1929-08-28 11 1 2 SENATE 306 0 Senate. 1929-08-28 The PRESIDENT (Senator the Eon. W. Kingsmill) took the chair at 3 p.m., and read prayers. 308 papers The following papers were presented : - High Commissioner for the Commonwealth in the United Kingdom - Report for 1928. Reparations - Report of the Committee of Experts on Separations, June, 1929; together with summary of the conclusions of the committee. Egypt - Note delivered to the. Egyptian Government, containing proposals regarding a treaty of alliance and friendship. Russia - Proposals for resumption of diplomatic relations between the British Empire and the Soviet Union. Public Service Act- Appointment - Department of Trade and Customs- S. J. Griffith. Defence Act - Regulations . amended - Statutory Rules 1929, No. 85- No. 86- No. 87. Naval Defence Act- Regulations amended - Statutory Rules 1929, No. 83- No. 84- No. 90. Seat of Government Acceptance Act and Seat of Government ( Administration) Act- Ordinances of 1929 - No. 16. - Registration of Births, Deaths and Marriages. No. 17.- Rates (No.3). Commonwealth Bank Act - Balance-sheets of Commonwealth Bank of Australia and Commonwealth Savings Bank at30th June, 1929, and statement of the liabilities and assets of the Note Issue Department at 30th June, 1929; together with Auditor-Generals' reports thereon. 308 miscellaneous 308 Senator REID presented the report of the Parliamentary Standing Committee on Public Works, together with minutes of evidence, relating to the proposed automatic Telephone Exchange at Caulfield East, Victoria. 308 miscellaneous The PRESIDENT reported the receipt of a Commission from the Deputy of the Governor-General to administer the oath or affirmation of allegiance to senators. Commission read by the clerk. 308 Questions 308 308 JTL 0 0 DALY, John Senator DALY asked the Minister for Defence, upon notice - Is it a fact that instructions have been issued at Duntroon Military College that the Australian game of football is not to be played? If so, by whom were these instructions issued, and why? Will the Minister give immediate instructions for the cancellation of this embargo on our national game? 308 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The answers to the honorable senator's questions are: No definite instructions have been issued that the Australian game of football is not to be played at Duntroon. The numbers at the College do not permit of more than one code of football being played, and the cadets themselves have selected rugby. Rugby is played by all the schools in New South Wales with which Duntroon has for many years competed annually, and by the Royal Australian Naval College at Jervis Bay. These matches are annual fixtures, as is also the match between the combined colleges team and the combined Public Schools team in Sydney. The Minister does not propose to give any instructions that this practice be altered. 307 307 JYB 0 0 DUNN, James Patrick Digger Senator DUNN asked the Minister for Defence, upon notice - Whether the Government will consider the advisability of ascertaining the views of returned soldiers as to whether the construction of the National War Memorial at Canberra should be postponed, and the £250,000 proposed to be spent upon it used to continue works on which returned soldiers were employed, who, however, have now been dismissed? 307 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - There appears to be no necessity to consider the advisability of ascertaining the views of returned soldiers as suggested by the honorable senator. When the Parliamentary Standing Committee on Public Works was conducting its investigations in regard to the memorial it summoned the general secretary of the Returned Sailors and Soldiers Imperial League of Australia to give evidence on behalf of the returned soldiers. That official stated that the proposal had been considered by the league's executive, and that the State branches had been asked for their opinions, with the result that they unanimously endorsed the Government's proposals. The Public Works Committee recommended that the erection of the building be proceeded with at the earliest practical opportunity. In March this year the Prime Minister received a letter from the Federal president of the league, in which the following statement was made : - I feel that it is unnecessary for me to state that the ex-service men and women throughout Australia would greatly appreciate the early commencement of the construction of the memorial. The Government proposes to proceed with the erection of the Australian War Memorial. 307 307 JYB 0 0 DUNN, James Patrick Digger Senator DUNN asked the Minister for Defence, upon notice - Is it the intention of the Government to vacate the Victoria Barracks, Paddington, New South Wales? Does the Government propose to hand over the site and buildings to the Paddington Municipal Council for the purpose of erecting there workers' homes? 307 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW The answers to the honorable senator's questions are: - No. No. 307 Cruise to New Guinea 307 JYB 0 0 DUNN, James Patrick Digger Senator DUNN asked the Minister for Defence, upon notice - How long did the cruise of the H.M.A.S. Albatross to New Guinea last? What was the total amount of fuel used during such trip, and what was the cost of same ? What were the total number of officers and men on board and the total amount of wages paid during the cruise? What was the total value of victuals used throughout the cruise? How many flights did the seaplanes make, and what was the total expenditure in connexion with such flights? 307 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The replies to the honorable senator's questions are: - Thirty-five days. 900 tons. £3,200. Navy- 28 officers, 369 men, £7,735. Air Force - 8 officers, 34 men, £972. £1,345. Forty-eight. £250. All this expenditure would have been incurred excepting (2), if the seaplane carrier had not gone to New Guinea. Thirty-five days' cost for oil when in harbour would amount to £735. As honorable senators are aware, New Guinea is governed by the Commonwealth under a mandate from the League of Nations. It seems fitting, therefore, that His Majesty's representative in Australia should visit the Territory. Beneficial results will accrue from the visit which, I feel certain, was not only appreciated by the white and native population of New Guinea, but also has the approval of the people of Australia. 308 308 JTL 0 0 DALY, John Senator DALY asked the Leader of the Government in the Senate, upon notice - Will the Minister furnish the Senate with a statement showing the different boards, commissions, tribunals, &c., brought into existence by the Commonwealth Government, and which were in operation during the years 1927-28 and 1928-29, together with the annual cost of each board, &c? 307 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW The information is beingobtained. 308 308 JTL 0 0 DALY, John Senator DALY asked the Minister representing the Minister for Trade and Customs, upon notice - Will the Minister state the amount of bounty paid to each industry in the Commonwealth for the year 1928-29? 308 KTR NAT 1 0 MCLACHLAN, Alexander Senator McLACHLAN - The Minister for Trade and Customs has supplied the following information - ' 308 leave of absence Motion(by Senator Foll) agreed to - That Senator Chapman be granted two months' leave of absence on account of his being overseas. 308 miscellaneous Motion (by Senator Sir George Pearce) agreed to - That Senators Crawford, Daly and Dooley be appointed to fill the vacancies now existing on the Standing Orders Committee. 308 miscellaneous Motion (by Senator Sir George Pearce) agreed to - That Senators Daly and Rae be appointed to fill the vacancies now existing on the Printing Committee. 308 miscellaneous Motion (by Senator Sir George Pearce) agreed to - That Senator Barnes be appointed to fill the vacancy now existing on the House Committee. 308 miscellaneous Motion (by Senator Sir George Pearce) agreed to - That Senators Cooper, Daly, Sir John Newlands and O'Halloran be appointed to fill the vacancies now existing on the Library Committee. 308 bill 308 Debate resumed from 22nd August (vide page 197), on motion by Senator McLachlan - That the bill be now read a second time. 308 JTL South Australia 0 0 DALY, John Senator DALY . - The subject of insurance might profitably be discussed at considerable length, but in this case honorable senators on this side feel that it is their duty simply to define the policy of the Opposition in regard to the bill and to indicate to the Minister in charge of it certain alterations which should, we consider, be embodied in it. I shall leave the discussion of those alterations until we reach the committee stage. If the title of the bill permitted, and members opposite were open to conviction, honorable senators of the Opposition would like to discuss the nationalization of insurance but, recognizing that the policy of the Government is in favour of private enterprise, we know that it would be futile to enter into such a debate. In our opinion the bill, in view of the policy of the Government, becomes a mere consolidating machinery measure to regulate the activities of private enterprise, and we realize that the best that we can do is to secure to members of the community the maximum protection in the circumstances. In order to give the Minister in charge some idea of what is in the minds of honorable senators on this side, and so that our opinions may receive that respect to which the right honorable the Leader of the Government admitted they were entitled, I shall briefly deal with some of the vital omissions from the measure. It will be admitted that members of the community are either policy-holders or potential policy-holders. One of the most vital omissions from the measure is provision for the protection of those potential policy holders against unscrupulous canvassers. The canvasser is the first person that the potential policy-holder meets in this matter. Whilst admitting that reputable insurance companies take every' precaution to see that they are represented only by the right type of man, who will not make representations inconsistent with the terms of the policy, and who recognizes that the representations he makes are not binding on the company, I point out that the only representations that are binding on the company are those contained in the policy. A high-principled company employs representatives who are prepared to canvass for business only in strict conformity with the provisions of the policy. But there are other canvassers who have no such code of honour, and honorable senators of the Opposition have had their attention drawn to certain cases which should be considered by the Government and its supporters when dealing with this bill. Honorable senators will realize that the measure does not set out to alter the existing law so far as it concerns canvassing. The Government of South Australia found it necessary, in the interests of the community in that State, to protect reputable land firms, and companies who were honestly dealing with subdivisions, against unfair competition on the part of unscrupulous land-owners, by providing that all who wish to transact subdivisional sales shall first receive some authorization. That authorization is in the form of a public authority. The land salesman rnakes an application, which is submitted to the police, who go into his antecedents and satisfy themselves that he is a man who can be trusted to speak only the truth to potential buyers concerning the sales he endeavours to make. I suggest to the Minister and honorable senators opposite that it would be wise to incorporate a similar safeguarding provision in this bill, providing that insurance canvassers shall be trustworthy. 