6th Parliament · 1st Session
The President took the chair at 3 p.m., and read prayers.
page 3261
Assent reported.
EUROPEAN WAR.
lossof Submarine AE2: Wounding of Major-General Bridges.
– Before we proceed with the business, I ask the permission of the Senate to make a statement in connexion with the wounding of Major-General Bridges, and the loss of the submarine ASS.
Leave granted.
– The following is a copy of a cablegram, from the Admiralty, dated the 18th May, and received here on the 19th May:-
No communication having been received from submarine AE2 since 26th April, her loss must be presumed. From a report received through diplomatic channels at Athens it would appear that three officers and seventeen men were taken prisoners out of a total of’ three officers and twenty-eight men. Every effort is being made to ascertain further . particulars’ of the survivors.
Board of Admiralty desire to record their deep regretat the loss of this vessel with so many of her gallant crew, after a memorable feat of arms, and congratulate the Commonwealth on the high qualities of their officers and seamen.
I am sure that honorable senators share the sentiments of that message. Since the Commonwealth took her over, this little vessel, I may say, has steamed no less than 30,000 miles, which is a record for a vessel of that type, and has done very valuable service. There is no doubt that the operation in which she was lost was of a very daring character, and we will await further particulars as regards that. I regret tohave to announce that the Government have been informed by cablegram that Major-General Bridges, the . Officer Commanding the First Australian Division, has been wounded very dangerously. I am sure that honorable senators share the regret I express at receiving such news. Major-General Bridges I regarded as one of -our ablest officers - an officer who lived for his profession, and was a thorough master of it - and one in whom I am sure the men of the Division . and the people of Australia had the utmost confidence. That that confidence was justified one will see when he reads the encomiums passed on the operation in which his Division took part by that great soldier, Lord Kitchener, in a Bpcech, reported in the press to-day, in which he speaks of the skill and forethought with which the landing and subsequent operations were carried out. We know, of course, that the main command of the Mediterranean lies with . Sir Ian Hamilton, and that the command of the Australian Division rested in MajorGeneral Bridges; but we feel sure that the latter played a very . prominent part in carrying to a successful issue the landing of the Forces under difficult conditions. I venture to say that his name will always be associated with that feat. I think we can claim, without any boastfulness, that the landing of that Army and its subsequent operations will stand out alongside the feat of Wolfe on the Plains of Abraham, that as time goes past and we are able to look at the thing in proper perspective, it will be one of. the great battle stories of the British Empire, and the name of Major-General Bridges and his command will always be associated with it. We deeply regret that he was wounded so seriously that he had to relinquish the command. I . have to announce that, on receipt of the information, the Government decided to appoint Colonel Legge, the Chief of the General Staff, to the command of the Division.. Colonel Legge is now on his way to the front, and on his arrival we shall have the satisfaction of knowing that the Division is still in the command of an Aus-‘ tralian officer, who, I feel sure, will prove worthy of the choice which has been made.
– Who is in command at present, seeing that Major-General Bridges is wounded ?
– I do not know; but I think we can rest assured, with perfect confidence, that the officers on the spot will see that they are under the charge of a competent officer. I think that it would not be right to conclude this statement without expressing, on behalf of the Senate, our deepest sympathy with the wife, the family, and the relatives of Major-General Bridges. Our sympathy goes out to them all the more, owing to the fact that he is away. They are suffering with hundreds of others; indeed, one might say with thousands of others in Australia. I am sure that our sympathy goes out to the relatives and friends of the many who have fallen, and are falling, at the Dardanelles, in the heroic struggle which the Australians are making there. But they have this solace to their feelings : that their relatives have been wounded, and are falling, in the defence of a glorious cause, and of the Empire, that they have either died a noble death or received glorious scars which will stand to their credit.
page 3263
– Has the attention of the Leader of the Senate been directed to the following report in to-day’s Age of a meeting which was held in Geelong on Wednesday?
At the half-yearly meeting of the Loyal Orange Institution of Victoria, which was opened here to-day, a lengthy resolution was unanimously carried, in which the righteousness of Britain’s cause in the war, the magnificent courage and unflinching bravery of the Australian soldiers and sailors’ at the Dardanelles, and the splendid response of the North of Ireland to the country’s” call, were referred to. Grief was expressed at the deaths of several notable Orangemen. The concluding clause of the resolution was as follows : - “ We recognise that this in great part is a religious war, originating on the one hand in the revolt of the heroic Servian people against the attempt of the Vatican to deprive them of their civil and religious liberty, and, on the other hand, in an effort of the Papacy to punish the French nation for throwing off her bondage to the Roman Catholic Church. We believe the responsibility of thus again deluging Europe with blood lies at the door of the Vatican in this greatest and, we pray, last effort to regain her lost temporal power, but an effort in which few, if any, of her lay adherents have any sympathy or part-
– Order ! I have previously pointed out that it is entirely out of order for any honorable senator to read a long extract from a newspaper under the cover of a question.
– I just want to conclude the extract, Mr. President, by reading a few more lines.
– Will the honorable senator please resume his seat? It is entirely out of order for any honorable senator to read newspaper extracts in connexion with questions. It would be more fitting to do so on the motion for the adjournment of the Senate. There has been a continued abuse of the privilege of asking questions without notice, although I have endeavoured to the utmost of my power to keep senators within the proper limits. I would again ask honorable senators not to read any further extracts when asking questions.
