Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 13 December 1927

Senator McLACHLAN (South Australia) (Honorary Minister) . - I move -

That the bill be now read a second time.

The object of the measure is merely to approve an agreement that has been entered into between the Commonwealth Government and Amalgamated Wireless Australasia Limited. Its importance lies in the fact that it brings up to date and into line many issues that to some extent were open between the two parties to the agreement. I may say in passing that that importance cannot be measured by the length of either the bill or the agreement, because wireless is destined to play a very big part in our future, isolated as we are in the Southern Pacific. . Civilization owes much to a number of individuals. It owes a debt to the master mind which invented the telegraph, and to the men of all races who have assisted to extend its usefulness. It owes a debt also to the great discoverer of wireless and to those who to-day are developing it in conformity with the needs of the people. By its use we are brought closer to the centres of civilization. It has also been the means of saving lives at sea, and it is likely to prove helpful in the defence of this country as the years go by. I do not think we need concern ourselves with its early history in Australia. It is within the knowledge of honorable senators that in 1922 an agreement was entered into between the Commonwealth Government and Amalgamated Wireless Australasia Limited under which the Government acquired 500,001 shares in a company which had a capital of £1,000,000. That agreement was objected to in certain quarters, but it received the approval of the Parliament of Australia, and, subject to a modification that was inserted in 1924, has been operating ever since. The value of the patent rights, which are one of the assets of Amalgamated Wireless Australasia Limited, has been assessed at various amounts in the balance-sheets of the company. If those patents are valid - and I venture the opinion that these large overseas corporations would not have contributed one farthing of the tribute levied by the holders of similar rights in other countries unless they were assured of their validity - their value is not a matter for computation, but is limited only by the amount which they can earn for the concern which possesses them. The man in the street, viewing the position generally, and having regard to the fact that the Commonwealth Government holds more than one-half of the total number of shares, is probably anxious to see a reduction effected in the tribute that is levied from the users of wireless sets. It is certain that those .who trade in those instruments have evinced a keen anxiety to be relieved from the tribute they are called upon to meet. A great deal of publicity has been given to the matter. Honorable senators will remember that, at the instigation of a number of the parties concerned, a royal commission was appointed a few months ago to investigate generally the position with regard to wireless in Australia. That commission examined a number of witnesses, and heard a tremendous volume of evidence, after which it arrived at certain conclusions.

Senator Needham - None of which has been accepted.

Senator McLACHLAN - The Leader of the Opposition will find that, with certain modifications, the first set of recommendations has been accepted, and that it is now proposed 'under this measure to give effect to them. The* position was investigated from various other angles, but we need not concern ourselves with those for the moment, because they are still engaging the attention of the Government. Amalgamated Wireless Australasia Limited were charging 12s. 6d. in respect of valve' sets and 5s. on every licence issued to a listener-in. The commission regarded those, charges as excessive, and recommended that they be reduced. It was not prepared to either discuss or consider the validity of thipatents that are held by the company, but that question has received the consideration of the neighbouring dominion of New Zealand, where the patens rights have been challenged. It-would ill become Australia, which has its own patent laws, and is bound by an international convention on patent rights, to either question or take any action with respect to those rights, especially in regard to a company in which the Government is vitally interested. It is to be presumed that until these patents have been challenged in a court of law and their invalidity has been established, they are valid. A challenge was issued to the Government of New Zealand, which has thrown the mantle of its protection round the listeners-in, and practically agreed to adopt the role of defendant in the event of their being attacked by Amalgamated Wireless Australasia Limited. Adopting the recommendation of the commission, the Commonwealth Government has said to Amalgamated Wireless - " This confusion and these quarrellings must cease, in the interests of not only wireless itself, but also the general community. It is time that the trouble was settled, so that you may proceed with your business." Therefore, negotiations took place between representatives of the Government and the directors of the company. Before proceeding further, I shall say a word or two regarding the findings of the commission which, according to the Leader of the Opposition, have not been given effect to. The commission has indicated that, as a last resort, the Government might have to take over Amalgamated Wireless Australasia Limited, and work it in conjunction with the post office.

Senator Needham - That should have been the first resort.

Senator McLACHLAN - The commission indicates very strongly that it would not be in the interests of the nation, civilization, or wireless itself to have control by the Post Office. It advises the Government to act in the way I have indicated only as a last resort. The honorable senator will find in the commission's report the following paragraphs: -

In view of the fact that litigation had commenced between Amalgamated Wireless Australasia Limited and certain of the parties which were represented before the commission, it was precluded from taking evidence on any of the matters involved in the litigation. These matters, however, did not seem to have any material bearing on our investigation.

