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Thursday, 12 November 1959

Mr CALWELL (Melbourne) . - There is no doubt that the public was shocked when the announcement was made out of the blue, to use an appropriate colloquialism, that airline fares would be increased, that the service on aeroplanes would be reduced and that a new impost would be introduced in regard to the transport of passengers between city offices and airports. Dispassionate examination of all the factors leading to this announcement prove that had the Government's policy been directed, as it should have been, towards the maintenance of proper standards of competition between the airlines, this situation would never have arisen. When Trans-Australia Airlines was established, there was much criticism of it from members of the parties now sitting in government, and for a time it seemed as if T.A.A. would be sold to private enterprise if there were a change of government. But, despite the hobbles and shackles that have been placed on it in the ten years that this Government has unfortunately had charge of the destinies of Australia, T.A.A. has succeeded. It has never been given a fair opportunity to compete either with Australian National Airlines or with the organization that gobbled it up - Ansett-A.N.A.

The competition between A.N.A. and T.A.A. was complicated by the existence of an airline run by Mr. Reg Ansett. He skimmed the cream, to use another colloquialism, from the air traffic between Sydney and Melbourne. He helped to destroy A.N.A. and ultimately took over what was left. Then he bought out Butler. Now this Government, to help Mr. Ansett to remain in the airline business, will not provide Mr. Butler with the necessary dollars to enable him to set up an airline and to give A.N.A. and T.A.A. the competition in which the Government says it believes. It believes so little in free enterprise that it is determined to protect AnsettA.N.A. against all competition, whether from T.A.A. or from any new airline company that might be established.

In recent years the Government has passed several pieces of legislation which have had the effect of crippling T.A.A. because they have been designed to help Ansett-A.N.A. I need refer only to the Airlines Equipment Act 1958, which gave T.A.A. the right to borrow £3,000,000, where previously it had had the right to borrow only £1,000,000. The Government forced this on T.A.A. in order that Ansett- A.N.A. could be given a loan of 3,000,000 dollars in United States currency to purchase Lockheed Electras. T.A.A. wanted to operate a jet line of Caravelles but the Government forced it to adopt the Electras. Eventually when T.A.A. had to capitulate, Ansett-A.N.A., which already had two Electras on order, brought them to Australia and operated them months before T.A.A. could even buy, let alone have Electras delivered to Australia. The Electra is an obsolescent machine. It is on the way out. We are entering the jet age and we should have Caravelles on our airlines. If the Government thinks that Caravelles are not the right kind of aircraft for us, we should have Comets. In fact, if this Government is so anxious to help British industry, it should be buying Comets and should not be committing the nation to the expenditure of dollars which we certainly do not have.

Mr Whitlam - And Australia makes the motors used by Caravelles.

Mr CALWELL - Exactly, the motors can be made and fitted here. I understand that they are being made here and are being exported. The introduction of the Electras gave Ansett-A.N.A. a great advantage over T.A.A., so great in fact that during the period when the Electras were being operated by Ansett-A.N.A. alone, £400,000 profit, which T.A.A. would otherwise have earned if it had been able to compete on a fair basis, went to Ansett-A.N.A. But, according to the report which was presented to Parliament yesterday, T.A.A. still finished the financial vear with a profit of £250,000. Had it been able to earn that extra £400,000 profit, or something like it, T.A.A. would have been able to absorb the losses which we are now told make the increase in fares necessary. The increased cost to T.A.A. this year as a result of the r-cent salary increases to pilots amounts to £100,000. The basic wage increase of 15s. a week accounts for another £150,000. Other increases and wage adjustments might add another £250.000. but, even taking these amounts into consideration also. I feel that if T.A.A. had been allowed to compete with Ansett-A.N.A. fairly, it would not be operating at a loss. However, I think the position certainly will be better this year than it was last year.

I believe that the Government is so anxious to keep Ansett-A.N.A. in the air that it will force T.A.A. even to run at a loss, lt will continue to divert traffic in various ways to Ansett-A.N.A. The Government talks about free enterprise, and you would almost imagine that it did believe in free enterprise. What the Government forgets all the time is that all the airport facilities in Australia, which have cost many millions of pounds, have been provided by the Australian taxpayer. The air in which all aircraft operate is a public domain. The cost of maintaining airports and airport facilities is about £9,000,000 a year. Ansett-A.N.A. and T.A.A. pay about £250,000 each in landing charges.

Mr Thompson - And they have the use of all the flying aids as well.

Mr CALWELL - Exactly, both airlines use all the aids that are inseparable from modern flying under safety conditions.

Mr Curtin - Has Ansett-A.N.A. yet paid the tax that it owes?