– I can assure you, Mr. President, that I would not attempt to read the paragraph did I not feel that it had an awful significance in connexion with the future history of this war.
SenatorBlakey. - Do you think any sensible people would take any notice of that?
– Possibly a great deal of notice will be taken of it.
– God help the intelligence of the people, then.
– I just want to read a few more lines of the extract as follows : -
We earnestly hope that the dread struggle will end in a peace that will put an end to clerical intrigue and the malign encroachments of any Church on the civil and religious liberties of humanity.
I wish to ask the Leader of the Government - Is not that statement a traitorous attempt to remove some of the onus ‘of the present dreadful war, with all its horrors, from the Kaiser and his hordes? And does he not think that the resolution will be utilized by historians in the future to show that it was not Germany and the Kaiser who were responsible for the conflict that is now in progress?
– While listening to the resolution as read by the honorable senator, I could not help recalling to mind a well-known character of Shakspeare, who is made to say, “ I am but mad north-north-west: when the wind is southerly I know a hawk from a handsaw.” I was also reminded of one of Dickens’ characters who, no matter what subject was under review, contrived to bring in some reference to King Charles’ head. I am of opinion that the future historian will be able to take this resolution at its true value.
page 3263
– Has the Minister of Defence yet received any information which he can give to the Senate concerning the inquiry with reference to the allegations as to the purchase of Red Cross material at R’abaul ?
– The reply is in the form of a long statement, and is as follows : - On 7th inst., Senator Millen, in moving the adjournment of this House, referred to some statements which have been circulated regarding the disposal of Red Cross material forwarded to Rabaul. The charges were, briefly, that Private Campbell was in the company of another member of the Expeditionary Force to
Rabaul, who purchased two suits of pyjamas, containing notes from Red Cross workers in Sydney, at the dry canteen there. The report was denied by the Administrator, Colonel Holmes, who stated that Private Campbell was writing to the Sun newspaper, informing it that the pyjamas in question were privately purchased from another member of the Force. The Sun, however, stated that it had not received a letter from Private Campbell, and, further, that the latter denied writing such a letter. Campbell further stated that he was paraded before the officer commanding the troops, LieutenantColonel W. W. Russell Watson, in regard to the original report, and as a punishment he was sent away at a few hours’ notice as ship’s guard to outlying islands. On his return from this duty, he stated that he personally purchased the pyjamas at the dry canteen, which did not have Red Cross tickets on them, but they were labelled “ O.S.M.,” which he took to be the initials of a Red Cross worker. A final statement is that the profits of the canteen did not go to the soldiers. The matter was referred to a Court of Inquiry in Sydney, composed of the following officers: -
Colonel G. Ramaciotti, O.C. 11th Infantry Brigade;
Lt.-Commander J. O.. Graham, R.N. ;
Major H. G. Edwards, Sydney University Scouts.
The Court took evidence on oath, and reported on 13th inst. as follows: -
The Court find:- 1. That the statement made by Private R. B. Campbell in his letter to his mother is untrue. 2. That Campbell admitted to Colonel Watson and Captain Lane, in the presence of Warrant Officer Inglis, that the statement in question was untrue. 3. That this admission was reduced into writing, in duplicate, and signed by Campbell. 4. That one copy, or part, was sent to the Administrator by the O.C. troops, and copy forwarded by the Administrator to the Hon. the Minister of Defence. 5. That the second copy, or part, was addressed and posted by Captain Lane personally by the express order of the O.C. troops to the editor of the Sun. 6. That the sole punishment awarded to Campbell was a reprimand by O.C. troops. 7. That the marks “ O.S.M.,” alleged to have been found on the pyjamas alleged’ to have been purchased by Campbell himself at the dry canteen were marks indicating sizes commonly in trade use. . The Court are of the opinion that Private R. B. Campbell is of weak character, and does not appear to realize either the seriousness of his statements, or his position.
The papers have been laid on the table of the Library for the information of honorable senators; but I desire to add that the Red Cross Society in Sydney has advised that the names alleged to have been inserted in the garments do not tally with any of the workers for the society in the districts mentioned, and that Private Campbell must be mistaken. The pyjamas sold at the dry canteen were manufactured and supplied by George Hird and Company, of Sydney, who state that the letters “ O.S.M.” mean “ outside men’s size.” The editor of the Sun stated that he had no evidence in support or rebuttal of the charges. The profits of the canteen amounted to £420 for the whole period, of which £150 went to the Men’s Sports Club, and £270 to the Belgian Fund. Private Campbell was sent on the Meklong to outlying islands, because he was one of those who had volunteered for extended service, and he was selected for this work, in the ordinary way of duty, by a subaltern, Lieutenant R. H. Norman.
– I would like to know if I understood the Minister correctly when following his reading of the first portion of his reply. It appeared to me that it was stated I had made certain charges. If that is so, I would ask him, after referring to the Hansard report, to have the official document corrected.
– No; it is not put in that form, but is as follows: -
On 7th inst., Senator Millen, in moving the adjournment of this House, referred to some statement which had been circulated regarding the disposal of Bed Cross material forwarded to Rabaul.
From this, the honorable senator will- see that he is not made to father the statement.
page 3264
Report of Public Works Committee on the erection of buildings at Flinders Naval Base presented by Senator Keating.
page 3265
Delay in Mail and Cable Services.
