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Thursday, 15 October 1964


Senator McKELLAR (New South Wales) . - The last time I rose in the Senate to speak on a motion for the disallowance of regulations was, if my memory serves me correctly, when the proposal before the Senate was for the disallowance of regulations to validate the payment of £100 million to the defence forces. On that occasion 1 voted with the Opposition for the disallowance of the regulations. Subsequently an act of Parliament was passed to validate the allowance that had been paid. On this occasionI want to make it quite clear at the outset that I do not intend to vote for the disallowance of these regulations, because I think that the Commonwealth Government has acted in a way that all Australians would wish it to act. The only exceptions would be, perhaps, those who arc actively interested financially in what is going on and those who are anxious to drive a wedge between the parties holding office in the Commonwealth Parliament, and also between the parties which we hope will form a coalition Government in New South Wales in the near future - the Liberal and Country Parties.

What justification did the Commonwealth Government have for deciding to take over the control of intrastate services? I do not profess to have any legal knowledge, but I know that the Commonwealth Government is of the opinion that it has sufficient power under acts already in existence to undertake the action that it has commenced. I know that it was argued this afternoon, and that it will be argued later during the course of this debate, that the Commonwealth does not have that power. That is the bread and butter line of our legal friends, and far be it from me to deny them the opportunity to get up here and state their views. I am looking at this matter from a layman's point of view. A little later I shall deal with the aspect of the sovereign rights of the States. In a comparatively short time the Commonwealth has spent £60 million on intrastate airlines - the provision of aerodromes and so on - in Australia. That in itself only bears out something that is recognised by many people in Australia, that if you receive Government assistance, whether it is Commonwealth or State, in the affairs in which you are interested, sooner or later you have to concede to that Government some say in the conduct of those affairs. If that lesson has not been learned by this time, all I say is that some people are very slow to learn. The Government has spent £60 million on air services in the Commonwealth and is at present spending at the rate of £121/2 million per annum. Is it any wonder that up to this point of time the States have sat back and said, in effect: "This is pretty good. We have not got to spend any money on the upkeep of the aerodromes. All we have to do is to allow the Commonwealth Government to carry out this work and pay the bill."

Let us take an extreme case as an example. Suppose that a State Government decided to license a particular airline to fly a certain type of aircraft on to a certain aerodrome, and that the aerodrome was not designed for such an aircraft. It might be too fast or be too heavy.


Senator Ormonde - That could not happen.


Senator McKELLAR - It could happen. The State Government would not have to worry about maintenance of the aerodrome or damage done to it by that aircraft because the Commonwealth Government would have to carry out the repairs. That is an extreme case, but it is possible. We have to remember that the cost of maintenance of aerodromes at the present time amounts to over £4 million a year. Some of these matters were referred to in the letter sent by the Prime Minister (Sir Robert Menzies) to the State Premiers. In discussing the postwar period the Prime Minister said -

In the immediate postwar period, it- meaning the Commonwealth Government -

.   . secured from United Stales disposals, large numbers of DC3 aircraft, which at the time formed the backbone of the air services.

I think that I should pause here for a moment to pay tribute to this wonderful

DC3 aircraft. While it is outmoded compared with present day aircraft, it is still a very good aircraft. The Prime Minister went on to say -

Later, it arranged for DC3's to be sold by the R.A.A.F. to the airlines at very low prices, and also for Fokker Friendships to be sold by T.A.A. to East-West Airlines and MacRobertson Miller Airlines on most favourable terms.

Those are the facts. In the next paragraph the Prime Minister said -

Next, the Commonwealth has more than £60 million invested in facilities for international and domestic air services.

That statement confirms what 1 have already said. He went on to say -

In addition, the Commonwealth has provided the Government-owned airlines with something like £25 million in capital for the provision of modern jet aircraft and ground facilities. On the maintenance side, the cost for the whole Australian network in 1937 was only £123,000 whereas the comparable figure for 1963-64 was £12.5 million, which included £4.3 million for the intrastate network.

