COUNTY COUNCIL INSURANCE

Press, Volume LXXVII, Issue 23413, 21 August 1941, Page 6

COUNTY COUNCIL INSURANCE

BILL PASSED BY THE HOUSE

MINISTER’S EXPLANATION

(P.R.) WELLINGTbN,, August 20,

Emphasising that the bill was the outcome of resolutions at earlier conferences of the Counties’ Association, the Minister for Internal Affairs (the Hon. W. E. Parry) said, when moving the second reading of the Counties Insurance Empowering Bill, in the House to-night, that the only likely contentious clause was that giving councils power to subscribe capital to the insurance company without taking a poll of the ratepayers. The Minister said the nominal capital would be £IOO,OOO, and counties would subscribe about £IOOO each. A swift passage was given the bill, which went through all stages and was passed in an hour and 25 minutes.

The bill, Mr Parry explained, was a simple one, enabling county councils to forni the Counties’ Co-operative Insurance Company, Ltd., confirming to the terms of the Companies. Act, 1933. The company would arrange the insurance of such county councils as elected to join the scheme, which was purely voluntary. It would have' memorandum and articles of association, and the Minister for Finance would have all the powers necessary to see that the articles contained the power to get the company through its initial stages, it was proposed that the paldup capital should be sufficient for the company to carry insurance from the beginning of the scheme. The nominal capital would be £IOO,OOO. An Opposition member: Is that in the bill?

“No,” replied Mr Parry. “The company will not begin business until a minimum of £55,000 has been subscribed by county councils, and £27,500 has been paid up. “The company will have to comply with the requirements of the Insurance Companies Act, • 1940, and will operate on a co-operative basis. Membership is limited to county councils, and the company will insure for its members only. The counties will at the outset contribute capital on a prorata basis, according to the capital value of the land in their respective districts. Counties, coming in after the nominal capital has been subscribed will purchase their shares from those already in the scheme on a prorata basis. The share capital will carry, a fixed rate of interest- of 4 per cent, No other dividend will be payable to counties; but on the company winding up in the event of the venture proving a failure, the capital would be payable."

Mr W. J. Poison (Opposition. Stratford): There would be a distribution prorata? ■’ The Minister: Yes. Low Premiums

\ The object of the company was not to make profits and premiums would be kept as low as possible, consistent with there being sufficient money to meet liabilities under the scheme, the Minister continued. The bill was in keeping with the general outlook of the fanning community that they could do a collective job. The councils felt they had the men to do it, and at the same time make a .saving to their farmers. ' ■

Mr W. S. Goosman (Opposition, Waikato): Are the profits taxable? : “No provision is made for that,” replied Mr Parry, . Mr Goosman: What about social and national , security tax? The Mihister for Finance (the Hon. W. Nash): If there is a profit,.we will tax them. ‘ '

Mr Parry said that the first directors would be named In the articles of association. and would be important members Of counties, tried men who had the confidence of the counties. They woqld regain in office until the first ordinary general meeting df the company. • ■ - Dealing with the, final clause, authorising councils to raise loans for the purpose of meeting their share capital without a poll of ratepayers, he said the sum of about £IOOO would have to be raised by each county,.and the taking, of a poll of ratepayers would,cost practically that sum.; . - _ ' Mr Poison; I take it that the Counties’ Association has asked for this bill? Mr-Parry: Yes. ,' xl _ Mr Poison: And Is content with the terms?

“Yes,” replied Mr Parry. , “What is the difference between this bill and the act under which the municipalities operate their insurance? asked Mr Poison. , . Mr Parry: This is collective, covering a number of counties. . The Leader of the Opposition (Mr S. G. Holland) said, the. Opposition would be glad to acquiese in the passing of the bill. It was - good legislation, and they would assist the Goyernment in putting it through. He thought that much that the Minister in charge of the bill- Kad' said in explanation might have been incorporated in .the legislation itself.. It would be a comfort to the insurance companies to know that the bill would subject the,new company to the same taxation that they had to Repr resentatives: of some of the counties had assured him that the measure had their full approval, and hfe hoped that it would achieve the objects which they wanted. It was designed to give counties the same, rights as. those; enjoyed by municipalities, and it was a co-operative effort iri the; writing of .insurance cover. : • . . .

,Mr Nash said the company would be a co-operative one, and that would give" It standing at the 'start, because toe-term could not be used unless the Govemor-General-in-Gounill gave hfe consent Any county or every county could become' a member. It was not a close corporation, andbe hoped that every county would join. \\ In answer to a question, the Minister 'said tiiat 11 the' company had to pay but more than was. subscribed as capita], toe company itself would bfe liable, but he thought that the banks or the Government would come to its assistance if necessary. In the meantime, the whole thing Was built up on reasonable, good, conservative lines. If toe counties organised it is , it should, be; organised, Mr Nash concluded, the scheme was worthy of toe support of every county. It was a tremendously. valuable bill, and showed what, co-operative spirit would d 6., Mr W. A. Bodkin (Opposition, Central. Otago) asked whether counties could'hot have obtained better terins than they would get under-toe bill by joining l together and .having their, risks underwritten' by Lloyd's, There was ethdepce ‘that .Lloyd’s, .would hive underwritten toe scheme at-consider-ably lower premiums, and if that were done Counties would obtain, immediate benefits, instead of having to wait for some years for reduced premiums.. ;

Mr -Poison said that the. measure em l phasised toe co-operative and voluntary principle, ancj, was - therefore good and sound. He ..expressed' surprise at toe - change - of : sentiments of the ;Minister'for Finance in describing-the bill as moulded‘bn conservative lines, stating that Mr Nash had been a socialist '

, bill: is a : capitalist; bill ‘eh: a socialist; said: the H<wi. ! A. Hamilton (Opposition, Wallace). 7,‘T mean a co-operative basis,” he added; When hfe remark - was- greeted '. With laughter. ♦The: • objective ■of ; toe Labour Party is to knock ■ down capitalism.” Mr Nash: To use it -where it isgoOd; and to-'knock it down, where it is bad. , Mr,' Hamilton said toe bill proposed •toe formation of a company, not primarily tojniake profits, but to pay . interest- on cfepital, and then to distribute any. surplus to the people who provided toe business. That was co* operation, or;; a conservative - socialism. It the Government adopted; that policy where -it was suitable, and a policy! of individualism ■ where; it was sUitaUe. there wohld not be much to quarrtl about