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Wednesday, 31 October 1956

Mr WARD (East Sydney) .- The Opposition does not propose to vote against this measure, but we do intend to be very critical of it. The measure provides for an increase in the stevedoring industry charge from 7d. to1s. 7d., and, according to the Minister for Labour and National Service (Mr. Harold Holt), this is necessary in order to meet certain variations of the award, which will benefit waterside workers. We have no objection to that. We approve any gain in working conditions, but we would have handled this situation in an entirely different way. I think it will now be apparent to any honorable member who has examined the report of the recent committee of inquiry into the stevedoring industry that the shipowners are well able to afford an improvement in working conditions. There is no need to increase the stevedoring rate and so, in turn, increase freights and also the cost of living.

According to the Minister, the proposed charges have been made necessary by an increase in attendance money from 16s. to 24s. a day, by sick leave privileges, by payment for statutory holidays, and by improved amenities on the waterfront. It is rather interesting to note that, although the Minister is talking about payment for statutory holidays, the waterside workers have not been paid - if they ever will be - for the last Six Hours Day holiday. We contest his assertion that the additional expenditure must be met by increasing the stevedoring rate.

Alterations in the award have, in many respects, effected great savings for the shipowners and the stevedoring companies. It has not been a matter of merely bestowing benefits upon the waterside workers. First, the number of men working below in the hold has been reduced from eight to six in each gang. Whereas, previously, four men were working in what are called the " alley ways ", now there are only two. Thus, the cost of employing four men has been saved in every -gang working a ship. As a result, the remaining members of the gang have to work harder, and take greater risks. The four truckers and stackers, who previously came from what was known as the " veterans' list " now come from the gang itself. If eight gangs are working a ship, there is a total saving of 32 men. Recent alterations to working conditions have effected such savings for the shipowners that there is no need to increase the stevedoring rate.

Relief men are no longer provided. No one stands by in case an accident occurs. If one of the gang is injured and has to go to hospital for treatment, the remaining members must share the additional work and the shipowner bears no added expense. At one time sling loads were governed by safety factors, but to-day the stevedore decides what the load shall be. Under the old agreement cartons were loaded in the sling to a height of 3 feet 9 in., but to-day the stevedore can decide the height. All these things have effected great savings for the shipowners.

Let us turn now to the radio pick-up service. No doubt the Minister spoke in ignorance, and from material prepared for him by a public servant, when he said that the considerable cost of the radio pick-up has to be met from increased freights. The radio pick-up has in fact meant a saving to the shipowners. Previously men were picked up from a central point or depot and then proceeded to where the ship was berthed. The time allowed as set out in a booklet which I have before me, varied from five or six minutes to an hour. During that period no work was done for the company, but to-day the radio pick-up system ensures that the waterside worker reports to the ship's side, and his pay commences from that moment. The removal of the dead time occupied in moving from the pick-up place to the ship's side is a direct saving to the shipowner. lt is preposterous to suggest that the shipowners are justified in increasing freight rates, when they have gained enormously from changes in the award. The Minister for Labour and National Service does not. of course, care. He said -

While the Government regrets the need fo? these increases it is not without knowledge of the difficulties confronting the Australian coastal shipping lines, for it knows very well the financial position of its own line of ships.

Normally that might be accepted as some sort of an argument, but every honorable member knows that the cost of operating Commonwealth ships is greatly inflated because of departmental sabotage, and sabotage on the part of those who control stevedoring operations. It suits the private owners that the charges of the Commonwealth shipping line should be high. The Minister, referring to the report of the committee of inquiry; said further -

It bears out the difficulties which the interstate shipping lines have faced in recent years.

That is exactly what the report did not set out. It is well known that the investigating committee could not carry out the directions of this Parliament because the private shipowners refused to make their financial statements and balance-sheets available foi examination. The committee was not in a postion to state that increased freights were justifiable. On page 9 of the report we read the following: -

For the most part shipping companies engaged in the interstate trade eventually complied substantially with the requisition.

