25th Parliament · 1st Session
The DEPUTY PRESIDENT (Senator Drake-Brockman) took the chair at 3 p.m., and read prayers.
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– 1 address the following questions to the Minister for Civil Aviation: ls it a fact that the Department of Civil Aviation has refused permission to the German airline, Lufthansa, to fly two services a week between Australia and Germany? Is it also a fact that Qantas Empire Airways Ltd. operates two services a week through Frankfurt and that this arrangement morally obliges the Australian Government to grant the German request for a bi-weekly service to Australia? What are the Government’s reasons for refusing the necessary permission to the German airline?
– This matter was discussed with the German mission that visited Australia just recently. It has been decided that Qantas Empire Airways Ltd. and the Lufthansa airline will each run one service a week to Australia. This is such an important matter that, having given the honorable senator that information, I ask him to place his question on the notice paper so that I may give him a considered statement.
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– I preface my question, which is addressed to the Minister representing the Minister for Health, by reminding him that on 30th September last I asked a question relating to a report that Sir Ernest Marsden, a scientist who had just returned from an overseas study of cancer, had stated inter aiia; “ . the causes of lung cancer had been discovered . . . “
The then Minister for Health referred, in his reply, to seven components of tobacco smoke as being capable of inducing cancer. He referred in detail, and by name, to the most carcinogenic of them and stated that various factors in the growth and treatment of the tobacco plant materially affected the quantity of these carcinogenic compounds in tobacco leaf.
I now ask: Has- any research been undertaken by either the Department of Health, the Commonwealth Scientific and Industrial Research Organisation, the Department of Primary Industry, or any other department under the authority of the Commonwealth, in an endeavour to assist Australian growers and/or processors to supply a final product free of these carcinogenous components? Alternatively, does he know whether any such research is being carried out by any cigarette manufacturers or any other people or organisation? Having in mind the splendid work that is being carried out by this Government in regard to improved tobacco marketing facilities, will every effort be made to ensure that Australian tobacco growers do not lose these advantages to any other tobacco-producing country because of its earlier discovery of methods of eliminating carcinogenic components in tobacco leaf, thereby gaining one of the strongest possible sales promotion features, to the detriment of our own producers?
– In answering the question which the honorable senator asked of him on 30th September 1964, the previous Minister for Health, the late Senator Wade, mentioned that there are seven components of tobacco smoke which are capable of inducing cancer. These components are called polycyclic compounds, and vary in their propensity for promoting cancer. The Minister also mentioned that the concentrations of the polycyclic hydrocarbons may vary according to the method used in curing and ageing the tobacco and, further that it was possible that certain tobaccos may be less carcinogenic than others due to factors such as the nature of the soil in which the plant was grown, the type of plant, and so on. However, it is thought that any variations in this regard would be minor rather than substantial.
In answer to the honorable senator’s new question, I know of no research being carried out by the Commonwealth Scientific and Industrial Research Organisation, the Department of Primary Industry, the Department of Health, or any other Commonwealth Department or instrumentality, with a view to obtaining a tobacco free of carcinogenic components. I understand that some of the large manufacturers in America are spending millions of dollars on research. This research has been directed to the objectives mentioned by the honorable senator as well as to exploring the possibility of discovering some satisfactory substitute for tobacco. It would appear that no suitable substitute for tobacco has been found up to the present time. Also, as far as I am aware, no method of measurably reducing the carcinogenic components in tobacco has been elicited. The honorable senator will appreciate that research aimed at securing improvements or advantages in the marketing of a product is outside the authority of the Minister for Health, but he may wish to discuss his suggestions with the Minister for Primary Industry and the Minister in charge of the C.S.I.R.O.
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– My question is directed to the Minister representing the Treasurer. For how much longer will the Menzies Government delay in carrying out its promise to assist decentralisation by equalising the prices of petrol?
– The honorable senator should have directed his question to the Minister representing the. Minister for National Development who is responsible for this aspect of Government policy. Very difficult problems have been encountered in this matter requiring consultations with all State Governments. These consultations have been undertaken and the road is now clear for us to proceed. It has not been by any means an easy constitutional problem to overcome and the matter has been proceeded with as expeditiously as possible. I think we can look for legislation providing a solution to this problem in this House before very long.
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Activities in Education and Research whether he has seen a report in the newspaper, “Muster”, of 13th January 1955 that in the Tamworth pasture protection district the rabbit population is said to have reached its highest level since before the introduction of myxomatosis and that the secretary of the Tamworth Pastures Protection Board, Mr. J. M. Simpson, believes that myxomatosis is no longer an effective control measure against rabbits. Would the Minister indicate whether this opinion is held in other parts of Australia where the rabbit pest is experienced? Would he also inform the Senate of the results of further experiments by the Commonwealth Scientific and Industrial Research Organisation aimed at the extermination of these animals?
– The C.S.I.R.O. has prepared an answer to the honorable senator’s questions. The answer to his first question is “ Yes “. The answer to the second question is that although myxomatosis continues to kill rabbits, the level of kill is much lower than when the virus was introduced to the rabbit population in 1950. There are two reasons for this situation. First, less lethal strains of the virus have developed in the field. Secondly, the rabbit population has developed an inheritable resistance to the virus. Myxomatosis, therefore, cannot be relied upon to produce a very high level of control, although it still remains an extremely useful weapon. Nevertheless, the C.S.I.R.O. Divisions of Wildlife Research and Animal Genetics are studying resistance of rabbits to selected strains of myxomatosis and are looking for new virulent strains of myxomatosis which may be of value in rabbit control programmes. Control by poisoning, particularly with the poison 1080, is the most promising technique developed so far for capitalising on the gains won in the past by myxomatosis. The effectiveness of poisoning as a long term weapon depends on the application of findings about rabbit behaviour and rabbit biology. The Division of Wildlife Research is therefore studying natural populations in areas representative of four of the main habitats of rabbits in Australia. These studies are being supplemented by experimental work in the laboratory and in enclosures. A number of important findings have already emerged which have helped increase the effectiveness of rabbit poisoning programmes conducted by State rabbit control authorities.
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Local Government Rates
– My question is directed to the Minister representing the Treasurer. Has the Minister seen a report in one of this morning’s newspapers to the effect that it is thought in the Shire of Colac that rates in that shire will increase as a result of the changeover to decimal currency? Can the Minister say whether this matter has been studied by the Treasury, and can it be taken that rates will be affected in this way throughout Australia?
– This is an interesting question. The level of rates levied by a shire council is a matter entirely in the hands of the council. The council can compute the rate under the decimal system which will return the same amount of money as it is getting under the present system. This being so, there should be no difficulty. If the council wants to obtain more money it can compute a rate under the decimal system to return this greater amount. Conversely, if it wants a lesser amount than it is getting now it can go down the scale and make the appropriate computation. The imposition of rates is in the hands of the council itself, and the council has to answer to the ratepayers for its rate fixation.
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– Will the Minister for Repatriation advise whether he has received the Returned Servicemen’s League’s pension plan for 1965, there being at least another four months before the next Budget will be presented to the Parliament? Does the Minister not agree that the requests made by the Returned Servicemen’s League covering totally and permanently incapacitated servicemen’s pensions, war widows’ pensions and other ex-servicemen’s pensions are reasonable and should be favourably considered and agreed to by a just government?
– Yes; the pensions plan put forward by the R.S.L. has been received and will be given attention by Cabinet in the course of the next few weeks.
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– My question is directed to the Minister representing the Minister for Labour and National Service. Have any call-up notices yet been sent out by the Department, of Labour and National Service to persons who were recently required to register for compulsory military service and who are due to be called up as a result of the ballot conducted in Melbourne? Will the Minister consider sending with all future advices a brochure setting out the rights of those eventually called up, and the name or names of the person or persons whom they may contact in .the Department in order to resolve any doubts they may entertain about any aspect of the call-up?
– I think the second part of the question is the operative part. I will bring it to the notice of the Minister for Labour and National Service, so that he may reply to the honorable senator.
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– I ask the Leader of the Government in the Senate: Has the Government over a considerable period of time received many petitions and requests for a referendum to secure amendment of the Australian Constitution by removing from it the provisions discriminating against the Aboriginal people? In view of the growing public interest in and concern for the Aboriginal people, does the Government not consider that the time is long overdue for the conducting of such a referendum? Will the Government therefore give serious and urgent consideration to this proposal?
– While it is true that from time to time this question has been raised, I think it would be overstating the case to say, as the honorable senator has suggested, that there have been continuing and persistent requests and representation in this connection. The Government undoubtedly will give consideration to this matter at the appropriate time.
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– I direct to the Minister for Civil Aviation a question which I preface by referring to the Minister’s statement that the Government is about to spend £4 million on Sydney’s international airport. Without in any way criticising the expenditure on Sydney’s airport, as I realise that Sydney is a city of no inconsiderable consequence in Australia, I ask the Minister for an assurance that no expenditure at Mascot will delay the completion of Tullamarine jetport at Melbourne - the city which all honorable senators on both sides of the chamber concede to be the social, cultural, economic and political heart of Australia.
– I hope to make to the Senate tomorrow a statement which - I really believe will at last put to an end this tribal war that has been going on between these two cities.
– My question relates to that which was just answered by the Minister for Civil’ Aviation. As Adelaide is, 1 think, more in need of additions to its airport than is either Sydney or Melbourne, will the Minister include in his statement a reference to what we in South Australia can expect, even if it is in the distant future?
– I think the honorable senator will find some reference to South Australia in the statement that I shall make tomorrow, although it may not be all that she wishes.
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(Question No. 365.)
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has supplied the following answers-
I and 3. I am not aware of any dissatisfaction about the Defence Forces Retirement Benefits Fund having been expressed by contributors who have joined the Services since the 1959 legislation. However, the Treasurer has received representations regarding the high rate of fortnightly payments by some of the pre-1959 entrants to the scheme and the reply to the honorable senator’s question was delayed by consultations that are proceeding with the Services on additional means of resolving this difficulty.
Contributions to the Defence Forces Retirement Benefits Fund are compulsory for all members of the Permanent Forces who arc over 1.8 years of age and who, in the case of other rank members, have engaged to serve for at least six years. However, those pre-1959 entrants who would have been required to pay a high rate of fortnightly contributions, consequent upon an increase in pension entitlement shortly before retirement, have had three options not to contribute for the additional pension entitlement resulting from amending legislation. They have also had the alternative of deferring payment of portion of their contributions until retirement.
The balance of the Fund at 30th June 1964, was £26,252,816.
The last actuarial investigation of the Fund, in respect of the quinquennium ended 30th June 1959, revealed a small surplus. The investigation at 30th June 1964, is in progress.
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(Question No. 373.)
asked the Minister for Civil Aviation, upon notice -
– The answers to the honorable senator’s questions are as follows -
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(Question No. 379.)
asked the Minister repre senting the Minister for Primary Industry, upon notice -
– The Minister for Primary Industry has furnished the following answers -
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(Question No. 409.)
asked the Minister representing the Minister for Primary Industry, upon notice -
– The Minister for Primary Industry has furnished the following answers -
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– For the information of honorable senators I present the following papers -
Report of the Third Commonwealth Education Conference 1964. Report of the Australian Delegation to the Conference. and I ask for leave to make a statement relating thereto.
The DEPUTY PRESIDENT. - There being no objection, leave is granted.
– The two reports I am tabling emanate from the Third Commonwealth Education Conference, held in Ottawa from 21st August to 4th September, 1964. The first is the official report of the Conference proceedings, as approved by the delegates of member nations represented. The second is the report of the Australian delegation which was led by Sir Allen Brown, Deputy High Commissioner to the United Kingdom.
Honorable Senators may recall that the first Commonwealth Education Conference, the foundational one, was held at Oxford in 1959 and the second at New Delhi in 1962. The fourth conference will be held in Nigeria late in 1967 or early in 1968. We have hopes that the fifth conference will be held in Australia. The conferences are, of course, not just isolated meetings, they are the periodic points of review of the Commonwealth co-operation in education scheme. Essentially the principle behind the scheme is the sharing of educational facilities among Commonwealth countries for the purpose of strengthening Commonwealth ties and improving educational standards. One aspect of it. the Commonwealth scholarship and fellowship plan, provides opportunities for good students to study in an interesting variety of Commonwealth countries, as it has attracted not only the older members, but also many of the newer ones in Asia, Africa and the West Indies to offer awards. The number of scholarships available amounts to over 1,000 altogether. The greater part of the scheme, however, concerns help from the older countries to the new to promote the development of education. As Australian assistance of this kind is available to Commonwealth countries in Asia under the broader provisions of the Colombo Plan, this scheme, as far as Australia is concerned, is directed towards non-Asian, principally African, members.
Australian assistance under this scheme is of three main types. First, provision is made for the supply of a small number of Australian educationists to fill key posts in the education systems of developing countries. There are 15 of these serving overseas at present in positions involving teacher training, inspection and supervision, the establishment of new technical courses, the introduction of correspondence courses and the like. Second, arrangements are made for educationists holding positions of responsibility in developing countries to visit Australia for a few months to study Australian educational institutions and practices in fields related to their own responsibilities. Thirteen such people are at present visiting Australia. Third, awards are provided to enable teachers and other educationists from developing countries to undertake short courses, mainly a year in length, which will equip them to specialise in a particular field of education or increase their competence in a field in which they have already specialised to some extent. In the past few weeks 60 teachers have arrived in Australia to commence courses of the kind and a further 15 are expected in May.
The training needs of these teachers are often very different from those of the normal Australian teacher trainee, because of differences in their background of experience and previous training. Frequently special programmes have to be designed for them, either individually or in groups. One such programme is the course for the Certifi cate in Education for Overseas Teachers which commenced last year at the University of Queensland and provided concentrated training for people who are or will be teachers’ college staff in developing Commonwealth countries. Another, which has been designed by the Western Australian Education Department and begins in May, will give training in the principles and techniques of school inspection. In addition, a special course mainly in infant teaching method is at present being conducted in Sydney at the request of the Uganda Government for 30 primary teachers. The expenses of this course are being met jointly by the Uganda Government and the Australian Government. Honorable senators will realise that such activities cannot be carried out without the co-operation of the State Departments of Education and the universities and I am happy to say that their sunport has at all times been most generously given.
I might now say a few words about the main points of interest for Australia at the Ottawa Conference. Australia promised a 50 per cent, increase in its activities under the scheme, principally, as I have explained, on teacher training activities. It was thus gratifying that the Conference found teacher training to be an area in which the greatest need lay. While for a time many of the teachers needed by developing countries will have to be recruited from overseas, the Conference emphasised that every country should aim to reach the point as soon as possible where it could recruit and train enough teachers for its entire teaching force from among its own people.
Other matters regarded by the Conference as of major importance were co-operative action aimed at reducing illiteracy among adults and the development of technical education, especially the training of technicians. No expansion in the Commonwealth Scholarship and Fellowship Plan was recommended but it was agreed that the Plan was working well and had achieved a high prestige. Some thought was given however, to ways in which the plan might be used to stimulate university growth amongst the less developed countries.
In conclusion, I would point out that Commonwealth co-operation in education is not the only education aid Australia gives to developing countries. Besides the Colombo Plan there is also the scheme known as the Special Commonwealth African Assistance Plan; and the system of Australian International Awards provides scholarships to countries not covered by other schemes.
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Debate resumed from 25th March (vide page 140), on motion by Senator Paltridge -
That the Bill be now read a second time.
– The Opposition does not oppose the Housing Loans Insurance Bill but in our opinion it falls far short of the sort of housing programme which ought to be established to meet Australia’s building requirements. We feel that this proposal and the associated Homes Savings Grant Act are, in fact, simply fringe benefits and do not meet the requirements of our population. They are largely designed to influence finance for home building. While the scope and intention of the proposals might be good they do not include many things which could be said to be in advance of our time. They are mainly conventional. They do not meet the need for finance as some people think they do.
For instance, this proposal does not arrange to provide cheap finance for housing, as was the policy of the Australian Labour Party at the 1963 general election. The Labour Party’s policy at that time was the origin of these proposals put forward by the Government. But the main intention of these proposals is to get up an organisation which will tend to influence money, particularly private savings to be put into the field of home building. This is to be done on the basis of a guarantee of one mortgage.
It is very clear from the discussions and reports on this measure that there is no intention at all even to consider the question of renegotiating a second mortgage - for example, in the case of the War Service Homes Division or in other sectors of home building. Therefore, the Opposition adopts the view that the real needs of the Australian community are not the sort of fringe benefits which accrue from this Bill. The benefit of this Bill can only be tested in time. We have to see what impact it will make at a time when money is getting scarce. The Opposition is of the view that while we should not oppose this Bill we should draw attention to what are to us, the real needs of the communtiy. Obviously, while there has been some improvement in housing there is still a great need, particularly for young people, to get some direct assistance by way of cheap finance and low deposits to provide them with accommodation. We certainly do not want a situation in Australia where the breadwinner and his wife have to continue working to earn enough money to pay off first and second mortgages on a home which might not be of a good standard, anyway.
During the 1963 general election campaign the Australian Labour Party said that it would set up a home building commission to provide finance for home construction and to guarantee loans from those willing to lend at low interest rates and on low deposits. It could be, of course, that this policy was the germ of the present proposals by the Government. The Labour Party’s policy was fairly attractive and seemed to meet the needs of the day. The Labour Party also proposed that there should be grants to the States at 3i per cent., a low interest rate similar to that provided for war service homes applicants and. also, that there should be an inquiry into housing. In this matter of housing it is very apparent that we do not have the information, the statistics, nor the reports we want on which to base our conclusions as to the needs of the community. Most of us are working on what we know to be the practical needs in our own community. Obviously there is a great need for a proper inquiry into home building and for a commission of some sort to be set up in conjunction with the States.
The first point I want to make is that the Opposition regards this measure as simply a fringe benefit. It will be of some advantage to people. There is no doubt that, if second mortgages can be eliminated, this will make more finance available to people so that they will be able to occupy their own homes. But the real impact and advantages of this scheme can only be gauged over a long period. The need to develop a home building programme is urgent.
In his second reading speech, the Minister for Defence (Senator Paltridge), who represents the Minister for Housing (Mr. Bury), 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. As the amount borrowed may, at times, be a high proportion of the value of the house and land, there is the risk that a lender may lose some of his capital . . . lt has been argued that, if some scheme of insurance were introduced to guarantee housing loans, more people would be induced to enter this field of finance. It seems to me that we must have regard to the background against which this legislation has been introduced. A long time has elapsed since the Government announced its intention to introduce the legislation. Of course, I can quite understand the necessity to investigate the sort of scheme that should be adopted. The Minister has stated that there have been discussions with various authorities within Australia and that inquiries have been made about the situation in Canada and in the United States of America. But in this intervening period interest rates have risen and people have experienced difficulty in getting money for ordinary purposes. We must ask ourselves whether this legislation will induce people to invest money at low rates of interest when they can get a quicker return by investing that money in, say, the second mortgage field at interest rates of from 10 to 12 per cent. The Minister made this very point in his second reading speech when he said -
At present many institutional lenders have not the finance freely available to permit them to make many larger loans. Although we do expect all these lenders to make some larger high ratio loans, and to insure them, the needs of many borrowers will continue to be satisfied with loans up to conventional percentages of valuation which will not be insured.
It is common knowledge that interest rates have risen, and there is no doubt that when the proposed corporation gets down to business it will have to face up to this situation.
The Minister for Housing has been very careful not to say what the rate of premium will be. It seems to me that the approach to the proposed scheme has been based purely on business principles. Although it might be argued that the proposed corpora tion must be established on that basis, in order to assist young people to obtain homes we must get away from conventional methods. Money will continue to be in short supply. This legislation of itself will not make more money available. The basic situation will remain the same. Housing loan authorities such as the savings banks will continue to make advances on first mortgage, leaving the purchaser to obtain a second mortgage privately; the housing commissions, such as that in my own State, will continue to provide homes; and applicants to the War Service Homes Division will continue to have to wait for finance.
A little document that has been prepared by the Housing Industry Research Committee of Victoria has quite a lot to say about this legislation and housing requirements. Whatever we may think about the need for research, this document, which has been discussed in another place, is of considerable interest and we ought to consider its contents. In its newsletter of March 1965, the Committee said that savings banks, co-operative societies and government housing authorities in Victoria loaned £1.2 million less in the December quarter of 1964 than they did iri the same quarter of 1963. This is equivalent to a drop of about 350 houses. During the December quarter lending by savings banks and the cooperative groups was down by 6 per cent, on the same period in the previous year. The newsletter makes the point in relation to finance restrictions that the life assurance offices, permanent building societies and friendly societies increased their lending during the quarter. However, as their combined lending was less than 8 per cent, of all institutional lending, their increased lending could not offset the reduced lending of the major institutions. It continues by stating that the figures do not reflect the results of new measures taken by savings banks at or about the beginning of this year in following the request of the Reserve Bank to slow down the rate of lending. The newsletter also states that generally the banks are making fewer loans, some by introducing new qualifying conditions.