– If the Minister of Defence has not already seen the paragraph I am about to refer to, will he read it with a view to making an inquiry into the apparent failure of the postal authorities to deliver letters, cables, and parcels addressed to the troops at the front? The statement is made by a returned soldier that, although on returning he found that a letter had been despatched to him every week by his wife and other members of his family, he received only four. They had sent also a parcel and cable, neither of which he had received. A mate of his, more fortunate than himself, received a cable exactly three weeks after it had reached Egypt. Will the Minister see whether something cannot be done to insure a more accurate delivery of correspondence intended for soldiers at the front?
– The matter concerns both the Defence and the Postal Departments. If the honorable senator will hand me the extract I will have inquiries made.
page 3265
– Has the Minister representing the Minister of Home Affairs received an answer to . my questions regarding certain articles appearing in the West Australian newspaper condemnatory of the method of construction of the western section of the east-west railway ?
– The following reply has now come to hand from Mr. Bell-
I have to advise that whilst I was in Western Australia I perused the articles which appear in the West Australian, and to which Senator Needham refers.
On the occasion of my visit I went fully into the conduct of operations at the western end of the Kalgoorlie to Port Augusta railway, and was satisfied with the manner in which the work was being carried on. There has been some difference of opinion with regard to the number of men who should be employed to lay a certain length of rails per day, but this has now been satisfactorily adjusted. I cannot say more than that good progress is being made at the western end, and that the work, in all its operations, is proceeding satisfactorily. There are now over 1,100 men engaged.
– Has the Minister representing the Minister of Home
Affairs received the information I asked for recently as to the amount of revenue from public traffic on the east-west railway ?
– On the 22nd April the honorable senator asked the following question -
Revenue collected for fares and freights for three months ending 31st March, 1915-
The following reply has been received -
Revenue collected for public traffic for three months ended 31st March, 1915 : -
Kalgoorlie end, £642 lis. 8d.
Port Augusta end, £3,123 3s. 5d.
page 3265
– Have any instructions been issued in the last few days to the Sydney censors with reference to’ comments appearing in the press relating to the Small Arms Factory at Lithgow?
– Certain instructions have been issued to the censors as to references to the number of arms in the Commonwealth, and as to any references in the press to the output of tlie factory.
– During the last few days?
– The instructions were ‘ issued some months ago, and, apparently, were overlooked. They have, therefore, been reiterated during the last few days.
– It is scandalous. You cannot keep a man’s mouth shut in that way.
– We cannot give information to the enemy.
page 3265
Payment foe Holiday.
– Can the Minister representing the Postmaster-General yet give me a reply to a question that I asked on the 14th of this month in connexion with the payment, on Eight Hours Day, of men working on the undergrounding of the telephone wires ?
– The question asked by the honorable senator were as follow : -
The following information has come to hand : -
page 3266
-As the people are very much exercised in their minds about the statement that there is to be a shortage of sugar, and a probable” large increase in price to the consumers, are the Government taking any action in conjunction with the States? If so, will the Minister of Defence intimate to the Senate what action will be taken, with a view to alleviate the present tension, and protect the consumers against exorbitant prices ?
– The. Government have certain action in contemplation, but it is not considered advisable to make a statement at the present juncture.
page 3266
The following papers were presented : -
Defence Act 1903-1914. - Regulations amended, &c. -
Statutory Rules 1915, Nos. 61, 62, 63, 64.
Fisheries: Biological Results of Fishing Experiments carried on by F.I.S. Endeavour, 1909-14.- Vol. III., Part 3.
Lands Acquisition Act 1906 - Land acquired under, at -
Abermain, New South Wales - For Defence purposes.
Chippendale, New South Wales - For Postal purposes.
Eden, New South Wales - For Defence purposes.
Homebush, New South Wales - For Defence purposes.
Miller’s Point, New South Wales - For Defence purposes.
Muswellbrook, New South Wales - For Defence purposes.
Richmond, Victoria - For Defence purposes.
Ryde, New South Wales - For Defence purposes.
Waratah, New South Wales - For Defence purposes.
Dep6t Creek, South Australia - For Railway purposes.
Public Service Act 1902-1913-
Appointments, Promotions, &c. - PostmasterGeneral’s Department -
Appointment as Assistant Engineers, Class C, Professional Division,’ Chief Electrical Engineer’s’ Office.
Regulations amended, &c. - Statutory Rules 1915, No. 71.
War Precautions Act 1914-1915. - Regulation. - Statutory Rules 1915, No. 65.
War, The: Correspondence between His Majesty’s Government and the United States Government, respecting the Rights of Belligerents.
page 3266
asked the Minister representing the Treasurer, upon notice -
What is the practice of the Department of Old-age Pensions relative to the payment of pensioners admitted to benevolent asylums and similar institutions; and has the same been recently varied; and, if so, in what respects?
