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Thursday, 15 October 1964

Senator PALTRIDGE (Western AustraliaMinister for Defence) . - The sorry mental condition to which so many members of the Opposition fall victim at the very mention of the name of Ansett was never better demonstrated than it was a minute ago by Senator O'Byrne. He was shaking with passion, red in the face and almost incomprehensible because the name of Ansett had been mentioned. It is late in the night and it has been a long debate. For my own part, I probably would not be taking part had it not been for the fact that earlier today Senator Kennelly,- another victim of this sorry mental state, availed himself of the opportunity of this debate to attack the Government, to attack me and to attack my administration of civil aviation. I take the challenge up willingly and gladly. As I have told this Senator on many occasions, every time you want to criticise civil aviation administration in my presence I will speak in defence of it. What sort of attack was made, apart from die personal attack to which I will refer in a minute?

Senator Kennellywent back to 1958. He criticised what has become known as the " Caravelle deal ". This is a mulish attitude, a stupid attitude, for anyone who claims to know anything about civil aviation at all. In 1958 the Government laid down a prohibition against the use and the import of pure jet aircraft into Australia and events have since proved it to be one of the soundest decisions that it could have made. We were not ready for pure jet aircraft. We did not have the airports; we did not have the facilities. Let me say again that the Caravelle Mark I available at that time was not an aircraft which would have suited our existing route pattern. We have seen what has happened in other countries as the* result of the too early introduction of pure jet aircraft. We have saved the Australian air travelling public from some of the pitfalls which have appeared in so many other countries, in the meantime providing for our domestic network an aircraft, which on any judgment at all, has done a first class job.

Senator Kennelly - and I regret that he is not here now - then attacked again the cross charter arrangement and said that this had been detrimental to Trans-Australia Airlines. Let me repeat it: The facts of this deal were that T.A.A. was a willing partner. It is true that when the proposition had been made 18 months earlier T.A.A. had rejected it, but when the deal was last proposed, it was finalised for no reason other than that T.A.A. saw advantage in taking DC6's to service the New Guinea run just recently taken over from Qantas. How wise was that decision? How did it work out? Late last year when both airlines wanted additional capacity to see them through until they took delivery of their new jet aircraft what did they buy? Each of them bought one DC6B aircraft. Yet we have had Senator Kennelly whining, as he has whined during the years, about this particular deal.

He mentioned that Ansett-A.N.A. had been admitted to the Darwin route. It was. It was admitted to the Darwin route in terms of an agreement which had been reached between the two operators and to which this Government was a party and to which this Parliament had given its imprimatur. What were the circumstances? The Ansett-A.N.A. organisation applied for admission to the Darwin route for three years before the Co-ordinator thought that there was sufficient traffic to justify its entry to this route. For two years its application was rejected, and then in the third year, because of the change in circumstances, the Co-ordinator legitimately let Ansett-A."N.A. into that route.

What always amuses me about this reference to Ansett-A.N.A. 's admission to the Darwin route is the convenient manner in which the Labour Party forgets its own previous machinations in this matter when the present Leader of Opposition was a member of a government which kicked out Guinea Airways and put T.A.A. in. Yet tonight the Leader of the Opposition stands before the Senate as a pillar of private enterprise. On this question of the co-ordination of route structures generally, let it not be forgotten that the relevant committee comprises representatives of the companies with the Director-General of Civil Aviation sitting as Chairman. If there is no agreement the matter referred to the committee goes to the Co-ordinator. If, as was explained earlier today, the Co-ordinator rejects an application by any one party, he must provide in writing his reasons. The matter can be referred then to an appointed Chairman who is Sir John Spicer. I should like to tell the Senate thai it is almost the invariable case that whichever way the application is decided one party grizzles. If Senator Henty's experience is going to be my own repeated, he is going to have the disappointed applicants coming to him and complaining that their applications were not successful. That happened to me many times. In those cases I invariably said to the party who thought he had a grievance: "The legislation sets up an appeal for you. Why do you not take your appeal to the Chairman?" Do you know, in the seven years that I was Minister for Civil Aviation not one appeal was made to the Chairman? However, the appeal machinery has been provided, and it still exists.

