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Wednesday, 14 December 1927

Senator NEEDHAM (Western Australia) . - When we realize the rapid progress that has been made in wireless telegraphy and wireless telephony in recent years we can come to no other conclusion than that it is a subject of vital and transcendent importance to any country, and more particularly to an island continent like Australia, with vast distances between each centre of population. It is, therefore, the duty of the

Commonwealth Government to look at the development of wireless from every angle in order that the interests of the community may be safeguarded and the welfare of the country protected. I am compelled to say that the Government has failed lamentably and ognominously to do this. It is true that a little while ago it appointed a royal commission to inquire into the main aspects of wireless, but it has ignored all its recommendations but one. No one could read the recommendations of that commission without coming to the conclusion that they were of vast importance to Australia, yet the Government treated them with supreme contempt. When we are about to enter into an agreement regarding the development and control of wireless we must be extremely careful of our steps. But before dealing with the new agreement which this bill ratines it is just as well that I should give a brief resume of what has taken place in the past. Years ago the Commonwealth Government had presented to it a wireless patent system that for some years had been operated under the direction of Father Shaw.

Senator McLachlan - " Presented to it?"

Senator Duncan - I think there was a bit of a quid pro quo.

Senator NEEDHAM - At any rate it became the property of the Government. The Telefunken Company, which I believe was afterwards absorbed by the Marconi Company, subsequently brought an action against the Commonwealth Government for an infringement of its patent rights, and the Marconi Company also became involved in the matter, and was finally left to continue the fight against the Government. When the matter was referred to the High Court it decided that as it was a highly technical subject independent evidence should be obtained, and as a result one of the best experts available was brought out from Great Britain to assist the Commonwealth Government. That expert inspected the system in operation in Australia, and stated that there was no infringement of patent rights, and that it was 33 per cent, better than the Marconi system. In those circumstances one would have thought that the Government would then have let the High Court give, a decision that could result only in one way - in favour of the Government. But it did not take any steps to test the claim of the Marconi Company that its patent rights had been invaded. On the- 5th September, 1914, the Cook Government was defeated at the poll, and between that date and the 17th December, when Mr. Andrew Fisher took office, it paid the Marconi Company £5,000 and bore its own costs. I mention this in order to draw attention to the fact that an anti-Labour government gave concessions to the Marconi Company that should not have been given,, and I venture to say that thisaction was the source of a lot of our troubles of to-day. It is also strange to note that at the present timet another anti-Labour Government is continuing to give concessions to the Amalagamated Wireless Company. In 1921, Mr. Hughes, the then Prime Minister endeavoured to rush through Parliament an agreement with Amalgamated Wireless Australasia Limited, which, while posing as an Australian concern, is in reality a branch of the Marconi Company, a foreign concern. Parliament refused to pass the bill, and the measure was referred to a Parliamentary Committee, which vitally altered the terms of the agreement. I do not propose to discuss those terms - they are set out in a booklet issued by the Government - but the agreement itself required the company to do certain things which they did not do. In 1924 Parliament ratified a fresh agreement between the Commonwealth Government and- the Amalgamated Wireless Australasia Limited, which relieved the company from many of the obligations entered into in 1922. One of the main features of the 1924 agreement was the establishment of wireless communication with Great Britain by means of the beam system. I do not profess to be an expert on wireless matters, but I gather from the writings of people who claim to be experts that the beam system was not expected to be a success. Not long ago the British naval and military experts' maintained that it would be useless in war time. They contended that the beam could be destroyed, by a counter-beam. Whether that contention is correct or not I must leave it to experts to decide. The Royal Commission says, on page 17 of ths report that experiments are now in progress with the object of enabling the beam system to be utilized for defence purposes. It also says that the evidence establishes the fact that in the present stages of its development it is not as suitable for naval service as is the older circle system. I come now to the present agreement. Let me say here that it is my intention to oppose the bill which seeks to ratify it. " One of my main reasons for doing so is my belief that wireless should be under the control of the Government. For the safety of the nation it is just as necessary that wireless should be controlled by the Government as it is that our telegraphic and telephonic services should be so con? trolled. I contend that long ago the Government should have assumed sole control of wireless instead .of working conjointly with a branch of a foreign company. The longer we delay that control the greater will be our danger. Speaking in another place the Prime Minister said that the Government could secure control under certain conditions. Why should we bargain about the matter at all? This Parliament should be the supreme authority in this country. There is no need for us to haggle about conditions. Wireless communication should be ranked as a service of national importance in the same way that we now regard telegraphic and telephonic communications and the carriage of our mails. The report of the Imperial Wireless Telegraphy committee of 1924 contained as its first recommendation -

That the State, through the post office, should own all wireless stations in Great Britain for communication with the overseas dominions, colonies, protectorates and territories.