– The answer is -
If a claimant for pension, though otherwise qualified for, is unfit to be intrusted with a pension, the Department arranges for the admittance of the claimant to a benevolent asylum. In every such case the Department pays the benevolent asylum 8s. a week for the maintenance of the pensioner. (Sec section 31 (2) of the Act.) When -a pensioner is infirm and has no friends . able and willing to look after him, the Department considers he is unfit to be intrusted with a pension, and rehears his pension claim, so that, in accordance with the Act, steps may be taken tosecure admittance to a benevolent asylum. Sometimes similar action is taken when a claimant or a pensioner is addicted to drink. In these cases also payment is made to the benevolent asylum at the rate of 8s. per week. Under section 47 of the Act, a pension cannot be paid to any inmate of a benevolent asylum until he has been discharged. Following the principle underlying this section, the Department is unable to make payment to a benevolent asylum for the maintenance of an inmate unless he has been admitted at the request of the Department. Where a benevolent asylum gives shelter to a pensioner who is in urgent need of it, the’ Department sends the pensioner’s claim for rehearing, and, if satisfied, agrees to pay the institution for the maintenance of the pensioner, just * as though he had been admitted at the request of the Department. The practice of the Department has not been recently varied. ‘;
page 3267
asked the Minister of Defence, upon notice -
– The answers are -
page 3267
asked the Minister representing the Min- ister of External Affairs, upon notice -
– The answers are - 1 and 2. The estimated total cost of the Australian representation at the Panama Exhibition is £30,000, to which the Commonwealth agreed . to contribute £12,000 and the States the balance on a per capita basis - New South Wales paying £8,440, Victoria £6,510, and Queensland £3,050.
The States also provided the exhibits and paid the cost of their collection.
Mr. Nielsen was also paid a sum of £148 18s. 7d. - railway fares and travelling allowance at the rate of £3 per da)’ - in connexion with a visit to Washington, which extended over a month, to interview the authorities regarding the quarantine embargo against the admission of Australian sheep to the Exhibition.
page 3267
In Committee (Consideration resumed from 14th May, vide page 3166) :
Clauses 1 and 2 agreed to.
Clause 3 (Ratification of agreement).
– This is really the enacting clause of the Bill. Clauses 4 and 5 are consequent upon it, and make provision for the laws which are to apply within the territory when it has been taken over by the Commonwealth. Clause 3 refers us to the schedule to the Bill, which is the agreement entered into between th’ie Commonwealth Government and the Government of New South Wales for the surrender of’ this territory to the Commonwealth. The agreement sets forth the metes and bounds of the territory, but it would have been desirable if honorable senators had been given some information as to the lay of the land with which the Bill deals.
– A map of the territory was exhibited on the wall of the chamber.
– I was not aware of the fact. I was sitting at the table otherwise engaged when the second reading of the Bill was moved. I understand that the territory referred to in this Bill is between the Federal Capital Territory and the sea. It would be well if honorable senators were given some idea as to the relation which it bears to the Canberra area and the territory which the Commonwealth has already acquired at Jervis Bay.
– I endeavoured to give honorable senators the fullest possible information in connexion with this Bill. I had a map showing the territory exhibited in this chamber for two hours on Friday last. I regret that Senator Keating had not an opportunity of seeing it. I explained that it is considered necessary to acquire this land for the purposes of the port of the future Federal City. The Department thinks it is essential that the Commonwealth shall have this land, and its only regret is that the area is not about four times as large.
Clause agreed to.
Clauses 4 to 6 agreed to.
Schedule, preamble, and title agreed to.
Bill reported without amendment; report adopted.
Standing and Sessional Orders suspended, and Bill read a third time.
page 3268
– In moving,
That this Bill be now read a second time.
I desire to say that it is one of those useful measures which will confer a great benefit on many persons in the community. -It relates to a matter which has not previously been dealt with by this Parliament, because it has lacked the influence of any political party to force it to the front. The purpose of the Bill is to enact a uniform system of insurance throughout the Commonwealth. At present each State has its own insurance legislation, and it will be a distinct gain, particularly to insurance companies transacting business in Australia, to have their operations regulated by the provisions of a single Statute. They will thus have to forward to the Commonwealth only a single return relating to their revenue and expenditure, and their assets and liabilities, instead of having to forward a return to each State. That, I am sure, will prove an immense gain to them, and also to their policyholders. It will be much more economical
– A splendid argument for national insurance.
– Irrespective of whether an insurance scheme is national or not, the foundation upon which it is based will have to be laid deep before any steps are taken by the Commonwealth in that direction. The authority for this measure is derived from section 51, paragraph xtv. of our Constitution. Some time ago the question of insurance was referred to a Royal Commission consisting of Mr. Justice Hood, of the Victorian Supreme Court, and Mr. Knibbs, the Commonwealth Statistician. The people of this country are under a deep debt of gratitude to those gentlemen for the admirable manner in which they discharged their onerous duties. The thoroughness and efficiency which characterized their inquiries were exactly what we expected from gentlemen of their high capacity and distinguished attainments.
– Are the results of their work embodied in this Bill?
– The Bill is largely based upon their report and upon the Imperial Act of 1909. Although the measure is one which will directly affect a large number of persons throughout the Commonwealth, its general principles do not call for very much discussion. In Committee we can most usefully discuss any contentious details it may contain, though I do not think that many details will be found. The Bill introduces changes - changes recommended by the Royal Commission to which I have referred - and changes from some of the State Acts which their operation has shown are likely to prove beneficial In such a business as life assurance. The different classes of insurance - life assurance, industrial insurance, fire insurance, accident insurance, and employers’ liability insurance - are dealt with.
– Does it cover marine insurance ?
