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Thursday, 26 July 1906


Mr KNOX (Kooyong) .- As I am anxious to see this business disposed of to-night I do not intend to delay the House by making a long speech. My feeling in the matter is that if the terms of the proposed contract are faithfully carried out the Government are to be complimented upon having secured a most satisfactory agreement from the stand-point of the Commonwealth. Indeed, I think that all parties to the contract are deserving of congratulation. I think that Mr. Croker - whose name is attached to it - merits commendation for having been a party to an instrument the results of which ought to be favorable to the whole community. There is no doubt that when the terms of the contract were first made known, considerable apprehension was felt by many persons in regard to its conditions - apprehensions which the clear statement made by the Prime Minister last night effectually removed. When he intimated that the agreement did not mean the payment of £27,500 for a twelve months' option to carry the mails of the Commonwealth for a period of ten years, and that other large firms besides Sir James Laing and Sons were interested in it. I, in common with many others felt considerably relieved. I submit that during the course of this debate many valuable suggestions have been made which are deserving of the consideration of the Government. That modifications in the contract may be made has been conclusively shown bv the Ministry themselves making two amendments in it. I desire to say that, in my opinion, we ought to make perfectly clear what is meant bv the term "registered tonnage." I do not believe that that term - as it i« used in the contract - is intended to mean anything other than the gross carrying capacity of the vessels. But as the position is capable of being misunderstood, I invite the attention of the Government to section 78 of the Merchant Shipping Act, which reads -

In the case of any ship propelled by steam or other power requiring engine room, an .allowance shall be made for the space occupied by the propelling power, and the amount so allowed shall be deducted from the gross tonnage of the ship ascertained as in the last: preceding section mentioned, and the remainder shall (subject to any deductions hereinafter mentioned) be deemed to be the registered tonnage of the ship, and that deduction shall be estimated as follows (that is to say) - [a) . . . and in ships propelled by screws in which the tonnage is above 10 per cent, and under 20 per cent, of the gross tonnage, the deductions shall be 32-iooths of the gross tonnage.

The contract provides for vessels of 11,000 registered tons, but if it is the gross tonnage which is referred to in the agreement, the vessels would require to be more than one-third larger than that. In the Act from which I have quoted there are a series of rules which set out the manner in which the tonnage of a vessel is to be measured, and which show what constitutes " registered tonnage." I have no desire to enter into the details of the question, but I submit that, inasmuch as the Government are prepared to make some modifications in the contract, the term " registered tonnage " should be clearly defined, because it is quite certain that it is capable of misconstruction.


Mr Johnson - We do not want the vessels to be of a smaller size than those for which the contract provides.


Mr KNOX - The whole spirit of the agreement is that the vessels should contain ri, 000 tons of space for the purposes indicated under the Merchant Shipping Act. The Prime Minister has stated that the contract, in providing for the construction of vessels of 11,000 tons registered tonnage, means what it does mean ; but we should make the position perfectly plain. People would then know what class of steamers we are to secure under the proposed contract.


Mr Johnson - The Prime Minister told us that they will be larger vessels than those which are at present employed in carrying our mails.


Mr KNOX - They will be very much larger vessels. However, it would be idle for me to debate the question, seeing that there are. honorable members in this House who are associated with shipping matters, and who have a much more intimate knowledge of them than. I possess. The point which I desire to emphasize is that there is a clear difference between the registered tonnage and the net tonnage of any vessel. If the steamers which are to be employed under the new contract are to be of 1.1,000 tons "registered tonnage," plus the deductions to which, I have already referred, thev will be very large vessels indeed. I share the Prime Minister's regret that a suitable arrangement was not arrived at with the States in regard to the freights chargeable bv these vessels for the carriage of perishable products. I do suggest to him that the opportunity is still open to obtain control of the space available for the carriage of those commodities by inserting in the contract a provision that not more than a certain price shall be charged for it, so as to prevent the possibility of our producers being " squeezed." It would be a decided advantage if some arrangement of that kind were arrived at. There is still another matter which might have been dealt with m this contract. As honorable' members are aware, strong efforts have been made in Great Britain to reduce the Suez Canal charges. This matter has received a good deal of attention at the hands of commercial bodies in the old country. I hold in mv hand the last annual report of the Liver0001 Steam-ship- Owners' Association, which contains the following statement: -