The effect of all these measures is to restrict the buying of homes on low deposit. It seems to me that to introduce this legislation at a’ period of rising costs and interest charges will not meet the intention of the legislation. Although there are some fine sentiments incorporated in the legislation, it seems that it will not have the effect that was proposed. The Minister for Housing has said that the general idea is to encourage the investment of money in the market for housing mortgages. One of the associated points of view was that somehow somebody should set up a market for housing mortgages. On 18th March of this year, as reported in “ Hansard “ at page 134, Senator Paltridge, the Minister representing the Minister for Housing, said -
To the Opposition this seems to be merely picking at the problem. Government supporters are saying: “ We want to encourage the investment of money in home building. We want to divert savings into home building.” But the fact is that the legislation to implement grants for housing already is being amended as it does not meet the circumstances of many young people setting out to buy a home. We think that the legislation to insure loans by the Corporation is too bound up with business principles.
One problem that has been discussed in another place is the value of the sentiment expressed by the Minister when he said -
It is quite clear that the ordinary worker in industry, because of his income, will not have sufficient finance to cover the purchase of the house that he wants and obtain the benefit of this legislation. In the last report of the War Services Homes Division two figures are given as estimates of the cost of home building. The figure given for my home State of South Australia exceeds the figure cited by the Minister. The War Service Homes Division stated that, in South Australia in the year 1963-64, ‘the cost of land and a dwelling house was £5,376. Using the type of formula that has been indicated by the Minister for Housing in another place, it seems that a worker on an income of £22 a week, for example, will be able to obtain a loan of only £3,500. Of course, this is not sufficient for him to buy a home so that he has to wait until he has saved the balance. Either he must anticipate his marriage a long way ahead or he must have income other than his wages in order to raise the amount in excess of the loan needed to buy a house and land. If he cannot raise the required amount he will do as most young husbands are doing; he will ask his wife to go to work, and together they will pay off not only the first but also the second mortgage. This should not be allowed to happen, in our view. Our contention is strengthened by the fact that the Minister made many references in his speech to what he called a credit-worthy borrower, or to the ability of borrowers to meet a situation. This is again an indication to us that a conventional approach will be made and that no risk will be taken in the granting of benefits. One of the directions given by the Minister to the Corporation is that it is to make neither a profit nor a loss. So it appears to us that the legislation will cover the situation only of people of some means or people who have a high combined income and thus will be enabled to obtain a better type of house.
This does not mean that there are not some very good sentiments in the Bill itself. It seems to me that the scope of the Bill is quite good. A number of new principles are laid down which may, in our opinion, form the basis of improved legislation in the future. I mention, for instance, clause 4 of the Bill, which refers to the kinds of things that may be insured. This goes a fair way towards covering many items which are at present personally covered by the people immediately concerned. For instance, most people who build or buy a home at the present time have to pay at some later stage for the provision of kerbing and footpaths. This is an item of expenditure that might be covered by the Corporation. A loan may be granted to meet such a situation. There is also a provision for the Corporation to renegotiate a mortgage on the basis of the credit worthiness of the applicant. Again, there is a worthwhile provision covering existing buildings. All these things represent very fine sentiments, but I believe you must have something more than sentiment. You have to be able to say: “ We in some way will help to provide the finance, so that it will not be necessary for the community at large, in a competitive society, to attract the right sort of cheap money in a situation of rising prices and rising interest rates”.
There was one aspect which was not covered in another place and which I think 1 should mention now. No premium rate or interest rate has been mentioned. There has been no indication of the interest rate that may apply in relation to the operations of the Corporation. We would have hoped that if this legislation was to do something more than set up the usual business enterprise, there would have been an indication of the premiums that will be asked of the borrower in obtaining a first mortgage or in trying to discharge a second mortgage. I had hoped that the Minister would indicate the rates of premiums and interest so that we might evaluate the possible effectiveness of the measure.
It seems to me that clause 23 of the Bill is a good provision. It is gratifying to see such a provision in a Bill of this kind, which contains a mixture of sentiments, with one or two good clauses which could prove beneficial. Clause 23 seems to me to lay down something in the nature of standards of home construction which will be of advantage throughout the whole community. It. may be that as a result of our criticism the Minister will see fit to make some alterations to the provisions governing the Corporation. There will be some advantage in the provision that the Corporation will decide whether a dwelling is of suitable standard. I see something good in this part of the legislation. It seems to us that the Government is excusing its failure to make some attempt to provide cheap money for low deposit homes and to establish some authority to tackle the housing question. Throughout the second reading speech one notices a tendency not to deal with the question in a very positive way. Stress is laid upon the difficulties that would arise from labour shortages even though there were an increase in available funds. The Minister said that even if there were a large increase in the funds immediately available for housing it is doubtful whether there would be an increase in the rate of home construction, as almost all the labour available for home building was now fully employed. He added that in the first nine months of 1964 there was a most gratifying increase of 7,600 in the number of persons engaged in new dwelling construction.
The Minister’s point that even if we provided the funds we could not provide more houses because we have not the necessary labour, is the very point that we have been arguing over the years. There must be a plan for these things. The problem must be dealt with in a positive way. There must be a review of material resources, and finance for home construction must be provided. We must obtain the necessary statistics. We ought to be able to assess the requirements of the country in a sensible way. We are not able to do that now because there is an absence of information. It seems to me that the Government has a responsibility to start upon this work. There should be a review of the labour situation in the building industry with the idea of increasing the effectiveness of the labour force and determining why there has been a high turnover of labour. On 29th May the Commonwealth Statistician pointed out that the building industry had the greatest labour turnover of all industries. It is hardest hit by the movement of workers. The number of building workers who left jobs of their own accord jumped from 5 per cent, to 8.4 per cent. What the Government ought to do is to ascertain the reasons for this and try to remedy the position. It ought to organise labour requirements for an Australia-wide housing programme, having regard to the sentiments that we have expressed.
In my own State, apprentices in the building industry are at a minimum. The South Australian Premier has just made a proposal, which building industry groups have accepted, to the effect that one of the factors which will weigh with the Housing Trust in considering a contract is the number of apprentices to be employed by the contractor. This seems to be a remedy of the sort that anybody can take. The Commonwealth Government itself could promote measures of this kind. In South Australia applications for loans from savings banks cannot be met without delay. Applications are still being placed on a priority list.
Another aspect of the labour shortage is the proposition which was canvassed when the Government, the employers and the unions discussed the need for more skilled labour. It will be recalled that certain modifications were made to the apprenticeship system whereby credit was given for the holding of certain certificates by applicants for apprenticeships. Arrangements were made for paying living away from home allowances for apprentices in the metal industry generally. To my knowledge, such a provision has never been extended to the building industry because to some extent nobody seems to have worried about what was happening in that industry. I should be interested to know whether anything has been done along these lines. These matters are most important if it is agreed that some sort of organised effort ought to be made. It is not enough merely to set up a corporation to act on business lines and perhaps relieve many borrowers of the burden of a second mortgage at a very high rate of interest.
It is very difficult to find what rates are being paid. There are no reliable figures. The nearest I have been able to get to this information is an answer given by Sir William Spooner on 2nd May 1963, which appears at page 231 of “Hansard”. The question asked was -
Senator Sir William Spooner supplied the following answer -
The last survey made by the War Service Homes Division of the rates of interest paid by applicants purchasing second hand homes was in respect of applications dealt with in October 1962. The survey showed that -
It would appear from the latest figures that the interest rates have risen even higher in this field of finance. We are not very confident that the purposes of the Bill can be met in this regard. There was a further increase in interest rates recently. The Government expects that the ordinary investor in the community, who can invest his savings in all sorts of investments and receive quick returns at high interest rates, will put his savings into housing loans. We hope that there will be some positive step taken in this regard.
The Minister said, and it has been mentioned in another place, that the Corporation will be told that it cannot renegotiate second mortgage where the moneys for the construction of a home have been borrowed through Commonwealth or State housing authorities. This matter immediately brings into question the position of people who are on the waiting list for assistance from the War Service Homes Division. While they are waiting for loans from the Division they are paying extraordinary interest rates on money borrowed elsewhere. The report of the War Service Homes Division for 1963-64 indicates that there is still quite a waiting list of applicants requiring assistance, although it has been reduced. On page 6 of the report, under the heading “Applications on Hand and Waiting Periods “ the following statement appears -
The gradual reduction in the number of applicants awaiting assistance is continuing. The number of applications on hand for assistance to build or purchase homes was reduced from 12,965 at 30th June 1963 to 11,806 at 30th June 1964.
Of the applications on hand at 30th June 1964, only 6,624 were applications for which there is a waiting period. The remainder were in process of being dealt with at 30th June 1964, or were deferred by the applicants for various reasons.
Applicants for finance from the War Service Homes Division should be dealt with in the same way as are the ordinary members of the community. Governments have endeavoured to give them special consideration by providing for low interest rates where homes are built or purchased through the Division. The situation created by the Bill will do an injustice to persons awaiting assistance from the Division, and it ought to be corrected. Whilst the problem has been recognised, as yet there has been no attempt to correct it.
I ask the Minister to consider the position in South Australia where the South Australian Housing Trust might be in similar difficulty in relation to second mortgage loans. A similar situation arose when we were dealing with the homes savings grants legislation last year. In South Australia, usually the savings banks advanced £3,500 for the purchase of the home, and the nurchaser, as a general rule, has to raise a second mortgage of £750 from the Housing Trust. I am concerned that the purchasers of homes through the South Australian Housing Trust might be in the same position as ex-servicemen who are purchasing homes through the War Service Homes Division. That is one of the matters that seem to me to require urgent consideration.
The Opposition takes the stand that, while it is possible that the legislation might be of some benefit and that it might attract finance into the home building field, there is obviously a need for more positive action on the part of the Government in conjunction with the States. There is, of course, the vital need to increase the amount of moneys available and to ensure that those moneys are loaned at low interest rates on small deposits in order that people on low incomes may be able to own their own homes during their lifetime. There is also a need to ensure that both the husband and wife are not forced to work in order to pay extraordinarily high mortgage repayments.
We believe that the legislation will provide fringe benefits. It may be of value in the long run, but its real effects will have to be watched and evaluated for, perhaps, a couple of years. Many of the clauses in the Bill are praiseworthy. We say that the intentions of the legislation, as expressed by the Minister, are good in themselves, but we have doubts, for example, about it encouraging additional finance. It seems to us that the Government cannot encourage additional finance into the home building industry because investors have a better market in other fields. We hope that the Government can encourage additional finance.
Another point which we ask the Minister to consider is the need to ensure that the interest charges and premiums paid by the borrower are reasonable. We ask him to give us an idea of the rates that will apply. We also ask him to ensure that the Corporation is not too businesslike in assessing the creditworthiness of applicants. It is of no use establishing the Corporation for the purpose of assisting home builders and enabling more finance to be directed into the home building field if its establishment will place greater burdens upon the people. I ask the Minister to consider the point I made concerning applicants who are on the waiting list for assistance from the War Service Homes Division, and also to examine the situation in South Australia to which I have referred. The system which operates in South Australia at the present time covers a very large percentage of home purchasers. We are building 3,000 homes per year in South Australia. As I have said, many people receive an initial loan from the savings banks and obtain a second mortgage from the Housing Trust. A worse position arises in other States where a young married couple who wish to buy a home for about £6,000 both have to work. They pay off a second mortgage at rates of interest between 10 per cent, and 1 2 per cent.
They are the general remarks of the Opposition in relation to the measure Amendments will be moved at the Committee stage. We do not oppose the Bill, but we feel that it falls short of the requirements of the Australian public. We hope that the Government will consider the proposals which we have advanced, particularly in relation to surveys and statistics.
– I listened with great interest to Senator Bishop’s remarks and I rise now to support the Bill without a number of the reservations that he mentioned. The purpose of this Bill is to establish the Housing Loans Insurance Corporation which will insure lenders against losses arising out of the making of loans for housing. The Bill has been created and brought to this Parliament under the powers vouchsafed to the Commonwealth by the Constitution. As all honorable senators know, we in this country work under a limited Constitution, so this Bill should be examined specifically from that angle. I agree with Senator Bishop that it will bring great benefit to the people of Australia who desire a home of their own. I do not agree with him that the fact that this proposed Commonwealth organisation will guarantee loans will draw off investment.
The honorable senator referred to war service homes. The Minister in another place gave a very interesting undertaking in that regard in reply to an Opposition request, similar to that which Senator Bishop has made, for war service homes loans to be brought within this scheme. I would prefer to see the outcome of the undertaking before becoming too critical of the Bill because, after all, the guaranteeing of war service homes loans is a matter for another department. The Minister for Housing (Mr. Bury) is reported on page 304 of “ Hansard “ of the House of Representatives as saying -
We will review the war service homes scheme. This problem will be considered in relation to war service homes and repatriation measures.
Senator Bishop said he hoped that the Corporation would not consider itself to be bound by strict business principles. I hope that business principles will be observed in all considerations relating to the operation of this Bill. We are trying to save borrowers from all the problems associated with second mortgages as a result of which they have been compelled to agree to rather high rates of interest. Therefore I believe that this new scheme should be implemented in strict accord with sound business principles because when loans are made without sound business principles being observed there is always the chance of a mortgagee sale or a foreclosure. That is the very thing that this Bill sets out to avoid. It sets its face distinctly against problems such as would thereby arise. However, I think Senator Bishop gave the Bill a very generous and understanding consideration. It certainly helps, in a debate like this, when the Opposition has obviously gripped the main principles of the Bill.
I desire to set out in some detail just what insurable loans are to include. Insurable loans are to include loans made for the purpose of acquiring land and constructing, or completing the construction of, a dwelling on the land. They will not include a loan made for the purchase of land for speculation or anything like that. They will not include a loan to purchase land for agricultural or horticultural purposes or for any business purposes. They will include a loan to purchase land on which a dwelling will be constructed. They will include a loan made to construct a dwelling or to complete the construction of a dwelling on land owned or leased by the borrower, that is, where the dwelling is partly completed.
What is of significance in this Bill above ail bills relating to housing that I have considered during my 14 years in the Senate is that it guarantees a loan made to purchase an existing dwelling. Because of the backlag in building, emphasis over the years quite rightly has been on the purchase of new dwellings; but now loans made for the purchase of an existing dwelling are to be included. This is a rather important factor because it will go a long way towards preventing waste in housing-
Some very fine residences have been built over the past 30 or 40 years. Although some of them may look a little out of date now, they were built when materials were of a high standard and when workmen were well trained. These residences stand in areas in our capital cities and major country towns where all the facilities exist - ‘transport, water, electricity, schools, hospitals and so on. It has been rather difficult to find a market for these houses because, under the various governmental housing schemes which have existed, it has not been possible to obtain the finance with which to purchase them. As a consequence, some of our very fine suburbs have dropped in popularity. I am sure that this Bill will cause a fresh interest to be taken in this type of residence because loans to purchase them will be guaranteed under this measure. Governments, both State and Federal, will be saved a good deal of money because the services and facilities are already in and around this type of home and, therefore, will not have to be provided. In addition, I believe that purchasers of these homes, by and large, will get very good value. A lot of the discomfort suffered especially by young people who go into the outer suburbs, possibly 10 miles or more from the capital and 10 or even 20 miles from their place of work, will be avoided if they are able to purchase this older type of home in areas that were built up 20, 30 or even 40 years ago.
Guarantee will extend also to loans to alter, improve or extend a dwelling. These would include loans for, amongst other things, the permanent provision of water supply, electricity and sewerage, and the conversion of an existing dwelling into two or more dwelling units. I think that is a very wise provision. It will help the housing situation because the tendency these days is for families to be smaller than they were 30 or 40 years ago when a number of larger type homes were constructed. It is now possible for two families to live in one of these old style houses provided certain additional facilities, such as bathrooms, are created. The Government has shown imagination in including loans for this type of construction. As Senator Bishop has said, the Bill provides that loans may be made also- to meet expenses in respect of the provision or improvement of roads, kerbing, guttering or footpaths in connexion with land in which the borrower has a prescribed interest.
As honorable senators know, there is an obligation on a householder to the municipality to assist in the construction of footpaths and kerbing and sometimes the demand made by a municipality for kerbing expenses is severe. The Government has wisely covered loans made for these purposes. The Bill also provides that loans may be made - to discharge a mortgage, charge or other encumbrance over land in which the borrower has a prescribed interest . . .’
So it can be seen that although Senator Bishop has suggested that provision could have been made for one or two other types of loan, the Bill as framed contains a pretty massive list. I remind the Senate that the Minister for Housing (Mr. Bury) has given an undertaking that consideration will be given to the question of war service homes.
I want to make several observations now concerning housing on matters which I consider to be linked closely with the Housing Loans Insurance Bill. I do not call for any legislative action by the Government at this stage but I think action is required on these matters by way of conferences with the States. I regret that throughout Australia at present there is not a system of strata titles under the lands titles system. A system has been well tried in New South Wales and I believe one was recently introduced in Victoria. But in none of the other States or the Australian Capital Territory is there any provision for the registration of a strata title.
This is the sort of title that is desirable and necessary in the case of home units. When there is not a sound title system for them, it is not possible to borrow for the construction or improvement of home units. I believe that until a system of strata title is established throughout Australia, the full effect of this legislation will not be felt and the benefits conferred by the measure will not be available to the very people we are trying to help. They are the people in the lower income groups, childless couples and aged persons who have possibly sold their large home and want to go into something smaller. Such aged persons are not hanging on to something they are not using but are prepared to sell their property so that others can use it provided they can get a small home unit.
I should like to see the Government give this matter active consideration. I hope that at the next Premiers’ Conference the Government will confer with the Premiers as a matter of high priority with a view to the introduction of not completely uniform legislation necessarily but legislation of practically the same kind in every State so that loans made pursuant to this Bill may be legal first mortgages over units.
Even before that is done, here is a challenge to the Government to show its bona fides by legislating within the A.C.T. and by encouraging legislation in the Northern Territory and the Territory of Papua and New Guinea to ensure that in those areas where the Government has either legislative dominance or full responsibility, a similar provision is made.. The implementation of measures affecting war service homes would be assisted also if such remedial legislation were passed in the States and Territories. It is a shame that this Government has done nothing to ensure that recipients of loans from the War Service Homes Division who want home units can get them in States other than New South Wales. There is a real challenge to the Government to make this Bill apply to borrowers who get war service home loans and want to have a home unit.
I welcome the market for mortgages. I hope the Minister is able to create and encourage such a market. I hope also that trustees will be encouraged to make trust and estate loans on homes which are built with the guarantee embodied in this legislation. A lot of available money in Australia is held by the Public Trustee, by trust companies and private trustees. This money is held purely for the running of a trust. Usually the trust ceases with the life of a person, and with the death of a widow or a life tenant the money is available. Under Our law a trustee cannot invest money in other than gilt edged securities without incurring personal liability. These securities are generally bank fixed deposits, government loans, and loans on land, houses and real estate un to -> certain proportion which is about 60 per cent.
I hope that in the course of time and when the proposal embodied in this Bill is put into operation, the Minister will consider conferring with the States on the laws relating to trustees to ascertain whether it is possible to get the States to include in the permissible avenues of investment for trustees investment in a loan with the protection of a guarantee such as that provided in the Bill. I believe such provision would be of great benefit to the beneficiaries of trust estates who are entitled to a life interest. Instead of getting 4 per cent, or 4i per cent, as they do now from recognised gilt edged trust investments they might get up to 6 per cent, with the excellent guarantee that will be afforded by the Commonwealth Government. So I ask the Minister to explore the possibility of Public Trustees, trust companies and individual trustees being able to negotiate loans for the purpose of house building and also to do his best to ensure that the States will add to their list of permissible investments loans negotiated under such conditions.
– What possible reason is there for not insuring loans by trustees under this Bill?
– I understand that the Minister believes that, to get this scheme operating, it will have to start with some of the bigger traditional lending organisations. I am rather inclined to go along with him at this stage because it is a completely new venture for the Commonwealth to guarantee lending for housing. I would like to see the scheme commence in the way the Minister suggested. But I do not want him to put out of his mind, or for any supporter of the Government to put out of mind, the possibilities of extending this facility along the lines I have suggested.
I am in thorough accord with the Bill so far as it goes. I regard the Bill as a first instalment of an imaginative new venture in connection with housing loans. I hope that the Minister will pursue further amendments of this Bill with the same vigour that he pursued further amendments of the Homes Savings Grant Act which was before the Senate last year. In the Minister for Housing I think that we have a man of very great capacity, imagination and drive. I have no doubt that this Bill will be of great benefit to the Commonwealth.
