate what the premium would be in a transaction of the kind that I have described. I can readily understand that, in respect of a block of home units to be sold to the individual occupiers, there would be complications that might cause the premiums to be varied. Surely the Minister is appealing to individual potential borrowers and lenders, and surely we can take as a typical subject for a transaction the sort of home that, when it suits us to do so, we say the average Australian is entitled to. What will be the average premium for a normal transaction of that kind? Wa have no information on this point yet, and it seems to me that we are being sold a pig in a poke unless we have that kind of information.

Mr BURY:
Minister for Housing · Wentworth · LP

– Mr. Chairman, the honorable member for Melbourne Ports (Mr. Crean) has raised a matter that was put to me earlier by the Deputy Leader of the Opposition (Mr. Whitlam). I looked into it this afternoon. I have intimated that we have in mind a scheme similar to the Canadian one, under which the charge is 2 per cent. I do not think that, in a normal transaction entered into by an average couple purchasing a new house over a long term, that would be exceeded.

Mr Crean:

– This afternoon, the Minister gave examples of specific interest rates and specific lengths of term. Surely he could supply information to show how much difference in the weekly payment any variation would make.

Mr BURY:

– That would depend on the premium. The general scheme is based on a once and for all premium. This would not be reckoned as part of the sum represented by the maximum loan limit of 95 per cent. of the valuation of house and land, but would be added to whatever amount was approved for lending and would be amortised over the term of the loan.

Mr Crean:

– That would increase the weekly payment.

Mr BURY:

– Yes. We can assume that the proposed Housing Loans Insurance Corporation will be a non-profit organisation, though it will be expected to cover expenses. Over a period, it will be expected to cover its expenses and to build up some reserve to cover losses. In the final analysis, it will make neither a profit nor a loss over a period. The Corporation will be given the right to determine the charges to be made for its services. The honorable member for Melbourne Ports will appreciate that, this being a corporation, I do not wish at this stage to commit it to any particular rates of premium.

Mr L R JOHNSON:
Hughes

.- Mr. Chairman, I am concerned about clause 38 (3.), which relates to the payment of rates and taxes. This provision reads -

Nothing in this section prevents the payment by the Corporation of so much of any rates or taxes inrespect of any land as, in the opinion of the Corporation, may fairly be regarded as being in respect of services or facilities provided in relation to that land or for the benefit of land including that land.

It sems to me that this sub-clause indicates the kind of responsibility that the proposed Housing Loans Insurance Corporation is to accept for, among other things, the levying of rates. I was interested to read, in a report by the Federal Housing Administration in the United States of America on its experience with mortgage foreclosures and property acquisitions, that as a result of defaults foreclosures had reached considerable proportions in a number of years that were reviewed. The point I am making is that defaults and foreclosures are likely, and the proposed Corporation may subsequently come to own a considerable amount of property. I shall give the Committee an indication of the experience of the United States instrumentality, as outlined in the report that I have mentioned. It states -

By the first half of 1962, foreclosures had amounted to 16,700, or a little more than . 5 per cent. of insurance in force at the time. During the same period, property acquisitions rose from 16 in 1948 to 16,294 in the first half of 1962.

I hope that foreclosures of those proportions will not take place here. Nevertheless, it is conceivable that the Corporation may come to own, for short or long periods, a considerable number of properties. In many parts of Australia, the experience of local government authorities has been that the Commonwealth has had a tendency to welsh on its rate paying obligations. We have often heard of complaints at local government conferences that the Commonwealth fails to pay rates levied by local authorities. This applies even to Post Office properties, and ex gratia payments have become the order of the day. In contrast, if a local council wants a piece of Commonwealth property occasionally, as has been the case in my own electorate where the local council decided to straighten out the road leading to the atomic reactor at Lucas Heights, the Commonwealth charges market value for the land that the council needs so that the Commonwealth’s property can be serviced by decent roads. We would like to see a two way traffic and fair play on both sides. I am pleased to make this point on behalf of local governments, and had I noted this provision before I would have been inclined to prepare an amendment to ensure that the Commonwealth pays the rate levied rather than make an ex gratia payment in respect of properties that it may acquire as a result of defaults.