He said further -

There is at present a five year airport development programme, estimated to cost £30 million proceeding in all States, and last year alone £6. million was spent on airport and airways capital facilities. In addition to this, the Commonwealth made a direct contribution of £470,000 to development and maintenance of municipally owned aerodromes; the figure is expected to be £600,000 in 1964-65.

In the face of those facts, who can deny that the Commonwealth has a strong right to say that it should control all civil aviation, so far as it affects intrastate services?

I want to refer to the views of Captain G. F. Hughes, who is President of the Aero Club of New South Wales. These views were not his alone; they were supported by evidence given by other witnesses at an inquiry that was held into this matter. He said -

The very nature of aircraft and their uses, and the nature of the regulations required, make utterly impracticable, in my opinion, a control by the Commonwealth, the effectiveness of .which would only arise contingently on a particular class of journey being undertaken. Where could one draw the line and decide where Commonwealth regulations began to operate? Such ari arrangement would, in my view, be hazardous in the extreme, and a menace to all classes of aerial navigation . . .

He said further -

There is absolutely no other industry or means of locomotion in which control necessitates supervision of the product from the drawing board through all the processes of manufacture to the finished article, and then throughout the life of the machine. There is no means of travel which is so unrestricted by physical boundaries.

Surely that is evidence which shows that the Commonwealth has done the right thing in acting as it has. The Minister for Civil Aviation (Senator Henty) mentioned today in the course of his speech opinions which have buttressed the ideas of the Commonwealth Government on this matter. He referred to the judgments of Sir Owen Dixon and of Mr. Justice Windeyer.

I want to refer to the reasons why the Commonwealth should have power over civil aviation. If these reasons have been mentioned before, I do not apologise for reiterating them because I think they are of prime importance. The decision to amend the Air Navigation Regulations was made with the following objectives: First, to ensure the unified and co-ordinated regulation of air safety in all fields of air navigation including international, interstate, intrastate and territorial operations and operations of Commonwealth aircraft including military aircraft; secondly, the orderly development of civil aviation and associated facilities with due regard to national priorities; thirdly, the coordination of large and different financial, technical and operational programmes; fourthly, the planned expenditure of Commonwealth moneys on the growth of developmental and rural services; and fifthly, the regulation of competitive and . non-competitive routes to achieve maximum use of resources including aircraft utilisation.

I know that members of the Opposition agree with all these things, but object to the manner in which they have been done. After all, if you have a good cake, surely you do not object because it was cooked on a fuel stove instead of on a gas stove. As long as it is a good cake, what is the difference?


Senator O'Byrne - You are a good Socialist.


Senator McKELLAR - I am not a

Socialist, and God forbid that ohe day will ever come when somebody other than yourself alleges that I am. In 1937, in the intrastate field something like 12,000 miles were covered by aircraft and 16,554 passengers were carried. In 1963 there were 43,644 miles covered and 1 million passengers carried. Here is evidence of the growth of our intrastate air services. As wc know, they are growing all the time. New routes are being opened up. We arc fortunate in Australia in having good flying conditions. We are regarded as second to none in the world in air safety precautions. I, too, want to pay a tribute to the Leader of the Government in the Senate for the part that he has played in regard to that important aspect of civil aviation. In 1963-64 the subsidy for the development of essential rural services amounted to something like £440,000, That is only one sphere of operations. In addition, £470,000 was spent on the development and maintenance of municipally owned aerodromes.. These too have been very important in opening up our hinterland. Today one thinks with horror of the time it used to take to travel long distances. When one can leave, say, Alice Springs in the morning, fly via Adelaide and have an evening meal in Sydney, one realises that distances indeed have been shortened. No so long ago it would have taken days to make that trip. I have mentioned that as an example of the developments that have taken place in the speed and safety of air travel.

I said earlier that I would deal with the question of the sovereignty of the States. This is a States House, and while I am here 1 will always endeavour to be a champion of State rights. I have had the feeling for very many years that the States took a long step towards abrogating their rights when they decided to allow the Commonwealth to continue administering the system of uniform taxation which had been introduced justifiably as a wartime measure. Surely among the statesmen scattered throughout our States there must have been some - indeed, I know of some - who realised that in allowing the system of uniform taxation to remain the States were giving up their right to levy taxes and so were curtailing their sovereign rights. This has proved to be the case. I regret the trend in this regard but I think it is inevitable.