I desire to conclude with one or two other thoughts. I believe, as Senator Bishop did, that clause 23 of the Housing Loans Insurance Bill is of great significance. It states -
The Corporation may decline to enter into a contract of insurance in respect of an insurable loan if it is not satisfied that the dwelling-house to which the loan relates has been constructed, or will be constructed, as the case requires, in accordance with sound standards of construction or, in the case of a loan made for the purpose of altering, improving or extending a dwellinghouse, or for purposes including that purpose, that the alterations, improvements or extensions will be carried out in accordance with sound standards of construction.
By this section the Commonwealth, as any wise guarantor of a loan should do, can ensure the sound construction of a dwelling. In that regard I would like to commend to the Government certain work which appears to be going rather slowly and it is work in which Senator Gorton, as Minister for Works, is taking an interest. Senator Gorton, from time to time, or his officers, has attended conferences with the State Ministers who have the responsibility of fixing building standards, safety standards and other matters relating to buildings. I know that those Ministers have been attempting to encourage their respective governments to bring in some legislation of a uniform nature to ensure the highest standards of building activity. I know that Senator Gorton is primarily interested in the matter of constructional works in his capacity as Minister for Works. He is interested in the bigger jobs. But I look forward, with some confidence, to the time when a higher standard of building operations can be brought about. I hope that the State Governments will be interested in furthering this project.
This field of housing normally does not fall into the lap of the Commonwealth to undertake. But we are entering into it because we are engaging in the insurance of housing loans. When one engages in insuring something one must consider whether what one is insuring is properly constructed. The Commonwealth is entering this avenue and I hope that some progress will be made along those lines. I accordingly commend the Bill to the Senate and I hope it wi’.l receive a speedy passage. I hope that the Minister will regard this as a first instalment only and that he will keep an active and open mind with regard to improvements which may be brought to his notice from time to time. At present I am not concerned with the fact that he has not nominated the rate of premium, nor that he has not nominated the rate at which the Commonwealth expects loans to be granted. 1 have no doubt that very soon he will come to a decision on those two figures. As is obvious to honorable senators, these figures can be decided upon only after consideration of all the facts. The further consideration given by this Parliament to the measure will, I think, depend upon those two figures.
– I would support this Housing Loans Insurance Bill with a lot more enthusiasm if I were of the opinion that it would achieve all the things that Senator Laught believes it will achieve. Let us face the facts. This Bill does nothing at all. It will not result in the construction of an additional house in Australia. It will not give additional security to anyone lending money at the present rate. All this Bill does is to state that if money lenders will lend money, under terms and conditions that are unknown as yet, the Commonwealth Government is prepared to insure the loan against any risk of loss or expense incurred in the effort to recover. Therefore, there will have to be compliance with a set of conditions which, as I said, we do not know at the present time.
This Bill establishes a Housing Loans Insurance Corporation with wide powers for the purpose of insuring loans if certain requirements are met. It will not contribute one extra penny in itself for housing if the money currently available for housing can be lent at an interest rate outside the terms set by the Corporation. First, one of the main objections to the Bill - and it is a point which I thought Senator Laught would have taken up because he has been most active about this matter previously - is that we are passing legislation without knowing what it is. We are passing legislation to insure loans but we do not know what loans we are going to insure. The class of loans to be insured is something to be decided by the Minister for Housing (Mr. Bury). The particular type of insurance is to be decided by the Corporation.
From the second reading speech of the Minister honorable senators would gather that the Bill is intended to permit insurance on loans more beneficial to the borrower than at present apply. But whether this is so or not is something which only time will toll. Whether lenders desire to lend money on terms more beneficial to the borrower^ with the safeguard of insurance, is something which will have to be determined. We were told in the second reading speech that this legislation follows legislation passed in the United States of America and Canada where similar legislation has been introduced and that officers of the Department of Housing have had great assistance from those sources in the formulation of this particular Bill. The Government has taken from the Canadian legislation only that part which relates to insurance. The Canadian legislation established an authority for the purpose of dealing with reclamation, demolition and general home construction, as well as making provision for housing loan insurance. The measure now before us could ‘better be described as being a money lenders insurance bill than as one which makes any contribution to relieving the housing shortage.
There is an acute shortage of homes in this country. The returns of (he various housing authorities reveal a backlog of 75,000 homes throughout Australia. It is extremely difficult for people in the middle income group, and impossible for those in the lower income group, to purchase homes. The Government must find some method of getting over these difficulties and so fulfil its election promise to provide more homes. This Bill and the Homes Savings Grant Bill are the outcome of the Government’s election promise to relieve the housing situation, but this measure at least will not result in any more money being made available for that purpose unless the security offered induces people with available finance to enter the home building field. The Housing Industry Research Committee of Victoria pointed out in its March newsletter, which was referred to by Senator Bishop, that investigations had revealed that there was an acute shortage of money available for housing at first mortgage but that there was an abundance of money available at second mortgage. The newsletter added that several estate agents had said that the second mortgate market had more sellers then buyers, that interest rates were reasonable and that good terms were being offered. The lender seeks the highest rate of interest possible. The amount of money that is available at first mortgage will not be increased simply by offering a form of security that is not needed at present. Where have there been any losses on the part of lenders who have made money available for housing?
– That is not the point.
– Where have there been any such losses? There is a possibility of loss if the amount of money lent is as high as 90 or 95 per cent, of the total purchase price. But we assume that the Corporation will say to lenders: “If you lend up to that extent, we are prepared to insure the loan under certain conditions so that in effect we, too, will take very little risk.” Provision is made in clause 23 that a house must be of good construction. It is also provided that the ability of the borrower to repay must be considered. Indeed, the Minister said in his second reading speech -
The capacity of a borrower to repay a loan is a matter of importance.
– What is the honorable senator’s objection to that?
– What I am saying is that the Bill provides for insurance against a risk that does not exist. It offers insurance to lenders on first mortgage, but those lenders are able to lend their money at a rate of interest greater than that which the Corporation will determine as the maximum for a guaranteed loan. People are unlikely to seek the benefit of this legislation when they can dispose of all their available money elsewhere at a higher rate of interest. The Minister further said -
The Corporation may refuse to insure a loan if it thinks that the amount of principal and interest payable on the loan, and rates and any other payments in respect of the property, would exceed a certain proportion of the borrower’s established income. Assuming this proportion were 25 per cent, of income, a loan repayable by regular instalments at intervals not longer than 12 months over a period of 25 years at an interest rate of, say, 6 per cent, per annum, would be about three times the borrower’s established annual income.
During the debate in another place it was pointed out that a loan of £5,000 - that would be an average high ratio sum to borrow to purchase land and buy a house - at an interest rate of 6 per cent, and repayable over a period of 25 years would neces sitate the borrower having an income of £31 a week if he were to be within the limit of 25 per cent, of his income.
The question arises as to whether this legislation will achieve the objective of providing homes for people who are in the lower income bracket. I submit that that is one of three essentials in any scheme that is designed to meet Australia’s housing requirements. I again submit that this legislation will not result in more money being made available for housing while it is possible for lenders to obtain a higher rate of interest for second mortgage finance. Unless this kind of legislation makes more money available to people who are interested in obtaining first mortgage finance, it must result in a reduction of the rate of home construction rather than in an increase.
As to the difficulties that are being experienced by people in the middle income group, it is the policy of the Australian. Labour Party, as Senator Bishop has pointed out, that higher percentage loans at cheaper rates of interest should be made available. The repayment of principal and interest on homes, the cost of which has skyrocketed in recent years, is beyond the capacity even of people in the average or middle income group. What possibility is there of people in the lower income group, who are trying to raise a family, being able to buy a home? In the post-war years the Governments of Australia have embarked upon the construction of rental homes to house people who cannot afford to purchase their own homes. Because good tradesmen have left the industry due to its insecurity and have not been replaced owing to the break down of the apprenticeship system, homes now being built are not up to the standard that was achieved many years ago. Possibly the most important factor which has contributed towards a lower standard of housing has been the entry into the building industry of get-rich-quick builders and land agents who have become builders in order to develop sites for profit on the land rather than because of an interest in building. If the homes are built for rental purposes, the costs of maintenance fall upon the builder and it is necessary to devise a means whereby the occupants of the houses can take over the responsibility of maintenance, rates and taxes and so on.
In most States houses are now available on a deposit of only £50. Established lending institutions will lend an amount equal to from 60 per cent to 75 per cent, of the value of the house. Where a house is bought on a deposit of £50, the difference between that amount and the normal deposit payable when money is borrowed from an established institution is arranged by a second mortgage loan. Organisations which in other times would have built homes for rental and which have become liable for maintenance and other costs, now sell homes on extremely low deposits so that the problem of payment of maintenance, rates and taxes is passed on to the occupiers of the homes. These costs when added to the interest charges and repayments of principal are beyond the pockets of the ordinary home owners and the result is that in many cases homes must do without badly needed maintenance.
The Bill includes provision for loans to meet the cost of construction of roads and footpaths. It is conceivable that the money now available in over supply at the rates of interest applicable to second mortgage loans could well be diverted to meeting’ the cost of maintenance of homes and the construction of roads and footpaths by local government authorities. It seems to us that the Government is refusing to provide finance for people in particular income groups to purchase well constructed homes and because of that refusal it is seeking to find a means to make grants where sufficient savings are accumulated and to provide insurance for those lenders who will risk loans for housing.
The Labour Party supports the measure mainly, I think, because it represents an entrance by the Commonwealth Government into the field of insurance. This is a most profitable field and undoubtedly the Commonwealth has constitutional power to enter it. I have no doubt that in some cases the legislation will provide first mortgage finance as an alternative to obtaining a second mortgage loan, but our objection to the legislation is that it does not make additional money available for housing and it is unlikely that money lenders will seek protection for their loans on mortgage if no risk is involved. In the absence of cheaper money for the purchase of houses, this legislation increases the borrower’s liability in that he must pay an insurance premium on the mortgage which becomes part of his loan and therefore subject to interest. In other words, he must pay interest on the money advanced for the purpose of payment of his insurance premium. Thus he bears an additional charge at the very time when everybody acknowledges that cheaper interest rates should be available. The borrower must pay interest over a period of years on the money advanced for his insurance premium, which seems to increase rather than ease his burden.
I have said that there is some doubt whether a reasonable loan could be obtained by workers in receipt of low incomes because they lack security and represent a risk that the Corporation would not be prepared to accept. The possibility also arises that they may not be able to arrange a loan until certain money has been spent in commencing the construction of a x home. I direct the attention of honorable senators to clause 22 of the Bill which states -
The Corporation shall not enter into a contract of insurance in respect of an insurable loan mads for the purpose of enabling the borrower to acquire a prescribed interest in land and construct, or complete the construction of, a dwelling-house on the land, or for purposes including that purpose, unless it is satisfied ‘ that construction of the dwelling-house has commenced or the completion of the construction of the dwelling-house is being proceeded with, as the case requires.
Upon asking for a loan of 95 per cent, of the value of the project a prospective borrower may be told by the lending institution: “ We are prepared to lend 95 per cent, of the value of the project if the loan is insured by the Corporation “. But that cannot be decided until certain work has been done and the Corporation has been satisfied that contruction of a dwelling-house has commenced or is proceeding towards completion. Before the borrower can ascertain whether he can obtain a loan he must have commenced the operation.
– No; before the insurance contract is entered into.
– That is. so, but clause 27 states-
Nothing in this Act obliges the Corporation to enter into a contract of insurance in respect of any particular loan.
The borrower might believe that he is qualified for a particular class of loan and he can obtain insurance from the Commonwealth, but he could be disqualified under clause 27. The lending insitution he approaches might well refuse a loan until it is satisfied that it can obtain coverage by the Corporation. A prospective borrower may not be able to reach the stage at which insurance will be granted by the Corporation unless he receives a loan. This would suggest to me that coverage is provided for persons with sufficient cash to initiate a transaction, and not for persons in the case of whom any risk might be involved. People in the lower paid section of the community may wish to build their own homes, but they may represent risks either because of the very fact that their income is low or because of the possibility of their becoming sick or suffering an accident. It appears to me that the risks associated with such people will not be covered. Then the Corporation goes somewhat further. It is prepared to pay the insured lender under this legislation despite the fact that he has not taken every step available to him under his agreement to recover his money from the borrower. While paying the lender in these circumstances the Corporation takes over his rights to recover. If there is a case of hardship, or if the situation is becoming nasty or there is a chance that the borrower will be held up to a good deal of scorn, then the organisation is available to take over and put pressure on the borrower while paying the lender.
We support the Bill for the reasons given by Senator Bishop. It represents the introduction of a new scheme and provides the basis for a more worthwhile scheme under which provision could be made for certain risks to be taken. A more effective scheme would provide for loans of amounts representing a higher proportion of the costs involved in particular cases, with long periods for repayment and at low interest rates. It would make money available for lending in these circumstances and on these conditions and it would provide for loans to people with low incomes where some risk might be involved. In this way it would help the people who should be helped and who, we hope, will be helped after amendments have been made to the legislation. As it stands the legislation gives security to people who do hot want such security, and who possibly will not avail themselves of it because they will have no reason to do so. Instead of availing themselves of the provisions of this legislation they will dispose of their money in other directions at interest rates which they will set themselves and not at rates set by the Government.
Let me also make a protest that has been made in respect of other Bills that have passed through this Senate. We are bringing down a Bill to become an Act of Parliament when we do not know exactly how that Act will operate. We should be the body to say what kinds of loans shall be insured against, but we are not saying this; we have not even a hint about it. We should be the body to say what the cost of insurance should be, what should be a reasonable interest rate and what should be the period of repayment. We say nothing about these things. All we know is that the Bill provides that the Minister shall decide the class of insurance and the Corporation shall decide the particular insurance. We are really passing legislation that we do not know anything about.
Senator Sir WILLIAM SPOONER (New South Wales) [5.3]. - I think I can say, with respect, that Senator Cavanagh made a sad error of judgment in his speech by grossly overstating the case he wanted to advocate. I think this was a pity. I made some notes during his speech. They may not be quite accurate, but they indicate that Senator Cavanagh made these statements: “The Bill does nothing. It does not build houses. It will not contribute an extra penny to housing if the money can be lent otherwise. It is a money lender’s insurance Bill. It makes no more money available for home building. It is insuring against a risk which does not exist. The lenders can dispose of what money they already have at higher rates of interest.” I think these remarks indicate more than a negative and defeatist approach. I think they represent a criticism of the Bill which is unsoundly based and betrays some personal feeling. These remarks do not show an objective approach to the legislation.
Let us consider the Bill from this angle: What are the facts and what is the experience throughout the world? In Canada and the United States of America provisions of this kind have proved an important part of the financial arrangements for housing. Experience in Australia establishes the importance of the principle behind the legislation. I hope there will not be much dissension from that proposition. The terminating building societies have proved one of the most valuable contributors to home building in Australia, and they conduct their operations under the principle that is embodied in this Bill. It is true that the State Governments do not insure, but the State Governments guarantee the building societies, so that the principle is the same although different in legal form. Then the strongest request from the permanent building societies has been for this same form of insurance or guarantee from the Government. We have before us new legislation with which we are charting new seas, plotting a course in a new direction, and I just make the brief remark to Senator Cavanagh that it is grossly unfair and unsound to approach the legislation in the way in which he has approached it. All the indications are that there is an opening, an opportunity, a chance for this legislation to make a significant contribution to housing arrangements in Australia.
I would like to tilt another lance with Senator Cavanagh. If my note is correct he said that the lower income groups in Australia have no chance of building homes, that the various Governments have, under the Commonwealth and State Housing Agreement, been building homes for rental because people cannot buy them. From my experience this is entirely incorrect. What is happening is that the State Governments are building homes and selling them. It is not a case of people not being able to buy the homes that have been built under the Commonwealth and State Housing Agreement. The fact is that there are so many people willing and able to buy these homes that in my opinion the Commonwealth and State Housing Agreement is not doing the national work that it should be doing, because not enough houses are being built for rental purposes. This, I think, shows how Senator Cavanagh has made a pretty serious error of judgment. I ask him and other members of the Opposition to reflect on the fact that one of the interesting developments in connection with the Commonwealth and State Housing Agreement has been the complete rejection -by all State Governments - let me emphasise State Governments, of all political colours - of the Socialist approach of the original 1945 legislation. This to me is a very interesting political and practical matter. The 1945 legislation, as honorable senators will remember, was based upon the approach of providing large sums of money for the building of homes for rental purposes. It was attacked by the then Opposition upon the ground that it was wrong and that there should be provision in it for home ownership. This contention was rejected by the then Labour Government with the famous words: “We are not interested in little capitalists. This is a rental homes scheme.”
The practical result of that scheme was that State Governments asked for amendments to make it easier for them to sell homes. The Commonwealth Government agreed to those amendments upon the basts that it believed that housing was a matter for State Governments and not the Federal Government and that State Governments should administer housing finance in accordance with the principles which they themselves determined. The result was the sale of those homes in increasing numbers and on various conditions, determined to a great extent not by the practice that Senator Cavanagh mentioned but by another Socialistic theory that proved wrong in practice, namely, the maintenance of rent control. We got into a situation in which we were providing great sums of money at subsidised rates of interest, which instead of serving the purpose of providing rental houses, were used for the purpose of competing with private investment, because rent control had driven private investment completely out of rental housing.
I make that comment merely in passing, or perhaps not merely in passing; perhaps I have some satisfaction in the argument against Senator Cavanagh. Then, in his peroration, he said that he would be more satisfied with the Bill if it provided for loans for long periods on reduced margins of security. 1 may not have the phrasing accurate. His point was that he would have more support or enthusiasm for the Bill if it meant long term loans on small deposits. All that I can say in reply is that that, I believe, is one of the main purposes of the Bill. It is to get money on smaller deposits for building, at reasonable rates of interest spread over longer periods.
– But we do not know.
–
None of us can foretell the future, but this is what the Bill aims to do.
– A few honorable senators opposite are not interpreting the past too well, either.
The honorable senator means my interpretation of the Commonwealth and State Housing Agreement?
– Yes.
– I invite the honorable senator to stand and prove me wrong. I hope that I did not overstate the case but gave the factual story. My recollection is so clear because we amended the original Agreement in many ways at the request of the States to give them more and more power to do what they thought was the right thing. The net result was to turn the Agreement into .a home selling instrument instead of a home rental instrument.
– What was the first year in which Commonwealth moneys were made available to the States for use in the sale of houses?
–
Relying entirely on my memory, I should say 1951, 1952 or 1953. I believe that what I have said is accurate. We should look at the Bill in perspective, remembering that Commonwealth legislation upon housing includes the War Service Homes Act, the Commonwealth and State Housing Agreement Act, the Aged Persons Homes Act, and the Homes Savings Grant Act, by which the savings of young people are supplemented. This new measure has as its objective the attraction of additional moneys for housing at reasonable rates of interest. It also aims - this is of substantial importance - to create a market for housing mortgages in Australia. This is an interesting development. It is good that we should clear our thoughts upon what Government housing policy should aim at. My thoughts are clear. It is a great national matter. There should be direct governmental activity at some levels for what might be called social service purposes and for repatriation purposes. There is certainly justification for governmental activity at that level and perhaps for other purposes, but the principal governmental objective should be to attract private investment back into the field to do the task which it did in the past but which has been terminated by the operation of rent control.
If we can get private investment back into the field, this will be the right course to pursue. I do not advocate that view entirely on ideological or political grounds. I advance it from the point of view of sheer common sense, because in Australia we have so many things to do, many of which can be done only by governmental finance, that when there is a sphere of activity that private investment can cover, as it very largely did in the past, our objective should be to encourage private investment to take up that burden. We start upon that basis; we consider that to be a desirable objective. Whilst no-one can be certain about what will be the volume of transactions under this legislation, I believe that it is of an importance comparable with that of the legislation in which I always take a lot of satisfaction, by which the States allocate 30 per cent, of Commonwealth housing moneys to building societies. I think that it was a great help to the building societies, which are doing such magnificent work in Australia. I hope that this legislation also will assist them but I do not think it will assist them to the same extent or in the same dramatic way as the previous legislation. Nevertheless, I hope that it will operate along those lines.
When this scheme becomes successful, the way I see the pattern is that not only will it provide insurance to approved lenders over a narrow field, but it will also develop confidence on the part of investors in housing mortgages and transactions. I share the view that Senator Laught expressed - I think following some comment by Senator Bishop. I have no objection to the scheme proceeding slowly at the commencement. I have no objection to these transactions being conducted over a restricted field in the early stages. Nothing succeeds like success.
A new scheme is being inaugurated. When it is operating on a sound basis and attracts public confidence, it will grow, not only in governmental transactions, but also to the extent of attracting confidence in the mortgage market which has been so badly hit. As Senator Cavanagh mentioned, there are very few losses in bona fide housing mortgage transactions. There was a time when a modest couple, providing for their retirement, would put their money into housing mortgages because they were a safe investment. The rentals from the houses which they owned provided them with a safe investment, and the possibilities were that the houses would increase in value. But the mortgage money market in the real estate business was destroyed. I believe that it is now reviving. I believe that more money has come back into housing transactions over the last few years, and that the legislation will help in the transition period. 1 also make the point that, with the inauguration of this legislation, we in Australia will have practically the best of all the housing finance schemes that are operating throughout the world. Traditionally, in Australia housing finance has been provided by the savings banks. In my view, that will continue to be the case.
