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Wednesday, 29 June 1938

Mr THORBY (Calare) (Minister for Defence) . - I move -

That the billbe now read a second time.

The purpose of this bill is to ratify and authorize agreements which have been drawn up between the Government of the United Kingdom and the Government of the Commonwealth of Australia, together with a draft agreement between the Commonwealth of Australia and the Qantas Empire Airways Limited, relating to the Empire air service between England and Australia.

A few years ago, the Government of the United Kingdom originated a scheme for an imperial network of air services radiating from London to Africa, India and Australia. The British Government invited the dominions concerned to participate in the scheme and negotiations between the Government of the United Kingdom and the Government of the Commonwealth of Australia were commenced about two years ago, and an agreement has now been reached under which, subject to the approval of this Parliament, Australia will take part in what is now known as the Empire airmail scheme. Part of the scheme was brought into operation under an agreement entered into in 1937 between the Government of the United Kingdom and Imperial Airways Limited.

The terms of the agreement between the two governments are set out in the despatch to the Secretary of State for Dominion Affairs, forwarded by the High Commissioner of the Commonwealth acting under instructions from the Commonwealth Government, and the Prime Minister of Australia has received from the Secretary of State for Dominion Affairs a cablegram in which he states that the Government of the United King- dom accepts the terms of that despatch as recording the agreement between the two Governments. I shall refer to this agreement as the inter-governmental agreement. It deals with the establishment of an air service between Southampton and Sydney, to take nine and one-half days at the early stages, to be progressively reduced to seven and one-half days. The Government of the United Kingdom will control the section between England and Singapore, and the Commonwealth Government will control the section between Singapore and Sydney. The service on the section between Southampton and Singapore is provided for in an agreement between the Secretary of State for Air in the United Kingdom and Imperial Airways Limited. This bill submits an agreement between the Commonwealth and Qantas Empire Airways Limited, to provide for the service between Singapore and Sydney, which will be staffed by Australian personnel. The bill also provides for the ratification of the agreement between the two governments, and the authorization of the agreement between the Commonwealth and Qantas Empire Airways Limited. It is expressly provided in each agreement that it is not to come into force until approved by Parliament. The scheme contemplates a further agreement between Imperial Airways Limited and Qantas Empire Airways Limited, with a view to making arrangements for the aircraft of each company to fly over the whole route. 1 want that to be clearly understood by honorable members because, although that section of the route between Southampton and Singapore is to be under direct control of Imperial Airways and the section between Singapore and Sydney is to be under the control of the Commonwealth Government through the agency of Qantas Empire Airways, aircraft used on the service will be interchangeable so that it will be practicable for flying boats leaving Sydney to fly right through to Southampton and vice versa.

Mr Fairbairn - Is it proposed that each boat shall fly the whole route?

Mr THORBY - Not necessarily, but provision is made so that can be done if it be found desirable. The intergovernmental agreement sets out the conditions on which the Commonwealth Government will participate in the scheme, the principal conditions of which are briefly as follow: -

The Commonwealth Government will be entitled to have all first-class mail matter originating within Australia and its territories addressed to countries participating in the Empire air-mail scheme carried over all the services included in the scheme, and it will provide reciprocal treatment for first-class air mail originating in those countries to be carried over the Sydney-Singapore section. The Commonwealth Government will pay a subsidy and certain postal contributions, which I shall explain later, to Qantas Empire Airways, and will exercise control over that company in respect of the timetable, stopping places, fares and freights on the Australian section. Any variation of these matters is to be made by agreement between the two governments. The service will be carried out with flying boats. Aircraft operating the scheme will not, be charged housing or landing fees in Australian territory, and customs and other duties and taxes collected on fuel, oil and certain equipment imported into Australia and used in connexion with the service will be refunded by the Commonwealth Government to the company. It is provided that the Commonwealth Government may arrange with the company to carry out in Australia major repair work to the aircraft, and for the construction .of new aircraft in Australia if such work is found to be within the capacity of the Australian aircraft industry, but if such arrangement increases the cost of repairs incurred by the company, the 'Commonwealth Government will pay the amount of such increased costs calculated on a basis to be agreed upon.

