Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Friday, 11 November 1927

Senator REID (QUEENSLAND) - I do not say that. In my view any advantages that it has conferred upon the people of Australia have been outweighed by the extent of the financial loss which has been incurred. During the last three years it has cost the taxpayers of Australia about £600,000 a year. We cannot continue with it at that rate.

Senator Lynch -It is a pity that we were not of that opinion a few years ago. Wo might have saved the country a considerable expenditure.

Senator REID - That isso, but we had not then information which is now in our possession. All honorable senators are entitled to change their opinions if they feel that they have good reason to do so. At all events, I am not cast in a concrete mould. I am not concerned so much about consistency of political beliefs as I am about the need to bring common sense to bear when considering questions of public importance. I feel quite justified now in voting for the disposal of the Line.

Senator Lynch - We admit that the position is bad, but we believe it will be worse when the Government ships are disposed of.

Senator REID - The honorable senator and others who think with him on this subject have dealt only in generalities. They have not brought forward conclusive arguments to show that the Conference Linus would bleed Australia in a matter of freights when they had the field to themselves. We have had a particularly unfortunate experience in connexion with our shipping and ship-building activities. When tenders were invited for the construction of the two cruisers authorized by Parliament a year or two ago, it was hoped that the difference between the Australian and British prices would not be so great as to prevent the Government from placing the contract in Australia. If the artisans employed at Cockatoo Island had come together and had given" evidence of a sincere desire to co-operate with the Commonwealth Shipping Board, it would have been possible to build the cruisers in this country. The Senate, I believe, was willing to indorse the principle of Australian preference to the extent of 60 per cent over British prices. Had that contract been let in Australia it would have been of immense advantage to the ship-building industry in this country. We were hoping, also, that as the result of the building up of a mercantile marine, we should be able to find employment for naval reservists. Under present conditions, it is difficult to persuade Australians to adopt a seafearing life. The majority of the employees on the vessels of the Line are domiciled in Great Britain. This is a regrettable state of affairs.

Senator Payne - It was an astonishing revelation to most people.

Senator REID - An Australian mercantile marine would be a most valuable aid in the defence of. Australia. It is significant that other countries have had an experience similar to that of Australia. No State-owned shipping Line in the world has been operated successfully. Even in the United States of America, where efficiency and orgnization are worshipped as a fetish, the Government has lost an immense sum of money and it is unable, owing to the slump in shipping values, to dispose of its surplus tonnage. It was reported some time ago that Henry Ford purchased

Avery large number of Governmentowned . vessels for which freight could not be found, and after taking from them material which was of value to him, he threw them on the scrap heap. It is probable, also, that the Commonwealth Government will experience some difficulty in disposing of its vessels because shipping is in a state of transition all over the world. The Orient Company now has on the Australian run several magnificent steamers of 20,000 tons. How can we expect the limited number of comparatively small passenger liners belonging to the Government fleet to compete on anything like equal terms with those vessels? The purchase of several additional modern ships would involve the Commonwealth Shipping Board in the expenditure of millions.. I do not think that any shipping company ever commenced under such favourable conditions as the board did when these vessels were transferred to it at prices so much below their capital cost.

Senator Thompson - The dice were loaded in its favour.

Senator REID - Yes, the ships were written down to such an extent that they could almost be regarded as .a gift. If the board were to increase its fleet, in order to efficiently carry on the trade, it would have to purchase several oil burners, and if it cannot show a profit in the present favorable circumstances, how could it possibly show a satisfactory return on new ships the value of which would not be written down for some years.

Senator Lynch - The honorable senator is thinking only of the profits.

Senator REID - If the Australian taxpayers have to contribute millions of pounds towards the cost of new ships, those ships should show some profit.

Senator Lynch - The sum of £2,000,000 could be saved in other directions which could be used to meet the loss which these vessels are at present making.

Senator REID - I shall deal with that point later. Prior to the war there was a big slump in the shipping business just as there is to-day, and freights ruling between Australia and Great Britain were reasonable. During the war period, however, enormous profits were made by the shipping companies, and after the termination of hostilities, those engaged in the shipping business seemed to think that the same rate of profits should be maintained. A paragraph in the report of the Public Accounts Committee is to the effect that the Line has been instrumental in keeping down freights; but although shipping is now normal the freights between Australia and Great Britain are not quite so low as those on other routes, notwithstanding the Commonwealth Line. It is, therefore, unreasonable to say that it has been tlie means of reducing freights.