– No; the business of marine insurance is dealt with in the Marine Insurance Act of 1909. For the purposes of the Bill it is divided into different parts. Some States in the Com- monwealtli have not legislated to any great extent directly on the subject of life assurance contracts, but in most countries in which the business is transacted it has been considered insufficient to allow only the general law relating to contracts to apply. The main features ot life assurance business which have contributed this result may be said to be the fiduciary character of the business and the remoteness of the date of the maturity of the contract; the objects for which insurance is usually effected; the conditions under which the contract usually matures, namely, by the decease of one of the parties; the circumstances under which the recipients of policy moneys are often placed; and the complexity of the business and the farreaching effects of maladministration. Although the business of life assurance consists essentially in the deposit and withdrawal of moneys under certain conditions set forth in the contracts forming the basis of the business, and for that reason might appear, on a limited view, to stand in no greater need of special legislation than such a business as banking, nor to require for its control any further provision than the law relating to contracts in general, the features I have set out furnish ample reasons for special legisla,tive control. This Bill is based on a system by which the whole management of insurance will be placed in the hands of an Insurance Commissioner. He is to be granted unquestionably large powers - not extraordinarily large powers nor unlimited powers, but powers such as will be essential to him to manage such a difficult business, and to deal with the many troublesome problems which will crop up. And as a protection to the companies, the Bill provides for an appeal against the exercise of his powers by a company or others to the Courts to settle any question in dispute. The Commissioner will regulate the business of life assurance, fire insurance, and other systems of insurance, by a system of issuing certificates and licences. He will not only have power to say to what companies and to what persons the right to carry on. and conduct the business will be extended, but also to obtain returns and statements as to the financial stability or otherwise of the companies: to exercise generally a protecting influence so far as the public are concerned, and to see that no company is in an insolvent condition; that no company is permitted to use its funds in such a way that the representatives of those who insure with it shall be deprived of the benefits paid for when the policies mature. The right of the Commissioner to issue licences to companies will carry with it an obligation on their part to comply with the conditions on which the licences are granted. I might state at this stage that we could well divide tha system of insurance as il> is carried out into the American system of supervision and the British system of publicity. Under the “ publicity “ method «ach company is required to publish such full details of its business as would enable any competent person to form a general -opinion of the stability of the company. Under the “ supervision “ method a scrutiny of a more or less searching nature -concerning the detailed workings of the company’s business is undertaken by the Government. The system of supervision has, perhaps, many advantages, but over such a widespread area as that of the Commonwealth it would have many difficulties. For the purposes of this Bill we follow more closely the British system of the publication of returns, and demanding from companies returns of revenue, liabilities, and assets which will, in a general sense, enable the public to form a judgment as to the safety, tlie security, and the stability of any company. Not only will the Commissioner be afforded the opportunity to peruse these returns before they are published, but he can ask questions of the representatives of the various companies, and, if need be, publish the answers to the questions, always taking care that business of a confidential nature, and perhaps calculated to injure a company, shall not be distributed or given to one company to be used to the disadvantage of the other. As regards the licensing and registration of com.panies, I may mention that as one of. the means of insuring due compliance by a company with the requirements of the Act, the Bill provides for the registration of companies and for the issuing by tlie Commissioner to a company of a licence entitling it to carry on the business of life assurance in the Commonwealth. A company carrying on business without a licence is to be liable to a fine of £2,000, and, in addition, to a penalty of £500 per day for each day the business is so carried on. As regards the registration, the company is required to file with the Commissioner information relating to the situation of the head office, the directors, chief executive officers, shareholders, auditors, the name and qualifications of the actuary, and copies of the Act, charter, deed of settlement, memorandum of association or other document constituting the company.
– A period of six months is allowed after the commencement of the Act, though.
– Yes ; a term will be allowed after the commencement of the Act to companies now carrying on business in Australia to comply with its provisions. Special provisions are made for Australian companies about to commence business. The provisions which are made relative to the security of policyholders include a provision for the deposit of money, or other valuable considerations representing money, by the different companies. A life assurance company, for instance, will be compelled to deposit £20,000 in the first instance, and that amount will be increased by £10,000 a year until the deposit reaches £100,000. A company carrying on life assurance together with other insurance business must deposit annually £10,000 until the deposit, reaches £120,000.
– Is any provision made for the payment of interest on that deposit ?
– I cannot answer the question off-hand.
– It is very important to know, because it is a large sum of money for a company to deposit.
– That is one of the details of the measure which we can. deal with in Committee. The deposits by the companies will resemble very closely the deposits in a bank. The insurance companies having deposited the amount of moneys or securities required under the Bill, will not have to pay additional sums by being deprived of the interest on securities deposited, and if the Government invest the monetary deposits of a company, the company will be entitled to the interest on the investment. That will be one of the provisions of the measure.
– The question of Senator Senior is answered by clause 21. A company can deposit securities, and, therefore, it can deposit public bonds, which would carry interest.
– Exactly. I have referred briefly to the system of deposits to secure the interests of policyholders. It may be said that the amount of the deposits is large or small, according to the custom of this business in each State. It is larger than the amount demanded in Great Britain, and, perhaps, proportionately larger than the amount demanded in some of the States; but, in view of the enormous growth of the insurance business in the Commonwealth during the past few years, it is considered that the deposits required for security are not at all exorbitant, but reasonable, having regard to the flourishing and wealthy position in which the insurance companies find themselves to-day.
– Provision is made in clause 11 for foreign companies to start in business here. Will foreign securities be accepted in the same way as local securities ?