The matter that the Senate is now discussing is another illustration of this trend, but I cannot see any alternative to what the Commonwealth has done. If the States are to regain some of the sovereign rights that they have lost, their first duty, provided they arc prepared to put up with all the ills and troubles that will follow, is to revert to their own systems of taxation. Honorable senators will remember that we have seen concrete evidence within the last fortnight of the way in which the public regards this. One State Premier announced that he would like to re-introduce State taxes and he rereceived a very sharp rebuff from the people. That bears out what I have said. However, if the States want the sovereignty they should have they must try to regain their taxing rights. After all, if you hand over to somebody the responsibility of providing finance for you, you must hand over also the right to decide how that finance is to be allocated.

I want to turn now to the more personal aspect of the matter that we are now discussing - its effect on those of us who live in New South Wales. First of all, as has been mentioned by several honorable senators, Buller Air Transport Ltd. did a marvellous job in providing air services in New South Wales that previously had not been available. It is a matter for very great regret to many of us living in the areas served by Butler Air Transport that the company had to go by the board. Although Butler himself was a very fine airman, apparently the weakness in his organisation lay in the fact that he had to rely on others to look after the financial side of the business. But they were not as good businessmen as he was an airman. Consequently, he had to fold up, although the fault could not be laid at anyone's door. He was the pioneer of air travel in New South Wales and we owe a very great debt of gratitude to him.

Following the taking over of Butler Air Transport by the company that came to be known as Airlines of New South Wales Pty. Ltd., the existing services were maintained and new services were commenced. That company also has done a very good job. I lived in the vicinity of Dubbo for some 50 years and travelled very extensively by Butler Air Transport and then by Airlines of New South Wales. Many Dubbo people would not admit this, but, as I have always told them,, they have received outstanding service, particularly as the area served is very large.

I do not know the exact number of people who would be served by the airline putting down at Dubbo, but at the very least it would be between 30,000 and 40,000. Do not forget that apart from Dubbo itself, which has a population of about 14,000, there' are Narromine, which has a population of between 3,000 and 4,000, and Gilgandra, which has a similar population. There are also Trangie and Warren. Until the service to Orange was commenced, and indeed to some extent still, the Dubbo airport served the town of Wellington, which has a population of between 5,000 and 6,000. I shall have more to say about that later. This is the area that was served by Airlines of New South Wales until the State Government decided, willy-nilly, that it would reallocate airline routes in New South Wales.


Senator Ormonde - Do not say willynilly.


Senator McKELLAR - It was done willynilly. 1 have travelled pretty extensively with East-West Airlines, which also has provided a good service with the facilities at ils disposal, but it has been handicapped in the past because, in comparison with Airlines of New South Wales, it is only a small company. It has been serving the Tamworth-Armidale area very well. Lack of capital is one of the reasons why it has not been able to serve it even better.

It was said tonight - this is only one of the many inaccuracies stated by Opposition members - that East-West Airlines is not a public company, lt is a public company with some 600 shareholders. The honorable senator who made that statement erred when he claimed that East-West Airlines is not a public company. It did not go on the Stock Exchange because its administrators felt that if it had done so it could have been taken over by another airline such as Ansett-A.N.A. ) am one of those who believe that it is absolutely essential for New South Wales, and for the decentralisation policy which my party espouses, that East- West Airlines not only should be kept in existence but also that it should be allowed to expand on a profitable basis. That the Minister today undertook to do. I am sure that he will honour that undertaking. If only the New South Wales Government had had the sense to keep out of this brawl the whole thing could have been settled between Ansett and the manager of East-West Airlines in 48 hours. They are both reasonable mcn. They both realise that there must be give and take, and they are both prepared to give and take. But the stupid New South Wales Government, seeing an opportunity to gain political advantage, came into the dispute and, to use the phrase that has been used already, stirred up the muddy waters, to the detriment of New South Wales and particularly of the areas that I have mentioned - Dubbo. Tamworth and so on. What will happen in the Dubbo area? I cannot see Ansett providing an airline service to that centre with the threat of fines hanging over his head. That is enough to break any airline.