Senator Kennellytook the opportunity of referring again to the particular case of East-West Airlines and the circumstances that arose some three years or more ago when it was alleged by some that I was bringing pressure to bear on East-West Airlines to dispose of their interests and their assets to Ansett-A.N.A. Senator Kennelly mentioned three particular people in connection with this - Mr. Drummond, the then member for the district in this Parliament, Mr. Shand, who is the Chairman of Directors of East-West Airlines, and Mr. Pringle. I think honorable senators, if they will bear with me, might be interested to recall just what was the position of these three gentlemen in respect of the allegation that was made against me or insinuated against me at the time. I think most of us remember Mr. Drummond. I do not think it is unfair to say that in the later years of his membership here he suffered - and suffered badly -from defective hearing. He wore a hearing aid but it is common knowledge that he did not always hear as well as he would have liked, despite the fact that he wore that instrument. This is what Mr. Drummond said in respect of a conversation between myself and two of the directors of EastWest Airlines at which he happened to be present. This is the relevant part -

I can say definitely that the Minister said to the representatives of the company that they would have to get together with Ansett.

May I interpolate that that is quite true. In a long conversation, I had been trying to get the directors to see the advantage of reaching some composition with Ansett, not only as to routes - indeed, routes were not under consideration on this particular occasion - but also service of aircraft. So when I said that they would have to get together with Ansett, that is the reference. Mr. Drummond continued -

That statement is open to a certain construction. I did not hear the Minister say that this agreement was to bc cither in the form of a sell-out or an amalgamation . . .

He did not hear that. Of course he did not. He went on -

It could have been said but it was not said to my knowledge or within my hearing.

I dismiss Mr. Drummond, for Senator Kennel ly's benefit, as a witness to the allegation against me that I was trying to induce the directors of East-West Airlines to sell their assets to Ansett-A.N.A.

The next document to which I want to refer is a letter which I received about that time from the chairman of East-West Airlines, Mr. Shand, whom I saw from time to time in the ordinary course of my administration and whom, just before this letter reached me, I had seen at his request at the city of Orange in New South Wales where an airport was opened. It was subsequently alleged, may I remind the Senate, that I was bringing pressure to bear on Mr. Shand to sell out. This is how Mr. Shand wrote to me -

Dear Shane -

Sir, perhapsyou should be presidentially informed that that is my christian name. Isn't that a nice friendly way to address someone who is supposed to be trying to do you in the eye? Mr. Shand wrote -

I have given a lot of thought to the talk we had in Orange.

I called at your office when in Canberra last week and .found you had departed for South Africa. I hope your trip was as interesting as the one I had there recently.

I have been to see Donald Anderson and had a long talk with him.

Could you kindly wire me at your convenience, on your return as I would like to have a talk with you.

I now realise some of the tremendous difficulties that you have to cope with, and hasten to assure you that small as our organisation is we want to help the progressive development of this country and not hinder it.

Your Department, especially yourself and Donald have done much to help us develop. I do thank you for all your kindness in the past and hope you can spare some of your time to see me in the near future.

Yours sincerely,

Donald Shand.

This is the gentleman on whom it was alleged ] was bringing pressure.

The Deputy Leader of the Opposition mentioned Mr. Pringle in this connection. Mr. Pringle wrote me a most interesting letter. I shall read it for the benefit of the Senate and I remind honorable senators that it was subsequently said that I was putting Pringle under some sort of pressure. The letter is dated 8th August 1960 and states -

Dear Senator Paltridge,

Firstly, I would like to convey to you our appreciation for the friendly and frank talk we had in your office in Canberra on the occasion (hat Archie and I visited you.

The purpose of my writing you this personal letter is to inform you that I am taking my Directors for a short holiday fo Brampton Island -

J should explain that at that stage Mr. Shand was overseas and Mr. Pringle was acting chairman of directors- on Sunday, 21st August 1960, where we will bc remaining for a period of seven days. It has occurred to me that this could provide the ideal opportunity for a friendly talk with Mr. Ansett along the lines mentioned in Canberra.

It is felt that such a meeting would be the only way in which we could ascertain whether or not there is any chance of this Company working out some mutually acceptable agreement with the Ansett group. 1 do not know Mr. Ansett personally, and I would therefore bc most grateful if you could pass this information on to him at an appropriate time.

With kind personal regards.

Yours sincerely,


The fact of the matter is that having received his letter I told Mr. Pringle immediately that I would not ring Mr. Ansett but that if he felt that he wanted to take him to this island on the Barrier Reef or meet him there he should get in touch with Mr, Ansett himself. 1 did not know until months afterwards that that is exactly what happened; Pringle got in touch with Ansett, or someone from the Ansett organisation, and they had a meeting on this island in the Barrier Reef, not because I arranged it, but simply because the directors of East-West Airlines wanted to have a meeting to discuss their business with Mr. Ansett. Subsequently, the charge was made that 1, in all these dealings, was trying to bring some pressure to bear. I look back on it now, some three years ago, and laugh at the fact that at the time the allegation was made I gave it any serious thought at all. But that, of course, does not prevent the Deputy Leader of the Opposition, in the circumstances of this motion, from bringing the matter up again, smearing, and alleging that the Government, and myself particularly, had been engaged in some process which should not have been undertaken. I give the lie direct to that allegation now, as I did on the last occasion.