309 K0F 0 0 PEARCE, George Senator Pearce - Does the honorable senator refer to a system of licensing? 309 JTL 0 0 DALY, John Senator DALY - No, to a system of authorization. Honorable senators of the Opposition are not enamoured of the term " licensing." Honorable Senators may ask what necessity there is for it. We can bring under notice a number of cases of this particular form of misrepresenta-tion, against which we are anxious to safeguard the public. I shall quote an example that is not an isolated one. There were two old-age pensioners - a brother and a sister - in a country town in South Australia. A collector came to the sister, and said, "You do not want your brother to be buried by the Government. For 6d. a week we will give you a policy that will provide for the payment of £12 10s. on the date of his death. Of course, if you died first your brother would not like to see you buried by the Government, and, for another 6d., at the date of your death your brother will receive £12 10s., and you will be able to be buried respectably." This old couple thought the matter over and took out policies accordingly. They paid premiums for five years, and at the end of that period the brother contracted cancer. Not very long after it had been discovered that his case was hopeless, this particular canvasser called at the home of the couple, and, with tears in his eyes, said to the woman, " Well, you know, you could not bury him to-day for £12 10s.; but you have been such a good payer that, if you cancel this policy, take out a fresh one, and pay an extra id. a week, we will pay you £15." She listened to this proposal, and cancelled the previous policy. The brother died, and the sister received five months' premiums at 7d. per week. I personally interviewed the manager 'of the company, who said, " Of course, there is the proposal. This man told us he was in good health. The proposal says, ' I am in sound health '." But the brother knew, and the canvasser knew, that he was in a hopeless state of cancer. Would such a case be probable if a better check were kept over that form of canvassing? The respectable insurance companies do not adopt that method of business; but it does obtain. Senator Dunn will tell of another case that occurred in his State, and it is a most glaring instance of what can be done and of the unfair competition between what we may call the doubtful company and the company that is trying to introduce high morals into insurance life. Another aspect of this matter to which we should give serious consideration in committee is that form of proposal which is signed by the potential policy-holder in good faith, and contains a statement to the effect that he is in good health. But no medical examination is required of the applicant, and the gamble is all on one side. If it .subsequently transpires that, when he signed the policy, he was not in good health, the insurance company loses nothing, but the policy-holder loses practically all except his premiums. If a company decides on that form of policy it should take the applicant with all his defects. It has plenty of opportunity to limit its liability by insisting on a medical examination. Another alteration that I would suggest to the Minister - although it is not so serious a matter as that to which I have just referred - relates to children's insurance. In the bill the obligation is on the parents, and I suggest that where the word "parent" appears the word "guardian" should be inserted in its stead. A canvasser may call at a home when the father is absent at work. He canvasses the mother, secures her signature, and there is an effective policy. Now, who pays the premiums? The father probably knows nothing about the transaction. That should not be the position. If the father is the guardian of the children, he should know his responsibilities in the matter of their insurance. If the parents are legally separated by order of the court or by some other means, and the mother becomes the guardian, she is entitled to do what she likes regarding the insurance of the lives of her children; but while the father is the guardian he should have the final voice in the matter. Another point that might with advantage be explained by the Minister relates to the surrender value of the policy. It seems to me that sufficient protection is not given to the policy-holder, so far as the surrender value is concerned. 1 realize that we cannot lay down definite principles as to surrender value, because they depend on a number of contingencies; but I do suggest to the Government that the final arbiter in 'this matter should not be the company. Suppose, for instance, that a man desires to surrender his policy, either on the ground that he cannot afford to continue to pay the premiums, or for any other reason, and the company declares that the surrender value is £200. Once the company has made that decision there should be somebody to whom the policy-holder could appeal in the event of a dispute as to the value. This is a most important matter at the present time, because many men who have been able to keep up their payments for years now find that they have to rely on their policies being kept alive entirely out of the surrender value. A policy may be surrendered, and the holder may lose the benefits. If there is not sufficient provision in the bill to meet such contingencies I suggest to the Minister that it should be inserted. There is one other small matter. According to the definition clause, " actuary " means " a Fellow or Associate of the Institute of Actuaries of Great Britain and Ireland or a Fellow or Associate of the Faculty of Actuaries of Scotland." If we have not now, we certainly hope to have in this great Nationalist Capital City of Canberra an Institute of Actuaries. Why not alter that definition so that " actuary " would mean a fellow or associate of any institute of actuaries approved by the Governor-General-in-Council, or some such provision? That would provide for any contingency such as I have mentioned. The bill is essential for the protection of the community, and the Opposition will give the Government every facility to secure its speedy passage. 310 JXZ NEW SOUTH WALES NAT 0 0 DUNCAN, Walter Senator DUNCAN . - I listened with a great deal of attention to the statement made by the Minister on behalf of the department, in moving the second reading of this bill. I emphasize that point because it became evident to honorable senators that the speech which the Minister was supposed to be making was really the case for the department, and he read it as such. The time has arrived for the Senate to take strong exception to the way in which important measures are placed before this chamber very often by Ministers. Years ago it was the custom for Ministers in charge of bills to go to considerable trouble in order to acquaint themselves with their provisions and to deliver interesting and instructive speeches. But it has now become the practice for Ministers to read a carefully prepared statement which is recorded in Hansard as the speech of the Minister, when it is nothing of the kind. This is misleading to the. public and it is not treating the Senate with that respect to which it is entitled. 311 K8P 0 0 THOMPSON, William Senator Thompson - In this case the training of the Honorary Minister (Senator McLachlan), who is in charge of the bill, should peculiarly fit him to deal with, and know, his subject. 311 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - Then the case should have been submitted in another way altogether. As stated by the Leader of the Opposition (Senator Daly) this measure is long overdue. If my memory serves me aright, the Minister in charge of the bill had a most unfortunate experience not long ago because of certain transactions with an insurance company which could not have acted in the way it did had this measure been in operation when that company was formed. In consequence of the absence of proper legislation to control the insurance business, it has been felt for many years that the public has been exploited by mushroom insurance companies which have sprung up from time to time and which secure the services of well-known persons to act as directors. On some occasions they have appointed members of this Parliament to act in that capacity because they believed that in so doing they would be able to make a stronger appeal to the investing public than they could in other circumstances. The promoters of such companies get their cash and then slip quietly out of the business, whilst the investing public is left to " nurse the baby ". On several occasions in recent years, companies of this nature have been formed and the fact that no one has been prosecuted for obtaining money under false pretences points to the necessity of amending the law to meet such cases. Money was so obtained by these companies under false pretences, and the investing public lost not only their money but their confidence in genuine insurance companies which had a definite and stable offer to make to the public. The fact that nothing has so far been done is not perhaps entirely the fault of the Commonwealth Parliament. The State Governments have had the power to deal fully with this matter. 311 JZD 0 0 FOLL, Hattil Senator Foll - I think it has been exercised in all the States but New South Wales. 311 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - I shall deal with that in a moment. In the matter of a uniform company law the State Governments have been negligent to the public. All the States have insurance company legislation which this measure will eventually supersede, but the State legislation is out of date and inadequate. It has been shown that the State laws in actual practice do not afford proper protection to the public. 311 KOJ 0 0 HAYS, Herbert Senator Herbert Hays - That is not confined to insurance companies. 311 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - No. The company laws of the States are far short of what is required, and we have not the power to enact a Commonwealth company law. That is why certain investing concerns are in their present position. The most recent insurance act is that in operation in Queensland, which was passed in 1923. The last New South Wales act was passed in 1917, whilst the South Australian act was passed in 1899. The Leader of the Opposition referred to certain points which this measure does not cover, and quoted some heartrending cases that had come under his notice in South Australia ; but I remind the honorable senator that the South Australian Parliament has always had the power to fully protect the investing and insuring public. Labour and other governments have been in office, and have failed to introduce amending legislation. 311 JTL 0 0 DALY, John Senator Daly - But in South Australia we have to contend with a Legislative Council. 