– What proportion do the savings banks provide?
– I cannot remember the statistics, but, in my opinion, for many years past the major portion of money for housing has been provided by the savings banks. The proportion and the volume of the money has increased very materially since the private banks established savings bank departments. They have attracted additional deposits and have loaned more money for housing.
– It was a condition of their establishment, was it not?
– I say “ Yes “, but the plain answer “ Yes “ is only half the story. It was one of the things in the charter of the savings banks. We have superimposed on the savings bank departments what I think is a very good part of the savings and loans arrangements which are the foundation of North American housing finance. We have an equivalent in our terminating building societies. In Australia we have permanent building societies which, whilst not in any way approaching in size and importance the permanent building societies in the United Kingdom, are attracting an increasing volume of funds and are transacting a greater volume of business. By this legislation we aim to take the next step in providing insurance for loans and in creating a mortgage market for loans. When these two proposals are developed - and I believe that they will develop concurrently with additional confidence on the part of private investors - in my view we will have a very good and sound foundation for financing housing arrangements in Australia.
– Senator Sir William Spooner during the course of his remarks said that one of the interesting aspects of the Commonwealth and State Housing Agreement has been a complete rejection by all State Governments in Australia, whatever their political colour might be or might have been at the time, of the original approach of the 1945 legislation. But I remind the honorable senator that the 1945 Housing Agreement was made immediately after the cessation of hostilities. It was made after a period of five years of war when the nation’s complete war effort was geared and devoted to winning the war; when men were returning from the front; and when men and women, who had been thrown apart for years as a result of the war, for the first time were re-united as husband and wife and were searching for homes. At that stage, of course, there was a complete shortage of tradesmen and of materials.
It was in this atmosphere and against this background that the 1945 Commonwealth and State Housing Agreement was negotiated. Tt remained in existence until about 1956 - some six years after the present Government came into office. With the expiration of the original agreement in June 1956, there came into being, at the insistence of the Commonwealth, an Agreement which provided for the allocation of a certain percentage of funds to co-operative building societies; the utilisation of a further proportion of funds in the provision of housing specifically for serving members of the defence forces: elimination of the rental rebate provisions and loss sharing arrangement of the original Agreement: and determination of the interest rate on moneys to be made available under the Agreement at 1 per cent, less than the long term bond rate.
The effect of these new conditions, which were made at the insistence of the Commonwealth and carried into later Agreements, was to reduce the amount of finance available under the Agreement for housing of ordinary applicants through State housing authorities. The new conditions also brought about an increase in economic rentals because of what was. in effect, an increase in the interest rate, to the order of some 10s. a week. But they are things of the nast. Our attention is now directed to the Bill before the Senate.
At the outset let me point out that I, as a Labour man, together with each of my colleagues on this side of the House, hope that the day comes in Australia when every man who wants to own his own home will be able to do so. We are dealing with the Housing Loans Insurance Bill 1965. In his second reading speech the Minister for Housing (Mr. Bury) said, amongst, other things, that the purpose of the bill is to establish a Housing Loans Insurance Corporation to insure lenders against loss arising from the making of loans for housing.
The Bill authorises the Corporation to insure loans made for the erection of dwellings, the purchase of existing dwellings, additions to homes, repairs and renovations, and the discharging and refinancing of existing mortgages on homes. There can be no doubt in the mind of anyone who has made a detailed survey of housing generally that this is a great national and social problem. While we of the Opposition have grave doubts that this Bill will alleviate to any extent, the present grave national problem, we do not oppose it. That housing is a growing national problem is beyond doubt.
I think it fair to. say that it is only since the 1961 Federal election, after which the Government had a majority of only one in the other place, that it has decided to try to tackle this problem at last on a national basis. Indeed, despite an ever increasing shortage of homes since the commencement of the Second World War. in 1939, it was not until last year, after the 1963 Federal election, that the Government decided to establish a Commonwealth Ministry of Housing. One does not now envy the Minister for Housing who is confronted with the problem of trying to cope with the great backlag that has developed over the years, plus the ever increasing demand for housing as a result of the growth of population and the desire of the younger generation to marry at a comparatively early age.
There could be no doubt that with the post war population explosion and the influx of migrants into Australia the demand for housing will be greater in the future than it has been in the immediate past, and one cannot help but feel that the present proposal advanced by the Minister, is a mere skimming over of the whole problem. According to the annual reports of the various State housing authorities, last year approximately 45,000 people registered with them for accommodation. Clearly these are people, ordinary humble people in the community, who will not receive any advantage from the mere passage of this Bill.
In his second reading speech the Minister said that at present the average cost of a house and land is in the vicinity of £5,000. Frankly, I doubt this very much. Indeed, I think it is a most conservative estimate because if one takes £400 a square as the average cost of erecting a timber dwelling, one finds that a 10 square home costs £4,000, leaving only £1,000 for the purchase of a block of land in any metropolitan area. This is a very conservative basis having regard to present day costs of land and home construction. A more realistic and accurate amount, even on a conservative basis, would be of the order of £6,000.
For the sake of the argument, however, let us accept the Minister’s statement that the average cost of constructing a dwelling and purchasing an ordinary block of land is about £5,000. We have been told that a person’s income will be the factor which will determine the size of the loan to be insured under the proposed scheme. Since the scheme was announced references have been made to the fact that the Corporation to be set up under the legislation will consider that three times the annual income of the applicant will provide a good yardstick on which to base a loan. I think it was Senator Cavanagh who pointed out that in this case a loan to be repaid over some 25 years at 6 per cent, reducing interest would involve repayments very close to one-quarter of the applicant’s income. On this basis, in order to obtain a 95 per cent. loan on the average cost that the Minister cited, namely £5.000, which I suggest to honorable senators is a most conservative estimate of cost, having regard to present day prices, the borrower would need a net income of about £31 a week. Because, according to the Commonwealth Statistician, the average take home pay of the Australian worker these days is about £23 a week, one can see that not many ordinary wage and salary earners will receive much assistance from the passage of this legislation.
I know it is not the intention that tha Corporation should itself engage in money lending. It will merely insure loans against default by the home buyer. Because the Government has allocated only £100,000 for this purpose, this seems to me to indicate that not much tangible assistance will be forthcoming to the home hungry citizens of Australia, especially when one appreciates that the scheme is designed to insure loans that are made not only for the purchase of dwellings but also to cover the cost of repairs to and renovations of existing buildings.
The Minister also stated that, quite justifiably in his opinion, major lenders have rarely been willing to lend where they see a possible risk of loss. He went on to say that he hoped the major institutions that lend money for housing would be willing to make loans up to a high proportion of the value of a dwelling. Frankly, I doubt that very much risk capital would be involved in lending money to people for the purpose of building or buying a home, especially when one remembers that as a result of the ever increasing demand for homes the value of the existing dwellings is appreciating considerably. But because there is no specific requirement that anybody making a loan must insure the loan with the Corporation - since the Minister merely expressed a hope that they would do so and nothing else - there can be no guarantee that this legislation will operate efficiently. Indeed it would appear from the Bill and the Minister’s second reading speech that the scheme will rely entirely on the willingness of traditional lending institutions or authorities to make high ratio loans available.
I have the impression that similar housing indemnity schemes were introduced in New South Wales and Victoria several years ago but that they had little success because of boycotts by banks and insurance companies. The real hope of success for this scheme lies in the Commonwealth Government bringing pressure to bear on those financial institutions to ensure that they do provide loans in accordance with the provisions of the Bill. However, as I have said, it is pointed out by the Housing Industry Research Committee of Victoria, an organisation sponsored by a number of associations connected with the building industry, that there is no provision for this at all in the Bill. AH the Minister has said in his second reading speech is that he hopes the major institutions that lend for housing will be willing to make loans up to a high proportion of the value of a particular dwelling.
Then, of course, there is the question of the charge and the premium involved. 1 suggest that the charge to the borrower for this service will add to the cost of housing loans and give home buyers an even greater burden to carry. We do not know what the premium will be but I notice from the newsletter of the Housing Industry Research Committee that it has been suggested that the premium will be about 2 per cent, of the amount insured. The newsletter adds that this premium will be paid to the Corporation by the lender who will then add it to the loan to be paid for over the period of the loan by the borrower.
As I have said, the Minister has not indicated in his second reading speech what the amount of the premium will be. The legislation merely provides that the Corporation shall charge a premium for insuring a loan, the premium rates to be determined by the Corporation. This should not be, because having regard to the great national problem involved - the housing of the people - the Parliament should be devoting its attention to this matter to ensure that the rate of premium will not be greater than a certain percentage. We should ensure that those who borrow money will not have an even greater burden to carry. Those who are badly in need of housing, such as those who have registered with the housing commissions in the various States, will not be able to seek any benefit from this legislation, and having regard to the added burden that will be imposed on borrowers under this scheme, I suggest that there will be very little beneficial result from it at all.
Sitting suspended from 5.45 to 8 p.m.
– Prior to the suspension of the sitting I had pointed out to the Senate a number of deficiencies in the Housing Loans Insurance Bill which is now before us and stated, on behalf of the Opposition and along with my colleagues who spoke earlier this afternoon, that I did not think it would achieve much, if anything at all, towards a solution of the great national shortage of housing. As I have already said, I believe that this legislation is merely skimming across the surface of this great national problem. Indeed, if anyone doubts the scheme it surely is the
Minister for Housing (Mr. Bury) himself. Just from a cursory examination of the Minister’s second reading speech one sees that it is full of aims, hopes and expectations without direct evidence of tangible result at all. I will quote one or two sentences at random from the Minister’s second reading speech. He said -
Ii is our hope and intention that this scheme will progressively remove the present need for many creditworthy borrowers to obtain a second mortgage loan . . .
. the scheme aims to assist people to obtain low-deposit loans . . .
The Minister said that the Government hopes -
That the major institutions that lend for housing will bc willing to make loans up to a high proportion of the value of a dwelling.
He continued and said -
We hope that our offer to insure the repayment in full of housing loans will stimulate private enterprise . .
. we hope to attract additional oversea capital . . . Our offer to insure the repayment of housing loans . . will, we trust, go a long way towards achieving these important aims.
A little further on, the Minister said -
We have spoken to builders and housing project developers who will, we hope, be encouraged to expand their private enterprise activities . . . lt is expected that the premium to be charged will be in the form o’f a once-and-for-all payment for insuring a loan up to its maturity date.
As I have said, the Minister’s speech seems to be full of hopes, aims, and expectations, but it contains nothing more than that. Even the Minister himself, from his own speech, seems to be uncertain what results will eventually accrue from the passage of this legislation. If the Minister himself is of that frame of mind surely we of the Opposition cannot be blamed for being somewhat of the like opinion. 1 have already dealt at length, along with my colleagues, with what I believe are the main deficiencies in this Bill. In the few minutes remaining to me I want to deal with one or two things that I believe the Government could well be doing something about in order to overcome some of the great demand of the people of Australia for housing. In this regard, I want to refer to the 1964 Commonwealth “Year Book”. In this volume it is stated that the total amount spent on new buildings last financial year was £616,400,000. Of that sum barely half, or about £342 million, was spent on house and flat construction. I believe that the Commonwealth Government could well act quickly in this regard to check the huge diversion of funds that are obviously going into the construction of new banks and office blocks in the large metropolitan cities. Frankly, to me it is ludicrous to see these rather salubrious and substantial office blocks - these box like structures - being erected in all the capital cities of the Commonwealth while ordinary people are in want of reasonable accommodation. I think the Commonwealth should act in this regard and urge a two year break in what might be termed skyscraper construction in the large cities in order to divert some of this capital and the labour working on the construction to the building industry as ordinary people know it, especially at this stage. Recently, the Minister for Labour and National Service (Mr. McMahon) said that housing development would be likely to be retarded as a result of the increasing impetus of the Government’s defence projects.
I, too, along with my colleague, Senator Bishop, who mentioned this matter this afternoon, support the opinion of the Australian Labour Party that the War Service Homes Division could be expanded considerably to ease the financial situation of those who seek assistance from other money lending institutions. The war service homes scheme has been a quite profitable undertaking on behalf of the Commonwealth. If my memory serves me correctly its profit has been of the order of £40 million. The interest rate charged to people obtaining loans from the Division has been 3i per cent.
If this Bill will assist people to acquire homes the Opposition does not oppose it. However, we say that, having regard to the matters outlined by Senator Bishop, Senator Cavanagh and myself, we do not expect it to achieve much, but perhaps it may assist some people. Bearing in mind the existing housing shortage throughout the length and breadth of the Commonwealth, bearing in mind the actual increase in population that is taking place, having regard to the expanding migration programme, the steady build up of the number of age pensioners in the Commonwealth, as is shown in the Commonwealth “ Year Book “, the number of people whose employment is itinerant, the people who are displaced from slum clearance and redevelopment projects in the capital cities, and the needs of expanding country centres, I believe, along with my colleagues, that despite the passage of this Bill those who are sorely in need of assistance to acquire accommodation for themselves and their families will still be found in search of a solution,
– I rise to support the Bill. I want to deny, straight away, the statements of Senator McClelland to the effect that the Minister for Housing (Mr. Bury) is half-hearted about this Bill. He certainly is not halfhearted. As a matter of fact, the Government, in its policy speech for the last election for the House of Representatives, foreshadowed this Bill and said that if it were re-elected this would be one of the measures enacted. If I remember correctly there were some 13 or 14 promises made in the policy speech of the Prime Minister (Sir Robert Menzies). Two promises related to housing. As honorable senators will remember, one of those promises concerned a homes savings grant to people under the age of 35. years who would receive up to a maximum of £250 if they were prepared to save £750. The Government said that those people would be entitled to a free gift from the Government of £250, or part thereof, and with the £750 they saved it would make a total of £1,000. For every £3 they have saved, they are entitled to receive £1 from the Commonwealth. The relevant bill was introduced about 12 months ago. Since the enactment of that legislation, 25,000 applications have been received, of which 17,700 have been determined. A total of 16,200 claims have been paid, the total amount of Commonwealth money paid out being in excess of £3i million. As I said earlier, the measure we are discussing tonight is the fulfilment of the second of the Government’s promises in relation to housing.
Before discussing the Bill further, may I say that of the 14 promises that were made by the Prime Minister during the election campaign in November 1963, 12 have been honoured. One of the remaining two promises - the equalisation of fuel prices throughout the Commonwealth - will be honoured during this sessional period, and I believe that legislation to give effect to the promise in relation to unfair trading practices will be introduced during this sessional period or early in the next session.So, if the legislation we are now discussing is passed during this period, almost all the Government’s promises will have been honoured within 18 months of its being returned to office.
The Bill provides for the establishment of a Housing Loans Insurance Corporation which will consist of five members, including a Chairman and a Deputy Chairman who will be appointed for a period of seven years. The other three members will be appointed for terms of up to three years, one being appointed to serve for one year, one to serve for two years and the other to serve for three years. After the legislation is passed the Corporation will be given a sum of £100,000 with which to commence business. As provided in the Bill, the Corporation is not to make a profit; its function will be merely to insure loans, for which it will charge a premium. That premium will cover its operating costs. As the Corporation will not be a profit making organisation, it is envisaged that it will be operated at a minimum of expense.
The purpose of the legislation now before us is to give to the people of Australia an opportunity to borrow sufficient money on first mortgage to cover almost the total cost of their dwelling. Provision is made for up to 95 per cent, of the total cost to be insured, but it is envisaged that loans of up to only 75, 80 or 85 per cent, of the total cost will be insured. Only in rare cases will loans of 95 per cent, of the value of the home be insured. Let us assume that a young married couple who wish to build a home have saved £750 between them and under the Homes Savings Grant Act have received from the Commonwealth an additional sum of £250, making a total of £1,000. If the husband is in receipt of an average or slightly above average income, he and his wife will be able to approach a financial house for further assistance. No doubt they will be referred to the Housing Loans Insurance Corporation with a view to ascertaining whether they are a good risk. I should imagine that, as the husband has a good job and they have £1 ,000 in the bank, they will be entitled to borrow up to 85 per cent, of the total value of their home. Thus they will be enabled to obtain a block of land and build a home to the value of £6,000. That would give them an equity of 15 per cent. If they built a home with a total value of £5,000 they would have an equity of 20 per cent. This means that, in the case of the £6,000 home, the Housing Loans Insurance Corporation would insure the lender to the extent of 85 per cent, of the total value or, in the case of the £5,000 home, to the extent of 80 per cent, of the total cost.
Under this legislation, the whole of the sum borrowed could be obtained from the one institution. That is an important aspect of this measure and that is why the Minister is so keen about it. Moreover, the interest would be charged on the reducing balance of the loan. Before the introduction of the Homes Savings Grant Bill and the measure now before us, if a person who wanted to build a house costing £6,000 had a deposit of £750 and was able to raise only 70 per cent, of the total cost by way of first mortgage at the ordinary rate of interest permissible under this Bill-
– Has a rate been set?
– No, a rate has not been set, but it has been stated that it will be reasonable.
– -But no rate has been set.
– That is quite correct.
– What would the honorable senator regard as being a reasonable rate?
– I have heard members of the Opposition mention a rate of 6 per cent. 1 should say that that would be a reasonable rate.
– A flat rate of 6 per cent.?
– No, reducible. If he wished to purchase a home valued at £6,000 he would be able to borrow about 70 per cent, of that amount - about £4,200. Alter paying a deposit of say, £800, a balance of £1,000 would need to be raised by a second mortgage loan. As honorable senators know, - interest rates varying from 10 per cent, to 15 per cent, are payable at present on second mortgage loans. The intention of this measure is to eliminate entirely the need for home purchasers to pay high rates of interest on second mortgage loans. Providing the home purchasers or home builders are approved by the Cor poration, they will be able to obtain up to 85 per cent., or sometimes 95 per cent., of the total amount they require.
I believe that the legislation before us now is one of the greatest pieces of legislation introduced in this Parliament since I have been a member of it. I know that members of Government housing committees have made studies throughout the world of schemes of this type and have found that such business is transacted both in Canada and in the United States.
– How long did it take such schemes to get going in other countries?
– A similar scheme has been operating in Canada for 10 years. Before the Government introduced this measure in this Parliament it invited the director of the Canadian scheme to visit Australia and explain how it operates. Information was also obtained from other countries including the United States of America, and from the big Australian finance and housing agencies. I therefore believe that we can take it that this legislation has the approval of most of the finance and housing concerns in Australia. This legislation deserves the full commendation of both sides of the Senate. As the Opposition is not opposing it, the legislation must have its approval. Honorable senators opposite have said that it is a bit weak, but this criticism we can understand because it is necessary for them to say something critical about it, or they would not be an Opposition. Senator Cavanagh said that this Bill, when it is passed, will not provide another house in Australia.
– Will it?
– I draw Senator Cavanagh’s attention to the. related legislation, the Homes Savings Grant Act, which has given to our young people from the taxpayers £3£ million since its inception. Senator Cavanagh implied that that sum of £3-) million will not build a house.
– I say that because of the way in which it is distributed; it will not build a house.
– 1 presume that the legislation before us can be taken in conjunction with the related measure which, although it has been enacted for less than a year, has provided £3i million for our young people. This amount has been placed in their bank accounts so that if they wish they can approach the Corporation when it is set up and obtain practically all the finance they need for home building. They can obtain amounts up to £7,000, depending entirely on the type of home that is to be constructed and the amount of salary earned. In some instances persons earning £25 a week, which is about the average weekly wage today, may borrow almost three times their annual salaries. After payment of a deposit, a person on the present average weekly wage will be able to buy a house valued at almost £4,000. Many people today earn more than £25 a week. I understand that many men working at Mount Isa are getting £60 a week. If approved of as borrowers, they may obtain loans of about three times their annual salary - about £9,000.
– How many men at Mount Isa own a home?
– Many of them do not need to own a home, because they are provided with homes at cheap rentals, by the mine management. The honorable senator who has interjected knows that hundreds of homes have been built at Mount Isa. Senator Cavanagh is just against the Government. He began his speech by saying: “ I want to say a few things about this measure that show it cannot be any good “. The first thing the honorable senator said was that this legislation will not provide one extra house in Australia. I have already explained to him to the best of my ability that in conjunction with the Homes Savings Grant Act, which has been passed by the Parliament, the legislation before us will provide hundreds of houses in Australia. They will be provided through loans at low rates of interest - rates much lower than the rates at present being charged on second mortgage loans.
– In the sweet by and by.