The only other matter that I wish to raise relates to clause 22. This clause probably has far more technical implications than I am able to observe, but it seems to me that this provision, which states that the Corporation is not to insure a loan for acquiring land and constructing a dwelling house unless the construction has commenced, is a matter of putting the cart before the horse. I know what the clause is intended to mean because the Minister said in his second reading speech -

Clause 4 defines insurable loans to include -

loans made for the purpose of acquiring land and constructing, or completing the construction of, a dwelling on theland. However, clause 22 makes it quiteclear that the Corporation may not ensure a loan made solely for theacquisition of land - we do not wish to encourage the land speculator.

That is fair enough, and I do not think any honorable member on this side of the chamber wants to encourage the land speculator. As the honorable member for Yarra (Dr. J. F. Cairns) just said, there has been every indication up to date that the land speculator does not need encouragement because he is already pretty largely out of hand.

I ask the Minister what would happen if the home seeker could raise an amount of money, not only to buy the land but also to build a particular type of house - a kind of package deal - and he had some collateral. As I read this provision, unless the house is under construction the Corporation will not insure the loan, yet the likelihood is that unless the Corporation is prepared to insure the loan before the construction commences the applicant may not succeed in getting a loan. I do not know whether that makes sense to the Minister, but it intrigues me and I would appreciate some clarification.

Mr BURY:
Minister for Housing · Wentworth · LP

– The honorable member for Hughes has raised two points. I refer first to rates. The general intention is that this body will behave as any other commercial body and will pay rates locally - not only on properties that it acquires in the unhappy event of a foreclosure, but also on its own property. In other words, it should meet its ordinary liabilities to the local authorities, whoever they may be. This provision is included as a permissive power, but the intention is as I have stated.

Mr L R Johnson:

– Why does the Minister qualify it in this way?

Mr BURY:

– I think the honorable member will find that no government in the world will compel itself to do all these kinds of things which it is not constitutionally compelled to do, but I assure the honorable member that that is the general intention.

I appreciate the other point raised by him, but I suggest that the way it will work out is this: Suppose someone has some land and wants to build on it. It is true that the contract of insurance cannot become effective until the construction has commenced, but we have considered this matter fully. The usual way is to make arrange ments with the insurer. The lender makes arrangements with the insurer and is given a general undertaking that the building will be insured. As the honorable member has rightly said, this provision is put in the Bill as a safeguard to make sure that we are not insuring the purchase of land only. In other words, we want to be sure that construction will take place. From a practical operative point of view, we do not consider that this provision will raise any difficulty. If difficulties do arise the measure can be amended, but it is not expected that it will lead to difficulties.

Mr BRYANT:
Wills

.- I should like the Minister to revert more fully to the question raised by the honorable member for Hughes on the question of rates. The Minister has said that the Corporation is to operate as any other commercial undertaking and will accept some of the responsibilities as such, but there will be an infliction upon the 900 or so municipalities throughout Australia by all Commonwealth instrumentalities. While I am all for Commonwealth authority, sovereignty and all the rest, the fact is that the Commonwealth is a hard taskmaster and extracts the last pound of flesh.

The recent rise in interest rates has affected every municipality. The rising costs of Commonwealth services, such as telephones, postal charges and so on are inflictions upon local government, and upon the State Governments for that matter. Taxes and other charges are levied upon them. I believe that this one way traffic to which the honorable member for Hughes referred should be re-examined. Any Commonwealth instrumentality which moves into a municipality ought to pay its fair share of the services of that community. I represent two municipalities. One has about 13,000 ratepayers and the other about 17,000 ratepayers. This is largely a working class area. The maintenance of the services for that community are a great expense on many members of the community. In fact a large proportion of them - an increasing proportion in some areas - are pensioners to whom the rates are a heavy burden. Yet in that area are Commonwealth properties - post office, telephone exchange, Army drill halls and all the rest - and in some areas there are aerodromes. I should like the Minister to explain why in this Bill, in a matter which is under his absolute control, I presume, he has not adopted what would be to a hardy private enterprise character like himself a reasonable commercial practice.