The Commonwealth Government will pay to the company an annual minimum subsidy of £40,000 sterling on the .basis of £1 sterling for each. 1 lb. of mail matter carried, and, in addition, in respect of mail originating in Australia;, or its territories, in excess of 40,000 lb. carried in any year, a subsidy at the rate of 8s. sterling for each 1 lb., the total subsidy not to exceed £50,000 sterling, irrespective of what weight of mail is carried.

The Commonwealth will also pay to the company as a mail payment, 16s. sterling for each "1 lb. of mail originating in Australia, or its territories, which is carried by the company in any year, and the annual amount under this head shall not be less than £32,000 sterling, and shall not exceed £52,000. sterling. Thus the maximum .amount that can be received by the company in the form of subsidy and mail payment will he £50,000, plus £52,000, or a total of £102,000.

Mr Holloway - That is in any one year.

Mr THORBY - Yes. The total liability of the Commonwealth in respect of maintenance of ground organization on the Singapore-Sydney section will not exceed £30,000 sterling a year. Any amount expended in excess of that sum will be repaid to the Commonwealth by the United Kingdom Government. This sum will include amounts to cover amortization of capital expenditure and amounts paid by the Commonwealth to the operating company as a refund of customs duty paid by the company in the Netherlands East Indies, on fuel, oil and other goods. If this provision had not been made the subsidy payable to the company would have been so much greater.

The Commonwealth agrees to protect Qantas Empire Airways against loss of unamortized capital clue to the premature termination of the existing contract for an air service between Brisbane and Singapore. This company has conducted the air-mail service from .Singapore, via Darwin, to Brisbane for some years past, and it has done this work practically without accident and with great credit to itself, and, but for this agreement, its existing contract would iiia ve been continued. For that reason, special provision is made in this agreement to safeguard the interests of .that company which is foregoing its existing contract in order to participate with Imperial Airways in this new contract.

Mr Gregory - At what points does the existing Qantas service commence and finish ?'

Mr THORBY - It commences at Singapore and ends at Brisbane. That service will be discontinued as part of the overseas mail service, although not necessarily .as an internal .service, and the Qantas section of new air-mail service will be from -Singapore to Sydney.

The agreement sets out in detail the responsibilities of the two governments in respect of ground organization in Australia, the Netherlands East Indies and Singapore. The working operations will be supervised by an advisory hoard in London composed of representatives of the governments of the dominions and colonies participating in the scheme, including India and the Sudan: The agreement between the Commonwealth Government and Qantas Empire Airways Limited, provides for an air service between Singapore and Sydney of not less than three trips each way a - week. Should an increased frequency be necessary to carry the mails the additional service will be provided without extra cost to the Government. Flying boats of the Short " C " class type will be used, provision being made for the substitution of other types if necessary. The route decided upon is the shortest practicable route between Singapore and Sydney, the intermediate stopping places being

Batavia, Sourabaya, Bima, Koepang, Darwin, Groote Eylandt, Karumba, Townsville, Gladstone and Brisbane. The agreement will be for a period of fifteen years as from the 3rd August, 1938. The company agrees to own, and have available on the route, not less than six aircraft of the approved type. Exchange of aircraft between the company and Imperial Airways Limited is provided for in order to enable the aircraft of both companies to fly over the whole route from Southampton to Sydney.

Mr Forde - Where are those machines made?

Mr THORBY - In. England. Incoming overseas air mails will be delivered from Darwin to Sydney and intermediate stopping places, viz., Groote Eylandt, Karumba, Townsville, Gladstone and Brisbane, by the flying boat service direct. Mails addressed to Western Australia will be delivered by a subsidiary air service from Darwin to Perth and intermediate stopping places. South Australian, Victorian and Tasmanian mails will be carried by air from Darwin to Adelaide direct, the Victorian mails proceeding from Adelaide to Melbourne, and. the Tasmanian mails to Launceston and Hobart. This will enable the whole of the incoming air mail to be delivered in each of the capital cities during the second afternoon after arrival in Darwin, for which service, of course, no extra charge will be made. This arrangement overcomes those difficulties which would have arisen had all the incoming mail been taken to the one terminus in Australia, and then distributed to the various States. If that had been clone overseas mail would" have arrived in one State capital days ahead of the time of distribution of mail addressed to other capitals. Under this agreement all of the State capitals will be placed on an equal footing so far as the time of arrival of incoming air mail is concerned.