The commission realized at an early stage in its inquiries that radio as a means of communication was in process of rapid development, and that great care must be taken not to hamper this development or to create powerful vested interests.

Another suggestion was direct control of broadcasting stations by the Government.

In our opinion, such a system is inadvisable, iia experience already shows that when Governments are placed in charge of the means of disseminating news, they are apt to use such means for the purposes of political propaganda.

Moreover, such a "system would deprive the public of the benefit of the incentive which the present regulations give to the broadcasting stations to maintain an effective and satisfactory service.

Further, whatever wisdom may be displayed in the selection of Government officials for such a purpose, it is difficult to maintain that high 'standard of business acumen which is essential to securing the best results.

Those paragraphs do not give a very strong lead to the Government to nationalize wireless or broadcasting.

Senator Needham - I did not expect it.

Senator McLACHLAN - I do not know the politics of the members of the royal commission, but their report in that regard seems to me to breathe a lot of common sense. They indicate the lines on which the Government should proceed, and after commenting on the royalty charge in connexion with the use of valves, and the amount received in respect of each licence, they make the following calculation : -

The representative of the Victorian radio interests estimated that 50,000 was a fair estimate of the number of sets that would be sold in the Commonwealth in one year, and on the average these sets would contain four valve socket holders. The commission is of opinion that 50,000 is an excessive estimate, and prefers to assume a sale of 25,000. On this basis the company would have been entitled to royalties to the amount of £62, 500 on receiving sets per annum.

Assuming that the company's patents are right, the royalties of them alone would amount to a great deal more than it will receive under the agreement which this bill asks Parliament to ratify. There were one or two matters between Amalgamated Wireless Australasia Limited and the Government which needed cleaning up. For instance, there was the dispute as to whether or not terminal charges should be paid by the company. That matter has been cleared up by this agreement. There was also the question of the validity of the company's patents. As I have already pointed out, it was not for the Commonwealth Government to challenge the validity of the patents claimed to be held by its partner in the control of wireless, but the matter had to be safeguarded in some way, and it is safeguarded in paragraph 11 of the agreement. Under that provision the company, after entering into certain other obligations, has undertaken to bring to a successful issue in a court of final resort the test cases which are now proceeding with regard to the validity of its patents. Certain cases are now being decided in Australian courts of law. If Amalgamated Wireless Australasia Limited is entitled to receive 3s. per annum out of each licence-fee - formerly it received 5s. per annum - the revenue it will receive from this source will amount to £37,500 a year ; and it is only natural that we should wish to know that they are not getting this money for nothing. Accordingly, the Commonwealth Government has told the company to have its patent rights tested in a court of law, and if, on reaching the final court of appeal, it succeeds in establishing the validity of its patents, Part II. of this agreement, relating to broadcasting and the use of its patents, will continue; but if it fails to do so, this part of the agreement will be terminated. But as this would be a direct inducement to the people of Australia not to go on with their challenges of the validity of the company's statements, inasmuch as for the future they would be relieved of the payment of all charges for the use of the company's patents, the Government had to look for some other means to secure itself. The course it has taken has been to ask Amalgamated Wireless Australasia Limited to test the validity of its own patents and have the matter brought to a final issue in Australia within twelve months of the coming into force of this agreement. A case is now pending in which the company is pressing its claim for an infringement of its patents, and the Government has asked it to proceed with the case until final judgment is obtained or to proceed in New Zealand. If it fails to do so, Part II. of the agreement will be terminated. The important part of the bill is the agreement which Parliament is now asked to ratify. It is, of course, to run alongside the two other agreements with Amalgamated Wireless Australasia Limited already ratified by this Parliament. The real essence of the present agreement is to be found in paragraph 6. Under that provision the company will make its Australian patent rights available free of charge during the currency of Part II. of the agreement. These patents are defined in paragraph 7 in the widest possible language. They cover not only those which are owned by Amalgamated Wireless Australasia Limited, but also, with small exceptions, those which the company is entitled to use. Paragraph 8 provides for the payment by the Commonwealth to the company of 3d. per month for .every listener's licence. Para.raph 9 makes the Australian patent rights available free of charge to the Commonwealth in connexion with the manufacture or use of any plant or apparatus provided that such plant or apparatus is manufactured and used exclusively by the Commonwealth or if it is manufactured by or purchased from the British Government and used exclusively by the Commonwealth, or if it is purchased by the Commonwealth from the company and used) exclusively by the Commonwealth. If these three conditions are observed the Commonwealth Government has the free, exclusive use of Amalgamated Wireless Australasia Limited patents, not only those in the name of Amalgamated Wireless Australasia Limited, but also those under the control of the company. Under paragraph 10 the company agrees during the currency of Part II. of the agreement to grant a licence free of royalty to each newspaper published in the Commonwealth, and each wireless telephone broadcasting station in the Commonwealth which makes application therefor, to use any or all of the patents referred to in the agreement. This will enable the country press to obtain the Rugby news service without any levy being imposed on them. Paragraphs 11 and 12 of the agreement are very important. I have already referred to paragraph 11. It provides for the establishment by the company of its right to its patents in the courts of Australia or New Zealand, and that the New Zealand action has to be commenced within twelve months. There were various other outstanding matters between the Amalgamated Wireless Australasia Limited and the Government. One was that the price of the coastal stations, which had been fixed by arbitration at £56,500, was not to be paid to the Commonwealth Government until the last call had been made on the shares which the Commonwealth Government had taken up in the company. It might not be a very important- matter, but it seems to have been a very unbusinesslike arrangement, because, if the coastal stations had earned a profit instead of incurring a loss, as they did, the Commonwealth would have been getting no return on its money. We have managed to arrange it so that any moneys due to Amalgamated Wireless Australasia Limited shall be deducted from any moneys owing by the company to the Government. There will be a debit and credit account, and this amount of £56,500 will stand to the credit of the Commonwealth in any financial transactions between it and the company. The company will retain the coastal stations and discharge all our international obligations in regard to them. The annual cost of those stations before they were handed over to Amalgamated Wireless Australasia Limited was between £34,000 and £35,000. The Government has agreed to subsidize the company for the management of these stations to the extent of £45,000 a year, but it is to get back 30 per cent, of the revenue earned by them. That may appear to honorable senators to be a curious way of doing things, but the reason for it is clear enough. It is anticipated by the advisors of the Commonwealth Government that there may be an increased revenue at one station due to negotiations now proceeding. If we receive that 30 per cent, our outlay will be reduced. The principle underlying the agreement is that wireless communications outside Australia shall be in the hands of the Amalgamated Wireless Australasia Limited, subject to certain control by the Government, while wireless communications within Australia shall be under the control of the Postmaster-General's Department. I desire to draw particular attention to sub-clause 5 of clause 14 of the agreement, which reads -