Mr BURY:
Minister for Housing · Wentworth · LP

.- Should the new Corporation establish a branch in the division of Wills, the honorable member may rest assured that it will pay its rates. However, I cannot answer for the general position of Commonwealth instrumentalities. I am dealing with a Bill to set up one authority and the general intention is that it will meet its charges in the normal way.

Remainder of Bill agreed to.

Bill, as amended, agreed to.

Bill reported with amendments; report - by leave - adopted.

Third Reading

Bill (on motion by Mr. Bury) - by leave - read a third time.

page 316

ADJOURNMENT

Hotel Kurrajong

Motion (by Mr. Bury) proposed -

That the House do now adjourn.

Mr MINOGUE:
West Sydney

– I bring before the House tonight a matter which I believe is very important. I refer to the alterations that are being made in front of the Hotel Kurrajong here in Canberra. Evidently a carport is being built. I am in complete agreement with that, because when it is raining people will be able to go in and out of the hotel without getting wet.

However, two posts are being put in the middle of the road in front of the hotel. The road is only 28 ft. wide. There will be about 9 ft. or 10 ft. of roadway on the hotel side of the posts and the balance will be on the other side. The posts are being put in to support the roof of the carport, which comes out from the hotel. The two posts are concrete posts. They are 12 inches square. The other day I asked a chap who was working there whether it would be safe for strangers to drive in there. He said: “We will put a red light on the post “. I said: “ I do not know about putting a red light there. It could be taken to mean anything.” I do not think it would be proper to have a red light in front of the Hotel Kurrajong.

The point is that the carport could be built without blocking any of the roadway. There is about 8 ft. or 9 ft. of footpath and then you go up the steps and into the hotel. If one post was put on the edge of the footpath and the other across the road, that would leave the roadway clear. But the way the carport is being built, a Pioneer bus will not be able to go under it. People will have to get off the bus out in the street and carry their luggage into the hotel the best way they can.

When I was at the Commonwealth Games in Perth three years ago, I enjoyed watching the swimming in a stadium which held between 30,000 and 40,000 people.

Mr Kelly:

– More than that.

Mr MINOGUE:

– Perhaps more. The only posts holding up that building were 22 4 x 4 steel uprights or girders. Why could not similar uprights be used in the carport outside the Hotel Kurrajong? They could take the weight of the 9 ft. of roof over the footpath; then there would be the 28 ft. of roof across the road; and then the other posts could be put in the gutter on the other side of the road near the big tree. That would give people full use of the road. From what I saw in Perth and what I have seen in the Snowy Mountains area over the last four days, I do not think the architect for this carport ever worked in either of those places. He cannot even plan a carport across a road without putting two unsightly posts in the middle of the road. It is all very fine for the Commonwealth car drivers; but when other car drivers are looking for accommodation at the hotel on a dark and foggy night, they will be in a quandary. They will see the red light and they may not know whether they should or should not go in.

I understand that the Minister in control of this job is the Minister for Labour and National Service (Mr. McMahon), because it comes under Commonwealth Hostels

Limited. I ask the Minister for Labour and National Service, the Department of the Interior, or whoever is in charge of the job, to go to the hotel before it is too late and before the job is finished and consider my comments about the position that exists there. If nothing is done, the Pioneer buses will not be able to go under the carport. The entrance will be only 9 ft. wide and people will have to scramble in and out of the hotel with their bags, instead of the whole road being kept for the useof cars and people and having a carport over it at the same time.