For years Marconi has endeavoured to secure control of wireless in Great Britain, but without success. Successive British governments have refused to allow him to control wireless in Great Britain or to enter into any agreement which would give him any portion of such control. There is an example for us to follow. If a conservative people, such as our kinsfolk in the British Isles certainly are, consider it necessary that the government should have complete control over wireless, and that private companies should be kept at bay, we should hesitate before we decide to do otherwise. Referring to the agreement now before us the Melbourne Age said -

The Government shows singularly scant respect for public opinion when it treats as with a bludgeon the idea of having wireless under the control of the post office.

Regarded, from the point of1 view of defence alone, one would have thought that government control of wireless stations was essential. That aspect of the matter was dealt with by the commission in its report in the following terms -

At the present time there is nothing to ensure that these land and coastal stations are manned by British subjects, or that the training of the personnel employed in these stations would harmonize with the training of the defence force of the Commonwealth or the Royal Navy.

That is indeed a serious state of affairs which warrants the immediate consideration of the government. Should war come again - I fervently hope it will not - wireless will undoubtedly play a vital part, in it. It is, therefore, just as essential that our wireless stations should be manned by Britishers as that Britishers should occupy important offices in connexion with our military, naval -or air forces. What would be sai'd if the Government had entered into an agreement with a foreign company to conduct our munition factories? The people of Australia would revolt against the idea. I contend that wireless communications are as vital to Australia as are our munition factories.

Senator McLachlan - Would the honorable senator describe Amalgamated Wireless Australasia Limited as a foreign company ?

Senator NEEDHAM - To a great extent it is a foreign company. It is true that the Government is represented on the directorate of the company, and that it possesses a majority of the shares; but it is also true that, so far as the work of the company is concerned, the Government is impotent. The commission was emphatic that land and coastal stations should be under the control of the Government. The matter is again referred to in its report in the following terms : -

In the opinion of the commission there are overwhelming reasons why the land and coastal stations should be returned to Government control and linked up with the services of the Postmaster-General's Department.

The commission went on to deal with the financial side of the question and then said -

Notwithstanding these facts, and notwithstanding that for some years the Commonwealth Government must face a loss on the working of these stations, the commission considers that it is vital to the interests of the Commonwealth that a Government department should resume control at the earliest possible opportunity.

For reasons best known to itself, the Government has chosen to ignore that important recommendation. The defence authorities have stated emphatically that, from a defence point of view, wireless communications should be under the control of the Commonwealth.

Senator McLachlan - The commission does not say that.

Senator NEEDHAM - I have already quoted from the commission's report, in. which it says that it is of the opinion that wireless should be under the control of the Commonwealth Government.

Senator McLachlan - The commission suggested that it should be put under the control of the Navy.

Senator NEEDHAM - I assume that the Navy is under the control of the Government. The Minister's interjection is therefore merely a quibble. Admiral Creswell and Admiral Napier, in giving evidence before the commission, urged that the Commonwealth Government should control wireless as a public utility in the interests of the defence of this country. The opinion of those men should weigh with the Government. If I remember rightly, one of those gentlemen stated that very confidential information had found its way into the hands of Amalgamated Wireless Australasia Limited - a foreign company. A repetition of that unsatisfactory state of affairs may occur at any time under the present system. The joint system of control which now exists makes it easy for confidential information to leak out. Dealing further with land and coastal stations, the commission stated that they are inti mately bound up with the other communication services of the Commonwealth, and that, if controlled by the PostmasterGeneral's Department, greater use could be made of them in the less populated parts of Australia, and in maintaining communication between Tasmania and the mainland. Amalgamated Wireless Australasia Limited is not concerned with extending wireless communications in the interests of the people and the development of this country ; it is in the business only to make profits.

Senator McLachlan - The company, so far, has not been very successful in that direction.

Senator NEEDHAM - That is so; and according to the commission the further it proceeds in the way it has commenced the less successful it will be. Tha commission states -

The interests of Amalgamated Wireless Australasia Limited are primarily commercial. The policy of the Postmaster-General's Department is public service at the lowest cost.