311 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - Yes ; but in recent years no attempt has been made to introduce an up-to-date. measure covering insurance companies and insurance business generally. This measure, in which consideration is given to the legislation of other countries, appears to embody all that is contained in the State acts, together with a number of improvements which time and experience have shown to be necessary. A perusal of the bill shows that a very thorough investigation has been made by the officers of the department into the insurance laws of other countries, and I congratulate the officers who compiled the information upon the fine work they have done. It is a credit to them, and I feel sure that when this measure becomes law it will make the position much better for the insuring public and those who invest in insurance companies. Honorable senators have not the same facility for research as have the departmental officers, and when considering a measure of this kind have, to a certain extent, to depend upon the information supplied by Government officials. I am prepared to accept their work so far as it has gone, although I intend, when the bill is in committee, to move one or two amendments which appear reasonable and necessary. This measure will perhaps meet the needs of the position aud remove the reproach that Australia is behind other countries in legislation of this character. It provides amongst other things for the registration of existing and new companies, and requires the payment of a fairly substantial deposit in cash cr in approved securities as a guarantee of good faith. In the case of foreign companies the deposit is the same as it is in the case of bona fide established Australian companies. In the case of new Australian companies desiring to register, some easement is provided in the conditions under which they make their deposit, in so far as the £20,000 to be deposited may be paid over a series of years on a kind of time payment system. To that extent the conditions are much easier for new Australian companies formed and registered under this measure. No distinction ' is, however, made between established Australian companies and foreign companies as £20,000 is required in each case. This provision will require some justification by the Minister from the standpoint of the investor or the policyholder, as there is an important distinction between the two types of companies. An Australian company has practically all its assets in Australia, and these are real and tangible. They may be realized upon in cases of emergency, and may be available to assist the finances of the country. On the other hand, the greater portion of the assets of foreign companies is not held in Australia. An attempt is made to meet the situation in clauses 37 and 38 which relate to statutory funds. Two lists of statutory funds are to be established. The first relates to life insurance statutory funds, and the second to industrial insurance statutory funds. It is provided that all receipts in respect of such funds shall be carried to the credit of the respective statutory funds, and shall not be available to meet any liabilities of " the company other than those referable to the class of business in respect of which the fund was established. Some difficulty appears to arise with regard to the investment of those funds by a parent company. Clause 38 provides in subclauses 2 and 3 - Subject to this act and to the provisions of any memorandum or articles of association, deed of settlement or other instrument imposing restrictions on the manner in which the assets of the company may be invested, the assets of every statutory fund maintained by a company may be invested in such investments as the company thinks fit. Unless in this act otherwise expressly provided, the assets of any statutory fund shall not, without the sanction of the court, be invested directly or indirectly in any share or interest in any insurance business whether carried on within the Commonwealth or elsewhere except insofar as any assets are so invested at the commencement of this act. That restriction, in my opinion, is a wise one, because it is easy to understand that the funds of one concern may be invested in the securities of another insurance company, which, owing to some great national catastrophe, may be unable to meet the claims made upon it, in which event the funds of the investing company would be dissipated. A foreign company, I remind honorable senators, may invest its funds in any part of the world, and in any class of security, other than insurance security. Thus it may happen that the Australian assets of a foreign company, plus even the £20,000 deposit required under this bill, might not be sufficient to meet the claims upon the company, and it might not be in a position at the moment to realize upon its investments in other countries to meet claims made upon it in Australia. This may be regarded as an extreme case, but extreme cases sometimes become hideous realities; it is as well to provide for every eventuality. The Australian people, through the legislation passed by the Commonwealth Government, should retain some measure of control over the assets of all insurance companies doing business in the Commonwealth, because they are virtually in the position of trustees for Australian investors, I suggest, therefore, that a new sub-clause be inserted to provide that foreign companies shall be compelled to invest in Australia sufficient of their statutory funds to meet at least a. fair percentage of possible Australian obligations. What this percentage should be must be a matter for investigation. It may be desirable to require foreign companies to invest all their Australian funds in Australian securities, because the money is earned in Australia, and is subscribed in this country. If we require foreign companies to do this it will be all to our advantage, not only from the standpoint of development, but also from the standpoint of security for the investment. A new sub-clause to embody the suggestion I have made, would, I am sure, meet with the approval of the investing public, and at the same time would not injure the business of a foreign company. 313 K8P 0 0 THOMPSON, William Senator Thompson - Are there any such companies in Australia ? 313 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - There are not many; but Australia is developing rapidly, and it is possible that overseas companies, particularly those concerns which have their head-quarters in the United States of America, may look to this country for further expansion of their business. They may form nominally Australian companies registered under some State act, and unless we make provision against such a course, may invest their statutory funds in the United States of America or some other country. 313 JZD 0 0 FOLL, Hattil Senator Foll - Does the honorable senator include British concerns in the category of foreign companies? 313 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - I would include even British companies, because I wish to emphasize that all such concerns act as trustees for Australian investors. That, broadly speaking, is what life insurance means. The insurer pays his premium, and all such payments are invested by the companies in various forms of security. I say that all such investments should be made in Australia. 313 JTL 0 0 DALY, John Senator Daly - Would the honorable senator apply the same principle to private banking institutions? 313 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - Very few of the private banks have investments in other countries, though there is no restriction upon them in that respect. 313 JTL 0 0 DALY, John Senator Daly - Does the honorable senator suggest that if dividends are paid in England, the money will be returned for investment in Australia? 313 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - Dividends are not " invested funds." They represent a different thing altogether. Speaking generally, a private bank invests its funds in Australia, and we should see to it that the insurance companies do the same. It would not do any injury to a foreign company, and certainly it would do a great deal of good to Australia. I come now to the definition of a " foreign company." It is defined as " any company which is incorporated or the head office of which is outside the Commonwealth." That does not appear to be adequate. The company laws of the various States, even more than the State insurance laws, are in a chaotic condition, and this Parliament lacks the constitutional power to deal with the position. It would be easy for a foreign company to overcome all or a great many of the disabilities imposed upon it by registering as an Australian company. This has been done with some success, as honorable senators know, by the various foreign film exchanges. Only sufficient shares are issued to conform to the requirements of the act under which the company is registered, and those shares are generally held by the directors of the company, who are officials or servants of the foreign company. The difficulty could be overcome by a new definition of an Australian company. We have already defined a foreign company; we should also define an Australian company. Following the language of the previous definition, I suggest the following definition of an Australian company - " An' Australian company' means any company the majority of the shareholders holding a majority of the shares of which reside within the Commonwealth." That would afford some protection to the public, and enable us to deal with the situation. The Government is to be congratulated on having brought forward the bill which is long overdue. In committee I shall move the two amendments I have foreshadowed. I support the second reading. 314 JYB New South Wales 0 0 DUNN, James Patrick Digger Senator DUNN . - While honorable senators on this side of the Chamber support, in the main, the bill before us, I, personally, should be prouder still to support a bill providing for national insurance. When the Labour party gains the Treasury bench, as I expect will be the case in a few weeks, a national insurance bill will be introduced. Senator Duncan referred to the many mushroom companies which have been formed in Australia. In insurance matters, New South Wales has always been the happy hunting ground for these mushroom companies. Seeing that the bill before us will tighten up the legislation relating to insurance companies, I feel confident that before the debate proceeds very far, some honorable senators supporting the Government will raise objections to its provisions, for the reason that many of the big insurance companies are of the opinion that they should have a free hand. Senator Duncan held both Labour and non Labour Governments responsible for the delay in introducing legislation to control insurance companies. I remind him that when a Labour Government in New South Wales did introduce legislation along those lines the Legislative Council prevented it from being placed on the statute-book. 314 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - What did the Labour Government propose to do? 314 JYB 0 0 DUNN, James Patrick Digger Senator DUNN - It proposed to do something for the good of the community in general, in the same way that it placed on the statute-book the Workers' Insurance Act. Honorable senators will remember that the big insurance companies in New South Wales raised an outcry when that legislation was passed. Not many years ago Senator Duncan was a prominent member of the Trades and Labour Council of New South Wales, which at that time was just as "red" as it is alleged to be to-day under " Jock " Garden. 314 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - No fear! 314 JYB 0 0 DUNN, James Patrick Digger Senator DUNN - It is a wonder that, in those days, Senator Duncan did not endeavour to do something to place on the statute-book of New South Wales legislation which would benefit the workers and the community generally. It remained for the Lang Government to do so. 314 JZD 0 0 FOLL, Hattil Senator Foll - The legislation introduced by the Lang Government meant a fortune to many insurance companies in New South Wales. 