Senator Ormonde - That is part of the fight.


Senator MCKELLAR - Of course it is part of the fight. The New South Wales Government does not care two hoots about the people in that area so long as it can get some political advantage out of this fight. What will happen to the 30,000 people who may well be deprived pf any air service if the New South Wales Government refuses to give a licence to Airlines of New South Wales? On the other hand, we have the State Government saying to Ansett: "You go in there and we will fine you £20,000 per trip." So there you are. I happen to come from those areas. I have lived there for a long while, and the majority of the people are as reasonable and intelligent as you will find anywhere. They will know where the fault lies and whose fault it is if they are deprived of these air services. I sincerely hope they will not be. They will know where to apportion the blame and to act accordingly when they get an opportunity, which will probably be, first, at the Senate elections and then at the State elections in March of next year.

There is another aspect. Under this proposed reallocation we bad the town of Mudgee in that area, with some 5,000 to 6,000 people, being served by Airlines of New South Wales. The policy was that Airlines of New South Wales would fly a morning service daily via Mudgee to Dubbo and then to Sydney. Under the proposal by the New South Wales Government, EastWest Airlines would fly to Dubbo, forgetting about poor old Mudgee. If the Mudgee people will be amused about that, I shall be very surprised. I hope that they will take the opportunity, which they will get probably in March or April next year, to turn the present State Labour representative lor Mudgee out and put a Country Parly man in in his stead. The same thing will apply at Dubbo. The electorate of the Premier of New South Wales takes in Gilgandra, a town of some 3,000 to 4,000 people about 40 miles from Dubbo, the airport of which is Dubbo. Knowing the Gilgandra people as I do, if they do not take the opportunity to give Jack Renshaw a kick in the pants on that occasion, 1 shall be very disappointed.

I think I should say before going any further that I have met Mr. Ansett and I have met Mr. Shand. I am no particular friend of either of them. 1 travel with Airlines of New South Wales when that service suits me. I travel with Ansett-A.N.A. when it suits me, and I travel with T.A.A. when it suits me.I am a firm believer in the two airline service such as we have over the Commonwealth of Australia. It has been proved; there is no question about that I think that Mr. Ansett has shown over the years that he is a very shrewd businessman, and perhaps a pretty hard bargainer. He would not be where he is if he were not. There is no crime about that. My view - this is my view only; I am not suggesting that it is the view of the Government - is that Mr. Ansett endeavoured to buy EastWest Airlines as he did Butler Air Transport Ltd. He did not succeed. East-West Airlines was suffering at that time from lack of finance. Mr. Ansett at that time probably thought with good reason: "If you do not accept my offer now, you will be glad to accept my offer, or probably a lower one, later." It was a business deal. So much for Mr. Ansett.

Now I turn to Mr. Shand. He, of course, has been all for this suggested reallocation of routes which was so favorable to him - naturally. I wonder whether Mr. Shand, if he had been holding 70 per cent, of the airline routes of New South Wales, would have been satisfied with having 19 per cent, ripped off him and given to Ansett. I do not think that he would. We have been told by some ill informed people that all the shareholders of East- West Airlines are wealthy graziers. In the minds of most people, anybody who is a grazier today is wealthy. I happen to know some of the shareholders and some of the directors of East-West

Airlines. They are by no means wealthy,I can assure you. So much for those furphies. It is inevitable, I suppose, that they get about from time to time.

Let us look at what has been given to these airlines in direct financial assistance. East-West Airlines - I do not begrudge it this assistance at all; as a matter of fact, I am very glad indeed to see the airline have it - over the past five years has had some £140,000 to £150,000 by way of subsidies. This has enabled the airline to carry on; otherwise it would not have been able to do it. I give full credit to the Commonwealth Government for making these subsidies available. Last year, I think, about £26,000 was paid to this airline.