They did not comply with the requisition in full. I invite honorable members to consider what the report said. It proceeded -

The one material exception-

That is, to complying with the requisition - being the refusal of members of the Australasian Steamship Owners' Federation and the Independent Steamship Owners' Association to produce to the committee detailed trading accounts, profit and loss accounts and balance-sheets.

That was the one material exception, yet the Minister and the committee said that the companies complied substantially with the requisition that was forwarded to them. As a matter of fact, we know full well that freight rates, as even the committee was forced to admit, increased by 160 per cent, between December, 1947 and June, 1955, but operating costs of the ships increased in the same period, according to the committee's report, by only 100 per cent. Then the committee went on to say, as did the Minister in his speech, that this increase was necessary to put the steamship owners in a position where they could operate profitably. The increases in freights have not been uniform. It is difficult to find any justification for them. Freights in the coal trade between Newcastle and Adelaide increased by 36 per cent, in that period, but the general cargo rate between Adelaide and Fremantle increased by 235 per cent. The committee and the Minister would find it very difficult to justify those variations in the rates.

Let us see how freight rates were determined and whether any reasonable method was adopted. We all know that there exists a freight committee on which are represented all the private shipping interests and the Commonwealth Department of Shipping and Transport. This is the procedure which has followed: - Each representative has before him the overall financial results of the trading of the interests which he represents, together with estimates of the total amount necessary to cover any known or anticipated increases in costs. The actual results and estimates of each interest are not tabled or disclosed to the representatives of the other interests, so while they meet in conference and have before them all of the essential material which would permit thiem to determine a reasonable freight rate, they do not show it to each other. Then, on this basis, they carry out negotiations, and a list of increases or decreases in respect of each particular item in the trade is finally agreed by negotiation. That information is contained in the committee's report. How can a committee determine a matter by negotiation if each of the representatives at the conference fails to reveal to the others the material which he has in regard to the operations of the shipping interests he represents?

In the case of the Australian Shipping Board, which operates the Commonwealth line of steamers and which takes part in meetings of the freight committee, an increase in freight rate has to be approved by the Commonwealth Minister for Shipping and Transport. The private shipping companies always, according to the report, await the Minister's decision. Mr. J. B. Wilson, who gave evidence before the committee, said that as far as he knew the Minister had never failed to approve an increase in rates of which the freight committee was unanimously in favour. Of course, the freight committee, being overwhelmingly representative of private shipping interests, and knowing it will receive the approval of an anti-Labour Commonwealth Minister, is always unanimous.

Now let me turn to the sabotage of the Commonwealth ships, because that is an important factor in the maintenance .of high freight rates along the Australian coast. As everybody is aware, the Australian Shipping Board is not permitted to have its own stevedoring organization; instead it is obliged, under the present arrangement of operating the Commonwealth ships, to use the services of the stevedoring companies which themselves are subsidiaries of the private shipping companies. As a result, the Commonwealth ships are at a distinct disadvantage. Let me give just one or two illustrations of how Commonwealth ships are sabotaged as a result of the board not having its own stevedoring organization. I was advised recently by watersiders of an incident which occurred in the port of Sydney, and which I was assured was not of an isolated character, in reference to the Commonwealth ship " Yanderra ". Work on loading the ship had been almost completed as the week-end approached, and the waterside workers were wondering what gangs were to be retained to work on Saturday morning to complete the loading of the ship, which they realized could be done al the latest by midday with two gangs operating. But all of the eight gangs, I understand, which were working the ship, were brought back on Saturday morning to do the work that could have been completed by midday by two gangs, and the waterside workers themselves told me that they were just idling their time, just cutting out time, because there was not sufficient work to keep all the gangs occupied. The stevedoring company did not worry because it works on a system of remuneration of cost plus 10 per cent., and the higher the cost the higher its profit. The company therefore did not worry about the waterside workers who were idling their time, not because they wanted to idle it; they preferred to work but there was no work for them. But here is the most amazing part of it. Not only were these men required to report for work when there was not sufficient work available, but also somebody directed that a full complement of gangs report on Saturday night, and when the men reported on Saturday night "Yanderra" had already sailed; it was not in port.