314 JYB 0 0 DUNN, James Patrick Digger Senator DUNN - If that is so, the Commonwealth Treasurer has a good field to exploit. The Trades and Labour Council of New South Wales has placed in my hand the insurance policy of Christina Wilkinson, an office cleaner. The policy is dated 15th April, 1929. This woman signed the proposal form in good faith. From her small earnings she was prepared to set aside 1s. 3d. each week so that in case of an accident she would not be without an income. Later, she developed a carbuncle and was off duty for four weeks. The insurance company had paid her for only fourteen days of that period when it altered the policy by deleting the word " carbuncle " and adding the following condition - It is hereby declared to be a condition of this policy that no compensation shall be payable in the event of disablement, directly or indirectly arising from " carbuncle " or traceable thereto, nor shall compensation be payable beyond the usual time for any disablement or injury wherefrom the recovery of the insured may in consequence thereof be retarded. That provision was dated the 13th August, 1929, and was signed by C. H. Robinson, the manager of the industrial branch of the company. 314 KOZ 0 0 HOARE, Albert Senator Hoare - What is the name of the company? 314 JYB 0 0 DUNN, James Patrick Digger Senator DUNN - It is the Commonwealth Life (Amalgamated) Assurances Limited, whose authorized capital is ?500,000. I have the policy here, and have the permission of Mrs. Wilkinson to hand it to the Minister should he desire to peruse it. Had that policy been made out in favour of a company director, or an opponent of the Lang Government, the company would not have attempted to evade payment; but because the insured person was only an office cleaner, she was treated in that shameful manner. 314 KOZ 0 0 HOARE, Albert Senator Hoare - It is a case of daylight robbery. 314 JYB 0 0 DUNN, James Patrick Digger Senator DUNN - It is. Ned Kelly has been dead for many years, but in Australia to-day there are many worse robbers than he was. I agree with Senator Duncan's remarks in relation to foreign companies operating in Australia. If, as is frequently stated, trade follows the flag, I predict that there will soon be a number of Italian companies operating in the north of Queensland - a portion of Australia which is controlled by the " dagos". 315 JZD 0 0 FOLL, Hattil Senator Foll - Absolute rot! 315 JYB 0 0 DUNN, James Patrick Digger Senator DUNN - It is not. Senator Duncan hit the nail on the head when he dealt with the definition of a foreign company. I congratulate the Minister on having introduced this bill, and feel sure that he is big enough to extend its scope so that foreign companies may be effectively controlled. The Leader of the Opposition cited instances which have come under his notice of the activities of " go-getters " in South Australia. I also remind honorable senators that there are insurance "gogetters " as well as land " go-getters," and feel confident that the Minister in charge of the measure will accept suggestions to insert in it something to curb the operations of these nefarious individuals, and to protect the community against their depredations. Senator R.D. ELLIOTT (Victoria) [4.6]. - We all listened with a great deal of interest to the very illuminating history of insurance legislation as given by the Honorary Minister (Senator McLachlan) in submitting this measure to the Senate last week. I shall not give any time to its consideration at this stage, but will proceed to deal with the remarks just made by the Leader of the Opposition (Senator Daly), who urged that there was need for the fuller protection of policy-holders. Senator Dunn laboured the same point. I feel that it is because of the realization of the need for something of that kind that the Government has brought down the bill with which we are now dealing. I am unable to agree with Senator Daly that life assurance should be nationalized. I believe that nationalization of industry, whether it be that of insurance business or any other branch, is the greatest factor at present damning the progress of Australia. With every advance of production, under the impetus of private enterprise, the nation advances towards the only communism that can benefit mankind: the communism of opportunity. Such a need is not confined to the man of affairs; it applies equally to every section of the community. The working man, however poor he may be, should have the same opportunity that every other person in Australia enjoys. The honorable senator spoke of the "authorization" of insurance agents. I think that in looking at the bill from that viewpoint Senator Daly has approached it from a wrong angle. When we realize that we are dealing with an industry which had, in 1922, assets in Australia amounting to £80,973,935, and in 1927, five years later, invested assets in Australia amounting to £118,274,047, we must recognize that the issue is a big one. It must be appreciated that in five years the accumulated assets increased by nearly £35,000,000 ! That is why I contend that the angle from which both Senator Daly and Senator Dunn have approached the subject is not in conformity with our status as a Senate. The Leader of the Opposition dealt with surrender values, and here, I agree, there is need for protection to all concerned. That causes me to reiterate the statement that it is because of a realization of that need that the Federal Government has brought down this legislation. My concern in life insurance is limited to a case that may interest Senator Daly . I am not a shareholder or a director of any insurance company. My interest is confined to the fact that shortly after I began work, when I was twelve years of age, I wished to lay the foundation of a form of compulsory saving, and it was presented to me that a life insurance policy represented the best method. I took out a policy, and continued to pay premiums, to the maximum of my ability, until my policy had a surrender value of £120. I then surrendered it, and that amount was the first capital that I possessed. I confess that I have one fear in connexion with this measure, and that is that it presents in clause 6, which provides for the appointment of a registrar, a possibility of establishing another big government department. My hope is that before we have finished with the bill the provision for the appointment of a registrar will be so safeguarded as not to mean another department for the Government to administer. All that is necessary is that the registrar shall be an actuary. Whether his charter be Australian, English or Scottish is immaterial, provided that he belongs to one of the institutes which regard their business as a science. Essentially that scientific outlook on figures is required, and I trust, then, that the registrar will be an actuary who will become an official of the Treasury. Senator Duncan dealt with the clause which requires a deposit of £20,000 to be lodged by insurance companies. I am afraid that he misinterpreted the object of that requirement. Admittedly I speak as a layman, and I may be wrong; but I believe that the amount is not to be regarded as being in the nature of a security. Twenty thousand pounds would be totally inadequate as a security for almost any insurance company at present operating in Australia. Even £500,000 would scarcely be sufficient. 316 JXZ NAT 0 0 DUNCAN, Walter Senator DUNCAN - That amount might be used to meet statutory liabilities. Senator R. D. ELLIOTT . - My interpretation of the provision is that it is merely to show bona fides, and to prevent the establishment of " mushroom " companies such as those to which honorable senators have referred this afternoon. I even feel uneasy regarding the intention to allow new companies formed within the Commonwealth to pay the deposit of £20,000 by instalments of £2,000 per annum. If such a company is unable to put down a deposit of £20,000 on commencing business, then it should not, in the interests of the community, be permitted to begin business. For many years life insurance business in Australia has enjoyed a world-wide reputation for the soundness of its practices as well as for strong and efficient management. The astonishingly rapid growth of the older offices, their great financial strength, the soundness of their investment methods, and the extent of their bonus distributions to policy-holders, are features of our life insurance history of which every Australian may be proud. 316 JZD 0 0 FOLL, Hattil Senator Foll - Would that not rather indicate that the premiums paid have been too high? 316 JYH VICTORIA CP 0 0 ELLIOTT, Robert Senator R D ELLIOTT - Again I remind honorable senators that I do not speak as an expert; but a study of the activities of the mutual offices of Australia reveals that, in life assurance principles, they lead the way in the Empire, if not in the world. If, as Senator Foll suggests, their premiums have been too high, that policy has reacted to the advantage of the policy-holders in the shape of increased bonuses and the consolidation of the finances of the companies. That satisfactory history of insurance in Australia suffered a check after 1920, when mushroom companies began to develop, with results that are well-known to most honorable senators. Those mushroom companies were due really to the ease of finance, and to a very great extent to the gullibility of the public of Australia. The majority of them were established for the personal gain of their promoters - individuals, more often than not, ill-equipped to assume the management of or responsibility for the affairs of such companies. They had been accustomed merely to securing business for the larger offices, and all that they could see in life insurance was the obtaining of business. They were the " go-getters." of whom we have heard. There is a good deal more in life insurance than the mere getting of business. It is a science, the intricacies of which require almost generations of study to master. Honorable senators must realize how imperative it is that regulations appertaining to life insurance companies should be as stringent as those governing trustee companies.Unforfortunately, there has been no Commonwealth law to prevent departures from sound practice. It has been possible for a company to become hopelessly insolvent, both as regards capital and policy resources, and still continue to transact business. It has been possible for a company to disregard all principles of sound practice and jeopardise the savings of share-holders and policy-holders alike. This bill will call a halt in such circumstances. We know of cases where some of these mushroom companies have had an expenses ratio for new business as high as 321 per cent. for the first year, while their renewal business has amounted to only 32 per cent. For four years the whole of the premium income was utilized to cover establishment charges associated with the new business. Only after the lapse of those four years had the company an opportunity to make provision to meet its obligations to policy-holders. 317 JZD 0 0 FOLL, Hattil Senator Foll - And if the policies lapsed before the fourth year it meant a dead loss. Senator R. D. ELLIOTT .