– They will have to heap proved.
– The question will really have to be settled by the Insurance Commissioner. No reasonablesecurity, I take it. will be refused, no matter what its nature may be. It will be purely a matter for the company carrying on business to deposit a certain amount as security.
– We want to guide the Commissioner.
– We are framing a Bill now to guide the Commissioner. My honorable friend has asked a question off-hand as to the acceptance of foreign securities. I venture to say that were I the Insurance Commissioner at the present time, I would not care to give very much credit to German securities. They may be considered very valuable by the holders of them. Austrian securities may be considered very valuable, too, by their holders. It is a question to which a definite answer cannot be given. But. I venture to say that any securities which are reasonable and safe will be accepted.
– Securities which may be safe to-day may be unsafe in twelve months’ time.
– That matter we will have to leave to the Insurance Commissioner to determine.
– That also is provided for in the Bill. If securities accepted today are held to be sufficient, but are held to-morrow to be insufficient, the company must find fresh securities.
– The Bill empowers the Commissioner to deal with such matters. If the securities lodged by a company become enhanced in value, it will have the right to withdraw a certain proportion, leaving only the amount which the Act prescribes. I look upon the question as one of the details to be considered later. The question of safe securities must, I think, be left to the common sense of the Commissioner. I take it that he will be a man of sufficient business capacity and ability to appraise the value of securities as well as to understand the other duties which are placed upon him. I desire now to refer to the admission of age by assurance companies. At different times, on the maturity of policies, some companies have caused much trouble when confronted with a demand by taking exception to the age at which the policyholders insured, and refusing to pay the amounts due. This Bill deals with the matter in what we regard as a satisfactory manner. A company will have the right to cancel any policy taken out during the first twelve months if they are not satisfied regarding the age of the person; but if, after the first twelve months, they accept the premium for the second year, that acceptance will be regarded as an acceptance by the company that the age is correct.
– For the second year or any portion of it?
– If a company accept payment for the second year, and that, of course, would mean any portion of the second year, such company would accept the liability;’ and no further objection could be successfully alleged against the payment of any liabilities that might be incurred. In the business of life insurance as at present conducted, the age of the proponent furnishes, next to the state of his health, the most important, item to be dealt with by a company in considering his proposal. The amount of the premium payable for any given sum under any given form of insurance depends,, .in ordinary circumstances, entirely on .the age of the proponent. It is clear, therefore, that the matter is of fundamental importance to the company. In connexion with this matter, a practice has grown up of notifying the policy-holder that proof of age is desired by the company, but of pressing for such proof only when the policy has become a claim. By recognising the great importance to a company of a correct statement of age, it nevertheless is in the interests of the public that admission of age should be required at a comparatively early stage of the insurance. A very strong point in favour of early admission of age is the fact that the insured himself is usually the person best able to furnish evidence of age or to suggest sources from which such evidence may be obtained, and that to leave the proof of age until after his death is to wait until the principal witness is no longer available. As registration of births has been . in force in all States since 1856, there would, appear to be no real hardship on- either the company or the insured in providing, as the Bill does, that the acceptance by the company of the premium in respect of the second year of insurance shall be regarded as admission of age, but that the company may cancel the policy, if reasonable proof is not submitted by the insured during the first year of insurance. In the event of a dispute arising as to the reasonableness of proof, the matter is to be referred to the Court. In order that the insured may be notified of his rights and obligations as regards proof of age, the company must, in issuing a policy in which age is not admitted, cause a coloured slip to be attached, setting forth those rights and obligations. The principle of securing policy moneys against the claims of creditors is one which has long been in force in the various States of the Commonwealth, although the amount of protection so afforded varies considerably, as also do the conditions under which the protection is granted. Thus, in New South Wales and Western Australia the amount protected ranges from £200 to £2,000; in Victoria and Tasmania it is £1,000; in South Australia, £2,000; while in Queensland unlimited protection is afforded. In New South Wales and Western Australia’ annuities to the amount of £104 per annum are also protected. Under the Bill it is proposed that the policy moneys payable on the death of an insured shall be wholly protected from his creditors, with the exception that where the insured dies within three years of the date of the policy, a sum equal to three years’ premiums, together with interest at 5 per cent., shall be set apart out of the policy moneys for payment of the debts of the insured. The question of the satisfactory audit of the accounts of a life insurance company is one which does not appear to have received at all times from the Legislature as much attention as its importance deserved in connexion with company law. The object of the audit is that of providing an independent check on the financial transactions of . the company’s executive and staff by some person or persons appointed by . the shareholders or policy-holders. It has been well said that there are three things which it is the auditor’s duty to detect, if they exist. These are fraud, technical errors, and errors of principle. Evidently, as the auditor is designed to be the check upon the actions of both the executive and the staff, his appointment should not he in any case in the hands of the executive, and provision is made in the Bill for the election of auditors by the shareholders or policyholders. The Bill also provides that the responsibility for checking the valuation of the assets of the company shall be placed upon the auditor, and that, where necessary, he may call in the service of expert valuers in special cases. In certain States of America and elsewhere, provision is made for the issue of policies in accordance with a standard form prescribed by the Legislature, or in accordance with certain minimum requirements similarly prescribed, the presumable object being that of securing, as far as possible, a uniform interpretation of the terms of the several contracts, and by diminishing