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Thursday, 26 July 1906


Mr WILKS (Dalley) . - The Prime Minister opened his speech last evening by saving that he merely desired to make a few general observations. He then occupied an hour in adding his contribution to a debate which had already extended over two and a half days. He also informed us that the consensus of opinion in this House was that the contract embodied the greatest bargain that the Commonwealth had ever been able to make. If his statement were true, it should not have been necessary to occupy such a long time in impressing the advantageous character of the contract upon honorable [members. I should like to know what power is possessed by the party by the name of Croker, who has signed the contract on behalf of Sir James Laing and Sons? The names of other well-known firms, such as Armstrong and Sons, and Vickers, Maxim and Company, and others were bandied about by the Prime Minister as among those connected in some way or other with the mail contract. It should have been easy for the Prime Minister to ascertain by cable whether any of these firms were really at the back of Mr. Croker. The Prime Minister informed us that the proposed new steamers were to be of a, tonnage of 11,000 tons,, to maintain an average speed of 16 knots an hour, and that a considerably shorter service would be provided. But it seems to me that there are two sides to the question. Mr. Croker is reported to have made a very good thing out of the Butter Commission, and it cannot, be claimed that he or .those for whom he is acting are philanthropists. They are not going to rush in and build ships out of love for the people of Australia./ They are lynx-eyed business men, and, judging by the reputation that Mir. Croker enjoys, we may presume that he considers he is in for a very good_ thing. It is rumoured that his scoop out of the pool will amount to £10,000. I do not wish to cast any aspersions upon Mr. Croker. I wish him good luck if he is keen enough to obtain such a large sum of money. I think, however, that it is absurd for honorable members to put a wreath round his head, and represent him as a philanthropist who has come to the rescue of the Commonwealth Government in this matter. I never knew of a case in which a mail contract was presented but that it was represented to be the best ever entered into. I am becoming rather tired of this kind of thing, and further proof must be produced before conviction will be carried to my mind. If the bargain is such a good one, it is remarkable that two and a half days should have been occupied in trumpeting its virtues. The Select Committee of the House of Commons which sat in 1902 to inquire into the whole question of subsidies, bounties,' and subventions with regard to mail services stated that the question whether a subsidized mail service was, or was not, a good bargain could not very well be determined. Their reason for saving this was that the granting of a subsidy almost invariably shut out all competition. It was pointed out that the shipping companies themselves, by arrangement, did not compete at all, and consequently it was left to some proprietary to obtain the contract at their own price. That being the experience of a Select Committee appointed by the House of Commons only three years ago, the Government have no right to declare. -as they do, that they have made a great bargain on behalf of Australia. I admit that the statement that no tenders for the mail contract would be received, other than from the Peninsular and Oriental and Orient Steam Navigation Companies, has proved to be a myth. But nobody who had given the matter serious thought ever entertained that idea. A subsidy of , £125,000 annually may not seem a very large one until it is closely analyzed. I propose to show that the contractors, and not the Government, have made a remarkably good bargain for . themselves. They have entered upon an undertaking which will afford them an excellent investment for any of their loose capital. I need scarcely point out that£125,000 represents exactly 5 per cent. upon £2,500,000. To-day British consols are returning only 22/1 per cent., and I venture to say that the construction of the eight vessels which will be required to undertake our new mail service will not cost more than £312,500 each. At any rate, that sum will be much nearer the mark than any which has been mentioned during the course of this debate.


Mr Carpenter - What about the cost of running the service?


Mr WILKS - I will deal with that matter presently. Surely the honorable member does not contend that in the running of their vessels the Orient Steam Navigation Company have had to depend entirely upon the subsidy which they have received from the Government. That is not their only source of income. The subsidy is merely in the nature of an assistance to them to run their vessels.


Mr Carpenter - The honorable member is putting it simply as a matter of the payment of so much interest upon so much capital.