Mr CALWELL - No. It has a longterm loan that has been very favorably arranged. I have spoken of the Airlines Equipment Act of 1958. Then there was the 1957 legislation which imposed an excise duty of 6id. a gallon on kerosene fuel. This means that T.A.A. has to pay the Commonwealth Government an extra £400,000 a year which it should not have to pay and which it did not pay previously. T.A.A. has to pay the duty to a far greater extent than has Ansett-A.N.A. Therefore, £400,000 must be added to the losses that have been incurred by T.A.A.

Mr Curtin - From what bank did Ansett-A.N.A. obtain its loan?

Mr CALWELL - I am not certain, but all financial details are covered by the act. Yesterday Ansett-A.N.A. announced its balance-sheet. If only half of what it says is true, the company is doing well. It claims that its revenue rose from £9,600,000 in the previous year to £14,000,000 up to 27th June last. If that is so, why does Ansett-A.N.A. need an increase in fares to remain in the air? The company claims that it is paying 17 per cent, dividend on its paid-up capital, but that does not mean that it is solvent. In fact, the company is woefully under-capitalized. It has a capital of about £3,000,000 and its revenue is about £23,000,000 for all its activities. About £15,000,000 of this comes from airline operations. According to a share market letter that was issued in Sydney a few days ago, Ansett-A.N.A., in order to obtain some more capital, is issuing 2,880,000 shares of 5s. each which will be available until 23rd November - about eleven days from now. If these shares are taken up, and various other schemes succeed, the company's capital will rise from about £3,000,000 to about £4,300,000. Its liabilities are about £23,000,000, but T.A.A. does not have this very large liability in its books. It has been very well managed over the years from the time that Mr. A. W. Coles became the first chairman of directors until the present. It is a very efficient organization which really did not want to increase its fares.

The chairman of T.A.A. recently went to America. Before he went he said that there was no case for any increase in fares. When he returned, almost the first statement that he made on the morning of his arrival was that he was opposed to any increase in fares. All the Minister said was that while the chairman had been away a lot of things had happened. Well, a lot of things did happen. It is true that T.A.A. and Ansett-A.N.A. approached the Minister jointly and asked for these increases in fares. T.A.A. had not much alternative in the light of the pressures to which it was being subjected and to which it might be further subjected.

T.A.A.'s costs of about £500,000 for meals and about £350,000 for buses are quite considerable, but more efficient and more modern management of the bus services could eliminate a good deal of the losses in that respect. The meal arrangements to-day are really deplorable. People who fly from Perth to Melbourne, which takes about 4i hours, receive no refreshment of any kind - not even a cup of water. If they board a plane at Melbourne to travel to Sydney they are supplied with a bun, a piece of butter and a fruit drink. That is an austerity meal. I know that fares in this country are not high. In fact, I think that our airlines fares are among.the lowest in the world, and that our facilities are better than those in any other country in the world, but by no line of reasoning can it be argued that the position of T.A.A., at any rate, was so parlous that airline fares had to be increased and other facilities reduced. T.A.A. wants to run an economy tourist class of plane. It has paid off all its DC4's - I think they number four. They are written off and the airline could run a tourist service with that type of plane between Sydney and Melbourne, the only two cities between which it would be profitable, at £5 per passenger. But Ansett-A.N.A., which talks about running the same sort of service, would have to use DC6's, and in order to use them profitably would have to charge at least £6 10s. per passenger.

If we ever have that economy service operating in Australia, 1 guarantee right now that T.A.A. will be forced to charge £6 10s. per passenger, the same rate as Ansett-A.N.A. will charge. Ansett-A.N.A. cannot sell its DC6 planes at a profit. It cannot even sell them at a reasonable price. Ansett-A.N.A. is being propped up all the time by the Government. Well, that is not fair competition. I do not mind the existence of two airlines. Let us have that if it can be done economically and efficiently; but let us have some new arrangement in regard to services - some proper rationalization of services. We have not got that now. Aircraft of both airlines leave Sydney and Melbourne, and every other capital, within five or six minutes of each other. The public is being neglected all the time, yet this fierce competition proceeds in regard to the best traffic times.

Mr Beazley - And the competition leads to a deterioration, and not an improvement, of the service given.

Mr CALWELL - Exactly! That is quite germane to the argument. What is happening is that this competition is forcing down conditions for the travelling public. I am not making a plea for parliamentarians, who travel on warrants; I am making a plea on behalf of the people who have to pay their own fares.

Ultimately T.A.A. will probably be the sole survivor, because T.A.A. has very little interest to pay whereas Ansett-A.N.A. is under-capitalized and has a tremendous interest burden. If it is to survive ultimately as an airline competing with T.A.A., it will have to be at the public expense. Ansett-A.N.A. wants to buy a third Electra. If the Government permits it to do so T.A.A. will be further disadvantaged.

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