In the face of that statement, we are entitled to ask whether the claims of the less-populated portions of Australia and pf Tasmania are likely to be considered by the company in the same way that they would be considered by a Government department. The commission went on to say that the services rendered by these coastal stations resemble in many respects the services performed by the telegraphic and telephonic branches of the Postmaster-General's Department. That is another sound reason why joint control should be abolished and Government control substituted. The Government has refused to take over the land and coastal stations, giving as its reason that it is undesirable that the two branches of the service should be separated. I remind the Senate that a few weeks ago the Government introduced a bill to separate two important branches of the Commonwealth Bank. Honorable senators will, therefore, see how paltry is the excuse offered in this instance. I now desire to refer to the rates charged for the delivery of messages received at the main station in the Commonwealth. These charges are known as terminal charges. According to the Prime Minister, the legal advisers of the Commonwealth are of the opinion that the Commonwealth is entitled to make such charges. I understand, moreover, that the company has been requested to pay them, but that it has refused to do so. That refusal shows clearly the nature of the control exercised by the Government over the company. The Government has a majority of shares in the company, it has three representatives on its directorate; it assisted to elect the seventh director; but, notwithstanding its alleged control, the Government is unable to get that to which it is legally entitled. When the 1922 agreement was being discussed in the Senate, the manner in which the Government directors were carrying out their duties was referred to. The following is an extract from Hansard regarding the matter: -

Senator DRAKE-BROCKMAN (WESTERN AUSTRALIA) -brockman. - That means the representatives of the Government on the board of directors have not been carrying out their job.

Senator J D Millen - That is obvious.

Senator DRAKE-BROCKMAN (WESTERN AUSTRALIA) -brockman. - The present representatives will not do what the Government has asked them to do.

Senator J D Millen - I agree with the honorable senator.

Later in the debate Senator J. D. Millen said -

SenatorDrake-Brockman is quite correct in saying that the Government representatives on th.e directorate have not been properly functioning. The position is becoming a scandal.

I wonder if the Government representatives on the directorate are to-day doing what the Government wishes them to do?

Senator Millen - Yes.

Senator NEEDHAM - I have no doubt that the honorable senator will take advantage of an opportunity that will present itself shortly to inform the Senate of the present position. The Government poses as a great apostle of law and order. It won the last election on this issue.

Senator McLachlan - Is that why the honorable senator usually is so silent on the subject?

Senator NEEDHAM - I am never silent when there is occasion- to speak. I was not silent during the last election campaign, when the Government raised a false cry of law and order. The Government is not so particular about breaches of the law in certain cases. Recently when an industrial dispute took place on the waterfront, the Ministry declared that it stood for law and order, and that the parties to the dispute should take their case before the Arbitration Court, which was waiting for them. The Government, how- °ever, did not approach the court to ascertain what were its legal rights in relation to Amalgamated Wireless Australasia Limited. The Ministry had been informed by its legal advisers that it had every justification to demand the payment of the terminal charges, but in- stead of taking the matter to court to ascertain its rights in the matter, it made certain concessions to the company, as a result of which the company agreed to pay the terminal charges. What right , had the Government to bargain with the company over the payment of these terminal charges? Ministers are the custodians of the people's privileges, and the Government, strengthened as it was by a recommendation from its legal advisers, should have pressed its claim for the payment of the terminal charges, instead of haggling and bargaining with the company. Not only that, ' but we find the International Telegraph Convention and the International Radio Convention require the payment of terminal charges in circumstances similar to those which exist between the Government and Amalgamated Wireless". On this subject the commission reported : -

The commission is of opinion that if the Government's control of Amalgamated Wireless Australasia Limited at the present time is not sufficient to bring this company into line with what is necessary in the interests of the Commonwealth, then that control should be made effective, and, inasmuch as a partial purchase of shares would create difficulties and do an injustice to those whose shares were not purchased, no other course than a complete acquisition seems possible.