Mr WILKS - I am endeavouring to show the other side of the picture. All those who have previously addressed themselvesto the financial aspect of the question have endeavoured to make us believe that we should go down upon our marrow bones, and thank heaven that the contractors have been good enough to tender, and to accept our subsidy of £125,000 annually. I am utterly tired of hearing that sort of talk. I contend that these speculative shipbuilders have made a very excellent bargain for themselves. The £125,000 which we are required annually to pay them merely represents the Australian subsidy to the new mail service. As I have already pointed out, it is equi valent to a 5 per cent.return upon a capital of , £2,500,000, and I venture to say that £312,500 is a reasonable estimate of the cost of constructing each of the eight vessels which will be required to carry out the contract. Personally, I am absolutely opposed to the payment of any subsidy whatever in connexion with the carriage of our mails. I can quite understand that some thirty or forty years ago, when shipping communication 'between Australia and the old world was not what it is to-day, the payment of a subsidy was necessary. Of course, I have heard honorable members exclaim, " Oh, the press are unanimous in the opinion that a subsidy is necessary." To my mind that fact conveys nothing. It does not prove that the contract is either good or bad. It simply shows that the newspapers believe that certain facilities; should be continued, and that the payment of a subsidy is necessary for the maintenance of our present oversea mail system. That is merely the opinion of some writer or writers who have no more opportunity of acquiring knowledge upon the matter than has any honorable member. I contend that the commercial classes are more interested in our mail contracts than are any other section of the community. But it is my duty to view this matter from a broad stand-point, and - seeing that the entire community will be called upon to contribute the proposed subsidy - I ask whether it is right that they should be taxed for the benefit of a particular section. In discussing other questions, some honorable members never lose sight of that aspect of the case, although they conveniently forget it upon the present occasion. No disability would be imposed upon the commercial classes if their mails were delivered here upon Thursday instead of upon Tuesday, because to-day all transactions of any magnitude are conducted by means of the cable. Business men have their advisers in the old country. The latter cable them as to the state of the market, and they are then advised whether they are to purchase or not. Consequently, I contend that the payment of a subsidy is in the interests or pseudointerests of the commercial classes. Simply for the purpose of having our mails delivered upon a Tuesday instead of upon a Thursday the people of the Commonwealth ought not to be asked to continue the payment of a subsidy. The terms "subsidy," "bounty," and "subvention," all spell the same thing. They are pecuniary aids to some concern with which' the Government are connected. ,The party to which I belong has been vigorously engaged in«fighting the granting of bounties-


Mr Fisher - They intend to support every one of them.


Mr WILKS - The honorable member did not allow me to conclude. The party with which I am associated are opposed to bounties, subventions, and subsidies. I cannot understand any party in this House fighting for the continuance of a mail subsidy. As I have already declared, the time when Australia lacked shipping facilities has long since passed away. To-day our coast-line is penetrated by steam-ship companies from all parts of the world - companies which come here prepared to accept the risks of commercial competition. Yet we are asked to sanction the payment of a subsidy of £125,000 annually to a particular company, and we are told that we should go down upon our knees and thank the Government for having concluded the greatest bargain ever made on behalf of Australia. It took the Prime Minister an hour and a half to dilate upon that fact.


Mr Fisher - I do not see that in the contract.


Mr WILKS - The Prime Minister expects us to fall down and worship the PostmasterGeneral as a heaven-born genius of finance. Personally, I do not care to worship at the shrine of any idol. The Postmaster-General does not know definitely whether Messrs. Vickers and Maxim are at the back of the contractors. He merely knows that a gentleman named Croker is the agent for them. Mr. Croker is the very smart man who recently made £4,000 out of the Butter Commission, and Dame Rumour says that" he will make £10,000 out of this contract.


Mr Fisher - He did good work in connexion with the Butter Commisison


Mr WILKS - I do not blame him if he can make such fat fees, but I do say that honorable members are blamable for regarding the proposed contract as an excellent bargain for Australia.


Mr Thomas - What about the construction of the vessels which will be required to carry out the contract"?


Mr WILKS - I will deal with that matter in due course. I have already shown that an, annual subsidy of £125,000 is equivalent to a return of 5 per cent, upon a capital of £2,500,000. I now desire to point out that the contractors will derive an equal amount in connexion with the mails from Egypt, Ceylon, the Straits Settlements, and the Pacific Islands. The revenue from those sources is estimated by the Orient Steam Navigation Company at about £125,000. In other words, the contractors will receive a subsidy of £250,000 yearly - which is equal to a return of 10 per cent, upon a capital of £2,500,000 - for undertaking the proposed contract for ten years. We have been assured that a contract for a less period would not have recouped them for constructing such expensive vessels. I invite the House to look this matter fairly and squarely in the face. The leader of the Labour Party has told us that he would favour the limitation of the contract to a period of five years, but for the belief that if the period fixed were less than ten years, the shipbuilding firm concerned would not undertake the expense" which the contract necessarily involves. It seems to me that as the result of the combination of the two services the company, with a ten years' contract, would just clear the capital cost of their fleet. The contractors are shrewd business men, and I am endeavouring to show that, instead of our securing a great bargain, an excellent bargain has been made bv them. The difference between what we should have to pay for the carriage of our mails under the t poundage rate system and that which we are to pay by way of subsidy is £80,000. In other words, under that system we could secure almost the same regularity of delivery at a cost of £40,000, so that we are asked i'o pay the additional £80,000 in return for the privilege of having an Australian mail service. The mere possession of a mail contract is a great advantage to a steam-ship company; it is an. advertisement which materially assists them in obtaining passengers and freights. People naturally assume that the best service is*afforded by a line of mail steamers, and as a rule that is so. In these circumstances, shipowners make a. good thing out of the carriage of our mails, and that is an argument against the granting of a subsidy. The Postmaster-General has told us that, under this contract, we shall derive three advantages. In the first place, we shall have mail steamers of not less than 11,000 tons burthen ; that, in the second place, we shall have an accelerated service; and, in the third place, we shall have a fleet of mail steamers flying the Australian flag.