I hope and trust that my plea will not fall on deaf ears. I hope somebody will have a look at the position. Whatever ideas somebody might have about the red light, I believe that it is entirely wrong and unfair to the Hotel Kurrajong to put a red light in front of it. There should be plenty of room for cars to go through under the carport. The carport could easily be built, even by blind Freddy, without doing what is being done at present. It could be taken over the footpath and then right across the road. If the posts were put in the gutter on each side of the road, everything would be all right. But everything is all wrong at present. And I am no architect.

Question resolved in the affirmative.

House adjourned at 10.27 p.m.

page 318

ANSWERS TO QUESTIONS UPON NOTICE

The following answers to questions upon notice were circulated: -

Electoral. (Question No. 807.)

Mr Collard:

d asked the Minister for the Interior, upon notice -

  1. Is it a fact that, without request and prior to the closing of nominations, application forms for postal votes are sent to some people in some distant areas of Western Australia such as those on outback sheep and cattle stations and that this is done simply to ensure that these people have ample time to apply for, receive and return the ballot-papers by polling day?
  2. If so, and as it is only proper that every eligible person should have ample time to record a vote, will he arrange, where possible, for a similar service to be provided to many other people in similar circumstances, such as those along the Trans-Australian Railway or in main road camps and the like in the north and north-west of the State?
Mr Anthony:
Minister for the Interior · RICHMOND, NEW SOUTH WALES · CP

– The answers to the honorable member’s questions are as follows: -

  1. On the occasion of each election, Divisional Returning Officers distribute postal vote application forms to all Post Offices within their Divisions and to many other places where it is thought that electors may not otherwise be able to readily obtain the forms. These other places include all hospitals and institutions and also Police Stations and pastoral properties in isolated areas. Postal vote application forms are not normally sent, without request, to individual electors. The aim is to place the forms at points where persons entitled to vote by post may readily obtain them.
  2. While efforts are made to place postal vote application forms within easy reach of those electors who may require them, it would be a formidable task to determine before an election the location of all electors who may be temporarily in circumstances which would entitle them to vote by post. Indeed, it would be undesirable to place the onus of distributing application forms to all such electors on the Electoral Office. Such a procedure could lead to the failure to vote due to the electors awaiting the arrival of the forms from the Electoral Office rather than initiating action themselves. While the Electoral Branch will continue with the wide distribution of postal vote application forms, the responsibility for obtaining a form and applying for a postal vote must rest with the individual elector.

Medical Fees. (Question No. 827.)

Mr Webb:
STIRLING, WESTERN AUSTRALIA

b asked the Minister for Health, upon notice -

  1. When recent amendments to the National Health Act were passed did he receive an assurance from the Australian Medical Association that no recommendation to increase fees would be sponsored by the Association as a result of increased benefits?
  2. Has he seen reports that, despite this assurance, the Association is considering substantially increasing doctors’ fees?
  3. Will he draw the Association’s attention to the previous assurance with a view to preventing increases in doctors’ charges?
Mr Swartz:
LP

– The answers to the honorable member’s questions are as follows -

  1. Yes. The assurances received by the Government from the Association covered a period of two years, which will terminate in November 1965. 2 and 3. The Australian Medical Association recently undertook an economic survey of the cost structure of medical practice. This was not a Government survey but one arranged by the Australian Medical Association itself. I understand that the results of the survey will be considered by the Federal Assembly of the Association in May next. It would be premature for me to foreshadow any action that might be taken until the Federal Assembly has considered the results of the survey and indicated its intentions.

Dredge Tragedy.

Sir Robert Menzies:
LP

– On 21st October 1964 the honorable member for Kennedy (Mr. Riordan) asked me, without notice, whether I had received any report concerning the tragedy which occurred to the Danish dredge “ Captain Neilson “ in Moreton Bay, in association with which there were a number of acts of heroism and bravery.

I have since seen a copy of the official report and I understand that the Queensland Premier has the matter under close consideration.

Cite as: Australia, House of Representatives, Debates, 24 March 1965, viewed 22 October 2017, <http://historichansard.net/hofreps/1965/19650324_reps_25_hor45/>.

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