Mr Scullin - Will the rate of postage be the same in respect of all capital cities?

Mr THORBY - Yes. Furthermore, we undertake to deliver' incoming mail, and pick up outgoing mail at the intermediate stopping places. The aspect of night flying has been very carefully investigated, and I am pleased to be able to say that no night flying whatever will be necessary in connexion with this service. This will be of great advantage in two respects : it will enable us first, to avoid heavy additional expenditure, and, secondly, the risks involved in night flying to the lives of pilots, .members of crews and passengers. We have, therefore, been more than justified in overcoming any necessity for night flying.

Outgoing air mail will be collected in each of the capital cities and will follow the reverse route, the Tasmanian, Victorian, South Australian and Western Australian services, linking up with the flying boat service at Darwin. All mail posted inside Australia to be carried by air internally, or overseas, will carry, a surcharge of 3d. for each half-ounce.. This is a reduction of ls. Id. a half-ounce compared with the present overseas airmail rates which have been in operation since the overseas air-mail service was inaugurated. In addition, air-mail letters will bear the ordinary postage rate of 2d. making a total rate of 5d. as against the existing rate of ls. 6d., the new rate to come into operation as from the 1st August next. All complication will be avoided by providing a 5d. stamp in respect of air mail, and a 2d. stamp in respect of ordinary mail.

Mr Price - That is 5d. for each half ounce ?

Mr THORBY - Yes, compared with the present charge of ls. 6d. This substantial reduction has been made for various reasons. It will encourage greater use of air-mail services and thus help to provide Australia with one of the most complete and up-to-date air services that we have yet had, or, perhaps, most of us, a few years ago, contemplated would be possible in so short a time.

To those who have been rather impatient over the fact that this agreement has not been completed earlier, I point out that the whole scheme was evolvedonly a couple of years ago when the British authorities invited the cooperation of the Commonwealth in the establishment of an air-mail service in conjunction with other parts of the Empire. Such a proposal inevitably involved lengthy negotiation. It would be difficult to get complete agreement so soon in respect of practically any matter- between the governments of two countries so widely separated as Great Britain and Australia. As the result of prolonged negotiations involving innumerable exchanges by cable and despatches and many conferences we ultimately reached agreement;, but. until the principles of that agreement were arrived at, it would have been futile for this Government to have endeavoured to bring about an agreement between itself and the operating companies, or between the operating companies themselves. We had first to secure agreement between this Government and that of the United Kingdom, then between the two governments and the operating companies, and lastly between the operating companies themselves. The last-mentioned aspect involved the formation of a new company, the securing of the necessary capital for that purpose, the placing of orders for planes of a special type> and the creation of the necessary organization to enable the main service to be carried on efficiently and safely between 'Southampton and Sydney. [Chat has. been accomplished, and T give credit to all who have been associated with it. The technical officers and those connected with the formation of the company and the completion of the whole organization, instead of being subjected to criticism should be complimented on the manner in which they have performed their difficult task so expeditiously. Two years ago white men had hardly set foot on places like Groote Eylandt, whereas to-day there is established, there a highly efficient air hase, with meteorological and wireless equipment and all the necessary stores to meet the requirements of the flying boat service north and south three times a week each way, together with accommodation for the staff. This has been accomplished, not only at Groote Eylandt, but also at Darwin, Karumba - at the mouth of the Roper River, in the Gulf of Carpentaria - and other centres, with, the exception of some of the larger buildings associated with the base at Rose Bay, where it was necessary first to overcome many difficulties in connexion with the securing of the site. We also had to await a complete survey of the route by aviators. Many routes were traversed before the conclusion was reached that the route decided upon' was the most direct and suitable, and that bases fulfilling the requirements were available at different points. In addition to an air survey, a meteorological survey along the route and at the various bases was also necessary. Then, too, a survey had to be made of the water area available. For this purpose, the Moresby was sent into the Gulf of Carpentaria and also visited other portions of the Australian coast. Many months were occupied in connexion with these detailed surveys, in order to furnish the necessary data before any further step could be taken. It would have been futile to attempt to construct a base at Townsville until we were satisfied that satisfactory bases which would meet the requirements of the flying boat service could be built at Groote Eylandt and Karumba.