the variety of the forms of familiarizing the public with their nature and contents. After a careful consideration of this question of standard policies, and while recognising the force of the advantages of a standard policy, it has been decided that equal benefit and greater elasticity in the development of life insurance business can be attained %by a provision that every form of policy shall, before issue, be submitted for the approval of the Insurance Commissioner, and shall be subject to his veto or suggested amendment, with the right of appeal to the Court. A company is also required to submit to the Insurance Commissioner all forms of proposal intended to be used by the company. During recent years there has been, in Australia, as in other parts of the world, a marked development in that class of life-insurance business which consists in the issue of policies for small amounts paid for by means of weekly premiums, collected at the homes of the insured by servants of the insurance company. Owing to the fact that the persons assured under such policies at the initiation of the system in England, some sixty years ago, were drawn mainly from the industrial classes, this class of business received the name of “ industrial “ insurance, a name which in English-speaking communities it has since retained. The sums assured under industrial policies are in all cases small, and the weekly payments range from a penny upwards. The average amount insured per policy in the different countries is as fol- lows: - United Kingdom, £13; Australia, £23; Canada, £24; United States, £27. From the smallness of these sums it is evident that the object which a proponent has in view is, in most cases, not identical with that of a proponent* for what is known as an “ ordinary “ policy. In the case of an industrial policy, it is very generally considered that the object in view is mainly that of provision for death and burial expenses, and the importance which the industrial classes usually attach to a “ decent burial “ may possibly account, in part, for the rapid growth which has characterized this form of insurance since its initiation in England in 1854. An idea of the magnitude of the industrial insurance business may be gathered from the following figures : - At the end of 1913, there were, approximately, 36,162,031 policies in force in the United Kingdom, insuring the sum of £359,538,089, the annual premiums on which amounted to, approximately, £17,000,000 per annum. In the Commonwealth, at the end of 1913, there were in force 556,275 policies, insuring the sum of £12,642,710. In 1910, there were 19,000,000 policies in force in the United States, 5,000,000 in Germany, and 400,000 in Canada. While there can be little doubt that the growth of this form of insurance furnishes an indication that it supplies a “distinct want felt by the community, the opinion has been expressed in various quarters that the cost of the benefit falls with undue severity upon the working classes. Mr. Sidney Webb, the well-known Britishsociologist, in a report drafted by him on> behalf of the Fabian Research Department on this branch of the insurance business, and published recently in the NewStatesman, states -
In round figures the amount collected week by week every year from the wage-earners of this country by the industrial insurance companies is £20,000,000. The amount returned’ annually to the policy-holders is £8,000,000. About £3,500,000 is invested to provide for future contingent claims, and the remaining £8,500,000- goes in expenses and dividends.
The management expenses of “ordinary”” life insurance business, as conducted for the benefit of the middle and upper classes, amounts on the average to 13 per cent, of the premium income; the management expenses of industrial insurance amount to 43 per cent. The difference is accounted for by the different methods of, obtaining business and collectingpremiums. The well-to-do send in theircheques once a quarter, or, more usually, once a year. The working classes, it has been- found by experience, must for the most part be visited by an agent, who actually calls at each house for the money every week.
As there are about 40,000,000 policies in force at any given moment,- it is not surprising that the number of agents employed should be large.
The number is, in fact, about 70,000, the vast majority of whom are carefully picked men of more or less exceptional ability.
This army of agents is paid by commission, and largely by commission on new business; and constant pressure is exercised on them both by their superior officers and by their own financial interests, not on any account to allow the number of policies on their books to decrease.
The phase of the expense of management in industrial insurance has received careful consideration, but, from the nature of the case, it appears that industrial insurance must necessarily be expensive so long as the house-to-house collection is an essential feature of the system. That such mode of collection is essential to the successful conduct of noncompulsory industrial insurance is strongly held by all the companies engaged in the business, and their contention appears to be justified, directly by the almost absolute failure of the British Government’s scheme of Post Office insurance without collectors, and indirectly by the fact that, as far as is known, no prominent company in any of the countries above-named carries on industrial business without collectors. It is evident, therefore, that in carrying out the business with the assistance of housetohouse collectors, the companies are supplying a genuine want to the community in the only practical way in which, under existing circumstances, success can be assured. The fact, however, that the classes amongst which industrial insurances are usually effected are not, on the average, as well able as “ ordinary “ policy-holders are to use for their protection published returns concerning the companies carrying on the ‘business, warrants somewhat closer Government supervision in the case of industrial insurance than has been given in the case of ordinary insurance. In addition to the provisions requiring companies doing this class of business to lodge separate returns, and relating to the approval of forms to be used, the periodical actuarial valuation of liabilities and assets, as in the case of ordinary companies, each industrial company is also required to submit for the approval of the Commissioner its rates of premium, and the rates of dividend or bonus, if any, which it proposes to pay from time to time to its shareholders or policy-holders. In the event of the Commissioner withholding his approval, an appeal lies to the Court. In view of the huge profits made by the companies engaged in industrial insurance, no exception should be taken to the power of the Commissioner to supervise the rates of payment and amounts of dividends and bonuses of these companies. In many cases the companies carrying on industrial insurance are proprietary companies, and it has been alleged in the past that small premiums are collected from poor policy-holders to pay large dividends to rich shareholders. As many companies at present carry on both ordinary life and industrial insurance business, under the Bill the companies are required to keep the affairs