– The honorable senator knows well the record of this Government and he should not argue. In the past 30 years, for the last 15 of which the Liberal Party has formed or has helped to form the Government, a great number of homes have been built. The present number of dwelling houses in the Commonwealth is about 3,250,000. That figure represents almost double the number of homes in Australia 30 years ago and I believe that the present total will be doubled within the next 25 years. This has been said by the Minister. We can expect in the next 25 years to have within the Commonwealth about 6,500,000 homes. At present, on the average, each home is occupied by fewer than four people. That is a record to be very proud of and. as a government, we are proud of it. In normal circumstances we can expect that in another 25 years 6,500,000 homes will be built for a population of between 20 million and 25 million.
Returning to the measure before the Senate, I commend the Government for making provision for homes for farmers. It is stated specifically in the Bill that provided a farmer grants a first mortgage over a portion of his land, the Corporation can insure a loan for home building on that land. I think this will cause more than a little difficulty, because the Bill does not make any provision to speculate in land or to deal in land, except in the case of land on which a home will be built immediately. The Corporation must be convinced that the applicant has either started to build a home on the land or that he is intending to build a home on it.
I believe that we must pay some attention to our farmers. This is the first piece of housing legislation that has been brought forward in the Commonwealth to make provision for farmers who wish to erect dwellings on their properties. A farmer will have to negotiate a first mortgage with a lender. This is what the Corporation will require before the farmer borrower can benefit from this legislation.
– The war service homes legislation has a similar provision.
– This is the first time, leaving aside the war service homes legislation, that the Commonwealth has actively assisted in a financial way in the construction of dwellings on farms. This measure now provides that a farmer may negotiate a first mortgage in respect of a portion of his land. I understand that it will be necessary for the farmer to subdivide and provide quarter acre blocks, with access to each block. Then the farmer will be entitled to obtain finance from a borrower to erect a house on one of those blocks and to avail himself of the guarantee which is available from the Corporation under this legislation.
Farmers these clays frequently have to provide accommodation for all their employees. In many cases it is most difficult for them to do so. This is particularly noticeable in the case of new properties in Western Australia and in other States. I believe that many farmers in Western Australia will be only too pleased to take advantage of this legislation, so that they can then carry on with the development of their properties and provide decent housing for their employees, probably better housing than they would be able to provide if it were not for this legislation.
– What is the practicability of a farmer getting a loan on the balance of his farm?
– I did not say that.
– No, but that is what he will be put to. He will have to get a separate mortgage.
– Yes, he will have to get a separate mortgage. He will have to negotiate a mortgage with the lender in respect of the quarter acre block. You might say that the land is not very valuable, but I believe he would have to pay a deposit of 15, 20 or 25 per cent, of the total cost of the building. Although the land might be worth only £10 or £20 an acre, the Corporation would take into consideration the value of the home. No doubt the farmer would not be entitled in those circumstances to obtain as much as 95 per cent, of the total value, but I believe he could expect to get something between 70 and 80 per cent. That is how I think it will work out in practice. I might also remind the Senate that many farmers now employ men who live in nearby towns and drive to the farm properties daily. There will be nothing to prevent a farmer buying blocks in a nearby town and obtaining money from a financial institution, covered by a guarantee from the Corporation, to build homes for his employees in that town. I believe a farm employee is entitled to as good a home as a person working in any of the more favoured industries.
There is another feature of the Bill which I believe is vitally important. I refer to the provision which prevents the Corporation from guaranteeing loans granted to persons who are building or intend to build substandard homes. This provision in itself will help to improve housing standards throughout the Commonwealth, which I believe is of vital importance.
I would like to conclude my remarks by saying once again that the Government has not acted haphazardly in respect of this piece of legislation. We are wholeheartedly behind it. We know full well that the first leg of the Government’s housing proposals, the homes savings grant legislation, has already made available £3,500,000, and I can assure the Senate that the second leg, the setting up of this Corporation, will be as effective as the first has been.
– Senator Ormonde has just reminded me that we are not in opposition to this Bill. That is so; we are definitely not in opposition to it, but we just want to point out a few of its deficiencies. 1 had looked forward with eagerness - intense eagerness, I may say - to the speech of the former leader of the Government, Senator Sir William Spooner, who was also the Minister in charge of the War Service Homes Division and had more to do with housing generally than any other Minister. I can recall, as we all can recall only too vividly, how this anti-Labour Minister not so many years ago panicked when he found that 100,000 homes were going to be erected in the Commonwealth in one year. I thought the honorable senator was about to make a confession and an apology for his sins of omission and commission during his tenure of office. I rather expected him to claim credit - to which he was justly entitled - for pursuing the policy inaugurated by the Chifley Government which resulted in the establishment of the Snowy Mountains Hydro-electric Authority. However, the honorable senator did mention the Chifley housing scheme which was inaugurated in 1945, to take effect from 1st July 1946 and to be effective for 10 years, under which money was provided by the Commonwealth, under section 96 of the Constitution, for the States to erect homes to be available in no small proportion, as the honorable senator said, for rental purposes. What the honorable senator did not stress was that these homes were also for sale. Nor did he say that the moneys for rental homes were to be repaid over a period of 53 years. Now we are talking in terms of 1 5, 20 or perhaps 25 years, whereas the Chifley Government made money available over a period of S3 years. It made homes available to people who could not buy homes.
As you will recall only too vividly, Mr. Deputy Chairman, a rental rebate system was in operation, under which a man receiving the basic wage paid 20 per cent, of his weekly wage as rent. Something was added to this, of course, if another person in the household was earning money. A pensioner could get an attractive modern maisonette for as little as 8s. a week. Nowhere are these conditions available today and nowhere have they been available since 1st July 1956. Despite the long period of prosperity that has been talked about by successive Menzies Governments and their supporters, never have those Governments made homes available to the people receiving low wages on such reasonable conditions as did the Chifley Government. It is of no use for the former Minister for National Development to try so glibly and smoothly to put one over this chamber as he was wont to do previously. It is our responsibility to tell the truth and to put matters in their proper perspective for the benefit of the people who need assistance in respect of housing.
There are just a few remarks I want to make in respect of Senator Scott’s speech. He said that under this legislation young couples would obtain by way of loan up to 80 or 90 per cent, of the value of the property. Others mentioned a figure of 95 per cent. I should like to see this when it does occur because at the present time young couples are rinding it difficult to get loans of more than 50 or 60 per cent, of the cost of homes.
– That is the position at the present time. Under this legislation they will get more.
– We are waiting to see it. I am telling the Senate what is happening. No assurance that they will get 80 to 90 per cent, is engrossed in this Bill. The Government is hoping. It is trying to convey a false image to the people of Australia as it has always done. The honorable senator said that men at Mount Isa earning £60 a week will be able to get by way of loan three times their yearly income. Not many are earning £60 a week.
– They will get it provided they are approved.
– There is always a proviso.
– I cannot give it to them. The Corporation will give it to them.
– It is the Kathleen Mavourneen story again. It will be in the sweet bye and bye. They may get it, and they may not. I do not think that they will get it. Can anyone imagine this Corporation guaranteeing a loan of £9,000 to a miner at Mr Isa? It is too dashed ridiculous. It is beyond belief. The honorable senator was not even sincere. I hate to impugn his sincerity because he is always so serious, but in this instance I feel that he was not even sincere in espousing this cause. He knew that he had a weak case. 1 do not know whether I am entitled to use this word, but I think that this is a phoney Bill. The Government has no assurance that it will be implemented and be effective.
Let us have a look at it. For a change, in a second reading speech we at least did get a number of pages. There was not the discourteous approach that Ministers often show to the Opposition and to their backbenchers, by cursorily covering a measure, dealing with it in summary fashion. I pay tribute to the Leader of the Government in the Senator (Senator Paltridge) for presenting a second reading speech that covered many pages. However, I say in all seriousness that this is a phoney bill in relation to the rights of people to acquire homes. This applies more particularly to those on low incomes. It is all very well to talk about a home costing £4,000 or £5,000. In the Australian capital cities today it is particularly difficult to obtain a home for £4,000 or £5,000. Any sort of allotment of land ranges in cost from £1,500 to £3,000. I do not know where anyone will get for £4,000 a home to accommodate a family of two, increasing to four, and, perhaps without even trying, increasing to six. How is anyone to accommodate six in a house to be built for £2,500 on land costing £1,500?
– Not trying?
– I am speaking only about my own case. Senator Kennelly knows that it is very difficult to obtain a home for £4,000 or £5,000. The average cost of a home adequate to meet the needs of a modern family- £6,000, £7,000 or £8,000. This is what people today are entitled to expect from the nation for the services they have rendered to it. Looking at this measure carefully, what do we find? I did not hear Senator Sir William Spooner concede that there was a precedent for this scheme. I know that the New South Wales Government guaranteed building society loans amounting to tens of millions of pounds, and there was no insurance charge for the guarantee. But the moment an anti-Labour government comes into control of the Treasury bench of the Commonwealth Parliament it says: “ We must collect our pound of flesh, even if it is only 5s. per £100.”
Surely the Minister could have said: “ We cannot say exactly what the premium will amount to but we visualise that it could be this or that it might range between this and that.” There would be nothing wrong with that. But no, he leaves the door wide open, saying that when this Corporation becomes an established entity, with its chairman as managing director, and its four associate members, it will determine the charge. Surely if the Government visualises this as a living instrumentality, a vital entity, it must have in mind just how the Corporation will function and just what its charges will be. Surely it must have some idea.
This measure does not suggest to me that there will be any increase in the money available for housing. In fact, upon an approach to the banks, building societies or insurance companies today, one and all will say that their funds are limited and that they have no more money to advance. How will this measure improve the position? These organisations have, over the period that they have been functioning, assured themselves of adequate protection. This will provide them with no more protection than they have at present.
We think in terms of banks, insurance companies and building societies, but the Minister said that as time went on other classes of lenders would almost certainly be approved. Just what did he mean by that? Again, this is indefinite. If he meant trade unions, farmers’ organisations, and credit unions, why did he not say so? If he meant the Hooker building organisation, the Lend Lease Corporation, or any mushroom growth that might occur, why did he not take us into his confidence? We are trying to help him all that we can, as he knows. Let us be definite about this. Surely he must have in mind what he seeks to convey to the people of Australia, even if he is contemptuous of the rights of members of the Opposition and completely neglectful of his responsibility to his own backbenchers. He cannot leave the matter indefinite, saying: “There will be a premium. We will guarantee advances. We will guarantee insurance companies. We will guarantee building societies. As time goes on we will guarantee other groups of lenders.” What other groups of lenders has he in mind?
In terms of time, he is indefinite. As we know, by and large the private savings banks make loans for 15 years or even for 18 or 20 years, but this is rare. The Commonwealth Bank often makes loans for 20 or 25 years. Someone has spoken of a term of 35 years but there is no assurance from the Minister as to the term. The Government apparently hopes that if it is still in control of the Treasury bench its election promises will be forgotten by the people. That is how the Government has survived, apart from borrowing Labour’s ideas. When Labour puts forward ideas that the Government consider to be worthwhile, the Government borrows those ideas, at least in part. Here it is proposed that a government instrumentality will be established, in the expectation that it will assist young people. But not only young people need assistance. Many older people who have served this country well are still seeking homes. I admit that in the Bill and in the second reading speech there is no mention of age. When it comes to assessing an older couple as a risk, if the present Government continues in office, the Corporation will look unfavourably on them. But it is our hope and expectation that the present Government will not have control of the treasury bench for very much longer. The Government will face economic difficulties in the future and it is not doing anything about them.
I come now to the’ most important part of the proposal: Where is the extra finance to come from? The Government proposes to set up an insurance corporation, but that will not stabilise the approach of banks, of the insurance companies or of the building societies. They have provided adequately for their own protection in regard to mortgages and the risks they take. They will not lake unnecessary risks. Why does not the Government face up to the issue? Only as recently as last week BP Australia Ltd. sought to raise by way of debenture notes within the Commonwealth a loan of £10 million for expansion of its enterprises. I am not opposed to companies expanding their enterprises, but I am opposed to the dividends flowing overseas. The money could bc provided to assist in building a greater number of homes. The President of the United States did not simply make a statement on this matter. He almost delivered an ultimatum to the companies. He told them to send all their profits back to the United States. He did not name Australia, but we were necessarily included. He told the companies that if they wanted to expand their enterprises in other countries they could use the money in those countries al as low a rate of interest as possible, but they had to return the high profits to the United States. This Government is doing nothing about that situation.
The Bill is completely insubstantial. 1 commend the Minister on the length of his second reading speech. I do not know whether that was a result of the castigation of the Minister by an honorable senator last week for the cursory and discourteous approach that he adopted to the second reading speech of a Bill providing for additional expenditure, of, I think, £4.669,643 against original expenditure of £6,965,000. On this occasion apparently the Minister was prepared to sit down with his advisers and write out a number of pages for his second reading speech. They provide us with a certain amount of information, although most of it is insubstantial. In fact, as I perused the speech I could find nothing of substance in it for the married couples of Australia. There is no guarantee that one extra home will be built. In fact, it states that there could be a curtailment in the erection of homes. It was suggested that if the Government can provide this control, which is extremely doubtful, and if it can influence the lending instrumentalities, which is again extremely doubtful, the money will be diverted to homes already erected. How will that help people who are seeking new homes? How will that help people who are without homes?
The Government must make an active and a virile approach to the erection of more homes in Australia. Research studies show that Australia needs a minimum of 100,000 new homes a year. In 1959 or 1960 when we were attaining 100,000 new homes a year, the former Minister in charge of housing panicked and the Government imposed restrictions. It said: “Something worth while is happening but we do not know how to handle the mechanism of finance, the ordering of materials and so on “. I suggest to the Government that it approach the matter of housing from a completely new angle. It should look at the finance and the materials available in this country in relation to the needs of th: people. If overseas companies want to expand their industries here and draw the financial lifeblood from this country, let them provide the financial sinews. Do not let them draw on money from within the boundaries of Australia. Let the money within this country be utilised for the purposes that we deem most fitting and not lo provide dividends for overseas companies, as has happened in the past. The Leader of the Government in the Senate (Senator Paltridge) knows that fact better than I do because for many years he represented the Treasurer in this chamber, and he is not incompetent. He would know just how much money has been drained from this country. He knows now that a new approach is required. The policy of the overseas companies has been to drain as much money from us as they possibly can at the lowest rate of interest.
I say to the Minister that the Opposition is grateful for the many pages in his second reading speech, but we do object to the extraordinary difficulty of trying to find in it a definite clue as to what the Government intends to do. We took the trouble to peruse the pages, but nowhere could we find anything definite.
– It is necessary to read between the lines.
– Perhaps when the Minister replies to the second reading debate he will tell us what has ito be read between the lines. We ask him to tell us what premium will be charged for this insurance; why a premium is justified in view of the small risk involved; and how the insurance companies, the banks and the building societies will be able to provide more finance. Reference was made in the second reading speech to loans of 80 per cent., 85 per cent, and 90 per cent, of the total cost of a house. We want to know how the lending authorities will be able to provide these increased loans, in view of the fact that their practice at the present time is to advance loans of up to 70 per cent. We know that some State Governments through their own particular authorities advance 90 per cent, or 95 per cent, of the cost of houses, but the banks, the insurance companies and the building societies have not done so. Why is the Government so optimistic about a change in policy on their part when it knows that at the present time it is difficult to obtain more than 70 per cent, by way of first mortgage? What does the Government intend to be the responsibility of the Corporation to widen its authority in regard to other groups of lenders? The whole matter is so indefinite in the minds of Opposition senators and of Government backbenchers.
From 10th December 1949 up to the present time there has been a succession of extraordinarily good seasons. Reasonably buoyant prices have obtained. Large over* seas sales have taken place and good overseas credit has been established. Yet the Government has not been able to meet the housing needs of either the young or the older people of this country. How can the Government now hope, by way of this subterfuge, to meet the increased costs involved in the measure and to guarantee to the people the homes to which they are rightly entitled? They are entitled to homes because they have worked for this country, are still working for it, and are helping to preserve the Australian way of life.
– The Bill that we are now considering is part of the Government’s programme to provide more adequately for the housing needs of the people. Last year we considered the first instalment of the programme which has been undertaken by the Minister for Housing (Mr. Bury). I join with my colleagues in paying a tribute to his sincerity and to the hard work that the Minister has put into what is a new approach to housing by the Commonwealth since the establishment of the Ministry for Housing.
This Bill has been covered fairly adequately by honorable senators on this side of the House. The Minister described its purposes in his second reading speech. First and foremost, the Bill has the primary function of establishing the Housing Loans Insurance Corporation which will insure lenders against losses arising from the making of loans for the purchase of homes or for additions, repairs and improvements to homes. It is designed to help refinancing existing mortgages and, by adding vastly to the security of such loans, it should attract more money into housing and at lower rates of interest. This is the purpose and aim of the Bill.
In its gentle way, the Opposition has endeavoured to poke fun at the Government’s hopes, but I can see nothing wrong in introducing legislation in the hope that it will do something. It would be absurd to introduce legislation in the hope that it would not do something. We are all activated by the hope that what we do will be successful. This Bill is not exceptional in that regard and I do not see any fault in the Government’s approach.
The Opposition has told us many things that the Bill will not do. Of course there are many things that it never set out to do. I was very interested in the criticisms of the Bill that emanated from the Opposition. Although the Opposition is not opposing the Bill, it is carrying out its rightful Parliamentary function of examining and criticising the Bill. I think the debate has been interesting and, in a great measure, constructive.
I was interested in Senator Cavanagh^ jeremiad about the Bill. He was somewhat in contradistinction to his colleague, Senator Bishop, who could see at least some fine sentiments in the Bill. Senator Cavanagh welcomed the Bill with as much enthusiasm as a mother welcomes her 13th child. He complained that the Bill would not do anything. He adopted this line of thought when comparing it with what is done by somewhat comparable Canadian legislation: but he conveniently forgot that the Commonwealth’s constitutional powers in relation to housing are quite different from those of the Canadian Parliament. In those circumstances our approach to the matter must necessarily be quite different from the approach of the Canadian Government. Canada’s legislation has been carefully examined by the Minister and bv the Government, and those parts of it which arc applicable to the Australian housing position have been applied wherever possible.
The honorable senator described the premium of possibly 2 per cent, that will be charged to insure a loan as a load upon the finance to be provided, but he omitted to say that if, as the result of this legislation, a borrower can obtain finance at 7 per cent, interest instead of at 10 per cent, interest, the 2 per cent, once and for all charge will be infinitesimal in relation to the total cost of providing the home. He said that the 2 per cent, would be an additional charge, lt will be an additional initial charge but it will help the borrower to reduce the rate of interest payable during the currency of the loan.
Senator McClelland is an expert at setting up Aunt Sallys. He made some kind of a case about the fellow who has an average income of £23 a week. I do not admit that his figures are correct but I will accept them for the purpose of examining his case. He said that £23 a week was the average income of a worker in the Australian community and that the average cost of a home is £6,000. But that is not the average cost of a home. I have considered this particular aspect. I am very familiar with the set-up in Western Australia and I have in my hand quarterly statistics which show the cost of houses in that State. For the quarter ended June 1964 I notice that 1,529 brick, stone and cement houses were completed. Their total value was £5,840,000. The average cost, therefore, was about £3,810. The average cost of fibro-cement houses for that quarter was £3,125.
– Docs that include the cost of the land?
– No, it does not include the cost of the land. In case anyone should say that those figures relate to Western Australia only and may be all wrong for the whole of Australia let me turn to the annual report of the Director of the War Services Homes Division. I think Senator McClelland has this report in his possession. On the back page of the report are figures relating to the average cost Of homes erected by the Division in each of the States during 1963-64 compared with the average cost in 1962-63. For New South Wales the average cost in 1963-64 was £4,214, for Victoria £4,082, for Queens land £4,074, for South Australia £4,435, for Western Australia £4,195 and for Tasmania £3,848. I can see no reason for the astounding figure of £7,388 for the Australian Capital Territory.
– What was the average cost for the previous year?
– I shall not read Che average cost for all the States because they are much the same so I shall take the cost in New South Wales. In 1962-63 the average cost was £4,063 compared with £4,214 for the following year, as I have already mentioned. The report to which I have referred contains the figures for the years 1955-56 to 1963-64. They reveal variations up and down during that period.
– What does the honorable senator estimate to be the value of a block of land?
– This publication shows that in New South Wales the average cost of a dwelling house and land in 1963-64 was £5,053, so Senator McClelland has merely thrown another £1,000 in to make his story look a little better than it really is. It is a convenient dodge but it does not always come off.
I listened with a great deal of attention to Senator Laught. He mentioned the absence of provision for strata titles in some States and said that this would prevent the wider use of the provisions of this Bill. Senator Laught suggested a Federal-State conference to consider this matter. I welcome that suggestion because I am particularly anxious to see such a conference to consider not only this but also other matters that need to be considered when the Commonwealth institutes a housing programme and has to use State instrumentalities to bring it into being. There is an urgent need for close and careful cooperation between the Commonwealth and the State authorities in this matter and I support Senator Laught’s suggestion wholeheartedly.