- To the policy-holders. An investigation will reveal that many such companies welcomed the early lapsing of policies, as they had not the resources to meet their obligations. Let me cite an instance of a company which carried an annual premium income of £32,500 after three years operations. The fourth year's collections amounted to only £6,908 for premium renewals. In one year the policies issued carried £7,739 premium income; in the next, that company issued no renewal notices to the policy-holders, and the revenue from premiums amounted to only £483. An investigation of the losses to the public through taking out policies in such companies, paying premiums for a few years, and then allowing them to lapse, makes very interesting reading. We know from experience that some of these companies have resorted to issuing dummy policies in order to hoodwink their directors and the public. That practice, which is easily carried out, was followed because the expense ratio in most of the companies exceeded the income. In one instance a managing director insured the whole of his family for large amounts just before the issue of a balance-sheet, and even the office stenographer found herself possessing a very substantial life cover. This was done because the expense ratio was showing at over 100 per cent. It was merely a matter of an exchange of cheques for the premiums and in this way the finances were bolstered up so as to present a reasonable aspect to the directors. There was no renewal of these premiums : the policies lapsed after the first premiums had been paid. Then, again, we know that in preparing balance-sheets many of these companies included amounts for uncollected premiums that they knew would never be collected. They included them, of course, as live assets. Many examples of that practice might be given. I have before me the. particulars of the case of a company whose income for a year amounted to £4,086, and its expenditure was £14,151. That was one of the " mushrooms." Another company, in its third year, had absorbed £41,988 of its capital of £44,333, and its income of £11,177 had been obtained at a cost of £12,905. In yet another case the income of the company, after six years, was £7,685, and the expenditure amounted to £11,769, while, of its capital, amounting to £37,920, £21,851 had gone. In still another case, in which the revenue was £7,157 and the expenditure amounted to £14,219, of the capital of £45,483, no less than £39,848 had disappeared. Those are merely a few examples of the "high finance" that has been going on in connexion with insurance in Australia during the last few years. Turning to the bill, I am rather afraid of clause 6, because of the danger of it leading to the establishment of another Government department. I hope that an assurance will be given that in committee that risk will be eliminated. I do not intend to deal with the bill in detail, but Division IV., "Policies," gives scope for a good deal of discussion. I hope that there is nothing in the measure that will require life insurance policies throughout Australia to be uniform. We ought still to preserve and develop the initiative of insurance companies. We should maintain healthy, active competition. Any legislation that would bring about a uniform proposal form would be to the disadvantage of the public of Australia. 317 KTR 0 0 MCLACHLAN, Alexander Senator McLachlan - It is not so intended. Senator R.D. ELLIOTT. - So long as that is made clear, I am satisfied on the point. Considering the matter as a layman, I was inclined to fear that it would depend on the official charged with the administration of the act, who might place his own interpretation upon it and insist on uniform policies. Proposals for insurance that are off the beaten track are often received. It would be quite impossible for any business concern to submit such a proposal, and the conditions of policy, which would be drawn up to suit the particular case, for review by the authorities in Canberra. It would probably mean weeks and weeks of delay, and in the meantime the business might be held up for want of the policy. A matter upon which I am sure the Minister anticipates a query is that of proof of age. The onus should he on the person presenting a proposal for insurance. If the clause dealing with this question is passed as it stands, we shall find persons forming a habit of underestimating, to put it in a mild way, their age, knowing full well that by doing so they will obtain a reduced premium, and at the end of twelve months the company will be in the position of having either to cancel the policy or to accept the declaration of age by the policy-holder. Intending policy-holders will gamble on the prospects of a company being prepared to accept their assurance on the matter. Though the need for effective regulation is urgent, I feel that no legislation should be enacted without full consideration of the requirements of this very complicated business, and I am certain that that is the attitude of the Government. Care must be exercised not to place unnecessarily harsh restrictions on sound and genuine enterprises, or restrictions that would give a monopoly to the businesses of the older-established organizations. At the present time, however, more companies are engaged in insurance business in Australia than the value of the business warrants. The outstanding principle of life insurance is that it is essentially a trustee business conducted on the savings of every class of citizen. Our first duty, therefore, is to require that adequate protection shall at all times be given those savings by compelling a company to cease accepting new applications for insurance when its funds are no longer sufficient to meet its surrender liabilities. That, I realize, is one of the main objectives of the bill. Feeling that this is a highly technical measure, and that no body of laymen is capable of giving it the detailed attention that it demands, and seeing, that the Treasurer mentioned in his budget speech that he had been in consultation with experts on insurance, I wonder whether the Government would consider the advisability of appointing a select committee, so that the opinions of a number of outside experts could be brought to bear upon the measure. Since most of the heavy work has been done, this course would probably involve but very little delay, and I submit the suggestion to the Minister for his consideration. Senator Sir HAL COLEBATCH (Western Australia) [4.28]. - I join with those honorable senators who have already spoken in congratulating the Government on bringing down this undoubtedly belated measure, and I thank the Minister, too, for his informative speech in moving its second reading. At the same time, I direct the attention of the Senate to certain features of the bill which, to my mind, constitute defects either of omission or commission, and I suggest that the closest Consideration be given to them in committee. I am entirely in accord with the general principles of the bill. It should be obvious that in no matter is it more necessary that the public should be amply protected than in that of life insurance, which, if it is to be of any value at all, must be absolutely safe. Every element of risk must be removed, so far as it is possible to remove risk from human affairs, and we must have continuity, extending from generation to generation. It is equally important, however, that, in protecting the public, we should do nothing to burden unduly or' harass unnecessarily bona fide life insurance companies that have performed, and are performing, beneficent services throughout the Commonwealth. I know perfectly well that entirely undesirable companies have sprung up from time to time; but the people of Australia are to be congratulated on the fact that, over a long period of years, they have had their choice between a number of competing companies that have always conducted their business on a satisfactory basis, and have given absolute security to those who have taken out policies with them. Without for a moment passing any reflection on those companies which distribute their profits among shareholders, I think that I might take the opportunity to single out for special commendation those mutual companies that have not only raised themselves to a position of extraordinary importance in the public life of Australia, but have also established foi" themselves an unequalled reputation throughout the insurance world. It has been suggested this afternoon that these companies have been able to provide large bonuses, because the premiums they charge are too high. For that there is an explanation, which to my mind serves to emphasize the very distinct advantage of a mutual company to the community. Perhaps the greatest reason why the premiums to-day are too high is the fact, upon which I think we may all congratulate ourselves, that during the last half century there has been an increase of no less than fifteen years in the average term of human life. Consequently, premiums that were adequate to meet the circumstances of 50 years ago are now too high, but where too high a premium is charged by a mutual company, the whole of the excess comes back in the shape of increased bonuses to the policy-holders. That may or may not be so in the case of a company of a proprietary character that is not entirely mutual in its operations. I am 'quite sure that there is no desire on the part of the Government to embarrass any bona fide insurance company. I accept in advance the assurance that I know the Minister will give, that the act will be administered with wisdom and discretion; but, at the same time, I cannot refrain from associating myself with the honorable senator who has just resumed his seat in regard to the possibilities of danger underlying clause 6. That honorable senator suggests that under that clause another big department may come into being. I think that clause 7 makes it abundantly certain that another department will arise, because it provides for the appointment of a staff. My experience of public affairs is that not infrequently when an officer is appointed with a high sounding title, three things occur. First, because of the officer's high sounding title, he must have a high salary, and secondly, because of his high salary he must have a big staff - an establishment commensurate with his position. If we have a similar experience in connexion with this bill, an already embarrassed Treasury may find that it has done something to increase the steadily growing cost of federation - a matter that might more appropriately be discussed in connexion with the financial statement. 