Helen Coonan (NSW, Liberal Party, Minister for Communications, Information Technology and the Arts) Share this | Link to this | Hansard source

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

HOUSING LOANS INSURANCE CORPOR-ATION (TRANSFER OF PRE-TRANSFER CONTRACTS) BILL 2006

The introduction of this bill today represents a significant step forward in ensuring that the Commonwealth can divest ownership of the remaining mortgage insurance contracts written by the Housing Loans Insurance Corporation prior to its abolition in 1997.

Together with the Housing Loans Insurance Corporation (Transfer of Assets and Abolition) Repeal Bill 2006, this package of Bills will enable the Government to bring a long-running process to end its involvement in the mortgage insurance business, to a conclusion. At the same time, it also simplifies the operation of the law.

The Housing Loans Insurance Corporation was established as a statutory body over 40 years ago to meet a structural deficiency in the availability of mortgage insurance at the time. The Corporation insured lenders against the costs of mortgage defaults, thereby assisting low income earners with small deposits to obtain housing finance.

Since 1979, successive governments have recognised that there is no justification for the Commonwealth’s continued involvement in the mortgage insurance business as the private sector had a demonstrated capacity. In fact, its ongoing involvement was distorting prices and inhibiting the growth of the market, as well as imposing a burden on the budget.

Successive governments have made a number of attempts to sell the Corporation and exit the mortgage insurance business. An exit was first attempted by the then coalition government in 1979 but processes were overtaken by the election in 1983. Following the election, the then Labor government made two further attempts at a sale—neither of which was successful.

In 1996, the Australian Government restructured the Corporation to place it on a more commercial footing, the intention being to make it a more attractive sale proposition in time. The Housing Loans Insurance Corporation (Transfer of Assets and Abolition) Act 1996 gave effect to this restructure.

The restructure involved abolishing the Corporation and establishing a new company to continue the mortgage insurance business.

Contracts written by the Corporation prior to its abolition, known as the ‘pre-transfer contracts’, remained under the Commonwealth’s ownership. Claims against these contracts are managed on behalf of the Commonwealth under a management agreement.

In 1997, the Corporation was abolished. The new company and rights to the renewal business were sold to a private purchaser. To this day, however, the Commonwealth still remains involved in the business of mortgage insurance via its continued ownership of these residual pre-transfer contracts.

Importantly, the bill does not commit the Government to a transfer, but instead provides the necessary framework to enable any transfer of the contracts to occur, if desired.

And continuing ownership of these pre-transfer contracts is not desired. The Commonwealth’s involvement is no longer financially viable and will only become increasingly burdensome to administer over time. The current management agreement expires on 31 December 2006.

In addition, the Australian Government Actuary has advised that present market conditions and the current profile of the portfolio provides the Commonwealth with the best opportunity it has had to complete its exit from the lenders mortgage insurance business.

Any delay in amending the current legislation may diminish the Government’s negotiating position in the interests of the Australian public.

For these reasons, the Government considers that it is timely now to consider transferring ownership of these contracts to a private insurer to manage the run off of the remaining contracts.

This bill enables such a transfer to occur.

HOUSING LOANS INSURANCE CORPORATION (TRANSFER OF ASSETS AND ABOLITION) REPEAL BILL 2006

This bill is a companion bill to the Housing Loans Insurance Corporation (Transfer of Pre-transfer Contracts) Bill 2006.

On the transfer of the pre-transfer contracts, this bill repeals the existing redundant legislation which has achieved its purpose; that is, to restructure the Housing Loans Insurance Corporation and facilitate the sale of the Commonwealth’s interests in the company’s renewal business. These events occurred in 1997.

Full details of the measure in this bill are contained in the explanatory memorandum already presented.

FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT (2006 BUDGET MEASURES) BILL 2006

This bill gives further effect to the Government’s package of reforms announced as part of the 2006 Budget. The measures will boost support for rural pensioners and people who have been subjected to domestic or family violence, and improve the delivery of income support and family payments to the community.