That recommendation was completely ignored by the Government, if, indeed, it was not treated with supreme contempt. The Ministry surrendered to the company to the extent that it offered certain concessions on the understanding that the company would pay the terminal charges. Let us see what these terminal charges are worth. The Prime Minister has stated that the amount at issue is approximately £25,000. He has also said that, on a basis of 9,000,000 words per annum, which he considers a fair' estimate of the total traffic that will be handled by the company in the immediate future, the amount payable to the company for such terminal charges will be approximately £45,000 per annum. This amount will of course increase as business develops. From this it will b» seen that, without giving away any concession, the Commonwealth is entitled to collect £45,000 from the company, which amount would' be increased as business develops. But in order to get the company to pay this amount the Government proposes to make certain concessions to it in regard to the coastal stations that the company took over. To ascertain what these concessions are we must examine the 1922 agreement, which provided in the first place that the company was te take over the coastal stations which were valued by arbitration at £56,000. This amount was to be paid by the Amalgamated Wireless as portion of the Commonwealth's last contribution to capital. The agreement provided further that the Government would pay all amounts expended in carrying on the Commonwealth radio stations for a period of three years - in 1924 this period was extended for a further term of one year - and that the Government would receive all the revenue collected. When the right honorable W. M- Hughes brought down his agreement with Amalgamated Wireless in 1921 he made much of the fact that the stations under the control of the Government were losing huge sums of money. The right honorable gentleman estimated the losses at approximately £60,000 per annum, although according to the present Prime Minister's statement the average loss of these stations during the last five years under government control has been £34,300. There is a considerable disparity between the two estimates. There appears to be no doubt that Mr. Hughes considerably overestimated the losses of these stations in order to make the case against Government control of such stations appear as black as possible.

Senator Millen - The estimates covered different periods.

Senator NEEDHAM - On the other hand we must remember that the business has increased.

Senator McLachlan - If the business of the coastal stations has increased, that probably would account for the reduction in losses.

Senator NEEDHAM - No doubt it would be a factor. Mr. Hughes, referring to the Amalgamated Wireless Australasia Limited, said -

It is a business concern, which is run at a profit, and contrasts very favorably with our own wireless scheme, which is not a business concern run at a profit. . . .

The present business is unprofitable. . . .

Wo are buying into this profitable business at par. ... - On the other hand we may secure a scheme . . which has rights over the Marconi patents, has at its command trained experts, and which is managing a profitable business in glaring contrast to that which the Commonwealth is managing.

The right honorable gentleman and his Ministerial colleagues were loud ki their praise of the financial benefit which the Commonwealth would receive by linking up with this company. He pointed out, as the quotations which I have just read prove, that the Commonwealth Government was buying into a profitable concern. In other words, he urged that the Government was making a profitable investment, and he assured the House that the stations would soon be put on s paying basis. '{ The Commonwealth," he said, in effect, "cannot make these stations pay, but the company will." Let us examine the results to date. According to the Prime Minister, the average losses on these stations since the company has controlled them, has been £31,560, compared with the average losses under Government control of £34,300. In both instances, the figures relating to New Guinea are excluded. It would appear, on the face of it, that there has been a reduction in the losses of nearly £3,000 a year ; but we should take into account the fact that business has increased considerably since the company has had control of the stations. As I have already stated, the 1922 agreement provided that the Commonwealth Government should pay all working expenses for three years, and should also collect all revenue. In other words, we were to stand the losses for three years - the term afterwards was increased to four years. Why should we continue indefinitely to be responsible for these losses? If Amalgamated Wireless

Australasia Limited was the financial success that we were led to believe it was in 1922, why is it unable to show a profit on the working of these stations? The four-year period has expired, and now the Prime Minister has made an arrangement with the company whereby it will pay the terminal charges, amounting to £45,000 a year, and in return will receive a subsidy of a like amount on the understanding that it will return to the Commonwealth 30 per cent, of all revenue derived from the stations. The Prime Minister estimates that this 30 per cent, will represent £10,000. Again I ask why should we continue to be responsible for the losses, which, as I have shown, are about the same now as they were when the stations were under Government control? This is the concession on which the Government is giving to the company, so that it will pay the terminal charges for which it is legally liable. I wish now to refer to the £56,000 which is the amount to be paid by the company for coastal stations which it has taken over. This amount is not to be paid into capital by the company as portion of the Government's contributions to capital, but is to be used as a set-off against some payment to be made by the Commonwealth to the company. That is an entirely different proposal from that originally arranged. What is the reason for this alteration? In view of the fact that Ihe method of paying the £56,500 is by deducting it from the payments due by the Commonwealth- > the company, I should like to ask if the Government will deduct the £56,000 from the subsidies until it has been paid off. I now" wish to deal with royalties. In the opening remarks of the commission's report it states - :

The evidence discloses .that the operations of this company extend over a wide field of radio, and in almost every instance have created friction and dissatisfaction.

