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Wednesday, 21 October 1964


Senator KENNELLY (Victoria) . - Mr. Chairman, at the outset I desire to thank the Minister for Civil Aviation (Senator Henty) and the officers of his Department for the excellent report that they have submitted for the Department for the year 1963-64. There is a fund of information contained in it. It is a great credit to the officers who compiled it. I have found much pleasure in reading it. I only wish that other reports could be submitted in a like manner.

Some time ago I asked the Minister when the report for Trans-Australia Air lines would be available. It is most unfair to ask honorable senators to discuss the estimates for the Department' of Civil Aviation without having the report of T.A.A. before them because there would be certain matters in the report which would be of importance, as far as the nation's airlines are concerned. At the time I asked the question of the Minister he informed me that the report was in the hands of the printer. I went through the reports that have been presented under statutory requirements of the Parliament and I counted about 47. Another 3 or 4 reports were presented today. But the report of T.A.A., in which I am most interested, has not as yet been presented.

We have now passed the middle of October. When one looks at the contents of previous reports of T.A.A., surely to goodness it should not take the officers of that organisation too long to prepare the report for 1963-64. I ask the Minister, as far as he is able, to see that the report of this organisation is tabled as soon as possible.

Sitting suspended from 5.45 to 8 p.m.


Senator KENNELLY - I refer to Division No. .135 - Administrative - and I propose (o make some criticism of the Minister's decision - it is his decision - to increase air fares by 6 per cent. Under regulation 106 of the Air Navigation Regulations the Minister must approve any proposed increase in fares. This is a most unfortunate time for the Minister to agree to an increase. It is true, as he will rightly say, that both airlines requested an increase in fares. I am not concerned about any request that Trans-Australia Airlines may make because, in my view, it is punch drunk and docs not require much persuasion to agree to anything. The procedures adopted by Ansett-A.N.A. are a matter for the company itself, but from the meagre reports one gets it is practically impossible for a layman to know what is going on.

According to the report of the Australian National Airlines Commission for 1962-63, which is the latest report available, T.A.A. earned £14.8 million in passenger fares and charters and had a total revenue of £18.7 million. In 1963-64 revenue' would have increased to between £20 million and £21 million. I base those figures on the Minister's assertion that business this year will increase by at least 124 per cent. No doubt the increase in 1963-64 would have been about the same. This means that in the current year, T.A.A. would have earned, in round figures, an additional £2 million from passenger revenue or an additional £2.5 million from all sources if there were no increase in fares.

If you look at the revenue side of the ledger you must also look at the expenditure side. There are, one can say, three main avenues of increased expenditure and one that can be placed in another category. I shall mention that because according to the report of the Department of Civil Aviation the Minister has stipulated that this year T.A.A. must increase its return to the Government to 71 per cent. I have no quarrel with that because, in round figures, it represents about £35,000, which is extremely small in comparison to the amounts with which we are now dealing. Wage and salary increases will account for the largest part of the increased costs. The Chairman of the Australian National Airlines Commission has stated that increased wages and salaries will cost T.A.A. £800,000. I will not argue with that figure because no one would know the position better than he does. As a result of the implementation of the bill that we passed earlier today, air navigation charges will increase by 10 per cent. Last year T.A.A. paid £468.000 in air navigation charges - I have no quarrel with that - and this year, in view of the increased traffic that the Minister expects to be carried, an additional £50,000 will be paid.

Now we come to something on which I cannot be as precise as I have been. I refer to the cost of running the additional services necessary to cope with the expanded traffic. As I have said, I cannot make a precise estimation on this aspect because the 12± per cent, increase in passenger traffic and the 9 per cent, increase which the Minister expects in freight traffic will provide an opportunity for the better utilisation of aircraft for both passengers and freight. Therefore, there will be a higher load factor. However, to be fair to my argument 1 have worked on the basis of a 12i per cent, increase in costs which will add at least £500,000 to the airline's outgoings.

If we list the figures that I have mentioned - they are based on those cited by Sir Giles Chippindall who, of course, should know the position - we have £800,000 for increased wages and salaries, plus £50,000 for air navigation charges, plus £500,000 to cope with the 12i per cent, increase in traffic, plus even the £35,000 which is represented by the additional i per cent, that the Minister has said T.A.A. must pay in taxation next year. This makes a total of £1.38 million. To offset that, there will be an increase of £2.5 million in the income received by T.A.A. when compared with the current year's operations.

If my figures are correct - I believe that they are - T.A.A. next year, even without any increased fares, would have made between £1 million and £1.25 million additional profit. I am not opposed to T.A.A. making a profit. I believe that an industry run by this nation should stand on its own feet, lt should provide a service that is at least as good as, if not better than, that provided by its competitors. It should not be a drain on the taxpayers. It should pay its own way. I do not complain about the 7± per cent, profit that the Minister has said T.A.A. should show on its capital investment, but I do not think that a government instrumentality such as this should be used to jack up fares when, according to the figures that I have taken out, there is no necessity for this.

I am not worried about Ansett-A.N.A. That is a private concern. If Mr. Ansett wants to show 10 per cent, profit overall for his shareholders, that is his concern, but I do not think that T.A.A., which is a government undertaking, should be allowed to charge excessive fares. A 6 per cent, increase in fares will give T.A.A. an extra £1 million. I have attempted to be fair with these figures. Over the years I have done everything I can to help T.A.A., because I believe in it, as honorable senators know. There is no need to make excuses for that, and I do not do so, but I believe that the Government is abandoning a vital principle which should be applied to an industry such as this which is owned by the nation. If the Government is just going to allow T.A.A. to jack up its prices, the sooner it goes to a private concern the better. This is against the whole principle of its establishment. As a layman I have tried to study the profit and loss accounts, and I am just amazed at what I see. Certain loans are made to T.A.A. for the purchase of new aircraft. 1 want it to be a success but I think it is wrong in principle that the Minister should have given his permission-







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