Over the same five year period, Airlines of New South Wales received about £200,000. The reason for the difference between the amounts paid by way of subsidy to East-West Airlines and to Airlines of New South Wales is that Airlines of New South Wales has had a greater mileage. Last year it was paid about £29,000, not much more than East-West Airlines. EastWest Airlines, in the beginning, was assisted by a DC3 aircraft from the Royal Australian Air Force. First, it had the aircraft on a low rental basis. The aircraft was then sold to the airline at a very low price. Surely if the Commonwealth Government wanted to stulify this airline that step at the very beginning would not have been made. In addition, a DC3 aircraft was made available on hire purchase from T.A.A. and there was also a Fokker Friendship aircraft from T.A.A. Here was an opportunity, if the Government wanted it, if it was the ogre that the Opposition describes it as being, to say to East-West Airlines: " No planes are available." This company would not have been able to exist.

In addition to the planes that have been made available to East-West Airlines, Tamworth has a very fine aerodrome indeed. It is well situated on high ground, with plenty of room. About £330,000 has been spent on it. 1 would not know, but that seems a lot of money. It has certainly made a very good aerodrome. About £43,000 per annum has been spent on it to keep it in good order.


Senator Ormonde - By whom?


Senator McKELLAR - By the Commonwealth Government. When we consider these things we come back to the assumption - and it is a correct one - that this is only a political move by the New South Wales Government, not in the interests of the taxpayers of the State, not in the interests of the taxpayers of Australia, not in the interests of the air users of these areas, because they will be penalised. That is as plain as the nose on your face. If the New South Wales Government had only the sense to realise the fact, it would know that it cannot beat the Commonwealth. Even if it did have temporary success - I do not think it will - sooner or later legislation will be passed here that will give the Commonwealth Government the powers, even if it has not them now, to do what it feels it should do and what it will do. So this is plain foolishness, and I could use stronger language if I were not in this place. 1 said earlier that 1 was one of those people who wanted to see East-West Airlines expand and become profitable. It would bc easy for me to sit here tonight and say nothing, but I am not a fence sitter because it goes against my grain. I have stuck my head out before, it has not helped me as an individual but at least it gives me a certain sense of satisfaction. That is the reason why I am speaking here tonight. I am not going, to endear myself to East-West supporters, I will not endear myself to Ansett, but I feel that at least I have a duty as a senator from New South Wales to stand in my place and say what I think should bc done in this matter, and that is why I am speaking as I am.

The principle in itself is wrong. I said that I wanted to see East-West Airlines expand. I do, but I do not want to see it expand by the methods that the New South Wales Government set about using, ripping routes off an airline that had spent money and devoted time and a lot of thought in developing a service. The intention was to rip these routes off this airline overnight without a by your leave or anything else. If we have it in respect of airlines, we shall have it in respect of banks and every other thing about the place. It is time that somebody took a stand on it.

I think it was mentioned by one speaker earlier tonight that the idea seems to have got about that Ansett Transport Industries Ltd. is controlled by Reg. Ansett and a few wealthy individuals - an oil company and what have you - but it is pointed out that there are some 29,000 shareholders and 30,000 investors in addition in the company. So that gives the lie to that statement.

Let us consider what Senator McClelland said. I think he said that we could not question the bona fides of the New South Wales Government in acting as it did. I know Senator McClelland too well to imagine that he believes that and I will say no more on that point. Senator McClelland also said in effect that there was no doubt that at the next election the New South Wales Government would benefit by the decisions it has taken. I recall Senator McClelland being in the Dubbo-Gilgandra area during the last Federal election campaign and he was given the job by the Australian Labour Party of looking after the Lawson electorate. He was put on record as saying that no doubt Lawson would go to the A.L.P. I feel that the forecast Senator McClelland made then was about as accurate as the one he made tonight. I have known that area for a long time and I knew the fallacy of his forecast when he made it because I was chairman of an electorate council in Lawson for a number of years.