That is a very strong charge against the company. Further on, the commission states -

As a result of the company's acts of omission, the company is regarded with suspicion, and its business methods are not approved throughout Australia. Its own selling agent in Western Australia said, " I know Amalgamated Wireless Australasia Limited is undoubtedly the worst hated firm in Australia."

And this of a company with which the Government is associated! The report further states -

Not only has the company made demands on radio dealers which, in the opinion of the commission, are excessive, but they have sought to impose terms and conditions in their licences which are oppressive and unfair.

That is another vital portion of the commission's report which the Government has ignored. There appears to be some doubt concerning the validity of the company's claims in the matter of royalties, in connexion with which the commission states -

The conduct of the company in regard to patents claimed by it has caused a bona fide doubt in tlie minds of those interested as to whether the company itself regarded the patents owned by it as \alid.

Even the company is not sure of its ground. The report continues1 -

Notwithstanding that traders were refusing to sign the licence form submitted by Amalgamated Wireless Australasia Limited, and that goods were being sold in every city of Australia, which were, according to the managing director of Amalgamated Wireless Australasia Limited, an infringement of patent rights held by his company, no steps were taken by the company to protect its rights until quite recently, and the litigation commenced against Melbourne and Sydney firms has been allowed to proceed in a leisurely fashion.

If this company was concerned with the validity of its claims, why did it not expedite the hearing of its claims in order to reach a decision on such an important matter? This agreement, which contains many vital provisions, should be carefully studied. The report continues -

In- the meantime, the Parliament of the Dominion of New Zealand has passed legislation which was apparently intended to invite Amalgamated Wireless Australasia Limited, to a contest on the question of the validity of the patents used in broadcasting stations. Evidence has been given that radio dealers in New Zealand are in some instances carrying on the sale of goods, employing patents of which Amalgamated Wireless Australasia Limited claims to be the owner, without any attempt on the part of that company to protect its rights. If Amalgamated Wireless Australasia Limited were in a position to commence litigation against residents of the Commonwealth in respect to infringement of its patent rights it is difficult to understand why it was not equally prepared to defend its rights in New Zealand.

There is, as I have said, a considerable doubt as to the company's claims in this connexion. The Prime Minister claimed that the company had made a great concession by waiving certain royalty charges. For some years the company has been levying a royalty of 5s. on every listener-in. The right honorable gentleman said that by foregoing the royalties on 250,000 listeners-in the company had sacrificed £62,000, and that in foregoing a royalty of 12s. 6d. per valve on 25,000 four-valve sets, it was sacrificing another £62,000. In addition, he said it had waived its claim on up to 25 per cent, of the revenue from "B" class stations, representing approximately £1,000, making a total of £125,000. These alleged concessions, which are to be made for only five years, are in respect of claims which the company cannot substantiate. When its royalties were allegedly being infringed, the company should have put up a real fight to defend what it terms its rights. It has not done that, possibly because it has not a proper legal standing. The commission in its report said that it considered the charge of 12s. 6d. per valve of 25,000 four valve sets, and the 5s. charge to listeners-in unjust and extortionate, and that the amounts should be reduced to 5s. and 2s. respectively. As I have already stated, the company has agreed to waive this claim for a period of five years, but the Government is to pay the company 3d. a month, or an average of 3s. per annum, in respect of every listener's licence issue. Taking the present number of licensed listeners-in. which approximates 250,000, the company will thus receive £37,000 per annum. As the number 'of listeners-in will probably bo doubled within a short period, the company will, to use a colloquialism, be " on a good wicket." It is, .as I have said, conceding something to which it has no right, and for this it is to receive from the Government £37,000 per annum - an amount that will increase as the number of subscribers becomes larger. I intend to oppose the second reading of the bill, because the agreement should not be ratified by this Parliament. The time has arrived when wo should dispense with the system of joint control, and follow the splendid example set us by the British Government. We should tell Amalgamated

Wireless Australasia Limited that they must take their hands off this undertaking, which provides an important national service. It is even more important than our telegraphic or telephonic services. It is vital to the nation in times of war, and is absolutely essential for the progress and prosperity of any country in times of peace. For the reasons I have stated, I intend to oppose the second reading of the bill.

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