Senator Laught and other speakers on the Government side have agreed with the Minister for Housing that this legislation will make possible a mortgage market for housing. That is a most desirable and long overdue provision. I confidently expect that the Minister’s hopes will be realised in this connection. Like Senator Scott, I was particularly interested in certain lines in tha
Minister’s second reading speech. The lines Senator Scott quoted ware -
The Corporation may insure a loan secured by a first mortgage made to a farmer for the erection of any type of dwelling on his property.
But Senator Scott did not quote the part of the Minister’s speech which I think has a greater interest in this connection. The Minister went on to say later -
There are many people who wish to borrow to extend or improve their homes, but have already given a first mortgage over their properties. In 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. 1 was very interested in that section of the Minister’s speech in which he said -
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. . . .
This problem has concerned me greatly for a long time because anybody who is interested in justice and equality in the distribution of long term finance for home building should be interested in the case I have submitted previously, and now submit, of a big section of our people who need long term finance for housing. Australians who are engaged in primary production find that they are virtually denied any access to long term loans for home building. This affects all people engaged in agriculture whether as owners or employees. Because of this inability to secure suitable finance, the present legislation will have no application to a considerable section of the people.
Senator Scott made a suggestion that has been made often before, lt is that by deleting a small section of a farming property and securing a title to that section, the owner of a property can thereby secure the benefit of this legislation. But before he can secure the benefit of this legislation, the owner of the property must find somebody who is prepared to lend money on a security of that sort, and I do not think anybody is prepared to lend money on a section of a farm deleted from the rest of the property. Instead of adding to security, such an arrangement destroys security. Tt is of no use whatever. This plan has been put up many times but it will not help either in adding any security to a home or attracting lenders.
We have already had experience of the homes savings grant. We find that at 21st August 1964 only 13 per cent, of the successful applicants for this grant had come from the non-metropolitan areas whereas there are 44 per cent, of the people in that group. Although statistical records are generally made to sub-divide this group further into other rural and urban areas - and rural means farming areas and country towns of fewer than 1,000 people - this has not been done with the figures available in relation to the homes savings grant. Therefore, we have to guess at this distribution. If the figures had been available, I am sure we would have seen that the second group of people - described as rural - would have had virtually no successful applications at all.
Figures available for Western Australia to the end of February show that of the total number of applicants for the homes savings grant, 70 per cent, were successful but of these only 8 per cent, were from the nonmetropolitan area as against 62 per cent, from the metropolitan area. If we look at the needs of people on a percentage basis, we find that in 1962 the distribution of marriages was 59 per cent, in the metropolitan area against 41 per cent, in the rest of the State, which closely approximates the population statistics. Again, having regard to the fact that the majority of the successful non-metropolitan applicants are to be found in the large towns outside the capital cities, the situation is serious indeed. These figures show that 43 per cent, of the people get only 8 per cent, of the grants.
The same causes that prevent the provisions of the Homes Savings Grant Act from operating in rural communities will surely operate against the provisions of the Housing Loans Insurance Bill. Loans will continue to be unavailable unless the problem of security is tackled. That is why I say at the outset that the Minister does give me some hope by suggesting that a second mortgage or some other form of security will be acceptable. I know that the Minister is studying this problem carefully.
– That reference is limited to alterations.
– Yes. So far, I have endeavoured to study this problem in cold statistical figures. But it is a problem which concerns people - people who are engaged in Australia’s foremost industry, the industry which is providing the great bulk pf our export wealth. I believe that those people deserve a little consideration in this regard. Occasionally one finds a perambulating journalist who stumbles across this problem and writes about it. There was one such journalist who contributed an article to the “West Australian” of 30th January this year. Because I believe that the Senate is interested in this problem I would like to read this article, It is headed “ Modern Pioneers - The Women of Esperance “ and was written by Catherine Martin. The article reads as follows -
Much has been said of the new settlers at Esperance - the men, many of whom crossed the Nullarbor in trucks to take up their virgin scrubland, and are now developing it into rich pasture. Little, however, has been said of the women, who with stoicism and tenacity are living in conditions that the ordinary city girl would not tolerate. Some are newly weds having their first babies. Others brought their young families with them. . . .
Many farmers are living on their capital sweating out the first five years till they can hope that their farms will become productive. Any money made from the first crops is ploughed back into the land. Stock, farm machinery and buildings must of necessity come before the homesteads. Families are living in partitioned-off portions of the woolshed or other farm buildings till a start can be made on the family home. Others have put up one or two rooms of what will ultimately be the permanent home, and are living there.
The author instanced some of the cases. She said -
Mrs. Wallace Deane, former textile examiner, drove wilh her husband and two boys, now aged two and six, in a truck from Bendigo last January. They drove straight into the scrubland in the Munglinup district (making the first road on their property), parked the truck on a knoll, pitched a tarpaulin over the back, unloaded beds, a table and chairs - and they were in residence. They lived this way for two months till the couple, who had never built anything in their lives before, put up the corrugated iron shed in which they are now living.
Mrs. Peter Standish, a former school teacher, came from Victoria two years ago. She lives in a converted bus and has a baby less than a year old. . . .
Mrs. David Steer, who started housekeeping with two trams, “ stuck in the middle of nowhere,” near Gibson’s Soak, said the shortage of water was the biggest problem.
This article does deal to some extent with’ the manifestation of the problem but the author did not delve into the reasons for it. I am trying to present those reasons to honorable senators. 1 have read what the author saw at Esperance but she could see a repetition of this through all the developing areas of Western Australia and some areas that have been developed for quite a long time. It is all very well to glamourise this sort of thing but the glamour wears off. Last year, 1 received a letter from a woman farming at Lake Grace, an area that was pioneered many years ago. She said - 1 have seen many women, used to good houses, who become disillusioned after years of battling, and become an unwitting fifth column against the success of the farm. They just can’t stand the inefficiency any longer, the unloveliness, and lack of dignity.
This is a human problem. It is a problem which I believe we cannot ignore. No other section of the community is asked to put up with these conditions in housing for the lack of long term finance. I feel that our legislation has never adequately tackled this problem of security. 1 believe there is an answer to the problem if we only try to solve it. I believe that the Minister is making a serious attempt to find a solution.
In case any honorable senator thinks that this is a matter which only concerns the 17 per cent, or so of Australians living in areas classified as rural, let me assure them that part of the pressure at present being felt in the capital cities is generated by these forces that I have mentioned. We speak a great deal about the need for decentralisation. I feel that this is one of the forces producing a great deal of the concentration in the cities. This is because people who want to live in the country cannot get housing on suitable terms. Farmers cannot provide housing for their employees except by using money that is required for immediate developmental purposes.
Senator Scott mentioned the building of homes for farm workers in country towns. This would be an excellent thing. I am all for it. But at the present time the Commissioner of Taxation will not give the concession that is granted with regard to homes built for workers on farms if they are built in a country town. This is one aspect of housing that I think the Government should have a look at. I feel that a lot of the demand for housing in the cities is brought about because of the complete absence of long-term finance in the rural areas. The other day Senator Drake-Brockman related to me the instance of a person who had £1,500 available in cash as a deposit on a home. This person was informed by his bank manager that the bank could not give him any assistance if he wanted to build a home in an area about 30 miles outside Perth, but the money would be available if he moved into the metropolitan area. 1 recently discussed the position regarding war service homes For many years any returned man eligible for a war service, home found that he could not get finance from the War Service Homes Division to build a house on a farm. That position obtains today, to all intents and purposes, unless some part of the farm property is virtually a part of a town. If he lives any distance from a town it is virtually impossible to find an ex-serviceman in agriculture, either as an owner or employee, who has succeeded in getting a war service home. 1 discussed this matter the other day with a returned man who had been farming for many years. He could not get a war service, home on his farm. He retired from farming and moved and lived in Perth. He applied for a war service home. He was eligible for it and received it. But while he was living in the country he could not get one.
I feel that this state of affairs is not good. It is not good for the welfare of the country and it produces the pressures of centralisation and demands for more money. The demand for more money for underways and overways in the cities is an extra cost to the community and the city man should be interested in decentralisation because he is involved in the matter. I do appeal to the Minister to redouble his efforts with regard to housing so that we can remove What I believe is a standing disgrace to this country.
– I desire to make a personal explanation.
The ACTING DEPUTY PRESIDENT (Senator Wedgwood). - Does the honorable senator claim to have been misrepresented?
– Yes. I think I have been misquoted by the previous speaker, Senator
Prowse. He quoted something which was out of context. With your permission, Madam Acting Deputy President, I shall read the relevant part of the Minister’s second reading speech so that it will be apparent to everybody that what I said was quite correct. The Minister said -
The Corporation may insure a loan secured by a first mortgage made to a farmer for the erection of any type of dwelling on his property. As the Corporation will not be empowered to insure the repayment of a loan made to acquire land for farming and commercial purposes, the amount of an insurable loan made for farm housing will be determined in relation to the appraised value of the dwelling or dwellings proposed to be erected. 1 went on to say that the value that would be determined by the Corporation would not be as much as in ordinary circumstances. If the land involved was separated as a one-quarter acre block, it would not have any real value in the eyes of the Corporation and/or the lender.
– I wish to deal briefly with only one or two matters. Senator Prowse said that this was not a complete bill and he pointed out some of the things that it did not contain. He did not do too bad a job in doing so. Indeed, at one stage I thought he might be the only man in this place to vote against the Bill. He offered some criticism of the comments of Senator McClelland, who referred to a house costing £6,000. Senator Prowse quoted certain statistics, in the course of which he mentioned £4,195 as being the value of a house in New South Wales and £5,050 as being the value of the house and land. If New South Wales has overcome the problem of land prices to that degree, then Western Australia is entitled to be quite envious. You cannot get a block of land that you would seriously consider for anything like £1,000 today. At least, that is certainly so in Western Australia. In my own suburb I watched the price of a block of land move from £900 to £1,500 in a period of six months, and I watched the price of a prototype house that is being accepted by builders move from £4,000 to £4,500 in the same space of time.
When the Homes Savings Grant Bill, which made provision for a grant of £250 to prospective home owners, was passed recently it gave a vicious spin to the wheel of inflation in the building industry. The same problem id likely to arise following the passage of this legislation. Quite frankly, I cannot envisage any solution to the housing shortage unless the Government is courageous enough, in cooperation with the States, to exercise control over the price of land. The obvious way in which to do that would be to take the sale of land out of the hands of developers. The Government could take over the virgin land and retain control until it was finally made available to the builder for the erection of a house, and in that way costs could be kept as low as possible. Until that is done, I am afraid that it will continue to be a case of the dog chasing its tail.
One unfair aspect of the Bill consists of the many things that have been left unsaid. Far too many times it has been said: “ We hope this will happen.” I wonder just how much of this indefiniteness will be measured by costs that are handed on to the borrower. Senator Prowse referred to the insurance premium. In view of the fact that the Government has sought the advice and help of lenders and insurers, it ought to know what that premium will be. Senator Prowse referred to it as being 2 per cent. The Minister may correct me if I am wrong, but I understood that to be a calculated guess. It would seem that in introducing this legislation the Government is making the lending of money for housing purposes equally as safe as the buying of bonds. The Government is using its powers to ensure that people who lend money for home building will not lose their money. It is fairly obvious that the return on money so lent will be greater than the rate of interest on bonds. I wonder whether the Government has looked at the overall situation to ascertain what impact this legislation will have on the loan market.
I would not have participated in this debate if it were not for these few matters that have been raised. When all is said and done, although the Opposition has many reservations about the measure, it does not oppose it. We agree with Senator Prowse when he says that this is not a complete bill. Of course, we do not expect this Bill to do everything that ought to be done in relation to housing. But as long as the Commonwealth remains interested in the build ing of homes for the people, it will be moving in the right direction. Unfortunately, Senator Sir William Spooner was not quite so generous when he addressed himself to the Bill. Speaking from the heights of a man who was formerly a member of the Ministry, he said that he could not foresee the future. I said, by way of interjection, that he was not interpreting the past very accurately either. He invited me to point out where he was wrong. He referred to the entry by the Commonwealth in 1945 into the field of housing for the first time and said that that was a bad step because it was a socialistic approach. When a government uses the taxpayers’ money to provide for housing, postal facilities and social services, I do not see how any one activity can be regarded as being more socialistic than the others. It seems to me that all these activities have an element of socialism or whatever else we might like to call it. Honorable senators opposite may choose some other term if it offends them less. Senator Sir William Spooner criticised the Australian Labour Party for making provision in 1945 for the building of houses for rental purposes. When I asked the honorable senator when this approach was altered, he said in 1951, 1952 or 1953. He gave himself a fairly wide range. Of course, the change was made in 1956.
The Minister who introduced the Commonwealth and State Housing Agreement Bill 1945 was generous enough to say that that was not a complete measure. He said -
The Bill does not provide a housing policy complete in itself. The proposed Commonwealth-State housing agreement covers only rental housing of a good reasonable standard, for those who are in need of proper housing accommodation, and who, for various reasons, do not desire or are unable to purchase their own homes. The agreement would not preclude subsequent sale to a tenant at the discretion of the housing authority.
Honorable senators will see in the Bill that a housing authority is a State authority. It is provided in clause 14 that a dwelling may be sold by a State authority at any time after its completion. So it is completely wrong for Senator Sir William Spooner to make out today, with his knowledge of housing, that it was never contemplated in 1945 that homes could be purchased by the occupiers. The honorable senator started with the year 1951 and implied that the moment the present Government came . to office it rushed in to smash the agreement and set up something else. Of course, the truth is that in 1950, 1951, 1952, 1953 and 1954 this Government confirmed the agreement by introducing a bill each year in this Parliament.
– But was it not an agreement binding under its own terms for 10 years?
– I am not aware of that. Even that is not quite germane. The point is that Senator Sir William Spooner implied today - and Senator Wright listened to him - that the homes were for rental only and that there was no intention that the occupiers should be able to purchase them. It was not until 1955 that there was a slight amendment and not until 1956 that a change was made in the whole setup.
The Opposition supports the measure, but with reservations. Since the Federation of the Commonwealth the most important single step in the history of housing occurred in 1945 when the Commonwealth entered the field and a new concept arose. In 1945 it became quite moral and completely in accordance with the legislative programme to say that Commonwealth money should be devoted to housing the Australian people. That was the important housing news of that day. Today, Senator McClelland very adequately pointed out what Senator Sir William Spooner and many other people seem completely to ignore. In 1945 Australia was at war and many people completely ignore the fact that the internal economy at that time had to stand still. They judge the economy as though there were nothing unusual occurring at that time.
Prior to 1939 hundreds of people were not able to obtain houses because of the money situation, but the scheme was so good and was so well carried out that people began queueing up in their anxiety to get into houses. The scheme has been well carried out by this Government also since it came to office. A situation of greater demand was created and action had to be taken. Any Government would have taken the same action and it is at best irrelevant to take snide shots at the scheme 20 years later. It can only serve to cloud the atmosphere in a debate on housing. A tremendous programme lies in front of the Government because of the great increase in the costs of land and home construction. I have spoken to builders who operate in a big way in building houses for speculation in Perth in the last few years. They have said to me: “ Quite frankly, it is impossible for us to obtain land at suitable prices to build houses that we would be proud to put our names to and sell them to working class people. It is a financial and physical impossibility for us to come down to that section. So we are building for the middle class people houses valued at about £5,500 “. These homes are built on land costing about £2,000 and when the cost of furnishings and other extras are added the total amount required is about £10,000. Another type of home at an even higher cost is also built. This inevitably means that the people on low incomes must come flooding back to the Governments.
The considerations I have stated influence the Opposition to support the Bill tonight. We regret that we could not engage in a more detailed debate because of the nature of the Minister’s second reading speech which, incidentally, was delivered on 17th November last. Today we receive our first chance to debate the measure. Although I support the Bill I regret some of the things that have been said during this debate. To adopt the phrase used by the Minister, we hope that the legislation will prove to be a success. We certainly hope that other legislation will be introduced to grapple with the basic problem of housing the Australian people. We are a nation of home owners and home lovers and we do not want to get away from the achievements of the States prior to the war. In my home city of Perth the old workers’ homes scheme did marvellous work. It is almost unbelievable that prior to the war a home could be purchased on a deposit of £6 10s. Od. Home ownership is a tradition of the Australian people. The Opposition supports the Bill and hopes that it is the forerunner of legislation which will keep the Commonwealth vitally interested in the basic desire of the Australian people to own their own homes.
Senator PALTRIDGE (Western Australia - Minister for Defence - r9.45]. - in reply - Despite the fact that this Bill is unopposed, the debate has given rise to a surprising measure of pessimism and gloom. I think we should approach this housing legislation with the knowledge very firmly in our minds that this country enjoys one of the highest home ownership rates in the world. Over 75 per cent, of the homes in existence are owned or are being purchased by the occupants of those homes. Having regard to that fact, we should be able to put it into its proper perspective and regard this Bill, not as an omnibus bill covering the whole ambit of housing in Australia, but as a bill which is directed - and, I submit, very effectively - to the solution of a problem, or possibly a group of problems, but basically one problem, which we set out to alleviate and, ultimately, to cure.
This Bill represents a positive approach to the serious problem facing many home seekers. I refer to the problem of obtaining loans at reasonable Tales of interest without having to resort to costly second mortgage finance. We confidently expect that the Bill will be of great benefit to the community as the scheme develops over the years. One line of criticism that has been made seems to indicate that unless the morning after this measure becomes law the problem of second mortgage finance disappears, it will have been a failure. I want to emphasise that the financial habits of a nation do not alter overnight, and that it will take time for this measure to become properly embedded in the housing finance structure of the nation. It will take time for lenders and borrowers to accept it as a normal facet of housing finance. If we accomplish this result, as .1 confidently believe we will in the years to come, this legislation will be appreciated as a very useful addition to the armoury of housing finance which, over the years, this Government has sought to set up in Australia.
I was very disappointed that Senator Bishop in leading for the Opposition should have said that this legislation is merely picking at the problem. It is not picking at the problem, it is breaking completely new ground in Australia in respect of this matter of reducing the need for second mortgage finance. As I have said, the aim of this measure is to provide for finance to be available on first mortgage from a single lender to the extent of up to 95 per cent, of valuation, so that a man may borrow, up to that maximum, all he needs and can reasonably expect to repay. That is the prime object of the Bill, but the second object, and one which in its own area is as important as the first object, is to encourage the provision of more money from the private sector of the economy for housing finance at reasonable rates of interest. This I believe to be a very desirable aim indeed. The Bill is directed straight at that objective - the objective of more money from the private sector for housing purposes.
If I may anticipate an amendment that is to be presented by the Opposition, let me make the comment that there seems to be a good deal of confusion in the minds of members of the Opposition as to the purpose of this Bill. It is directed at private finance. The provision of low interest Government finance .through Housing Commissions, the War Service Homes Division and similar Government authorities is one thing. This is one direction in which the Government has moved over the years and in which it will continue to move. But the measure before us is directed at attracting private finance into home building, and this, I repeat, is most desirable. It was, of course, at one time a characteristic of the Australian economy that private finance in large quantities was available for home finance. But in the postwar years the provision of private finance for this purpose became unfashionable and for a period quite unprofitable. However, the Government considers it desirable and I believe the people now see that it is desirable to ‘attract private money back into this field. This is the second object of the measure before us.
I was very pleased today to hear my colleague, Senator Sir William Spooner, say that this is not only desirable on philosophical or political grounds, but also that it makes good commonsense economically. I firmly believe that it does. Having in mind all the projects’ which are being undertaken or to be undertaken in Australia these days and which can only be undertaken with the aid of Government finance, it is proper that private finance should be allocated to areas in which it can perform the most useful function.
We embark on this scheme with not a great deal of direct experience of it. We have made inquiries in those parts of the world in which we thought inquiries would be profitable. We have closely consulted the United States of America and Canada, in which countries schemes of this kind have been in operation for some time. We embark upon this measure admittedly in a modest way. One of the criticisms which may be levelled at the Bill is that it does not at once undertake to do all the things that it might conceivably do in a period of years. If this is to be a criticism, my answer is that it is far better to start in a modest way and, in the light of experience, develop and expand the activities of the Housing Loans Insurance Corporation than to embark hastily upon a programme which may prove to be over-ambitious. It must not be forgotten that the Department of Housing is not at the moment richly endowed with personnel with the experience to undertake the kind of work required by this measure, but as time goes on the necessary administrative resources will be built up and .there will be an opportunity for greater expansion.