of the two branches distinct, in order that one class of policy-holders may not be made to bear part of the expense legitimately chargeable to the other. Expenses common to the two branches will be apportioned on principles to be approved by the Commissioner. In connexion with fire insurance the nature of the business is such that there is not the same urgency for special legislation that exists in the case of life insurance. The contract is essentially a contract of indemnity, covering an ordinary business risk, and does not possess the fiduciary character which attaches to a life insurance policy. The fact, however, that fire insurance is essentially a traffic in contingencies, and that the due performance by tlie fire office of its part of the contract may involve the payment nf large sums of money renders it desirable that offices carrying on such business in the Commonwealth should be subject to a certain measure of supervision, and that no person or company should be allowed to transact such business except after the issue of a licence. In the several States of Australia there is no special legislation relative to the business of fire insurance, and in the United Kingdom, until the passing of the Assurance Companies Act 1909, such legislation as related to fire insurance related to it in a secondary capacity, as associated with fire prevention, or as forming a branch of business carried on in conjunction with life insurance. Under the Life Insurance Acts of the States life insurance companies carrying on other insurance business were required to file separate accounts and balance-sheets of that business, but owing to the fact that no company carrying on life insurance business in Australia had a fire branch, the provisions were inoperative. In common with life insurance companies, and mainly for the reason set out with regard to life insurance companies, the provisions of the Bill relating to the following matters apply to fire insurance companies as well as life insurance companies, viz. -
The deposits in money or approved securities required from fire insurance companies under the Bill are as follow : - In the case of existing companies and foreign companies not carrying on business at commencement of the Act an initial deposit of £20,000. In the case of companies formed in the Commonwealth, and not commencing business until after the commencement of the Act, an initial deposit of £2,000 and annual deposits of 25 per cent, of’ the premium income, or £10,000, whichever is the less, until the deposit reaches £20,000. A question which has caused a good deal of consideration in connexion with fire insurance is that relating to the practicability of tabulating the combined experience of fire insurance companies in such a manner as would furnish a relative basis for the computation of standard rates of premium for various risks, classified according to locality and nature of the risk. It has been alleged in various quarters that such a computation was impracticable, but after a thorough investigation of the subject, there appears to be no reason why, if the risk were classified into fifty-six classes, as some fire companies do at present, or even in a less extensive manner, the Insurance Commissioner, after consultation with representatives of the various fire insurance companies, should not be able to arrive at standard rates of premium for various risks. The tabulations would need to be made over a number of years, and any information obtained from the companies would be treated as strictly confidential. The necessary tabulations are carried on by each company at the present time for the purpose of fixing its own rates of premiums regarding the risks run, and there appears to be no reason why the Commissioner could not use the combined efforts of all the companies in order to arrive at standard rates for different classes of risks. Power is given under the Bill to the Commissioner to obtain the necessary information and make the necessary tabulations, and the rates deduced are to be the basis for the computation of standard rates for the several classes of risks. It is a necessary incident to fire insurance business that the companies should be allowed to re-insure their risks. The greater the distribution of the large risks the lighter will be the strains on the resources of the companies engaged in the business. He-insurance, however, establishes intimate relations between the various companies carrying on the business, and hence there is a possibility of a combination amongst them to maintain rates at a higher level than would be the case if . the business were more strictly on a competitive basis, and in addition, such a combination, well organized, might effectively prevent the introduction of any competitor attempting to reduce rates. At the present time the major portion of the business is conducted on rates determined by Tariff associations. These rates represent the combined experience of the offices connected with the association, which appear to furnish a fairly satisfactory method of determining a reasonable basis’ of operations. There appears to be an impression that the rates may be maintained at an unduly high level, and in order to prevent these Tariff associations from becoming injurious monopolies, the Bill provides that all rates must be reasonable and just, and the standard rates to be fixed by the Commissioner will be some* evidence as to what rates are reasonable and just. Companies charging unreasonable or unjust rates are liable to a penalty, and companies entering into combination to fix rates that are unreasonable and a detriment to the public are guilty of an offence.
There are no special provisions relating to accident and other insurance business., but like fire insurance companies, companies indulging in these classes must obtain a licence, file periodical and actuarial accounts, lodge the same deposits as fire companies, and comply with other general provisions, such as appointment of auditors and actuary, relating to fire insurance’ companies. I have touched upon the principal parts of the Bill. As this is an important matter, I trust it will have careful attention at the hands of honorable senators, and that in Committee it will receive that fair criticism which can always be looked for in the Senate. The Bill ‘ marks a progressive step in the history of insurance legislation.
– You can scarcely call it progressive. It is simply coordinating the legislation.
– It may not appear to be progressive, but it will bring the insurance laws of the Commonwealth under the control of one governing body. If honorable senators can show me where improvements can be made, they will be acceptable; but I am not throwing the Bill into- the hands of honorable senators in order that any member may move ill-considered amendments with the object, possibly, of embarrassing the Government. I will listen attentively to the discussion on the second reading of the Bill; and I hope that we shall soon have the satisfaction of placing upon our statute-books a measure which will be of great benefit to Australia.
Debate (on motion by . Senator Millen) adjourned.
Senate adjourned at 4.20 p.m.
Cite as: Australia, Senate, Debates, 20 May 1915, viewed 22 October 2017, <http://historichansard.net/senate/1915/19150520_senate_6_76/>.