I want to say further, in regard to what Senator Kennelly said, that whether he likes it or not the success of the civil aviation policy pursued by this Government is now an established fact which is acknowledged throughout the world. Senator Kennelly may not like it. In fact, I know he does not like it because he, in common with all members of the Australian Labour Party, does not want a two airline policy. He wants one airline - T.A.A. But the fact is that our policy has worked very successfully and this is acknowledged. With due modesty I confess to some feelings of satisfaction that the policy has worked out very well. That would not have been possible without the work of the officers of the Department of Civil Aviation and I pay immediate tribute to those who have worked so assiduously to bring about this result. But I, too, take some small satisfaction from what has occurred and some pleasure from the frequent references in overseas aircraft magazines - and most overseas countries have their difficulties with airlines - pointing to the success of what has been done in our own country. I merely want to say in respect of that matter, Mr. President, that left alone, unhindered by the Government of New South Wales, which is merely engaging in a political stunt, we will do in New South Wales precisely what we have done on the the trunk routes of Australia.

My first thought oh the present situation that we are discussing tonight is my regret that an air operating company like EastWest Airlines should have become entangled in party politics or permitted itself to become entangled in party politics. This has done it no good. One has to look at the development of this situation in order to get it in the proper perspective. The Senate might well be reminded that it was not until 1957 that these feeder airlines were subsidised at all. I cannot remember in all the history of aviation, despite the fact that in 1957 many of these feeder airlines were in grave financial difficulties, the Premier of New South Wales or the Premier of any States doing anything to assist them. They could have rotted as far as the Premiers of the States were concerned.

In 1957, might I add, under policies developed, sponsored and recommended to Cabinet by myself, we undertook the subsidisation of feeder airlines. East-West Airlines was one of the beneficiaries. Is it not rather ridiculous to believe that, having gone to some trouble to maintain it in existence, 1 would then take action to run it out of existence? I repeat that this was done in September 1957. The purpose was to give the feeder airlines a chance to survive. But when we undertook subsidisation it was made clear to all the airlines that while we were prepared to pay them subsidies for unpayable routes, while we were prepared to assist them in the procurement of aircraft, we looked to them to do something realistic to help themselves out of their difficulties. I remember now - I have remembered many times since - that when we undertook this sibsidisation plan there were many people in this chamber and elsewhere who looked very sourly at it, because in the minds of many these small airlines were just getting ready to be dropped into the lap of T.A.A.

Senator O'Byrne - What is wrong with that?

Senator PALTRIDGE - And this action by ourselves saved them from that particular circumstance.

Senator O'Byrne - Would it not have been awful?

Senator PALTRIDGE - We think it would have. Every one appreciates, of course, that you are an avowed socialist, that you do not agree with the two airline policy and that you would exclude private enterprise from participation in civil aviation. Everyone understands that.

Senator O'Byrne - We would not exclude T.A.A., as you are doing.

Senator PALTRIDGE - But we do not, and as it happens we are the Government. We understand well that in the unlikely circumstance of the Opposition ever becoming the government again, it will do its level best to kick private enterprise out of the air and re-establish a government monopoly. We know that, despite the fact that at election time your leader can go to the people and say, in effect: "We are a Socialist party but believe me, brethren, if we are elected this time we are not going to socialise anything for two years."

East-West Airlines, as I say, was one of the small airlines. To indicate the type of difficulty it was in at the time we started to subsidise it, I inform the Senate that its paid capital was £82,000. Clearly one of the things that had to happen was. that it had to get an infusion of new capital. Clearly that imposed certain difficulties upon it. But the Government understood its difficulties and, indeed, it was our subsidisation policy which was designed to mitigate those difficulties as far as it was possible. While this was going on, Ansett concluded that the best way to protect private enterprise in this industry was for the private enterprise components in it, one way or another, to get together. Even if you do not agree with that policy, at least you can understand it, having regard- to the fact "that private enterprise had only escaped the clutches of the Socialists by the skin of its teeth just a few years before.