That is the way in which the Commonwealth ships are sabotaged. That labour had to be paid for because the men had been directed to report for work. This is only one of many instances. Waterside workers say that there are innumerable instances where Commonwealth ships are berthed at a wharf, either discharging or loading, and when a private ship arrives, there being insufficient wharfage space for both ships, the Commonwealth ship is pushed out into the stream and has to wait until the private ship either discharges or loads. Recently, in the port of Cairns, in north Queensland, when a dispute existed in the sugar industry and there was a shortage of supplies, the private companies deliberately organized the port in such a way that they were given a full complement of sugar to load while the Commonwealth ships were permitted to depart either empty or with incomplete cargoes. This is how it was done: The Commonwealth ships and the private ships were working at the same time, and, according to reports, the waterside workers were loading the vessels at the same rate; that is, the rate of loading was identical in the case of each vessel. But the men loading the Commonwealth ship were discharged because it was said that they were giving insufficient effort. That was the charge levelled against them, and the Commonwealth ship ceased to load because the men were discharged. It was alleged that they were not loading the cargo rapidly enough, although they were loading at the same rate as other men were loading the private ship. The gangs on the private ship were allowed to continue. This was the method used by the stevedoring company to ensure that whatever sugar cargo was available for loading would go into private ships, regardless of whether or not there was sufficient to complete the cargoes of Commonwealth vessels. These are illustrations of how the Commonwealth steamship line is sabotaged.

Let me turn to the profits of the stevedoring companies, because they are quite considerable. According to the committee's report, allowing for rebates that are made to the private shipping companies that own the stevedoring companies - the committee agrees that these rebates ought to be regarded as profits - the profits of the stevedoring companies increased by 433 per cent, between 1947-48 and 1953-54, while the wages of waterside workers, about which honorable gentlemen opposite are always complaining, increased by only 114 per cent, in the same period. Seventy per cent, of the profits of the stevedoring companies were retained in the shipping industry. As a percentage of wages paid, net profits, plus rebates, increased from 4.78 per cent, in 1947-48 to 10.49 per cent, in 1953-54. The Minister admits that these stevedoring companies did not assist the investigation that was instituted by decision of this Parliament. They refused to give information on the voyage costs of particular vessels and the costs at particular ports. If they had given that information, it would have been shown clearly that the Commonwealth line of steamers was being deliberately sabotaged by the private companies.

Let us consider the question of traffic, because the traffic around the Australian coast is also organized. The individual companies do not decide where they will sail their ships or what cargoes they will pick up or deliver. That is decided for them by a traffic committee on which the private shipowners again have a majority and of which they have the overwhelming control. The unprofitable cargoes are left for the Commonwealth ships. In addition, the Commonwealth ships are, on occasions, given cargoes that are unsuitable for the vessels operated by the Commonwealth line of steamers. As a result, because they have been obliged to take cargoes for which i hey were not built and for which they

Are unsuitable, their repair costs have been enormously increased.

I want to refer now to charter ships. Honorable members will be aware that a great deal of the traffic around the Australian coast is carried by charter ships. In the post-war period, it was unprofitable to operate ships on charter because of the world-wide shortage of ships. The rate charged for the chartering of ships made it a very unprofitable business. Naturally, when it was unprofitable, the private shipowners did not want this business and they left it for the Commonwealth ships. During the period when the Commonwealth shipping line was exclusively operating charter ships, between 1947-48 and L950-51, it lost an amount of £2,600,000. Then the situation changed and the operation of charter ships became profitable. Consequently, we find that now it has become a profitable business, instead of being left as a monopoly for the Commonwealth ships, the work is shared with the private shipping lines. The Commonwealth shipping line has to be satisfied with a very small proportion of this most profitable business.

I shall mention one other matter, that is, the basis for determining the profitability or otherwise of the Commonwealth shipping line. The Government determines this question on the basis that it permits a payment to the Commonwealth Treasury of 4 per cent, of the depreciated value of each vessel in addition to an amount covering depreciation. Although a considerable amount for depreciation is allowed in the trading accounts, an additional 4 per cent, is paid by the Treasury on the money advanced to purchase or construct the ships. Even so, the private shipping lines, according to the Minister, felt that this was not a satisfactory way of determining the profitable operation of their vessels, and refused to accept it.