Very lengthy and difficult negotiations had to bo conducted with the Dutch authorities. They wore difficult because of the requirements of the flying boats differing from those of amphibians or of the flying boats attached to the Dutch organization. We had to make arrangements, through the Dutch authorities, to have the ground organization available throughout Java, in which there will be landing places at Batavia, Koepang, Bima, and several other points. Provision for that organization had to be made in foreign territory, which meant very lengthy negotiations with a foreign government, through the agency of the British Government.

I have mentioned some of the things which have been accomplished, each of which took a considerable time and had to be carried out in sequence, because it was impossible to take certain steps until other steps had previously been taken. That is why approximately two years have been occupied in finalizing the negotiations which have enabled us to bring in a bill embodying the draft agreements drawn up between the Governments of the United. Kingdom and the Commonwealth on the one hand and the Government of the Commonwealth and Qantas Empire Airways on the other hand, designed to give to Australia a fast, efficient flying boat service second to none, and one which will complete an air organization throughout the Commonwealth, effectively linking up Australia with the various parts of the Empire, the shortest space of time being occupied between the posting of a letter in Australia and its delivery in the United Kingdom.

Mr Price - Will landing fees have to be paid in Java.

Mr THORBY - Yes. Under the International Air Convention, provision is made for payment of a landing fee for the use of an aerodrome or a landing area in foreign territory. The agreement embodied in the schedule to this bill provides that where the Qantas Empire Airways pays landing fees in Netherlands East Indies, any amount exceeding 30s. shall be refunded to the company by the Commonwealth Government.

Mr Price - What is the position in respect of a foreign company's machine landing in Australian territory?

Mr THORBY - Under the International Air Convention, a foreign company would have to pay to the Commonwealth the landing fees payable by Commonwealth aeroplanes. That, however, is a matter of adjustment. What I emphasize is that Qantas Empire Airways will not bear the cost; it will be borne by the Commonwealth as part of the expenditure involved in arrangements for the ground organization in connexion with the administration of the air-mail service. The Government will incur no cost at Singapore, which is the junction of the two services, and not a terminal. In one sense two services are being merged into one, Singapore being the dividing point. South of Singapore the service will be under Australian jurisdiction, and north of Singapore under British jurisdiction. No charges will be made for the use of the base at Singapore; that base will be made available by the authorities to Qantas Empire Airways as one of the facilities which will enable the service to be conducted successfully.

Mr Paterson - In other words, the authorities at the British end will pay the charges.

Mr THORBY - Yes. In conclusion I would say that, having completed all the surveys associated with meteorological investigations and the necessary soundings at the bases, the Government had to take up with several of the manufacturing firms the subject of the manu facture of special equipment needed to meet the requirements of the meteorologists and wireless authorities for the installations at various bases, and so give us the wireless results we wish to obtain. These include direction-finding equipment, air beacons, meteorological stations, and stores of the type which will enable the flying boat service to maintain food supplies in a wholesome condition. Considerable expenditure, investigation and delay were involved. We can now say with a good deal of satisfaction that these stations are completely equipped with everything that modern science can devise for the conducting of an air service with the greatest degree of safety, at the same time providing reasonable comfort and all other facilities for the staff stationed at isolated bases. That necessitated a substantial expenditure on the installation of refrigerating apparatus and so forth, because it meant the erection of electrical supply plants at the different bases, each of which has to be a self-contained unit.

Mr Forde -There are beacons along the Queensland coast at all the important towns. Had the Commonwealth Government anything to do with their installation?

Mr THORBY - All the beacons have been established by the Commonwealth Government, although not necessarily in conjunction with this organization; they are part and parcel of other branches of civil aviation.

I should like to add, although it is not actually related to the agreements under this bill, that , the Commonwealth has also conducted negotiations with the British Government and the Government of New Zealand for the purpose of inaugurating a flying boat service between Sydney and Auckland which will eventually co-ordinate with this flying boat service. That will be organized under a separate company and a separate agreement. There will be three operating companies merged into one, with representation on a commission of some sort of the British Government, the Government of New Zealand, and the Commonwealth Government.

