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Friday, 26 May 1939

Mr GREEN (Kalgoorlie) .- It has been suggested that the Accountancy Advisory Panel will be able to regulate prices, because these experts will investigate costs very carefully. I propose to mention two instances, both of which arose during the brief period when I was Minister for Defence, in order to show that such a job is beyond even the best of accountants. At that time the department was contemplating the renewal of the air-mail contract from Perth to Wyndham, which was then being operated by a Western Australian company. The usual procedure was to give preference to the company operating a particular service, provided it was giving satisfaction and its contract was not considered to he excessive. The Secretary of the Defence Department and I considered that the cost in this case was excessive, so we asked the company to submit a fresh tender. Thereupon, the manager of the company conferred with the investigating officers of the department and proved to the satisfaction- of some of those officers that the price being paid was not excessive. However, as I was determined that the price should be reduced, I was reluctantly compelled, in accordance with my duty to the country, to call for fresh tenders. As the result the contract was given to the MacRobertson Miller Company, which now operates that service. The point I emphasize is that although the departmental costs accountants thoroughly investigated tho figures of the company which previously operated this service, and came to the conclusion that its price was not excessive, the price tendered by the MacRobertson Miller Company was half of that amount. We might very well be suspicious, therefore, of the ability of private enterprise to build up balancesheets which will defy the best accountants to prove that costs shown therein are excessive.

A similar case arose at the time I mention in connexion with the supply of oil and petrol to the Defence Department. In order to check up on the costs of the company which had this contract I decided to call for fresh tenders. The Shell Company quoted a price, and, although the tender embraced .hundreds of items covering different kinds of oil required by the Air Force, that submitted by. the Shell Company was identical with the tender submitted by the company seeking a renewal of the contract. It was impossible to separate the two tenders in any one particular, despite the fact, as honorable members know, that prices charged by the companies for distribution of petrol and oil in this country are excessive. Consequently, I have little faith in the competitive system, in which the Minister of Supply and Development (Mr. Casey) places his trust, to keep prices down to a reasonable level. At any rate, that system did not prevent the companies which I have mentioned from putting in prices which did not differ by a fraction of a penny. We got out of our difficulty in that particular case by dividing the contract between the two robbers.

Progress reported.

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