Senator Lynch - Does the honorable senator not think that the presence of a shipping combine is a menace to Australian shippers?

Senator REID - I shall deal with that point later.

Senator Lynch - The report of the Public Account Committee is full of it.

Senator REID - I have read the report.

Senator Lynch - Then why does not the honorable senator admit it.

Senator REID - I shall answer the honorable senator in my own way. I have studied the interim report and the majority and the minority reports, and have still my own opinion concerning the way Australian shippers will be served by the vessels of the Conference Lines. The keen competition between British and the French, German and Italian shipping companies will always ensure fair rates being charged. , Even if the Line is disposed of, I do not think there is any likelihood of primary producers getting into the grip of a shipping monopoly as Senator Lynch suggests.

Senator Lynch - The honorable senator should read carefully page 19 of the committee's report.

Senator REID - I have done so.

Senator Lynch - Has the honorable senator noticed the words " either guard against such victimization " and so on ?

Senator REID - I know all that is in the report; but that document, is not necessarily correct in every particular.

Senator THOMAS (NEW SOUTH WALES) - It is piffle.

Senator REID - It is not. I do not think it likely that any British shipping company will rush to acquire the vessels of the Australian Commonwealth Shipping Line under the conditions which the Government seek to impose.

Senator Lynch - Has the honorable senator read the evidence?

Senator REID - It is not available. The evidence is not of great importance.

Senator Needham - Then why was the inquiry held?

Senator REID - To obtain information. The evidence of an individual witness is not of much value. The committee had to obtain opinions from different authorities, and then, come to a decision on all the evidence tendered. The Orient Company could not profitably conduct its service to Australia without the mail subsidy. The Commonwealth Government is in as good a position to make a bargain with that company as is the British Government with the Peninsula and Oriental Company. The subsidy paid by the Government to the Orient Company is largely for the refrigerated space which is used almost exclusively by the exporters of primary products. As the number of producers increase and our exports become larger, the shipping companies will have to compete with each other for the freight that is offering. The boards and pools which have been established will doubtless negotiate in the best interests of the producers.

Senator Lynch - Would the honorable senator like to be condemned by a jury which had no evidence before it?

Senator REID - I should like to ask Senator Lynch-

The PRESIDENT (Senator the Hon. Sir John Newlands). - The honorable senator must address his remarks to the chair.

Senator REID - For the information of the Senate I quote the following from Brassey's Naval and Shipping Annual for 1927:-

The reductions in the Australian trade were followed a month later by a lowering of the rates on produce from New Zealand. In the past rather higher rates had been quoted from New Zealand and from Australia, owing to, among other factors, the large number of calls which the liners make on the coast of New Zealand to collect cargo. In August, 1026, the New Zealand rates were brought practically to parity with those from Aus. tralia, the reductions amounting to 7J per cent, on the previous' rates for the first three years and to 12} per cent, for the fourth year.

This is the portion of the article I should like Senator Lynch to follow : -

An important feature of the New Zealand trade is that the control of meat, dairy produce and fruit, is now in the hands of boards which makes contracts for the whole of the shipment. The new rates are about 50 per cent, above the pre-war level, while working costs are declared to be still fully 100 per cent, above the pre-war standard. Shipping managers in both the Australian and New Zealand trades have hope that there might be some compensation for the lower rates in larger shipments, but that there can be very little profit, if any, in such terms is now generally agreed by managers, including those who have experience of the cost of carrying produce in other routes. It is to be feared that the. granting of the minimum rates of freight must cause owners to look with extreme care on working expenses. Their natural inclination would be towards even better services than have been provided in the past, but with sailings maintained on the basis of at best a very narrow margin of earnings over outgoing the cost of construction and maintenance will have to be considered very closely.

That is a complete answer to Senator Lynch.

Senator THOMAS (NEW SOUTH WALES) - Are the freights from New Zealand to Great Britain cheaper than the freights from Australia to Great Britain?