Ansett, as the leader of the private enterprise wing of the industry, was concerned to see that that private enterprise wing. would strengthen itself and would be able; as far as was possible, to hold off any action by any subsequent Socialist government. Because he held this belief, he made an offer to purchase the shares from the shareholders of East-West Airlines. It was a fair offer. Indeed, I think it was a remarkably high offer for the shares, but whether that is so or not does not matter. The company, acting well within its own rights, said: " No, we will not accept the offer ". I do not criticise it for the refusal. That is its decision. Having done that, the company then took the textbook action of altering its articles of association to provide that shares were not transferable without the approval of the directors. That was understandable. The company went further, Mr. President. It established an assets revaluation reserve from which it made a bonus issue of shares to shareholders to the extent of some f 5 1,000 or £52,000. The assets revaluation reserve was created by writing up goodwill and the value of the airline licences. 1 merely explain it; I make no comment on it. I think that most people would agree that it is more unusual than usual, but this is what it did.

When the company made this bonus issue of shares, I as the Minister had not been informed, but finding out that it had done this I took the first opportunity of getting in touch with the company, initially by telegram, and informing the Chairman of Directors that for the purposes of subsidy assessment the bonus issue which the company had made out of this newly created reserve would not be taken into account by me. I would think that most people would regard this as a most proper action. Having regard to all the company's difficulties, as I did, understanding what its difficulties were and realising that it was trying to beat off an attack by Ansett, I do not know why the company had to take this second step, because it had covered the position in its first step by restricting the transfer of shares. But, realising just what its trouble was, I did not intend to make this bonus capital available for the assessment of subsidy. My refusal to do so was an action for which, in some quarters, I was very much criticised. Members of the Australian Labour Party ought to remember this. Senator O'Byrne has said that East-West Airlines ought to be supported, and he set beside that proposition the criticism directed at me for the action that I took. I advise him to go to the next meeting of his local branch of the Labour Party and explain his own attitude towards the subsidising of capital raised in the way that I have described.

This brought us to the point at which the New South Wales Government became involved. I have never understood whether East-West Airlines approached Heffron or whether Heffron approached East-West Airlines. But, out of a meeting, this idea of the Borthwick plan was cooked up. The purpose of that plan was to take from the existing company, Airlines of New South Wales Pty. Ltd., some 19 per cent, or 20 per cent, of its revenue and give them to the other airline. 1 put it to the Senate that, regardless or whether one has sympathy for East-West Airlines or dislikes Airlines of New South Wales, this is straight out appropriation of private property. And this is what Renshaw wants to embark on in New South Wales. It is straightout socialist appropriation.

Senator Ormonde - But this is being done by those who form the Government of New South Wales.

Senator PALTRIDGE - I know: They form the Government now. This is the sort of policy that they want to put into effect.

Senator Murphy - What nonsense.

Senator PALTRIDGE - Senator Murphy has talked of decency and fair dealing. How does he line up this sort of action against Airlines of New South Wales with decency and fair dealing? It is just robbery. His justification of it is: You did it to TransAustralia Airlines. The fact is that this was never done to T.A.A.

Senator O'Byrne - Of course it was done.

Senator PALTRIDGE - It was not clone to T.A.A.

Senator O'Byrne - It was done little by little.

Senator PALTRIDGE - The circumstances were completely different. I have pointed out time and time again that what was done in respect of T.A.A. and AnsettA.N.A. in the allocation of routes was done within the framework of an agreement to which both were parties. That is well illustrated on the Darwin route. When Ansett picked up a route, he did so because of the accumulation of traffic that had occurred on that route. There was no appropriation of private property in the way proposed now by the Premier of New South Wales. What he proposes is straight out appropriation. I see that Senator Murphy smiles. He may not like Ansett or Airlines of New South Wales, but he will not argue with my contention that what Renshaw proposes is nothing else but appropriation of private property. That is the only way in which it can be described.

I want to make just one or two more comments. The whole of this debate has been set against the background that the Labour Opposition in this Parliament wants to see East-West Airlines preserved in New South Wales.

Senator Ormonde - We wish to protect private enterprise.

Senator PALTRIDGE -I do not believe that, and I do not think that any honorable senator opposite believe it. Do 1 need to remind my colleagues in the Senate how frequently Senator Kennelly has risen to his feet and asked me when the Government proposed to let T.A.A. operate intrastate services in New South Wales? He has taken every possible opportunity to criticise this Government because it has not let T.A.A. do that. Although I have described to him with mathematical precision the reasons for the Government's attitude, he has never been satisfied about the matter. The plot here is plain: Something is to go to T.A.A. via East-West Airlines if ever a Labour government in the Commonwealth sphere gets a chance to enter into collusion with the Labour Government in New South Wales. I am probably not as smart as I should like to be, Mr. President, but I have been in this business long enough to read the signs. I reject as entirely insincere the arguments that have been advanced by the Opposition in this chamber today. What we have witnessed in this debate is the kind of political stunting which has been originated in New South Wales and which is repeated here so often.

Question put -

That the motion (Senator McKenna's) be agreed to.

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