Mr Nairn - Is it likely that tenders will be called for the New Zealand service ?

Mr THORBY - Not necessarilyThere are difficulties associated with the calling of tenders for work of this description.

Mr Nairn - Will the overseas flying boats continue the journey to New Zealand ?

Mr THORBY - No. A flying boat of a new and larger type, with a longer range, will be used, because the flying boat to be used from Singapore or Southampton to Sydney will not have a range which would enable it to carry the necessary fuel, plus a pay load, from Sydney to Auckland, which is a rather long hop to be negotiated in one operation.

Mr Curtin - Longer than the last hop to Darwin?

Mr THORBY - Oh, yes. Karumba and Groote Eylandt come in between Townsville and Darwin.

Mr Curtin - Would it not be shorter to go from Hobart to New Zealand?

Mr THORBY - I do not think so. The route suggested by the New Zealand authorities is from Auckland to Sydney. I understand that Auckland has very suitable water facilities for flying boats.

The point I was about to emphasize was that, in addition, as late as the 30th May last, the Commonwealth completed the organization and the signing of an agreement with another company for the New Guinea air service which is now operating from Sydney along the Queenslaud coast, giving us a most efficient service linking New Guinea, with Queensland and New South Wales in particular. That is a further indication of the tremendous development which has taken place in connexion with civil aviation during the last couple of years. I say advisedly to honorable members that the Government has been confronted with the difficulty of keeping pace with the tremendous development of aviation in different parts of Australia within the last couple of years. It is of no use to be critical of the fact that it has not been possible to keep up with the demands of outlying centres and many small country places in which aero clubs have been formed. Besides co-operating with overseas companies the Government has been faced with the provision of technical apparatus in respect of air beacons and the meteorological equipment necessary, to safeguard men in the air, so as to give to Australia a complete chain of highly technical organizations along the main air routes, linking up the capital cities. That chain has been almost completed, and the Government is very proud of the fact that within the next few months Lorenz beacons and other beacons, together with the wireless equipment, will have been installed along the whole of the main air routes, thus providing in respect of air navigation the same security and safety as have been provided for generations by lighthouses in respect of navigation on the high seas.

Mr Forde - What will be the passenger capacity of the flying boats?

Mr THORBY - The Short " C " type of flying boat will have a capacity of twenty passengers, or a little over 3 tons of mails, and the necessary food and other supplies to meet the requirements of tin* passengers. They are four-engined, and are equipped with all the most modern instruments and safeguards necessary to meet the demands of aviation.

I may add that before any plane can operate on any of these services it will have to be licensed by the Commonwealth authorities and will have to comply with our regulations and other requirements. 1 assure honorable members that by the agreements embodied in the schedule to the bill, which have been most carefully examined and have been revised over and over again in order, first,- to meet the requirements of the respective governments, and secondly, to fit in with the necessities of the operating companies, every precaution will be taken to ensure that the service is established on a sound business basis as well as on a safe basis for those who we hope will use it.

Mr Jolly - The Commonwealth will not be responsible in respect of any accident?

Mr THORBY - No; but everything, possible has been done to prevent accidents.

Mr Jolly - The Commonwealth will not have to pay workmen's compensation.

Mr THORBY - The company, and not the Commonwealth, will be the employer. These matters have been provided for, so that- the employees will still be protected under workmen's compensation legislation. That, however, is not the responsibility of the Commonwealth. Similar conditions apply to the operations of the service generally.

Mr JOHN LAWSON (MACQUARIE, NEW SOUTH WALES) - Will the planes pick up at Singapore mails from the East?

Mr THORBY - The agreement covers the carriage of mails between the points I have mentioned, at the rates specified, and any other mail matter will be carried and charged for at the rates imposed in the country of despatch. The agreement can not, of course, control the conditions under which air mails are handled in foreign countries; that is provided for in international agreements, adopted at the Postal Convention, governing foreign mail matter, and those agreements have been respected under this agreement.

Mr Price - In the event of the service expanding, is there any provision to enable planes used in the service being manufactured in Australia?