I shall now say a word about overseas freights and the operation of the private shipping companies. These companies refused to divulge any information to the committee regarding their earnings and profits. They supplied some information of a confidential nature, but made it a condition that, when the committee dealt with this confidential material, the only people to be present were members of the com mittee, counsel, or officers assisting the committee, such as shorthand writers and so on. The union representatives, who were most vitally concerned with this question, because it affects their employment, were excluded. They were not permitted to cross-examine witnesses and, so that there could be no possible chance of any leakage of this information, when witnesses were giving evidence, they referred to the companies by cipher and did not name them It is obvious, therefore, that this so-called investigation into profits was rigged. The shipowners did not call any witnesses. If they had, they would, naturally, have been subjected to some interrogation on the operations of the shipping companies.

I have often heard supporters of the Government, and the Minister, say how much it cost the Australian export industries for freight. The figure was said to be £100,000,000. That is evidently an instance of " just think of a number ". When I asked the Minister a question upon notice about the amount of money paid on out exports for freight, he could not tell me He said that the information was not available. That means that the figure which has been mentioned is purely a guess.

What happens in regard to the fixing of our overseas freight rates? The shipowners have what is called an Australia-United Kingdom Continental Conference. It is always called a conference when shipowners engaged in a particular trade meet to determine such things as freight rates. In turn, a conference is held with the Australian Overseas Transport Association. The Minister said, "Whether the system results in freight rates which are reasonable to both shippers and shipowners depends, of course, on the relative bargaining strength of the parties to the contracts ". It is not a question of fixing a reasonable rate; the rate is determined on the basis of the bargaining strength of the parties to the contracts.

Obviously, in a discussion on shipping freights, the people who own and operate the ships hold all the cards. They are the people who hold the bargaining strength in these conferences. As a result, we find that, although the shipowners meet the shippers in conference, the negotiations are not based on an examination of what it actually costs to operate a ship, but on an examination of increased costs since 1951

They accept 1951 as the base year, but they cannot be examined or interrogated on whether the rates were reasonable in 1951. The starting point is the base year, and the only argument is what additional costs were incurred since that date. I think it will be agreed that that is a very unsatisfactory situation for Australian export industries. The shippers, of course, have no means of ascertaining whether or not the profits made by the shipowners, in 1951, were reasonable. The wool traffic is shared. The quotas are fixed for each shipping company, and each shipping company obtains only its proportion. The companies share the spoils.

Because of the refusal of the overseas shipping companies to furnish information, the committee was obliged to set up what it called an examination of the voyage costs of a specimen vessel. It was an imaginary vessel and, strangely enough, in the report it was called " Fairplay ". The committee began to analyse the costs of operating the phantom ship over a period of twelve months. An interesting comparison can be made on the working costs of the specimen ship " Fairplay ". The South AfricanUnited Kingdom-Continental Trade Agreement, which was entered into in August, 1955, provided that freight rates' should be determined on the basis of a profit rate equal to 5 per cent, on the capital investment as represented by the replacement value of the vessel. If the same formula were accepted for the alleged costs of the phantom vessel

Fairplay ", the profit earned by the specimen vessel, according to the committee's figures, would be equal to 21.9 per cent. The shippers in South Africa have, evidently, a better representation at these conferences, which enables them to obtain a much more favorable agreement than the committee believed that the shippers in this country should receive. It is interesting to note that the committee went on to say -

The earnings of the " Fairplay " were based on freight rates ruling prior to the 71 per cent, increase which came into effect in the latter half of 1955.

So, the 2 1 .9 per cent, increase has not taken into account the last increase of freight rates of 71 per cent. Why is it that the overseas shipowners are able to exercise this great control and are able to exploit the Australian community, particularly the exporting industries? It is because they operate a great monopoly. They may be represented as separate, privately owned shipping companies, but for the purpose of freight rates, and for the purpose of exploiting communities and dividing freight between them, in reality they represent a monopoly. That is recognized by the committee, because it refers to them as a monopoly. How can we compete against a monopoly? We could deal with the monopoly by taking complete control of it If it were operating in a particular country that could be done, but because of the overseas registrations of shipping companies, that would be extremely difficult. On the other hand, we could do what the Government has refused to do, and develop and expand our Commonwealth shipping line so that it could compete with the privately owned shipping companies. That is the only effiective way to bring down fright rates.