The Opposition has had a good deal to say about the fact that there is no stated or indicated interest rate or premium rate to be charged by the Corporation. Let us consider the reasons why. It is interesting to note that one of the criticisms levelled in another place, and I think repeated here, was that at the point of time when we are introducing this legislation it has been found necessary to make a slight increase, in interest rates. If anything, this merely gives point to the prudence of not stating now what the interest rate may be. The interest rate will depend on a number of factors. First, the various transactions will differ one from another. A reasonable interest rate, for example, in the case of a new cottage might well be different from that charged in respect of the erection of a large block of home units or in respect of providing a second mortgage in an old home for installation of electricity and sewerage. Secondly, while it is obviously desirable to keep borrowing rates charged to home owners as low as practicable, the maximum rate must be high enough to encourage the flow of funds into housing. This is particularly relevant to the point referred to or implied by Senator Willesee, who referred to the possibility of setting the rate either at the same rate as or in consonance with the long term bond rate. If the maximum rate is set too low for the main potential lenders, most of whom will have to borrow from the public, the Corporation will clearly make very little contribution of a practical nature to the housing problem. As the maximum insurable interest rate is a matter for determination by the Corporation in the first instance, subject to later concurrence by the Minister, it would not be proper to commit the Corporation some time in advance of its operations and before its members have been able to tender the Minister for Housing (Mr. Bury) appropriate advice. The three reasons I have given will, I am sure, all be recognised as hard, practical, matter-of-fact reasons why interest rates should not be stated at this time.
Much the same criticism is made of the absence of a stated insurance premium. The explanation of this is that the Corporation will be covering varying types and degrees of risks and must be left free to decide, in the light of its own experience, the premium which it will charge in respect of each type of risk. As mentioned in the second reading speech, it is expected that the Corporation will normally charge an initial once and for all premium along lines that operate in theCanadian scheme. The Canadians operate* mainly on a 2 per cent, once and for all! charge, which is usually added to the loan and amortised over its life.
I particularly noted with interest the very valid point made by Senator Prowse. He said that the amount of premium that would be charged in order to secure these loans, set against the interest saving was - to use his own word - infinitesimal. It is envisaged that a scale of premiums varying according to the measure of risk involved will be charged. It would seem reasonable, for instance, to charge a lower premium on a loan of, say, 80 per cent, of property valuation, with a short period of repayment, than on a loan of 95 per cent, over a longer period. The Government is keen that the Corporation be not tied down on these matters. This is surely a matter for commercial judgment. The Corporation will be allowed maximum freedom of action, restrained only by business prudence and the particular limits of overall government policy. It must be free to deal with successive situations as they occur.
I think that most of the points which came from the Opposition were dealt with as they occurred by my colleagues on this side of the chamber. I noted particularly the interesting point made by Senator Laught in respect of strata titles. He referred’, particularly to the fact that procedures la: the Australian Capital Territory, as distinct from procedures in some States, do not provide for strata titles and these, therefore, would not be eligible for treatment under our insurance loans scheme. I should like to take the opportunity of assuring him that I have particularly noted this point. 1 do not contest what he put. Home units of this type show an increasing trend on the Australian social scene. I propose that his comments be brought to the notice of the Minister for Housing (Mr. Bury.)
Senator Prowse returned to a topic on which we have heard him formerly, namely, the position of the farmer. He spoke of the rural dweller in relation to the provisions of this Bill. I do not wish in any way to contest the validity of what he put. It is quite true that there is provision for this scheme to apply to farm properties, as was indicated by Senator Scott, but the practical problem was pointed up by Senator Prowse when he said that the difficulty was to get some one to lend against this particular type of security. Senator Prowse acknowledged that he had had discussions with the Minister about this and that he knew that the Minister had put the question under study. I want to add only that I noticed that when this matter was raised in the debate in the other place the Minister did in fact give the same sort of assurance, namely, that he proposed having a look at it, recognising it as a problem which required his particular attention and study.
In this quite brief reply to the debate, I end on the note that this piece of legislation, while not being a comprehensive, allembracing bill on the matter of housing, does bring a very practical, very realistic and what I believe will prove to be very successful approach to a particular housing problem, which is, I believe, the greatest single housing problem that we face today.
Question resolved in the affirmative.
Bill read a second time.
In Committee:
Clauses 1 to 3 agreed to.
Clause 4. (1.) In this Act, unless the contrary intention appears - “approved lender” means a person approved by the Corporation under the next succeeding section but, except in relation to a loan referred to in sub-section (4.) of that section, does not include a person whose approval under that section has been revoked; “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 respect of a particular kind of security, includes a security of that kind;
– I refer to the definition of “ approved lender “, which reads - a person approved by the Corporation under the next succeeding section. . . .
Clause 5 reads - (1.) The Minister may, by instrument in writing, declare a class of person specified in the instrument to be an approved class of lenders for the purposes of this Act. (2.) The Corporation may, by instrument in writing, approve a person, being a person included in an approved class of lenders, as a lender for the purposes of this Act.
One will notice the manner in which the approval is given, that is to say, by an instrument in writing - not by regulation, even, because that would be subject to the control of the Parliament. An instrument in writing that emanates from the Corporation or an instrument in writing that emanates from the Minister is neither a regulation nor part of the Act. Therefore, by these two means under the definition in clause 4, the whole benefit of this Bill is intended to be confined to particular classes of persons who lend money. These are to be defined by the Minister’s instrument in writing. Within those classes, the actual person who lends money, who must have approval to bring his loan within the benefit of this Bill, is to be indicated by the Corporation, again by an instrument in writing.
I am totally at a loss to see any need for the Minister or the Corporation to have statutory power to approve or disapprove classes of loans or individual lenders. The Corporation being entrusted with the power to insure housing loans, we are confiding to it a discretion to fix the rate of interest and the rate of premium appropriate to the risk. So long as it satisfies itself that the security is of the proper amount and that the house is in a sound condition, which is done by the ordinary processes of commercial valuation, Bill Smith’s money is as good as any bank’s money.
It seems to me to be the oddest idea that the benefit of insurance of loans should depend upon any particular class of lender being selected by the Minister or any particular individual being selected by the Corporation. The importance of that proposition comes from a statement that was made by the Minister. He said that the legislation is intended to apply to banks, life assurance companies and building societies. If that is so, it is going to exclude many lenders who are now contributing a great deal to housing finance. I have in mind what the Leader of the Government in the Senate said when closing the second reading debate. He said that one of the prime purposes of the legislation is to attract as much money as possible for housing from the private sector of the community which has the money to lend.
I wish to refer to a publication entitled “ Studies in the Australian Capital Market “. I am indebted to Senator Prowse for drawing my attention to it. It was edited by R. R. Hirst and R. H. Wallace of the University of Adelaide, and was published in 1964. It shows that in 1962 the building societies invested £289 million in housing finance; savings banks invested £239 million; major trading banks invested £95 million; and life assurance offices invested £154 million. Turning to page 123, the publication states -
Considerable lending on private mortgages is arranged through estate agents, solicitors and mortgage brokers, but there is no way of making a reliable estimate of its size. From such information as is available from mortgage registrations it seems unlikely that private mortgage outstandings would be less than one-fifth of institutional outstandings or, say £300 million in 1962, but that could well be much larger than this.
That figure is in excess of the figures given for building societies, banks and life assurance companies. Therefore, if it is intended to discriminate between classes of lenders so as to exclude lenders who include the major trustee companies of the country, with vast sums of money always available for home finance, I feel that the purposes of the Bill will be defeated. There seems to be no reason why the Minister or the Corporation should, even by regulation - if it is to be done, it must be done by regulation and not by a private instrument that is not available for scrutiny by the Parliament - discriminate against one class of lender. If the Corporation is given the valuation of the security with a certificate as to the soundness of the home or dwelling which constitutes the security, and it knows the term of the loan and the rate of interest to be charged, it has all the elements upon which it should be able to assess the risk. I move -
Leave out the definition “ approved lender “.
– I agree with what Senator Wright has said. The Minister stated that he wants to have the greatest flexibility in relation to the administration of the proposed Act, that he does not want the Corporation to be impeded in any way, and that the Government would find it very difficult to state precisely the definition of “ approved lender” or to state a rate of interest It is interesting to note that in practically every State of Australia there is an act which governs money lenders. No difficulty is experienced in administering the act. It states the type of person who can lend money and the interest rates at which he is to lend it. His character has to be established. All those matters are essential, not only for the borrower, but for the lender and the insurer. 1 do not place much reliance on the Minister’s statement that the Government does not wish to state in the Act a clear and distinct definition of what constitutes an approved lender and what the maximum rate of interest will be. I think that it is a very loose way in which to draft legislation. It leaves the position wide open and some people in the community could be prejudiced merely because the Minister or the Corporation is not prepared to approve a potential lender.
Why is it not possible to write into the Bill provisions similar to those which are written into the legislation relating to money lenders which give the widest possible scope to persons prepared to lend money and at the same time give adequate and proper legal protection to people who borrow from, these approved lenders of money? When all is said and done, they are really money, lenders.
.- 4 indicate at once that I am unable to accept the proposed amendment. In doing so I point out that if the amendment were carried, not only would it be impossible to add to the list of approved lenders but in fact there would be no approved lenders when the Act came into operation. I shall read from that portion of the second reading speech relating to approved lenders and the procedures which are proposed. It states -
The legislation will provide that an insurable loan must be made by an approved lender. The classes of lenders eligible for approval will be specified by the Minister, but the Corporation will approve particular lenders. The Corporation will also have the power to withdraw its approval of a lender. Classes of approved lenders will include banks, life insurance companies and building societies. As times goes on other classes of lenders will almost certainly be approved.
May I point out that only last week when this Bill was being debated in another place and when this particular matter was before it per medium of a contribution to the debate by Mr. Wilson from South Australia in relation to the desirability of including trustees as approved lenders, the Minister at that point, with the Bill still in the process of passing through the Parliament, indicated that trustees were a class of lenders which he was considering.
– Trustee companies?
– He said trustees but, as the honorable senator has interjected, it would appear to me to be not improbable that if trustees were admitted, then a$ a first step trustee companies would be included. 1 want to emphasise what I might refer to as this process of gradualness because it is important. In relation to ‘the homes savings grant the Minister particularly has given every indication of his willingness to introduce amendments to the legislation as the need for them becomes obvious. I believe that this is very desirable for a government and for a Minister moving in an entirely new field. It has been commended here during the debate today.
In respect of the matter now before us, it is proposed to do precisely that - to widen the field and to broaden the scope of the legislation in the light of experience.
It has been said that to pass the legislation in its present form would give an advantage to banks, insurance companies and building societies, but I want the Committee to look at the proposal from another aspect. I want the Committee to realise that if we cannot introduce this scheme and get it going initially on the basis of banks, insurance companies and building societies, its introduction will necessarily be delayed. The simple fact of the matter is that this is not just a question of nominating as approved lenders people and organisations who appear, at first blush, to be suitable although they may, and in many cases certainly will, prove to be so. This step has been taken after an examination of the question and after discussion with people who have had experience in this field.
I am informed that all the advice we have received from overseas countries in which there are housing loan insurance schemes is that the administrative tasks of the lender - the lender is responsible for the administration of his loans - .are very much reduced if lenders are confined to persons and organisations who are experienced in administering mortgage loans along sound business lines. We believe that it is fit and proper that the Government should determine the broad classes of approved lenders.
– ‘Does that happen in Canada?
– I believe so, and I think it is a proper function of government to see whether classes of lender are included. Similarly I believe it is a proper function for the Corporation to say which particular individuals within that class are approved as lenders.
I put this proposition: Here we are embarking on a new field of activity, not wishing to restrict it unduly; indeed, within the ambit of practicability, wishing to push it along as fast as we can, but taking cognisance of the real difficulties that are present and trying to apply to those difficulties procedures which are proper and which will prove to be efficient. I can only end where I began. I return to the second reading speech and to what the Minister said in another place the other night when he indicated that from time to time other lenders will be authorised and will participate in the scheme. I think this is the right way to do it.
.- I wish briefly to supplement what I have said in the light of what has fallen from the Minister. I emphasise that in his second reading speech the Minister said that classes of approved lenders will include banks, life insurance companies and building societies. Those are the three classes that he approves and that he tells the Parliament specifically that he approves. He also said -
As time goes on other classes of lenders will almost certainly be approved.
That means simply nothing. As a parliamentary operation it means nothing. What other classes will be approved? When will they be approved? In what circumstances will they be approved? On what criterion will they be approved? As to the three chosen classes, let me return to the book to which I have already referred. I prefer to quote the printed word rather than rely upon impressions or opinions of my own, but I point out that the printed word corresponds with the impressions that I have gained from my own experience. It states -
Between 1945 and 1955 the housing outstandings of the major trading banks increased steadily at about the same rate as outstandings of all the institutions. However, the 1955 figure of £106 million was a peak; since then outstandings have fluctuated just under £100 million. The £95 million at June 1962 represented only 7 per cent, of the total institutional outstandings; in 1955 the proportion was 17 per cent.
So since 1955 the first of the chosen three has reduced the proportion it has contributed to housing loans from 17 per cent, to 7 per cent. We all know this has been done under insistence that trading bank advances should be turned over rapidly with advances of six months or perhaps 12 or 18 months at the most. The result has been more money available for fringe finance institutions and subsidiaries running on commercial hire purchase propositions in the motor car industry and the machinery industry.
Then we come to the life insurance companies. I support all these companies operating in their particular way but I oppose the Minister’s choice of the first three organisations which have gained his approval. The publication “ Studies in the Australian Capital Market “ to which I have previously referred contains this reference to the life insurance companies -
I would think that now the rate is certainly 7 per cent. The publication continues -
Except in exceptional cases lending is restricted to policyholders or to persons willing to become policyholders. Some companies normally require endowment of whole-of-life cover for the full amount of the mortgage, but others consider 50 to 75 per cent, sufficient. The company treats the life policy as collateral security, taking a charge over it as well as a mortgage over the property. Normally repayments plus insurance premiums can mean a fairly heavy commitment for the borrower, so again this precludes the lower income earner.
Anybody who has had experience of borrowing from life insurance companies during the rampage of the last eight years will know the cost of insurance. Insurance is a facet of commerce that I support thoroughly but not as an adjunct to be forced on a borrower through the power of lending money and making it too expensive for the borrower. He has to take out insurance and if he repays the loan after getting money on more advantageous terms at the end of three, five or seven years, he has to cancel the insurance.
But having pointed out .the objections to the favoured three, I support the purpose of the Bill to attract money from the private sector through the benefits of the insurance provided by the Bill. As I have said, the private lender is now lending more than any one of these favoured three. But I want to add something further. It has been said repeatedly in the course of this debate and by the Minister in another place that it is hoped to encourage a market in housing securities through the insurance given on these loans. So what do we foresee if we have any commercial acumen at all? If the benefits of this Bill are to be channelled to the favoured three - .the big commerical complexes - as has been stated by the Minister for Defence in closing the second reading debate, they will be expected to get their money from the public. They will make their profit in lending and then will make their profit in buying and selling securities. But who will the buyers and sellers of the securities be? The answer is: The ordinary Bill Smiths who have £2,000 or £5,000 to lend.
It is wholly contrary to any purpose I ever dreamed was implicit in this Bill that it should be channelled in favour of approved lenders only. What Liberal will permit the benefits of legislation like this to be given, by the discrimination of the Minister or the Corporation under statutory power, only to certain classes of people who will lend for home building? It is completely contrary to the idea of free enterprise especially when the purpose of the Bill is to get such money from the private sector for housing finance.
I submit that the Corporation, by its own administration methods, is left completely free to determine the soundness of every risk, and that can be determined upon the report as to the security and the terms of the loan. It is completely contrary to that business judgment which the Minister properly suggested in his closing speech should be left to the Corporation, to say that the Corporation shall insure the loans only in the first instance to approved lenders who shall be banks, life insurance companies and building societies, while excluding all other people who are now lending money for home finance. It is for these reasons that I submit the provision for approval is quite inappropriate.
I want to refer to only one argument of the Minister and that concerns administra- tion. He said that advice from all quarters showed that the arrangement would run more smoothly if the Corporation had to deal only with certain classes of lenders. It might be convenient to operate in this way but I suggest that the purpose of the Bill is to give the benefit of proper terms to all bona fide lenders. The Corporation should manage its business so as to cope with all the business offering. If the provision of this insurance means a reduction in the cost of housing finance, as we confidently hope, from 7 per cent, on mortgage to 6 per cent., the proposal will be justified. I simply cite those figures. I do not know what is the anticipated figure but that seems to be a reasonable anticipation of the probable margin of advantage to be gained through this Bill. Why then limit it to banks, insurance companies and building societies? Why not make the benefits available to all those other people who provide money for the benefit of this industry?
– In the course of his most recent remarks Senator Wright referred on a number of occasions to the three groups of lenders that were referred to in the Housing Loans Insurance Bill. He referred to them on one occasion as the favoured three. He referred to them continuously as if they were to remain the three groups - and the only three - who were to be approved as approved lenders under this scheme. He took the second reading speech of the Minister for Housing (Mr. Bury) and read from it the following sentence -
As time goes on other classes of lenders will almost certainly be approved.
He asserted that that statement meant nothing. I tell honorable senators that despite the assertion by Senator Wright it means what it says. It means what it says unless the Minister in charge of this Bill in another place is prepared deliberately to mislead the Senate. It means what it says because the Minister reaffirmed the statement in the course of debate in another place the other might in speaking about trustees.
The speech made by Senator Wright was a characteristically dramatic one but it was not very much to the point, unless the Minister is misleading the Senate. I have indicated that the Minister is moving towards a consideration of other categories of lenders. The categories are proposed to include other insurance companies - that is insurance companies other than life companies - trustee companies, certain classes of finance companies, and no doubt other classes of lenders will be included as approved lenders to be declared by the Minister from time to time.
This is a Bill which will be continually before the Parliament. This is a proposal which is exposed to public criticism. I believe that public interest in it will be high. I believe that any shortcomings that might be thrown up from time to time will be immediately seized upon. Equally do I believe that it is the intention of the Minister, and the Government, to move in this field with all the rapidity possible in the direction that he has positively indicated, by admitting more approved lenders as time goes on - to use his own expression. I ask the Senate to accept what the Minister has said as an assurance of good faith.
– I have been very interested in what the Minister for Defence (Senator Paltridge) has had to say on this subject. If I understood him correctly, the Housing Loans Insurance Corporation is setting its face at this stage against the possibility that a borrower may find his own lender and take him along to get the benefit of the insurance. This would not be looked at with pleasure by the Corporation. That type of situation may happen quite frequently. Let us consider the case of a solicitor who has, perhaps, £100,000 to invest on first mortgage with adequate security on behalf of an estate or client and proceeds to advocate to his client that he should take advantage of this Bill and lend large sums of money, backed by the guarantee of the Government, in effect. Do I take it that if a solicitor went along with a set of proposals for a mortgage in that situation that at the moment, in the conception of the Corporation, that type of transaction would not be acceptable? I could apply the same type of situation to estate agents and to the other category mentioned by Senator Wright, mortgage brokers, who flourish rather extensively in the community and render a very real service. If I understood the debate, from these private sources in one year alone the sum of £300 million would be available.
– No. That is said to be the amount estimated outstanding for 1962.
– At a particular point of time? Well, quite obviously a very considerable sum of money is in play. I put it as a proposition to the Minister that he has himself acknowledged that it will be difficult to encourage thinking on the part of the financial institutions and others to adopt this new procedure. Financial institutions do not readily change. I put it, not with any assurance but as a proposition to the Minister, that perhaps the quickest way to get this type of operation accepted would be to encourage people such as solicitors, estate agents and mortgage brokers to be the first clients of the Corporation instead of these three large bodies who will take a considerable time to alter their pattern of lending. That is so according to the Minister himself.
Has any consideration been given to the fact that probably the quickest way to secure acceptance of the services of this Corporation would be to interest people such as solicitors, estate agents, mortgage brokers and others in that category? That may well be - on a proper consideration of the facts - the quickest way to get this scheme afloat. Would the Minister say whether consideration has been given to that proposition? Would he also indicate whether, in the event of two private persons, a borrower and a lender, going to the Corporation in the immediate future, they would be accepted or rejected?
I know that the Minister puts his argument on the ground that it is very convenient, administratively, to the Corporation to deal with a few big institutions. I understand the argument put; that those institutions would get to know what the Corporation requires and would realise the need of notifying the insurer or the Corporation if there were default under the mortgage. Yet, after all is said and done, the rules relating to default and all the rest of those things will fall into a fairly narrow compass. Even the intelligent private individual would be alert as to what were his rights and obligations in order to conserve the full benefit of the insurance. There are no great complications about that. No high intelligence would be required. The mere need to safeguard the insurance would be enough stimulus to any intelligent lender to make sure that he complied with the requirements of the Corporation. Those requirements could not be very complicated in respect of each individual loan. When all is said and done, irrespective of whether the loan transactions come from three major categories of financial institutions or not, each loan has to be looked at on its own merits as an individual proposition. They cannot be disposed of in bulk. Each one has to be looked at in relation to the security, the standard of the dwelling, the character and competence and income earning capacity of the borrower. Each transaction would require a separate individual study. Why then does the Government propose at this stage to set its face against somebody who comes along with one loan, two loans or three loans instead of 300? The problem in respect of each loan is the same. I shall be interested to hear the Minister’s comments upon the aspects I have put to him.