Mr THORBY - I explained earlier that the Commonwealth Government, by agreemen t with the companies, may enter into negotiations for the manufacture, repair or replacement of aircraft in Australia, and if the doing of the work here should involve the companies in increased cost as compared with the cost of manufacture elsewhere, the Government is to make up the difference in actual cost. The absence of such an undertaking would have been a bar to manufacture, repair and replacement being undertaken in. Australia. The principle is similar to that adopted in paying bounties on the manufacture in the Commonwealth of goods which Australia actually needs.

Mr Nock - Is that provision optional ?

Mr THORBY - Yes; it will depend upon agreement between the Commonwealth Government and the companies concerned.

Mr Anthony - What additional cost is involved under the proposed new scheme ?

Mr THORBY - The maximum cost of the mail subsidy is £102,000 sterling, plus a maximum amount of £30,000 which the Commonwealth can be called to pay for maintenance, running costs and ground organization, making a total maximum cost of £132,000 in any one year.

Mr Anthony - That does not take into consideration any offset in the matter of revenue derived from the carriage of mails?

Mr THORBY - No; I have given merely the expenditure. It is difficult, if not almost impossible, to estimate accurately, the quantity of mail matter that will be carried. Two factors have to be considered : Under the new service, the travelling time betweenSouthampton and Sydney will be reduced, and the postage rate will also be reduced from1s. 6d. to 5d. a half-ounce. These two factors will undoubtedly be responsible for a very substantial increase of the quantity of mail matter carried by air.

Mr Paterson - Ninety per cent. of the first-class mail matter will be carried by air.

Mr THORBY - The revenue from the 3d.surcharge will amountto from £50,000 to £80,000 a year, but it is difficult to obtain an accurate estimate until wo have some indication of the volume of mail matter that will be carried. In time, the public will fully appreciate the cheaper rate of postage, and the rapidity with which replies can be received to overseas communications. If, as the honorable member for Gippsland (Mr. Paterson) said, 90 per cent. of the first-class mail matter will be carried by air, the revenue derived from the surcharge will be greater than is at present anticipated and the offset against the probable expenditure will be correspondingly larger.

Mr Hawker - Will the operating companies receive a refund of customs duty on petrol and oil consumed in these services ?

Mr THORBY - I have already dealt with that.

Mr Curtin - I thought that the Minister referred only to a refund of sales tax.

Mr THORBY - The companies will be entitled to a refund of the customs duties on the items specified in the schedule, such as engine parts, wireless fittings, replacements of instruments and special equipment necessary in the handling of aircraft. The companies will also be entitled to a refund of the customs duties collected in Australia on petrol and oil used between Darwin and Sydney. Had that concession not been granted the subsidy would have been greater.

Mr Nock - What subsidy is paid under the present system?

Mr THORBY - I cannot say exactly at the moment.

Mr Forde - What authority will determine the relative costs of manufacture in Australia and overseas?

Mr THORBY - There will be an over-riding commission, acting in an advisory capacity, and representing the governments, to deal withmatters referred to it by the operating companies or by any one of the governments which is a party to this agreement. Questions which arise between the Commonwealth Government and the companies concerned will be decided by agreement. There is also a provision that if a company is dissatisfied in respect of any particular matter, it can refer such matter to the British Government or to the Commonwealth Government for consideration; but neither government can alter any vital provisions of the agreement without the concurrence of the other government. Every precaution has been taken to prevent one government from doing anything to the detriment of the organization. It really becomes an agreement by consent between the British Government, the CommonwealthGovernment and the two operating companies. In view of the fact that there are at present four interests involved, and that when an extension of the service is made there will be other interests, it would be difficult to vary the agreement without discussing such a variation with all the interests concerned.

Mr Forde - We must accept it enbloc.

Mr THORBY - It is very difficult to alter the agreement, and if any vital alteration were required, it would mean holding up the whole service. I am not suggesting that this Parliament is not entitled to amend or reject the proposal, but the agreement now submitted to Parliament has been carefully prepared and examined from every angle in the light of advice received from experts in Australia and overseas associated with the respective governments and the companies concerned. I cannot see how any alteration could be made to improve the conditions already provided in the agreement.

Debate (on motion by Mr. Forde) adjourned.

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