Last year the country received in dividends upon its holding in the shares of the Suez Canal Company the sum of £900,000. The country has, therefore, now received ^9,500,000 in return for its original investment of ^4,000,000. The. whole of the first cost to this country of such shares, with interest at the rate of 3^ per cent, per annum, had been repaid out of dividends received before the end of the year 1S99. Since that date the country has received, with last year's dividends, a sum of upwards of ^'5,500,000, three-fifths of which has been paid in dues by British vessels using the Canal. These extraordinary profits are only made by the levy of charges which exceed by 100 per cent, the cost of working the Canal, and the association submit that means should be found by which this country's share in such extraordinary profits should be applied for the benefit of the trade from which they are drawn.

Feeling that we should endeavour to reduce the cost of the means of communication between Australia and the mother country by every means in our power, I think that the Government might have embraced this opportunity to draw particular attention to the serious mature of the charges which are imposed upon vessels coming to the Commonwealth by the Suez Canal route.


Mr Deakin - Those representations are in the hands of the British Government now.


Mr KNOX - I am very glad to hear it. That being so, the point has not escaped the attention of the Prime Minister, and, if any reductions of that character are made, the contractors may reasonably be expected to give the Commonwealth the benefit of the saving thus effected. ' It is obvious1 that during the currency of the proposed contract it might aggregate a very considerable sum. I ask the Prime Minister to give this matter his serious consideration. Last evening the honorable and learned gentleman, by his able exposition of the terms of the contract, dispelled many objections which were previously entertained to it. He demonstrated to the House - and I make the statement without derogating in any way from the work of the PostmasterGeneral and of the Vice-President of the Executive Council, who acted for him during his absence in Europe - that he had followed very closely every detail connected with the contract.


Mr McColl - I think that he has done all the work.


Mr KNOX - He showed such a close knowledge of every detail that it is evident he has been co-operating with the Vice President of the Executive Council, who acted as Postmaster-General during the absence of the Ministerial head of that Department. throughout the progress of the negotiations. I also desire to say that