319 JVF 0 0 DOOLEY, John Senator Dooley - Does not the honorable senator believe in federation? Senator Sir HAL COLEBATCH. Yes ; but I do not believe in extravagance, whether it be connected with a good or a bad thing. It seems to me to be extremely likely that we shall first have a registrar with a branch of his department and a staff in every State. The next thing will be to find something for the staff to do. That something, under the provisions of this bill, may amount to vexatious interference with the proper activities of insurance companies. That, I am sure, we all wish to avoid. Reference has been made to clauses 57 and 58, which require that policy and proposal forms shall be submitted for approval. There we have abundant scope for officers who want to find work for themselves. I know of one insurance company which, in its ordinary department, has no less than 25 tables of policies, and I am inclined to think that matters of that kind can be more satisfactorily dealt with by the companies themselves than by a staff such as is contemplated under this bill. There is also opportunity for abuse under clauses 53 and 54, which relate to the furnishing of confidential returns. I am not at all sure that we ought not to consider whether an order of the court should not be necessary before a company is compelled to divulge returns of that character. I entirely endorse all that has been said concerning clause 78, because in clauses 73 and 77 we have ample provision for adjusting difficulties that arise in regard to proof of age. Trouble arose in New South Wales a short time ago because a learned judge in that State made a mistake qf twelve months in his age. It is a fact that in 20 per cent, of the proposals for life insurance errors in regard to age are inadvertently made, but it is also a fact that these errors have never caused any serious trouble or loss to persons insured by bona fide companies. Instead of following the practice adopted in the past by which an error can be adjusted whenever it is discovered, even after the death of the person insured, and without prejudice or without charge against the policy beyond what would have been paid had the error not been made it is now proposed that at the end of twelve months, a quite inadequate period for this proof of age to be secured, the company shall take one of two objectionable courses. It must either take the extreme step of cancelling the policy, thus causing the person insured to forfeit his first year's premium, or it must be finally and definitely bound by the policy. I cannot see any advantage in a provision of that nature, and I ask the Honorary Minister to contrast it with the course which is followed to secure accuracy in regard to the age of applicants for old age pensions. That portion of the bill which leads up to clause 35 also requires close consideration. Clause 35 reads - In all matters relating to the value of securities deposited under this act, the decision of the registrar shall be binding and conclusive. Personally, I do not like decisions which are "binding and conclusive although we must, in cases of this kind, have something which is conclusive. We have the conclusions of the High Court by which we are governed; but we should be very careful before we trust to any official a power that is given in clause 35, which, so far as I have been able to study, in the limited time at my disposal governs paragraph 3 of clause 30. This paragraph reads - If any company fails to comply with any notice given under this section within a reasonable time after receipt of the notice, the failure shall be a good ground for cancelling the license to the company. This extreme step is -contemplated without making any provision for an appeal from the decision of the registrar. The only other matter to which I wish to refer at this stage, is an important omission from Part rv., which deals with the insurance of children. I do not think I am breaking any confidence in saying that at the conferences to which the Honorary Minister referred, a very earnest request was submitted by the representatives of some of the most important life assurance companies in the Commonwealth, that the legal difficulty that had arisen in regard to what are known as deferred insurance policies on the lives of children, should be remedied when this measure came before the Federal Parliament. These deferred insurance policies provide that if a child dies before reaching the age of 21 years, the premiums paid shall be returned with or without interest. For many years it was thought, as, indeed, it was intended, both by the persons effecting the insurance and by the companies concerned, that these policies were the property of the parents until the child reached the age of 21 when they became the property of the person insured. A recent English case has thrown doubt upon the question of ownership, and it is the desire of all these companies - it is also in the interest of the policy-holders, too - that the opportunity should be taken under this bill to remove the difficulty. I should be grateful if the minister in charge would carefully peruse certain clauses which have been drafted by eminent counsel with the object of overcoming this difficulty. There are many minor matters in the measure which I hope to refer to when it is in committee, but for the moment I shall content myself with cordially supporting the bill. 320 KQZ Victoria 0 0 LAWSON, Harry Senator LAWSON .- I add my congratulations to those which have already been tendered to the Government on the introduction of this measure, although it is true, as some have said, that its introduction is somewhat belated. Some honorable senators have urged that the States are to blame for not having brought their life insurance company legislation up to date. As a fact, the subject has been considered by all the State governments from time to time. In Victoria there has not been much necessity for amending legislation because our law on this subject is fairly up to date; but it was felt by the States generally that the Commonwealth Parliament would, in due course, exercise the authority given it under the Constitution to deal with life insurance. It is a fit and proper subject for Commonwealth consideration. It is unquestionably a matter for uniform Australia-wide legislation and those charged with the conduct of insurance companies will find it an advantage to have to deal with only one authority. I was particularly interested in the Minister's reference to the history of life insurance, and his story of the legislation on this subject by the Mother Country. The evolution and development of life insurance is of special moment to us, inasmuch as Australia has contributed in a very large measure to the benefits of the system and to the methods which are now employed in the business. The honorable gentleman said that Lord Parmoor presided over a committee which considered the question of industrial insurance and that as a result of his labours and those of his colleagues an industrial insurance measure was introduced into the British Parliament in 1923. It may interest honorable senators to know that the greater portion of the alterations recommended by that committee had already been adopted by most of the life insurance companies - certainly the leading ones - in Australia. That shows that Australia has nothing to be ashamed of in its contributions to the system of life insurance. It is also pleasing to note that it was an Australian company that in 1870 first introduced the non-forfeiture principle which provided that so long as the surrender value of a policy was sufficient to pay the premiums, the policy should not be forfeited. That revolutionized the whole practice of life insurance throughout the world. At the inception of life insurance, as honorable senators are aware, the business was in the! hands of proprietary companies, and it was in Australia that the mutual principle was developed. "We on this side of the chamber are opposed to the nationalization of insurance, which is the - policy of honorable senators opposite. There is a fundamental difference between nationalization of insurance and insurance conducted on the mutual principle. In the latter, we have the finest embodiment of the principle of cooperation that can be imagined. It is sincere, genuine co-operation, and the nearest approach to the ideal which the Leader of the Opposition cherishes. The principle of co-operation is safer and saner than that of nationalization. I do not wish to raise the party issue on this measure. It is one which honorable senators should approach with due regard for the magnitude of the problem with which it deals and a fitting sense of its responsibility in passing a law to govern the operations of these institutions. Our policy must be to encourage thrift and foresight, and those stabilizing influences which are so essential in the life and character of our people. The whole of our influence should be thrown behind any movement which makes for stability in the community. We should encourage in every way that which induces people to save and make provision for the major contingencies of life. This ideal is not the peculiar possession of any one party. It is the well-being of the whole community - rich and poor alike - that we have to consider in passing legislation of this kind, and we must do all that is possible to protect their interests. I have spoken of the desirability of uniform legislation - of the wisdom of lifting the subject from the conflicting laws of the several States and placing it upon an Australia-wide basis - and providing facilities for the successful operation of life insurance companies throughout the Commonwealth. In our consideration of this bill we should give due weight to the importance of the interests involved. By this I do not mean the interests of the capitalists or the plutocrats - those people whom our friends opposite are pleased to condemn with such fiery enthusiasm from the public platform. What I wish to impress upon the Senate is the fact that every section of the community is deeply interested in the stability, the strength, and the safety of life insurance companies, to whose care the savings of the people are entrusted. Honorable senators will have gained from the figures quoted by those who have already spoken in this debate, some idea of the magnitude of the operations of life insurance companies, and the extent of the interests involved. It seems to me that the placid and undisturbed atmosphere of such a chamber as this is an admirable one for the discussion of this measure. Some of the provisions of the British bill referred to previously have not yet received legislative sanction in the Imperial Parliament, but they form the subject of recommendations by an expert committee that has been considering the problem. It should be our aim, therefore, to enact a model cod'' of life insurance legislation that will he our pride and the envy of other countries. I suggest that we can do this only if we approach, the discussion of this bill in a thoroughly impartial manner, and realize how important is the position occupied by the numerous life insurance companies whose interests are affected by it. I believe all honorable senators realize that the money invested in these companies which represents the accumulated savings of, for the most part, the poorer sections of the community, and what we may term the middle classes, has been, on many occasions, applied to the service of the Commonwealth. They will recall how, in times of national crisis, the insurance companies by reason of their financial strength and power, have been able to render valuable aid by way of loans to the Government. Invariably they have responded magnificently to the call of the State. Apart from the financial assistance which they have been able to render to the State, they have also been a source of strength to municipal and semi-public bodies in various parts of the Commonwealth. Money which has been made available by these companies for. investment in municipal and other undertakings has been used advantageously as a developing agency for this country. If one had time and the Senate were prepared to listen, one could tell an arresting story of useful service rendered not only to members of societies and policy holders, but to the general community by the employment of life insurance companies' funds in the way I have indicated. I say, therefore, that we should bring to the discussion of this bill a due sense of our responsibility, having regard to the extent of their operations and the influence of the companies whose interests are affected, and we should do nothing that is calculated to restrict in any way the beneficial influence of their operations. The provisions of the bill should he designed to protect as far as possible all those who have entrusted their savings to these companies, and to guide and help those upon whom rests the obligation to invest such funds wisely. I congratulate the Government on having faced