– As the the Leader of the Opposition suggests, it will be the function of the Corporation to examine each individual application and to approve each lender. It will be the function of the Minister to approve each group. This discussion revolves around the question as to whether certain groups will be admitted and, if so, when they will be admitted. I have had an opportunity to look at another statement which the Minister for Housing (Mr. Bury) made during the debate in another place and which I think adds emphasis to the points I have been making. Mr. Bury is reported at page 306 of “ Hansard “ as having said -
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.
– I may have missed the point, but I should like to ask: What is the advantage of the limitation? Why is the Government seeking to limit approved lenders to certain categories? Probably the other matter I wish to raise is not germane to the matter we have been discussing. I know that it is not contemplated that overseas capital will be attracted into this field in the early stages, because of what we assume the interest rates will be. However, because of the rapidly changing situation overseas, we cannot tell whether this field will or will not become attractive to overseas investors. The fixing of this limitation might be bad from that viewpoint. However, the first point I raised is the one in which I am most interested. I ask: Of what interest is it to the Corporation to limit the categories of approved lenders?
– I reply briefly to the honorable senator by repeating that, for the reasons which I have stated, it is not the intention to impose a limitation. To get the scheme going it is necessary to start with the three categories for which provision has been made in the Bill. I have quoted two or three statements made by the Minister for Housing himself which indicate in quite positive terms that the field will be widened. I repeat the following words used by the Minister -
The idea is to get the scheme under way without delay, using the existing institutions that have thenestablished patterns of valuation and so on. The Bill is designed to embrace an increasingly wide field of lenders.
That is the stated intention.
– There is still a limitation. Of what advantage is it?
– Where is the limitation?
– Even if 99 out of 100 are included, there is still a limitation.
– That is so - but merely nominally.
– Of what advantage is it to the Corporation?
– The only limitation that is applied at this time is because of a need to get the scheme going now. As the scheme gathers momentum, more categories of lenders will be brought in.
Senator Sir WILLIAM SPOONER (New South Wales) [10.55].- Hi had not wished to interrupt the Minister, but the approach adopted by my friends, Senators Wright, McKenna and Willesee, in which they got things somewhat out of order, calls for some comment. Surely the task that faces the Government is to get the scheme launched successfully. It is not an overstatement to say that to launch the scheme and allow it to run into a set of difficulties, to experience a series of failures, and to suffer certain losses, would be disastrous. As I said earlier today, the lending of money on real estate is good, safe business provided it is done carefully and the proper precautions are taken.
As I read the Bill, Mr. Temporary Chairman, no limitation is imposed upon the Corporation or upon those who are associated with it. The relevant definition merely provides - “ approved lender “ means a person approved by the Corporation . . .
As explained in the Minister’s second reading speech, all that is being done is to adopt the normal, sensible procedure of starting off gradually with people who are experienced in these transactions to gain the benefit of their experience, and then to let the organisation develop in association with these people. If we are successful in doing that - we should be - then we can spread our wings. To start off a scheme of this magnitude by going out into the highways and byways, throwing out offers and inviting everybody to come in before the organisation is established, before we have officers who are experienced in the work, and before we can assess the risk that is involved, would be a great error of judgment.
I am sorry that I cannot go along with Senator Wright on either philosophic or practical grounds. I do not see any validity in his argument that the proposed procedure will mean restricting the advantages to certain classes of people. That is not the intention of the legislation. I repeat that the appropriate definition merely provides - “ approved lender “ means a person approved by the Corporation . . .
I do not see any limitation in that.
– Clause 5 (1.) confines it to certain classes approved by the Minister.
– I see nothing wrong with that.
– The honorable senator said that it was not limited to certan classes.
– No, 1 did not. The honorable senator misunderstands me. Perhaps I have failed to express myself correctly. As I read the Bill, it is proposed to nominate in the early stages certain classes of lenders and to develop from there. That seems to me to be simple common sense. I attach very great importance to ensuring that the scheme starts solidly and that it develops successfully. There is more at stake than the success of the Corporation itself. What is at stake is the encouragement of investment back to the real estate market. In addition tothe successful undertaking of this class of transaction by the Corporation one of the byproducts of this legislation will be the creation of an atmosphere that will lead to a development of the transactions to which we were accustomed in days gone by.
Consideration interrupted.
– Order! In conformity with the sessional order relating to the adjournment of the Senate I formally put the question -
That the Temporary Chairman do now leave the chair and report to the Senate.
Question resolved in the negative.
Consideration resumed.
– I have about completed the development of the thought that it is a matter of great importance to see the Corporation established, operate successfully and thus contribute to the restoration of confidence in the real estate market and to the reinvestment of private funds in that market. I wish to remind the Senate that Government instrumentalities are wonderful but side by side with them almost invariably run ordinary commercial activities. For instance, in Australia an official short term money market operates upon which moneys can be placed on deposit, on security of Commonwealth loans. Running alongside that market is the unofficial market - the inter-company borrowing transactions. The possibility is that each market is of equal size. The figures for the official short term money market are available. The day to day deposits are of the order of £150 million. No verified information is furnished as to the volume of the unofficial money market, but the general impression is that it also is of the order of £150 million.
With the commercial bills market the position is similar. There is a governmental scheme and I think the unofficial market is greater than the official market. In this legislation we are embarking upon a new set of financial arrangements relating to housing. I do not think we can leave out of consideration the fact that the unofficial transactions alongside the official transactions are of great volume. The unofficial transactions will be encouraged or destroyed according to whether the official transactions are carried out successfully. Surely it is a correct approach in financial matters initially to act conservatively, to feel the ground, to test the possibilities and develop from that stage onwards. As I read the Bill and the Minister’s second reading speech, such action is proposed at this stage. In my judgment it is a sound approach that the transactions should be commenced with those who are experienced in them. The Government organisation will gain its own experience at the same time and with that foundation will move on to what might be the fulfilment of the legislation.
– I gather from the remarks of the
Minister for Defence (Senator Paltridge) that the classes of lenders nominated by the Minister in his second reading speech are quite definitely established as the nucleus of organisations which may be regarded as the base approved by the Minister at this stage. Can the Minister tell the Senate whether these institutions have shown the Government an inclination to be approved? In other words, have they indicated that they wish to operate under the Act? I should also like to know whether there will be an opportunity between now and the proclamation of the Act, or immediately upon the passing of the Act, for other lenders to submit their names to the Minister for inclusion in the privileged class of approved lenders? Can any person who believes that he has the right to belong in the approved class of lenders apply to the Corporation for approval? If not, can the Senate be given an indication of the type of impediment that might be experienced by a person asking to be included in the list of lenders approved by the Corporation?
If the Minister can provide answers to those questions it will make it possible to see to what extent lenders who have not been privileged to have consulted with the Government before it decided on the approved class might obtain recognition under the Act. The Bill states that the Corporation shall cause notice of the approval, or the revocation of the approval of a person as a lender, to be published in the Gazette. It appears then that after a person has obtained approval as a lender, for no stated reason and with no statutory protection, the approval which according to the Government is so jealously guarded can be revoked. What right of appeal has such a person? What would cause revocation of approval which has been granted first by the Minister and then by the Corporation? What is the position of persons who have established confidence in a lender to whom they have made funds available for investment in housing, but whose approval is revoked?
These questions need to be answered because I am quite sure there is a wide public interest in money lending. The theory of the measure is good, but more information is needed. At this stage has a borrower a right to approach the Corporation? Up to this stage we have heard well expressed but nebulous and doubtful statements of how the Government proposes to protect lenders. Thousands of cases have occurred where borrowers who feel they have been unjustly treated have lodged appeals under money lending legislation. I refer to cases where borrowers have claimed that money lenders have not obeyed the law, have not complied with the restriction of 15 per cent, maximum rate of interest, or have included in the loan contract conditions which do not comply with the State money lending legislation. Is the lender to be protected to the extent that the borrower cannot make any appeal? Is there any basis upon which the borrower can be protected in respect of interest rate plus insurance premium or in respect of the drawing of documents, all of which might tend to restrict the money market and could involve even an approved lender. Do not let the Minister say that this would not happen, because there is provision to revoke an approval on some grounds. On what grounds? I ask the Minister to give specific answers to the questions I have raised regarding doubtful provisions of the legislation. I ask him particularly to state what would get a man into the privileged class that would gain the Minister’s approval. What application would be necessary to achieve this result? I ask the Minister to answer these and the other questions I have put to him.
– I think the provision for an approved lender in the definition clause, clause 4, is a wise and proper provision. The arguments that have been advanced against this have mostly been concerned not with the definition of an approved lender but with matters which properly arise under the following clause, clause 5. There is nothing in the definition with which we are at present concerned which brings in the notion of an approved lender being a person included in an approved class of lenders. That comes in under clause 5 and has to be dealt with under that clause.
– If this fails it certainly will be.
– I think this should not fail because there is a good reason for having provisions dealing with approved lenders. One leaves aside for the moment the question of classes, and I think Senator Wright would agree that it does not arise at the moment but arises under clause 5.
You deal simply with the situation of approved lenders, and of course you should have approved lenders. Whether there is a definition such as this or not the Corporation may still determine whether it will approve of a particular contract and whether it will enter into a particular transaction.
– Yes, but it may do that only if the class approved by the Minister is involved.
– But that does not arise under this clause. 1 am dealing with the question whether there should be approved lenders or not, and I say there should be approved lenders. I think Senator Wright is well aware that the approach I am making to this is correct, and a lot of the considerations to which he adverts do not relate at all to his amendment. The question of class or no class has nothing to do with his amendment; it arises under the next clause. Should there be approved lenders? Yes, there should be approved lenders, not for the protection of the Corporation as such, because it can always decide whether it wants to enter into a particular transaction, but for the protection of the public.
The approved lenders are persons who are to be ultimately notified publicly, and there is a protection for the public because in the world of lending which is associated with the purchase of homes there are rogues, just as there are in other fields. It is important that persons dealing with estate agents and others should know where they stand. Very often a person is induced to enter into some transaction on the pretence that everything is in order as the arrangements will ultimately be approved by the Insurance Corporation, and so on. It is very important for members of the public to know that they are dealing with a person who is an approved lender, a person whose name has been notified publicly. It gives them some assurance in entering into a transaction to know that they are dealing with a person who is an approved type. The insurance of this kind of transaction will become an important part of the business of borrowing and lending, and I think there should be approved lenders. Whether they should come within a class and whether there ought to be limits on that class, are other questions, but I think there certainly should be approved lenders under this legislation. This is material to the scheme of the measure and I think it would be unwise to have this removed.
Let me say that I have heard no real argument advanced so far why this definition should be removed. Whatever may be the situation under the following clause, I have heard no real reason advanced why this should be removed.
– How would the honorable senator get an approved lending authority under the next clause?
– The next clause, clause 5, may involve matters which may give rise to objection, but as far as clause 4 is concerned I have heard no real argument at all advanced as to why the definition of approved lender should be deleted from it.
.- I rise chiefly because the previous speaker has stated that I am aware of reasons why there should be approved lenders, meaning that I am aware of reasons why there should be approved lenders in the sense staled in the Bill. That imputes to me the offering of an argument based on convictions that are not genuinely held by me.
– 1 do not think I put it in that way.
– That suggestion I repudiate, scotch and destroy. Senator Murphy’s observations would detach the definition of approved lender from the immediately succeeding clause, clause 5, in a manner which I would expect no lawyer to suggest. When you find printed in the definition that I seek to expunge, “ approved lender means a person approved by the Corporation under the next succeeding section “, to suggest that that does nol immediately drive you to write in the next succeeding clause 5 into the definition is just to fly in the face of words. Clause 5 requires that the Corporation may approve a person being a person included in an approved class of lenders. Sub-clause (1.) says that the Minister is the person to declare; it gives the Minister the power to declare classes of persons, and this is obviously incorporated in the definition that I seek to expunge.
I just wish to state a series of propositions that are so transparently obvious that it engages me to try to divine any line of reasoning upon which a contrary proposition is submitted. What I am objecting to is that you give the Minister power to declare classes of persons who are to be sole beneficiaries of this legislation, not on any criterion of integrity or propriety. If that were stated, nobody would object to it. If somebody who observes proper standards of integrity and offers security on proper terms, applies and is therefore entitled to an approval, nobody would object to the Minister’s having the final say. But the criterion here is entirely within the uncontrolled discretion of the Minister. He has indicated that for the present the approval will be limited to banks, life insurance companies and building societies. He says that as time goes on other classes of lenders will almost certainly be approved. There is not the slightest suggestion that they are to be approved according to their conduct specified by law as to conditions of integrity and propriety of terms of lending. There is every unmistakable indication that the Minister seeks the power by instrument in writing. There is not even provision that it shall be published in the “Gazette”, although the Corporation’s notice of approval is required to be published in the “ Gazette “. The Minister, by instrument in writing, may declare a class on any terms he thinks fit.
So much I deem fit to say in response to the submission of Senator Murphy, but I rise also to bring to the notice of the Committee something within the experience of this Government in which Senator Sir William Spooner had a considerable hand, which completely refutes the judgment that he offered to us on this occasion. I refer to a novel insurance - export payments insurance^ - instituted by this Government. We created an entirely new corporation based upon the model of the experience of the Board of Trade in London. Did we ask there for the Minister to approve by instrument in writing the classes of persons to whom the Export Payments Insurance Corporation would give insurance? No; on the contrary. By a subsequent Act in 1961, after the original Act of 1956, we empowered the Minister to direct the Corporation, where it was in the national interest, to make insurance contracts which the Corporation might otherwise not have wished to make. The people we define by that Act as the beneficiaries of the insurance for their export payments solvency, are all persons carrying on business in Australia, and the insurance is against risk of monetary loss or other monetary detriment attributable to circumstances outside the control of the person suffering the loss or detriment, and resulting from failure to receive payment in connection with or otherwise arising out of acts or transactions in the course of or for the purpose of trade with countries outside Australia. If it is not necessary to specify classes for that rather special kind of insurance, where, in relation to a field of liability which Senator Sir William Spooner himself says affords little risk if care is taken, is the need to give the Minister power by instrument in writing to declare classes, thus discriminating in favour of persons who are nominated and against those who are not nominated?
– It should have become apparent to everyone now that Senator Wright, while raising a number of perhaps important matters, is raising matters which are quite irrelevant to the motion which he has made for amendment of clause 4. Every complaint that he has is as to the classes of persons, as to the provision that an approved lender has to come out of an approved class, and also as to how that is to be done. How a person is to become an approved lender is dealt with in clause 5. The definition of “ approved lender “ which brings it into (he scheme of the Act, is in clause 4. Senator Wright is objecting to the manner in which persons become approved lenders, which is in clause 5. He may or may not have good arguments on that, but his objection is as to how they become approved lenders and, in particular, as to the fact that here is a limitation of approved lenders to persons who would be included in clause 5.
When we come to clause 5, by proper amendment of clause 5, for instance, by deleting sub-clause (1.) and taking a part out of sub-clause (2.), he could achieve all that he seeks, but he has persisted in purporting to go further and take the notion of an approved lender right out of the Bill. I repeat that he has not advanced one single argument for the removal of the whole notion of approved lenders from this Bill. That is what I alleged against him before, and I repeat it. If I must say something harsh, he is merely wasting the time of the Senate by persisting with these matters under this amendment.
– I shall attempt to provide the information that Senator Cooke sought some little time ago. He asked whether the three categories of lenders - banks, life insurance companies and building societies - had indicated their willingness and ability to take part in this arrangement. I think that the answer is “ Yes “, but I want to make it perfectly clear that their willingness will not be formally indicated unless and until they make application in the terms of the Act. All I can say now is that it is confidently expected that they will.
– Can other classes also make application if they desire?
– Not as yet. That is the cause of this debate which has delayed the Senate so much tonight. As I have indicated repeatedly, it is the stated intention of the Minister that this application will be widened as time goes on. The honorable senator sought information about the revocation of an approval by the Corporation. I point out first that the Corporation itself will consist of five responsible men who will be appointed and who will be charged with the proper and businesslike conduct of the Corporation’s affairs. They will exercise, I am sure, proper judgment in matters which come before them.
The honorable senator was interested in what might be reasons for the revocation of a licence. These examples of what might occur have been given to me, but this is not a complete list. It is necessary for the Corporation to be able to exclude lenders who clearly would be unable to manage their mortgage loans - for instance lenders who would not follow up delinquent accounts and therefore would be bad risks from the Corporation’s point of view. Again, a lender might supply misinformation about a borrower’s ability to repay. A terminating building society that reached the end of its useful life would have its approval revoked. Similarly, an organisation in compulsory liquidation could not continue as an approved lender. Gazettals of approvals and revocations will keep the public informed of who are currently approved lenders.
– I have listened to this debate with very keen interest. I feel that Senator Wright has brought forward some points that should be considered by the Committee. Whether that should be done under clause 4 or clause 5 is a legal question. In limiting these advances to three types of financial institutions, I believe that the Government is not casting the net wide enough to allow people a sufficiently large area from which to choose sources of finance. Let us consider the three types of lenders that have been chosen. First, there are the insurance companies. What have they done in the past to lend money for housing? I think Senator Wright pointed out that they have forced people to take out insurance policies over a period of time, which has resulted in an increase in the cost of their homes.
So far as the trading banks are concerned, while I stand on certain principles, I believe that there are some banks in Australia which are notorious for the pressure tactics they use. I know that the Bank of New South Wales is notorious in the travel world for the pressure it exerts on its clients in order to get business. These are the kinds of people to whom we will give exclusive rights. The building societies are in a different category. But I believe that we should spread the net as widely as possible for the purpose of securing funds. Senator McKenna referred to other groups of lenders who might be able to supply funds for the purpose of housing. I do not agree with the view that has been advanced tonight that there is a fear that the legislation might collapse if we widened the lending field and did not concentrate on certain people. I think it is entirely wrong for the Government to specify certain classes of lenders, as set out in the Bill. I believe that we should open up all avenues of finance as much as possible.
The Minister for Defence (Senator Paltridge), for whom I have the highest regard, has handled the Bill in this chamber. He indicated that the Minister for Housing (Mr. Bury) gave a certain assurance in another place that the field might be widened later. As members of Parliament, we should deal with legislation as it is before us. We can consider a legislative enactment only as we read it. We cannot consider assurances. We must have regard to the Bill that is before us. I say that we must consider it as it is set out before us. Therefore, I propose to support the amendment.
– I merely rise to say that I have listened very attentively to Senator Wood state his support for the amendment which is before the Committee. With respect, I do not think that he has added any n;w argument at all. Therefore, I do not think there is any obligation on me to repeat the arguments which I stated earlier in opposition to the amendment.
– In my opinion, the procedure that has been adopted by Senator Wright is wrong. I agree entirely with what Senator Murphy has said. By deleting the definition in clause 4 Senator Wright will not achieve the purpose he seeks to achieve. I can see some merit in arguing that it might be an inhibition to restrict lenders to certain classes of people, because lenders who should be approved might not be approved. We have spent about 45 minutes discussing an amendment which should properly have been considered by the Committee when we are dealing with clause 5. We could have considered the amendment along with an amendment which the Opposition proposes to move. While there may be some merit in the points that have been advanced by Senator Wright, obviously they should be considered when the Committee is dealing with clause 5. Therefore, I oppose the amendment.
– It might meet the objections which have been raised if we were to postpone consideration of clause 4 at the present time and move on to consider clause 5, with a view to considering whether or not sub-clause (1 .) should stand. If honorable senators think that it would be more appropriate to” discuss the amendment when dealing with clause 5 (1.), I merely offer the suggestion so that the time which we have devoted to the amendment will not be wasted. That may assist in the Committee’s consideration of the matter. If that course is not followed, when clause 5 is considered I shall test whether sub-clause (1.) should stand or fall. If I fail in that course, 1 shall seek to substitute the word “ regulation “ for the words “ instrument in writing “. I suggest that it would meet the convenience of the Minister, as well as the objections that have been raised by Senator Murphy and Senator Bishop, if I were to move the postponement of clause 4, and if we were to regard the debate that has ensued as being relevant to clause 5 (1.). I move -
That further consideration of clause 4 be postponed until after consideration of clause 5.
– I oppose the proposal.
– I seek leave to withdraw the motion.
– There being no objection, leave is granted. The question before the Committee is: “That the words proposed to be left out be left out”.
Amendment negatived.
Progress reported.
page 234
Assent reported.
Senate adjourned at 11.41 p.m.
Cite as: Australia, Senate, Debates, 31 March 1965, viewed 22 October 2017, <http://historichansard.net/senate/1965/19650331_senate_25_s28/>.