Age Pension age people living on farms and rural residential properties will be the winners from the first measure in this bill, based on an investment of over $173 million to improve the treatment of rural land under the social security and veterans’ affairs pension assets test. Currently, these people may not be paid a pension, or may be paid at a reduced rate, because only their home and adjacent land of up to two hectares is exempt from the assets test, even though the additional land may be held on the same title. The Government is now moving to a fairer assets test for people who have their home and adjacent land held on the same title document, provided they have a long-term attachment, of 20 years or more, to their home. The Government does not believe that older Australians should be forced to move from a home where they have lived for many years to ensure an adequate income in retirement.

To access the fairer assets test the person must show that land with commercial potential is being used productively to generate an income. The Government recognises that some pensioners will have the potential to make an income themselves, while others will have lease arrangements in place or have the younger generation working their properties. Other properties will have very limited capacity to generate income (such as many rural residential properties). This bill recognises this fact.

The measure will enable some rural Age Pension or Carer Payment recipients of Age Pension age and qualifying Service Pensioners to have all the land adjacent to the family home, that is held on the same title document, excluded from the assets test. Clearly, this will increase pension payments, or allow pensions to be paid for the first time, to these rural people, improving their living standards while allowing them to stay in their long-term family home. Most meaningfully, perhaps, it will help retired farmers, who are no longer able to work their properties, to stay on their land while encouraging the land to be worked to its potential by those who are capable. The Government has taken seriously community concerns over whether older Australians in rural and city areas were being treated equally, when city dwellers had recently experienced substantial increases in the value of their home properties, yet still were not being asset-tested.

The bill also includes important new one-off payment support for people who have been subjected to domestic or family violence who choose to stay in their own homes. The support is in the form of a crisis payment, currently around $230 and payable up to four times in any 12-month period if appropriate. Crisis payment is already available to people experiencing hardship in certain personal crisis situations, such as if they have to leave home and start afresh because of domestic violence.

However, some people who have been subjected to domestic or family violence find it more viable to remain in their own homes, particularly if striving to maintain stability for children. Even so, there are often costs associated with such a crisis situation, especially in securing the home and other related expenses. Making crisis payment available will give valuable support to people to make these practical arrangements at these challenging times in their lives.

Additional amendments will be made by the bill to relevant provisions dealing with information management, as part of the Government’s ongoing programme to reduce debts and improve the accuracy of payments.

To achieve the proper targeting of income support payments, the assets test needs accurate valuations of people’s assets. Real estate assets have been identified as a particular area in which valuations held in the system may no longer be accurate, often because of rising property values. Also, pensioners who own real estate other than their own homes may not be aware the current value of those properties could affect their pensions, and may fail to declare them as they should. To reduce the possibility of incorrect payments, the law will be amended so Centrelink can check land titles records held by state and territory governments, and more regular valuations will be conducted.

Another area that is a debt risk for social security customers is if people receiving carer payment when caring for a frail or aged person overlook the need to tell Centrelink when the person they are caring for permanently enters residential aged care. Carer payment should stop in these circumstances however, if it continues, potentially large debts can arise. To streamline the arrangements in this area, amendments will allow the Department of Health and Ageing to give Centrelink information about people permanently entering residential aged care so the data can be checked against information on people receiving carer payment. This will identify cases in which the carer payment should be reviewed.

Proper privacy procedures will be followed to safeguard personal information provided through these new processes.

Lastly, the bill will introduce several provisions to enhance Centrelink’s capacity to detect and investigate serious and complex cases of fraud. Centrelink’s current powers to pursue investigations into suspected fraud are limited to provisions that may be used to require the provision of relevant information and, if appropriate, search warrants executed by the Australian Federal Police under the Crimes Act. Over recent years, Centrelink’s investigative capability has been developing, to allow the detection, investigation and prosecution of more serious fraud against welfare payments, including a significantly increased focus on the cash economy and identity fraud. To put this capability to its best use in protecting the integrity of the payments system, this bill introduces, for social security, family assistance and related student assistance payments, provisions for entry and search of premises, and copying and seizing material relevant to pursuing these investigations. These new provisions will mirror provisions already available to other Commonwealth agencies, such as the Health Insurance Commission, the Australian Taxation Office, the Child Support Agency and the Department of Immigration and Multicultural Affairs, in their similar activities.

Debate (on motion by Senator Coonan) adjourned.

Ordered that the Families, Community Services and Indigenous Affairs and Veterans’ Affairs Legislation Amendment (2006 Budget Measures) Bill 2006 be listed on the Notice Paper as a separate order of the day.