Senator McClellandalso referred to what had been said by the dreadful Deputy Leader of the Australian Country Party in New South Wales. I refer the honorable senator to the fact that the Deputy Leader of the Country Party in New South Wales, Mr. Chaffey, in common with Mr. Davis Hughes who is the State member for Armidale, did vote with the New South Wales Government on this matter but he said in the course of the debate thai they would be voting against some of the clauses of the Bill. Mr. Chaffey comes from Tamworth and after all I suppose one of the first duties of any member of Parliament is to hold his seat. Would not people around there, many of whom are airline shareholders, say to him: "If you do not stick up for us you have had it "? I do not think that was his only motive.


Senator Cavanagh - I thought you said the public were with the Commonwealth.


Senator McKELLAR - They are, but they are not all living in one or two centres. They are all over Australia.


Senator Maher - They are not all at Tamworth.


Senator McKELLAR - No. They are not all at Tamworth or Armidale. Just because a statement was made by the Deputy Leader of the Country Party, it does not mean that that was the view of the Party. I want to refer to a statement that was made by Mr. C. B. Cutler, the Leader of the New South Wales Parliamentary Country Party on 31st October 1961. He said then -

The Country Party believes:

1.   The development of New South Wales' Air Transport Services can best be achieved by the continued operation of two intrastate air services.

2.   East-West Airlines should be assisted to continue operations as an economic decentralised industry by:

(a)   Rationalisation on a sound basis of existing air services by the Slate in consultation with the Commonwealth Government and the two airlines concerned:

(b)   The granting of licences to new centres and the subsidisation of desirable but uneconomic services:

3.   The Commonwealth Government has acted wisely in assisting in the establishment of the two intrastate airlines by way of assistance with aircraft acquisition and subsidy on running of uneconomic services and that such assistance should continue on the principles previously existing.

4.   That the State Government should have Approached any rationalisation plan by calling together the parlies concerned and in conference with the Federal authorities have determined a formula for air routes which would have insured the continuance of East-West Airlines but would not have constituted an arbitrary threat to free enterprise undertakings in this State.


Senator Ormonde - Why did that not happen?


Senator McKELLAR - You ask Renshaw. The statement continues -

The present decisions can only be interpreted in this light in view of the fact that no consultations were held with Airlines of N.S.W. nor docs it appear that their co-operation and concurrence was sought.

5.   Finally if the present proposals are persisted with then it is the complete and absolute responsibility of the State Government to ensure that both East-West Airlines and Airlines of N.S.W.:

(a)   Maintain at least present services on all existing air routes from the point of view of frequency, suitability of times and passenger convenience:

(b)   That air fares shall not be raised without Government consent and that such undertakings be an essential and binding part of any agreement entered into with the two Airways.

That is what was said on behalf of this dreadful Country Party of New South Wales. Any comment? No. There is not because this is common sense and that is what should be done.


Senator Ormonde - We do not disagree with that.


Senator McKELLAR - Of course you do not; but because one or two members have made statements, you claim that they represent the policy of the Country Party in New South Wales. This often happens. You are only a thousand miles from the truth.


Senator Ormonde - The Commonwealth Government precipitated the crisis.


Senator McKELLAR - This Government did nothing of the sort. It was precipitated by an unfair allocation of airline routes by the New South Wales Government. Then the judgment was handed down and as a result of that judgment the Commonwealth Government decided that in view of the money that had been spent on aerodromes throughout Australia, it was up to the Commonwealth to put into operation the powers that exist. In the long run, this will help the States too. There is no question about that. Is it any wonder that we feel that the Opposition, for once at any rate, is not sincere in moving that the Air Navigation Regulations should be disallowed?

I, for one, hope sincerely that the people in the areas concerned are not going to be inconvenienced to the extent that they could be. If they are, they will certainly know whom to blame. Secondly, I believe that not only the taxpayers must be considered. We must also be concerned with the safety and convenience of the people using these airlines. Their interests must be considered. That is fundamental as the Minister for Civil Aviation has said repeatedly. I have pleasure in supporting the Minister's remarks.







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