this problem and on the introduction of this bill. In the main I think that it may be said that the principles enunciated in it are sound. I wish, however, to direct attention to one or two matters. In the first place, I support my colleagues Senator E.D. Elliott and Senator Colebatch, in the warning note which they have sounded with regard to the appointment of the registrar. We have a precedent to guide us in the appointment of registrars of friendly societies. These institutions are deserving of the greatest encouragement for the reason that, being thrift societies, they exert an important stabilizing influence on the community. But Parliament has said that there must be legislative supervision of the investment of their funds and some check on their actuarial calculations to see whether they are fulfilling the obligations resting upon them. In the State of Victoria, at all events, the appointment of a registrar of friendly societies has not led to the growth of a huge department. The registrar in that State is attached to the Statist's office. He is generally respected, the trustees of societies have confidence in his decisions and are grateful for the guidance and direction which he is able to give them in the management of their funds. I suggest that the same course might be followed with regard to the appointment of the registrar under this bill. It is necessary to have someone competent, from a scientific and technical point of view, some one capable of giving wise decisions and tendering valuable advice to the Minister who will be charged with the administration of this law. But there is the danger, as Senator Colebatch has so strongly stressed, that the person appointed may magnify his office. We are all familiar with what has happened on many occasions. We have seen a man appointed to a public office start with a table and a chair and before long he has gathered round himself a huge department. I should like to have a definite assurance from the Government that nothing of that kind is contemplated, that the Government will so circumscribe and direct the work of the registrar, that there will be no possibility of a big department springing from the appointment. 322 K3L 0 0 SAMPSON, Burford Senator Sampson - That would take some doing. 322 KQZ 0 0 LAWSON, Harry Senator LAWSON - I agree with the honorable senator, and for that reason I should like to know what safeguards the Minister proposes to adopt. 323 KTR 0 0 MCLACHLAN, Alexander Senator McLachlan - In this matter we should be fighting against human nature. 323 KQZ 0 0 LAWSON, Harry Senator LAWSON - I am aware of that. It is because human nature is what it is that I wish to impress on the Minister the need to impose effective safeguards. "I magnify mine office" is an often quoted Biblical saying. We must see to it that the bill contains such restrictions as will prevent the growth of the life insurance department into something that will be onerous, expensive, meddlesome and interfering. There should be the minimum of government interference where companies are discharging their obligations in a right and ; proper manner. Where, however, there is wrong doing - where there is any evidence that the public is being exploited, the Government, through its officers, should act in the strongest possible way, not only for the sake of the good name of the Commonwealth and in the interests of honesty and fair dealing, but also for the sake of those whose funds are embarked in these enterprises. It is well known that, in the framing of this measure, the Government had the advice of an expert committee of public officers of undoubted repute and integrity, whose sole concern was the public interest. It is not too much to say that in drafting the bill they have done an important work well. The measure is not overloaded. On the whole, it. may be said that in. its conception the bill is sound, and in its draftsmanship it adequately expresses the Government's intention. I am, however, advised by those who are competent to judge, that it contains a number of irritating provisions which are not likely to serve any useful purpose, but will increase the cost of administration. I suggest, therefore, that these provisions should be reviewed in the light of expert advice which can be tendered to the Government. Other honorable senators have mentioned the clause dealing with proof of age. It is a recognized principle that the onus of proof of age shall be on the proponent. The provision in this bill will throw the door open to misrepresentation, and, possibly, fraud; and, furthermore, it will operate harshly on companies, and will not help the cause of life insurance, which we are all anxious to see prosper. There are also one or two other matters which I feel should be reconsidered. For example, there is the provision which liberalizes the conditions of policies, probably at the expense of the general body of policy-holders. It is, I think, undesirable to remove any safeguards that make for security and safety. Clause 69, which I understand has been taken from a State act, provides that notice shall be given before the lapse of an industrial policy. I am informed by those who are competent to advise me that this provision, as operated in the State of Queensland, has not benefited the policy-holders, but that on the contrary, it has proved burdensome and expensive to companies, and has made industrial insurance in that State largely an unprofitable venture. I am informed, further, that the bonuses on industrial policies, in which Queensland policyholders share, are largely carried by the other States of the Commonwealth. This provision is one that contributes to that end. I, therefore, ask the Minister to give it careful consideration. I am informed that in the case of companies which operate outside Australia it will be impossible to lodge returns within the time specified in the bill. Many mutual life insurance companies operate both in the Mother Country and in Australia; others, in South Africa as well, and one at least in India. While we all desire to remove the cause for those complaints which have been voiced by the Leader of the Opposition, and to make life insurance a clean business, we must be chary about accepting ex parte statements. Senator Dunn referred to the case of an office cleaner. While all that the honorable senator said on her behalf may be true from her point of view - and I make no defence of the company - we must remember that, after all, her complaint is the complaint of a policyholder. 323 JYB 0 0 DUNN, James Patrick Digger Senator Dunn - The new condition to which I referred was added to the policy, and can be seen by honorable senators. 323 KQZ 0 0 LAWSON, Harry Senator LAWSON - I have investigated many such complaints, and have found that while, in some instances, they are founded on fact, in others there is a complete answer. Without a knowledge of the facts, we should not accept ex parte statements. I feel sure that the Senate will approach the consideration of this bill with a common desire to preserve for life assurance in Australia a reputation for honest and fair dealing; to make these institutions the safe repositories for the savings of the people - institutions to which they can look with confidence, because their guiding principles are strength and stability, and a capacity to fulfil to the uttermost the contracts into- which they enter. 324 KTR South Australia NAT Honorary Minister 1 0 MCLACHLAN, Alexander Senator MCLACHLAN . - I desire, in replying, to refer to the several matters raised during the debate. The Leader of the Opposition (Senator Daly), who referred to surrender values, 'will find, on closer reference to the measure, that that matter is dealt with, as regards ordinary policies, in clauses 66 to 68, and, as regards industrial policies, in clause 70. I do not propose to deal at this stage with the desirability or otherwise of nationalizing our system of insurance as suggested by the honorable senator. That is a matter beyond the scope of the bill, and . is also, in my opinion, out of the sphere of practical politics. In the preparation of this measure the Government has been in consultation with departmental officers, as well as with experts in the various institutions affected - indeed, the bill has been in draft form for two or three years - and it is believed that it will not unduly interfere with the business of the country, but, on the contrary, will preserve the principle of freedom in relation to life insurance business. Nevertheless, it doe.? aim at regulating life insurance. In my introductory speech, I said that I did not blame the States for not having introduced legislation to deal with life insurance companies. In 1910 a royal commission investigated matters connected with life insurance, and it was then agreed that it was a subject for the National Parliament to deal with. It has been said that we have closed the stable door after the horse has been stolen. However much the individual investor, in the shape of a company shareholder, may suffer through risking his money in loosely controlled or ill-conceived enterprises, or, where well conceived, badly managed enterprises, our , concern is not for him, but for the policyholder for whom company directors and shareholders are merely trustees. Our duty is to safeguard the future of the policy-holders by ensuring that the funds of life insurance companies are sufficient to meet their liabilities. If those who invest their money in rash enterprises lose it, they have only themselves to blame. This legislation does not aim at protecting them; it is introduced to protect those who, in good faith, take out policies to provide against death or accident. With that object, certain clauses, which may be referred to as disciplinary provisions, are incorporated in the bill. It has been suggested that in presenting this bill to the Senate, I should not have kept so closely as I did to a prepared memorandum. When submitting important legislation, I prefer to adhere fairly closely to a carefully prepared statement. It does not appear to me to be important whether that statement has been prepared by my officers or by myself, so long as I am the master of my subject : and we shall see as the debate proceeds whether or not I am master of the subject with which this bill deals. I desire to express my sense of obligation to officers of the Treasury, the Statistical, the Attorney-General's and other departments, who have brought to my knowledge the information I have submitted to the Senate. Many of the matters referred to by honorable senators are subjects for consideration in committee, rather than in a second-reading speech. Senator Duncan advocated the drawing of a distinction between Australian and foreign companies in respect of the deposit required. The considered opinion of the committee, to which I referred, is that it would be unwise to draw that distinction. My own inclination was to make the deposit in the case of a foreign company much higher than that required for an Australian company; but, after all, the deposit does not bear any relation to the statutory funds of the companies. It is rather in the nature of a guarantee of good faith and of capacity to carry on the business. Should an appropriate amendment dealing with statutory funds, and designed to take protective measures in the interests of the public, be moved, the Government will give it favorable consideration; but I remind honorable senators that considerable difficulties arise in connexion with such matters. It is impossible to compare insurance companies with banks, for their obligations to the community are entirely different. Reference has been made to the mushroom companies which have sprung up in Australia. If this bill becomes law, we shall have gone a long way towards guarding the community against the operations of companies which have done a great deal of harm to the name of insurance in this country. Senator R.D. Elliott suggested the reference of this measure to a select committee. I remind him that, before its presentation to Parliament, it was carefully considered by a committee of insurance experts and legal gentlemen, after which it was carefully considered by Cabinet and by one or two members of the Cabinet for four or five months. In my opinion, no better committee exists than this chamber to deal with the matters contained in this measure. The Senate is the proper place in which to give it that placid consideration to which Senator Lawson has referred. I may be wrong, and I am subject to correction by the right honorable the Leader of the Government in the Senate, but I think that it was here that our magnificent Bankruptcy Act was introduced and polished into its present form. 325 JZD 0 0 FOLL, Hattil Senator Foll - Does this bill make provision for the protection of shareholders when one company is amalgamated with another? 