I am very sorry our old friends, the Orient Steam Navigation Company, are not interested in the new contract. At the same time, we, as large exporters, must embrace every opportunity which presents itself of improving the means of communication between Australia and the motherland, and of securing .reduced charges for the producers. There is another matter to which I desire to call attention. We find in the contract provisions relating to the supervision to be exercised by representatives of the Commonwealth over the construction of these steamers. If skilled men are to be intrusted with the work of supervision considerable expense must be involved. In the first instance, the plans are to be submitted to a Commonwealth officer. A mere cursory examination of those plans bv representatives of the Commonwealth would be of no advantage to us. It will be necessary for us to employ a recognised authority to insure that our requirements are properly attended to. I should have been g[ad to hear the Prime Minister state last night what the Government intended to do in this regard. It must be recognised that if the supervision is to be complete considerable expenditure will be necessary. I trust that careful consideration will be given to the requirements of Australia in respect to the carriage of perishable products - that care will be taken to see that every facility is afforded for the carriage of our fruit and other perishable products, under the most approved conditions, to the markets of the old world. I recognise that the contractors themselves, as business mer.-, are likely to take every precaution, but a well-informed officer might be able to give the ship-builders very important advice as to what we 'require. Various matters to which I intended to allude were dealt with last night bv the Prime Minister, who removed many of the objections which some honorable members entertained to the scheme. I trust that the contract will be satisfactorily carried out, and that the fears which have been expressed in ma,n.v well-informed circles will not be realized. I hope that, as a result of this contract, we shall have a new and full\ equipped line of steamers engaging in the Australian oversea trade. Such a service would be hailed with satisfaction by the producers of Australia, who are, after all, at the foundation of our wealth and progress, and whose interests should therefore be considered. Throughout this de bate, there has been a tendency to assert that a saving of a day or two in the time of transit is not very material. One of the principal representations by people in Great Britain doing business with Australia is that the voyage is a very long one, and every reduction that we make in the time of transit must tend to improve our position. The more we curtail the time occupied in making the journey between Australia and the old country, the closer shall we come in touch with the rest of the Empire, and the sounder will our position become. If the contract be carried out it will reflect the greatest credit on both parties - on the Government and those instrumental in arranging it here. I trust that no time will be lost in ratifying it. I have been requested bv the honorable and learned member for Parkes to move the amendment, of which he has given notice. Notwithstanding our friendship. I should not have undertaken this task had I thought that it would tend to impede the making of this contract. I believe that I express his own views when I say that he, too. is desirous of seeing the agreement carried into effect, and a.t his request I propose, by leave, to somewhat modify the amendment, as printed, by substituting for the words "without any extra expense," which appear in paragraph 1, the words " at a sum to be named in the contract." I should have preferred the amendment to commence, " That this House is of opinion that the following modifications should be secured," and so forth, so that, whilst the proposed modifications would receive consideration at the hands of the Government, they would not be absolutely mandatory, or interfere with the acceptance of the contract. However, I shall move it in the form proposed by the honorable and learned member for Parkes. My honorable and learned friend contends, very justly, that Brisbane should be made a port of call, so that the people of Queensland would enjoy the same privileges as other States, at the expense of the whole Commonwealth, since it has to contribute fro rata to the subsidy. Such a determination on the part of this Parliament would show that it was desirous of allowing all th'e States to participate in the advantages of the service, to the cost of which they all contribute. Last year an arrangement was made between the Government of Queensland and the Orient Steam Navigation Company, bv which the vessels of that company made Brisbane a port of call. It would have been well had it been provided in this contract that the steamers, which I think are likely to make Sydney the terminal point, should go on to Brisbane. Honorable members ought to realize that Queensland is destined to be, if not the best, certainly one of the best of our States. Its natural advantages are illimitable, and I therefore agree with the honorable member for Oxley that the requirements of its people in this regard should receive consideration. There ought to be something in the contract to indicate that it is intended that these steamers shall call at Melbourne, Sydney, and Brisbane.


Mr R EDWARDS (OXLEY, QUEENSLAND) - It is not too late to secure such an amendment.


Mr KNOX - I do not think it is. It is for that reason that the honorable and learned member forParkes has requested me to submit his amendment.


Mr McWilliams - Tasmania not only fails to secure the calling of the steamers at one of her ports, but has to pay for the mails.


Mr KNOX - There ought to be some consideration for Tasmania. Then, again, in the contract as it stands, it is provided, that the consequences of a breach of it shall be limited on the side of the contractors to £25,000, and unlimited on the side of the Commonwealth.


Mr Kelly - If they are satisfied with that,why not leave it mutual-


Mr KNOX - I am referring to the position of the Commonwealth. Evidently the honorable member for Wentworth does not understand the suggestion. As the contract now stands, the contractors will be able to get out of it at a cost of £25,000, whereas if the Commonwealth were guilty of a breach of it its liability would be unlimited. There should be a modification in the direction proposedby the honorable and learned member for Parkes. With the fullest desire to believe in the bona fides of the contractors. I would point out that the mere sum of £27,500 which is involved


Mr Austin Chapman - There is something more than that involved.


Mr KNOX - I know that there is a condition as to the payment of £50,000, but the contractors are a ship-building firm. They have the option for sale in the London market with this contract in their hands, and can, ifthey please, arrange very satisf actor y terms for themselves. On the other hand, they may have entered into the contract with the intention of making as profit out of the carriage of the mails.


Mr King O'Malley - They may sell the concession to make money.