Senator REID - On some lines they are; but, generally speaking, they are about the same. It would be better to spend an amount equivalent to the loss which the board is now incurring in increasing the subsidies. Senator Thomas said that it was unfair that a rebate of 10 per cent, should be allowed to consignees who shipped all their goods by the one line. There is nothing unusual in that; it is only a business transaction. Some firms allow their customers 10 per cent, if their accounts are paid within a month, and perhaps 2£ per cent, if paid within three months.

Shipping companies are out to protect their own interests and it pays them to give a discount of 10 per cent, to firms that will ship goods by their vessels only. It enables them to get full cargoes. I see no need to make a fuss about what is an ordinary business arrangement. A great deal has been said during this debate about the losses sustained by government railways and it has been contended that if it pays a country to build railways and run them at a loss, it should also pay the country to run a shipping line at a loss. When we started to develop Australia we could not induceany one to sink capital in building developmental railways. As a consequence, the people themselves through their governments had to build them and once governments started to build these lines they had to keep on with the work. In the case of shipping, however, we have always had ships coming to Australia. We had not to build Commonwealth steamers because there were no existing shipping services.We built them for the express purpose of reducing freights. Therefore, the argument that losses on railways are comparable with losses on shipping lines doesnot appeal to me. It is a marvellous thing that scarcely anywhere in the world to-day are lines of transport, whether on land or sea, making a profit.Weare not restricted by lack of competition on our ocean trade routes. There is no lack of shipping coming to Australia. Vessels even come here from Germany.

Senator McLachlan - They are subsidized.

Senator REID - Germany built up its shipping by subsidies and so did Japan Mussolini has followed their example. He has subsidized ships and Italian vessels are now coming to Australia. We know that to-day our country is the one land in need of population. Ships will bring us the people we need and will compete keenly for our trade. No State in Australia has had more experience of State enterprises than Queensland.

Senator Foll - Queensland has had a bitter experience of State enterprises.

SenatorREID. - The only State enterprise in Queensland that has been a success is the State insurance scheme, but it did not require any particular ability to make that a success because it was a monopoly - everybody had to insure under it. Of all the other State enterprises, of Queensland, some of them are just about paying expenses. Recently I read in a Queensland paper some remarks addressed to a meeting of public servants by a State minister, a gentleman who was formerly a member of the Senate. I congratulate him on the courage he has displayed intelling the public servants a few truths on the subject of a fair day's work. He said : -

I am not going to say that we get it from all by a long way. If you want any evidence of this, take the State enterprises. I have no hesitation in stating that the partial failure of some of our State enterprises is due to a lack of faithful service, perhaps more than anything else.

And he added: -

Socialism can never succeed unless social service is as efficient as the service given in private enterprise.

There is not a State minister in Queensland to-day in favour of existing State enterprises. In the last two years not one minister has established a new enterprise. These government activities got into such a mess and have sustained such heavy losses, that if you ask a State minister to tell you how they are progressing he will immediately say " Say nothing about it." In my opinion, the people of Queensland are equal in intelligence to people elsewhere, and it seems to me that if State enterprises have failed in Queensland they are bound to fail elsewhere. No private shipping company has been treated more disgracefully than the Australian Commonwealth Line has been treated by the sailors employed by it. The men have the best conditions in the world, but they have done everything they could to hold up the Commonwealth vessels while the ships of other lines were left free to make money for their owners. It seems to me that all that they have sought to do in return for all that has been done for them has been to take advantage of the fact that the vessels are owned by the Commonwealth. We have heard some talk about grumbling on the part of the members of the Australian Shipping Board and that they have fallen out with one another. In the absence of evidence on the point we must take it for granted that this has happened because we are told by the committee that it has. I do not think that any honorable senator, whether he be in favour of nationalization or not, would not rejoice if this line had proved a success, but it has proved a failure, and I have heard nothing to convince me thatit should be kept going. I shall, therefore, give my vote for the sale of the Line under the conditions mentioned by the Government, namely, that it shall be retained on a British register.

Senator THOMAS (NEW SOUTH WALES) -What if we cannot get any one to purchase the Line on those conditions?

Senator REID - We must proceed in a business-like way. If no company will buy the vessels and put them on a British register the Government must sell them singly and make the best bargain it can.

Suggest corrections