Notwithstanding anything in clause 11 of the principal agreement, the fixation of all rates for traffic to be charged by the company shall be subject to the approval of the Commonwealth.

Other clauses deal with a variety of technical terms, which are- considered necessary by the experts, but with which most honorable senators are probably unacquainted.

Senator THOMAS (NEW SOUTH WALES) - What is a terminal charge ?

Senator McLACHLAN - Although no service may be rendered by the PostmasterGeneral's Department, a charge is made in respect of certain messages received in this country by every cable or wireless company. Honorable senators will agree that it is only fair that on the expiry of the period of five years referred to in part 2 of the agreement, Amalgamated Wireless Australasia Limited, having reliquished its rights over that period, and the Government not being prepared to carry on, should' as far as possible be reinstated in its old position. Clause 21 deals with that matter. Whether part 2 expires by effluxion of time, or owing to the inability of Amalgamated Wireless Australasia Limited to meet its obligations - a most unlikely happening - we cannot expect that the company will do other than take action to protect its rights. Clause 21 contains the following proviso -

Provided that no demand shall be made or proceedings instituted in respect of any use of the patents which occurs during the currency of part 2 of this agreement, and is in accordance with that part.

The science of wireless, which affects our lives in so many ways, will be helped by this measure. It will bring the Government and Amalgamated Wireless Australasia Limited into a closer relationship and allow the company to continue the far-sighted policy upon which it has embarked. The thanks of the community are due to those connected with the company who have assisted to bring Australia to the forefront in wireless matters. We are indebted to the men of vision who have been in control of the company, and to the many capable young Australians associated with it. Of the 800 employees of the company who have been sent abroad from time to time to study wireless science only two - and one of those, the general manager, who came to Australia from the Old Country and has been here for sixteen years - have been other than Australians. Australia should be proud of that record. The company has been faced with serious difficulties, but it has triumphed over them. We should be proud of its accomplishments and do all that we can to encourage it. I commend the bill to the Senate believing that it will assist the science of wireless, so that before long not merely will the prophecy that the earth shall be girdled in 40 minutes be fulfilled, but that feat will be accomplished in less than 40 seconds.

Suggest corrections