Mr KNOX - I do not think that that is the intention. No doubt the building of eight steamers, each costing from £450,000- to £500,000, is excellent business for theshipbuilders. I do not wish to throw suspicion upon the intentions of those connected with the contract, but it must be remembered that we are dealing with business men, whose object is to make money, and we must protect our own interests. The Vickers Maxim Company is a large public company, managed by persons who are not now closely related to either Vickers or Maxim, and, similarly, the directors of the firm of Armstrong and Company are keen business men, who will look sharply after their own interests, and it" behoves us to do likewise. It is very necessary that there should not be a limit tothe responsibilities of the other party tothe contract while those of the Commonwealth are unlimited. ' But that is the position as the agreement stands. The third' paragraph of the amendment asks that the-, right of the contractors to determine the contract, or. to be paid for actual or prospective diminished earnings, or increased' expenses, arising from Commonwealth legislation, shall be limited to legislation dealing directly with shipping, and shall not. apply to all legislation merely relating toshipping. This matter was referred tolast night incidentally, and the want of clearness which exists in article 15 was referred to by several honorable members. As the article has been framed, it might successfully be contended that the Australian Industries Preservation! Bill, and legislation altering the Tariff, relate to shipping. I should like to see some suchwords as these employed - " Legislation directly affecting shipping." The fourthparagraph of the amendment provides that, if war is declared or entered upon by GreatBritaim against any first-classnaval Power, the contractors shall have the right, not toterminate the contract, but only to suspend its operations for a reasonable time. With reference to that proposal, the honorableand learned member for Parkes has written to me to say that it seems to him to bemost fair, because only the other day England was on the eve of declaring war against Turkey, and, if she had done so, the contractors might have had the power to cancel the contract, and so put the Commonwealth in immediate difficulty. To provide for the suspension of the operation of the contract until a reasonable time after the termination of hostilities, or to make the right to terminate mutual, and not possessed by one party only, is only fair to the Commonwealth. To make the contract equitable, any penalties provided for should be liable to apply to one party as much as to the other, while the privileges should be equally distributed. I regret that the honorable and learned member for Parkes has been unavoidably detained in Sydney by professional engagements, because I feel that I have not submitted these amendments so clearly and forcibly as he would have done. Each proposal deserves consideration by the Ministry.


Mr Austin Chapman - Does the honorable member seriously suggest that we shall open up negotiations again ?


Mr KNOX - That has become necessary by the carrying; of the amendments moved by the Attorney-General last night.


Mr Austin Chapman - The alterations which we propose are very different from those proposed by the honorable member.


Mr KNOX - As the matter is to be opened up again, I think we are justified in making suggestions. I have made the reservation clear and distinct that we do not wish- to. jeopardize the contract ; but some of its provisions deserve further consideration. The service will be a splendid one if carried out according to the terms a,greed upon, and those responsible for the contract deserve that their work shall be recognised. I 'hope that the matter will Le final lv settled as score as possible. I move -

That the following words be added : - "And subject to the following modifications in its provisions : -

1.   That the contractors should be required (under clause 2) to call at the ports of Melbourne, Sydney, and Brisbane, at a sum to be named in the contract.

2.   That the consequences- of a breach of the -contract should be mutual, ' instead of being limited on the side of the contractors to £25,000 -(as in article 10), and unlimited on the side of the Commonwealth.

3.   That the right of the contractors (under article 15) to determine the contract or to be paid for actual or prospective diminished earnings or increased expenses, arising from Commonwealth legislation, should be limited to legislation which deals directly with shipping, and not apply to all legislation which merely 'relates to shipping.'

4.   That in the event of war being declared or entered upon by Great Britain against any firstclass naval power (as provided by article 16), the contractors should not have the right to terminate the contract, but only to suspend its operation until a reasonable time after the termination of hostilities, or that, in such an event as is contemplated under article 16, the right to terminate the contract should be mutual and not possessed by one party only."


Mr McColl - Will the paragraphs of the amendment be put separately ?


Mr SPEAKER - They may be discussed together; as they have been moved as one amendment ; but, as they deal with separate matters, I shall put them seriatim.







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