Honorable members have heard Government supporters speaking of the great success of the Minister for Trade (Mr. McEwen) last year, when the private shipping companies wanted to increase freights, by 10 per cent. Subsequently, it was announced in this House that the Minister, as a result of negotiations, had had a great victory and had been able to get the private shipping companies to reduce the proposed increase to 7i per cent. I am able to tell the Parliament that the shipowners had wanted an increase of only 7i per cent, in the first place. This was known to the Government at the time, and the shipping companies deliberately asked for 10 per cent, so that the Government would be able to save face by apparently securing a reduction to 7i per cent. It is a fact that an increase of 7i per cent, was all that the private shipowners required.

The Minister tried to tell the Parliamen that the shipping industry was in a parlous condition and that, therefore, we could not expect it to bear these additional charges. I naturally assumed that we would hear that interstate shipping had declined, because if the shipping industry was in a parlous condition one might reasonably expect it to be declining. But we find that the interstate shippers' share of the available traffic increased between 1946-47 and 1954-55, from 17,700,000 tons to 23,500,000 tons. That does not indicate that they were in a languishing condition. Therefore, it must be obvious to any reasonable member of the Australian community that this Government represents the great monopolies of the country and does not propose to do anything to curb them. As a matter of fact, it has reduced the opportunities of the Commonwealth ships to compete with the privately owned shipping lines, because it is not so very long since this Parliament passed legislation to limit the tonnage of Commonwealth shipping construction. It was provided that that limit was not to be exceeded, no matter how the traffic increased. The increased traffic was to be left exclusively to the private shipping companies. So far, the Government has not been able to eliminate Commonwealth ships completely from the Australian coast, but it is so shackling and crippling the Commonwealth shipping line that, in the end, it will destroy it as an active competitive medium against the private shipping companies and as a means of keeping down freight rates.

The Labour Opposition is not satisfied with the investigation that has been conducted. It has not been an investigation of profits, as we were promised it would-be. It has not been a proper examination of working costs of the vessels, and there can be no doubt in the world that these people are doing what the committee has said they are doing. The committee stated, referring to the overseas trade -

The ultimate determining factor in the setting of freight rates in this trade is " what the traffic will bear", having regard to such alternatives as are available.

Therefore, whatever the si shipping companies can extract from the Australian exporting industries and from the Australian community will be extracted. What alternatives are available? All the private shipping companies are in this agreement, this swindle of the Australian community, and the only effective alternative is to have a Commonwealth line of steamers operating and competing effectively with private enterprise, as it could under proper management.

That was proved possible under the management of a gentleman whom the late Mr. Chifley brought from England to manage the Commonwealth ships. He did that so effectively that despite all the handicaps imposed by an anti-Labour government and the private shipping lines, he was still able to make the Commonwealth ships a very successful undertaking which earned handsome profits. But what did the antiLabour government do? When that man's contract expired, although he was prepared to accept a renewal of the contract on condition that he was permitted to run the ships as he wanted to run them, the Government would not accept that condition and refused to renew the contract. It secured the services of a man who would carry out its wishes, the wishes of a government that represents great private monopolies in this country.

I do not know how long it will be - I hope that it will not be very long - before Labour again takes control of the national affairs. Should the figures in the Barker by-election be reflected in every electorate at a general election throughout Australia, it would mean the return of a Labour government. It is evident from the byelection figures that this Government, which represents the big private monopolies, has lost the confidence of the people. I know that it is useless to appeal to the Government to take action against the masters who direct it from outside, but it will not be long before Labour again takes control. When that happens, we shall deal with this shipping tie-up bv the private interests. We shall give to the exporting industries ships that will operate and carry their products at a reasonable rate and, by that means, bestow great benefits on the Australian nation.

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