325 KTR 0 0 MCLACHLAN, Alexander Senator McLACHLAN - That is regulated by the provisions which we have taken from existing legislation in several States, including Western Australia, South Australia and Victoria. After all, the shareholders are not the great concern of the Parliament in dealing with this measure. Essentially the bill seeks to provide protection for policy-holders. That is the business, first, of the registrar, and secondly of the court. No amalgamation will be approved if the policy-holder is not sufficiently protected by the existence of sufficient assets on the part of the purchasing company to create a statutory fund to meet the combined liabilities of both institutions. I draw the attention of honorable senators to the various improvements to our existing legislation, which have been taken from British, Indian and South African legislation and incorporated in this measure. I appreciate what has been said as to the possibility of some of the provisions of the bill irritating well-managed insurance companies. I assure honorable senators that if any mistaken policy has been embodied in the bill, the error has arisen from a too eager endeavour to make absolutely safe the position of the policyholders. The Government has at all times endeavoured not unduly to interfere with the operations of any of the highly creditable companies which are at present carrying on business. It has endeavoured to give effect to the very best practice at present prevailing amongst the reputable insurance offices of Australia. Honorable senators have my assurance that suggestions submitted by them for the amendment of any provisions that are considered to be too drastic, will receive a good reception from the Government, provided that they are consistent with the primary principle for which the measure stands, the safeguarding of the interests of the policy-holders. I express my gratitude to honorable senators for the manner in which they have received the measure. In conclusion, I may say that the Government has no intention to create what in future years may become a big Commonwealth insurance department. Senators Lawson, R. D. Elliott and Senator Colebatch, in speeches which were valuable contributions to the debate, referred to that possibility. Candidly, I admit that I come from the same political school as they. Frequently I have watched legislation passing through Parliaments other than our own, and have heard members giving assurances that no additional departments would be created. It is difficult, however, to guard against such an eventuality. When an official is entrusted with such duties as will be charged to the registrar under this measure, it is difficult to prevent the expansion of his bureau. If any suggestion can be made which will enable the Government to place a statutory restriction on that contingency, it will meet with no objection from me. All that I urge honorable senators to do is to refrain from placing the registrar in such a position that he will be leg-roped and unable to function satisfactorily in the interest of the policy-holders of Australia. We are dealing with a much greater matter than the establishment of a State Registrar of Friendly Societies. In common with Senator Lawson, I am aware that the Registrar of Friendly Societies for South Australia carries out his activities with the assistance of a staff of two. But the ambit of his operations is limited to the Friendly Societies of South Australia, whereas the ambit of the operations of the registrar in this case, is Australian-wide, and we must provide accordingly. I wish to call attention to one aspect of the matter, which has occurred to me during the debate. Suggestions have been made, one emanating from Senator Daly , with regard to the authorization - " licensing " is too painful a word for the honorable senator to use except in association with the liquor laws - of canvassers. That is a double-barrelled proposal. We are at present engaged upon the making of one of the most serious pieces of legislation, from a commercial point of view, that the Senate has ever passed. Once the Government licenses insurance companies it puts upon them the imprimatur of a government institution; it gives them government approval. No insurance company has such an imprimatur to-day. It therefore behoves us to be particularly careful how we act. I venture the opinion that this bill will tend to eliminate the abuses to which Senator Daly and Senator Dunn referred. I believe that insurance companies will make an endeavour to be represented by agents of a highly satisfactory character. The control that will be exercised and the pressure that will be brought to bear will eliminate the "go-getter" class of business and make for the establishment in Australia of that higher standard of life insurance business for which a number of us have heretofore looked, in some cases, in vain, but for which, I hope, we shall not long continue to seek vainly. Question resolved in the affirmative. Bill read a second time. In committee: Clause 1 agreed to. Clause 2 (Commencement). 326 KTR NAT 1 0 MCLACHLAN, Alexander Senator McLACHLAN - I think it but fair that I should draw the attention of honorable senators to the fact that this clause provides that section 131 of the act shall come into immediate operation. That provision enables His Excellency the Governor-General to do certain executive acts to bring into being the necessary machinery for the measure. The rest of the bill will come into force only when it is proclaimed. Much of the preparatory work is provided for by the Acts Interpretation Act. Clause agreed to. Clause 3 agreed to. Clause 4 - " Actuary " means a Fellow or Associate of the Institute of Actuaries of Great Britain and Ireland, or a Fellow or Associate of the Faculty of Actuaries of Scotland. 326 JTL South Australia 0 0 DALY, John Senator DALY . - I should like to see an alteration made to this clause, in accordance with the opinions expressed by me during my second-reading speech. If the recommendations which I made in my second-reading speech were given effect, the Governor-General in Council would be enabled to appoint a Fellow or Associate of an Australian Institute of Actuaries. 326 KTR 0 0 MCLACHLAN, Alexander Senator McLachlan - I take it that the honorable senator is aware that a person in Australia may qualify for any of the institutes mentioned in the clause ? 326 JTL 0 0 DALY, John Senator DALY - I am, but surely recognition should be given to an AustralasianFaculty of Actuaries, if it exists. 326 JZD 0 0 FOLL, Hattil Senator Foll - No such institute now exists. 326 JTL 0 0 DALY, John Senator DALY - But this legislation will operate for many years, and it would be regrettable if an institute of actuaries were established in the near future and its fellows or associates were ineligible for appointments as actuaries within the meaning of the act. An excellent man, a member of such a faculty, might not be able to qualify. I therefore move - That the word "the," line 2, be left out, with a view to insert in lieu thereof the word "any." If that amendment bo agreed to, I shall then move to so amend the clause as to provide that "Actuary" means "a Fellow or Associate of any institute approved by the Governor-General in Council." In the event of the contingency to which I have referred arising, the Governor-General in Council would be able to decide whether the institute concerned was of . sufficient importance to warrant the selection of one of its members as an actuary. 327 KQZ Victoria 0 0 LAWSON, Harry Senator LAWSON . - I have no wish to obstruct the debate, but I do not know precisely what the effect of the amendment would be. The bill is an important one, and vast interests are involved, therefore, I consider that any amendment should be circulated, and honorable senators given an opportunity to study it. Extempore amendments may appear speedy, but I do not think that, in this instance, they conduce to the satisfactory or expeditious despatch of public business. I ask the Minister to give honorable senators an opportunity to study any amendment that is moved. I suggest that the Minister report progress in order that honorable senators may see the amendment in print and be in a position to circulate any further amendments that it is proposed to submit. 327 K09 Tasmania 0 0 PAYNE, Herbert Senator PAYNE .- I have a suggestion to offer regarding a later portion of the clause, and it may involve postponement of its consideration. The CHAIRMAN (Senator Plain).A specific amendment is already before the Chair. 327 KTR South Australia NAT 1 0 MCLACHLAN, Alexander Senator McLACHLAN . - This may be an amendment to which little exception can be taken; but, if honorable senators propose to submit amendments as the bill is taken through committee, I think that we ought to have the more important ones printed and circulated. This is a highly technical measure, and, while the present amendment may not involve much discussion, it may be well to report progress at this stage. I invite honorable senators who have amendments to propose to put them in writing, so that we may consider their effect, not only upon the particular clauses to which they relate, but also upon the bill as a whole. Progress reported. 327 adjournment considerationofestimatesand Budget Papers. 327 K0F Western Australia NAT Vice-President of the Executive Council 1 0 PEARCE, George Senator Sir GEORGE PEARCE [5.42]. - As I understand that honorable senators are not prepared to proceed with the debate on the estimates and budget-papers at this juncture, I intend to move the adjournment of the Senate; but I ask them again to direct their minds to the financial statement, because it has been my invariable experience that, when the Appropriation Bill comes before the Senate, the Government is charged with not having allowed sufficient time to debate the general financial position. The details of the budget are open for discussion on the motion for the printing of the Estimates and budget-papers; but, when the Appropriation Bill is brought forward, there may not be much time for a general discussion of the financial position. I regret that honorable senators are not prepared to proceed with that discussion to-night, and, in view of that fact, I move - That the Senate do now adjourn. Question resolved in the affirmative. 327 17:45:00 Senate adjourned at 5.45 p.m.