The Prime Minister referred last night, with evident pride, to the fact that under this contract we should have mail steamers leaving this country flying the Australian flag. Apparently; for that privilege alone we are to pay £125,000 per annum. As to the condition thai' the steamers engaged in the service shall be of not less than 11,000 tons, the ' tendency tc-day is to build large steamers for the sake of economy in ihe handling of cargo. It is well known that a large "tramp" steamer can be more easily worked than can three or four vessels aggregating an equal carrying capacity. The provision in the contract as to the size of the vessels, therefore, does not indicate ihat the PostmasterGeneral has made a very good bargain ; it simply shows, as I have said, that the tendency of ship-owners to-day is to build large steamers in order to swell their profits. As 10 the reduced time of transit, I know verv well that after a speed of fourteen knots is attained, the consumption of coal per knot is enormously increased, so that something more should be granted for an accelerated service; but I do think that the suggestion made as to the flying of the Australian, fiac is absurd. The1 Australian flag, unlike the Union Jack, has not associated with it centuries of traditions about which we can become enthusiastic, and another point is that, although these vessels are to be registered in Australia, that doss not necessarily imply Australian ownership.


Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - We are to have the Australian flag floating over British vessels.


Mr WILKS - Exactly. The Prime Minister has told us that ihe policy of his Government is "Australia for the Australians," and that, under this contract, the mail steamers will be registered in Australia, and fly the Australian flag. When a vessel is registered in America it must be manned and officered by Americans, and must also be docked 'for repairs in " America.


Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - And built there.


Mr WILKS - Quite sc. That is the policy of "America for the Americans," and, however weak it may be, it is, to say the least, honest. It means something more than the mere flying of the Australian flag over a British ship. The only Australian feature associated with the contracting company is " a party by the name of Croker," who will make a bis; commission out of the venture. If the PostmasterGeneral is so solicitous for the welfare of

Australia, as he would have us believe, he ought to have inserted in the contract a provision that the vessels of the service shall be manned and officered by Australians. So many of our laws have been fashioned on the pattern of American legislation that I am surprised that the Government failed when arranging the details of the contract to take as their guide the American practice to which I have referred. I am opposed" to subsidies-, believing them to be synonymous with bounties or subventions. In the course of a day or two we shall be called upon to deal with a Bill to provide for the payment of bounties on the production of certain Australian products. The raising of those products will not give employment to a great deal of labour, whereas the adoption of my amendment would lead to the employment of hundreds of men. We find the Government prepared to grant £125,000 per annum, which is equal to 5 per cent, on £2,500,000 to a foreign company - foreign in the sense that it is not Australian - in return for the carriage of our mails to Europe two days quicker than under the present system. For twenty-five years or more the Orient Steam Navigation Company has battled gallantly for Australia., and, without any legislation dealing with the subject, has employed only white crews. It is now to be left in the lurch.


Mr Johnson - Did it not' have the same opportunity to tender as this company had ?


Mr WILKS - I propose to state my case in my own way. For years the Orient Steam Navigation- Company, without receiving any subsidy, did much to develop Australia, and, eventually, in return for a subsidy of £120,000 a year, they gave us a service which is only slightly inferior to that which we are to obtain under this agreement. When the Reid-McLean Government entered into a contract with the Orient Steam Navigation Company for the payment of that subsidy, many honorable members declared, through the medium of the press, that it was an iniquity. What has caused them to change their views? No one seems to be bold enough to do honour to a company whose services to Australia merit word's of recognition - I refer to the Orient Steam Navigation Company. It is well known that that company has not behind it the capital which is said to be behind this supposed company. It


Mr Thomas - Who is Mr. Croker?


Mr WILKS - That is what I wish to know. As I have mentioned, he has drawn a large amount of money from the Victorian Treasury, but beyond that I know nothing of him. £27,000 is not a very large sum to put down to cover a risk of over £2,500,000. No doubt, if the promoters find thatthey cannot profitably build vessels to carry out this contract,they will be prepared to lose that amount, and itmay be that the honorable member for Parramatta was not far from the mark when he suggested that 'a concession is being obtained from the Government to be hawked: through the London financial world. The eloquence of the Prime Minister last night did not remove from my mind the belief that there is reason for suspicion, because the Postmaster-General has not put beyond question the bona fides of the contractors. By communicating with the firms whose names have been mentioned, he could easily ascertain whetherthey are behind the proposal. In private business, no man would enter into an arrangement of this kind without cabling to ascertain the bona fides of those with whom he was asked to contract, and I do not know why the Government have not taken that course. Parliament will







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