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Friday, 10 December 1965

Mr WHITLAM (Werriwa) .- The Opposition does not oppose this Bill. Late in 1961, Mr. R. M. Ansett took full page advertisements in newspapers and sent letters to all honorable members setting out his requirements for civil aviation for the following 10 years. Accordingly, the letter was sent to the Parliamentary Draftsman to produce a bill which ordained among other things, that air navigation charges should not be increased at a greater rate than 10 per cent, per annum. The present Bill is in accordance with Mr. Ansett's requirements and the statutory provisions made pursuant to them in 1961. It is increasing air navigation charges this year 10 per cent, above those applying last year. Most of the expenditure for providing air navigation facilities on the ground, by radio and through meteorological services are met from ordinary Consolidated Revenue and not from air navigation charges. Last financial year air navigation cost the Australian people £20,700,000 and air navigation charges provided £2,220,000 towards that sum. Last year £2,400,000 more was spent on air navigation purposes and £350,000 more was raised in air navigation charges. It is estimated that the additional charges from this Bill this year will be £620,000. It is to be expected that the air navigation expenditure this year will go up by about £3 million.

The increase in air navigation charges last year, it will be noted, amounted to only one-seventh of the increase in air navigation expenditure. This year the increase in air navigation charges once again will be a small fraction of the increase in air navigation expenditure. Until 1971 it is not possible under this Parliament's obligations to Ansett Transport Industries Ltd. to increase the air navigation charges at a greater rate than 10 per cent, per annum. During the currency of the agreement so far the percentage of air navigation expenditure met from air navigation charges has increased from 8.9 per cent, to 10.7 per cent. One would expect that by the end of the Ansett decade the percentage of air navigation expenses met from air navigation charges will still only have reached about I2i per cent, or 13 per cent. Accordingly, the Australian people will continue to make much larger provision for air transport than they make for any other form of transport. In fact, they will make more provision for civil aviation than they do for all other transport combined.

Honorable members frequently hear references to the subsidies involved for rail transport in Australia through State Government deficits. In 1963-64, the last year for which the Commonwealth Grants Commission has reported on State railway deficits, the sum total of the deficits amounted to less than £114 million. It is true that there are some other budgetary provisions made in some States concerning the amortisation of loans for developmental railways. In addition to the railway subsidies there are losses which are borne by State Governments on trams, where they still run, and on buses, and occasionally on ferry services.

Australian taxpayers pay more to maintain civil aviation than all other forms of transport. This is all the more remarkable when one considers that most freight in Australia still goes by surface transport. We spend very much less on roads, railways, wharves, shipping and urban transport than we do on civil aviation which carries so very much less freight than any of the other forms of transport. Furthermore, this Parliament subsidises travellers by air to an entirely disproportionate extent. The average subsidy last year on every air trip was £4.

Sir Wilfrid Kent Hughes (CHISHOLM, VICTORIA) - On every passenger?

Mr WHITLAM - On every passenger who embarked.

Mr Bosman - Per passenger, or per flight?

Mr WHITLAM - It is £4 12s. per flight. This is a very large subsidy indeed for a form of transport which most passengers use on government warrants or expense accounts. Very few rail passengers travel on expense accounts or railway warrants. I would imagine there are no bus travellers - certainly no inter - city bus travellers - who travel on Government warrants or expense accounts. Very few people indeed travel across Bass Strait by sea on Government warrants or expense accounts. But in air transport, the percentage of people whose journeys are financed that way is by far the highest of any form of transport in Australia.

It is as well, I think, to consider this aspect when one hears the annual complaint about the rise in air fares. Air fares are not the same burden to the traveller as fares in any other form of transport. Fares have been put up a very great deal in recent years. Between December 1957 and October of this year, air fares for tourist passengers were put up by 57 per cent, and those for first class passengers by 44 per cent. The yearly increases have varied between 3 per cent, and 10 per cent. The increases of 57 per cent, and 44 per cent, for tourist and first class passengers respectively are the compound increases in the last eight years.

The increase in fares has primarily been caused by the Government's obligation to ensure that Ansett Transport Industries Ltd. pays a 10 per cent, dividend after all its ordinary commercial obligations have been met. The principle was stated in these terms by Senator Paltridge in September 1961 -

In order to meet reasonable private enterprise standards, Ansett Transport Industries Ltd. must have a target of the order of 10 per cent, after tax and a reasonable allocation to reserve.

Every increase which has been permitted to Ansett-A.N.A. and which has been required of Trans-Australia Airlines has flowed from the fact that Ansett Transport Industries Ltd, of which Ansett-A.N.A. is a subsidiary, must pay a 10 per cent, dividend after tax and a reasonable allocation to reserve, on the sum total of its operations, not merely on its air operations. For example, if Ansett Transport Industries Ltd. had to carry losses on a new television subsidiary then allowance would have to be made with respect to its air subsidiary to counteract those losses. I quote the following from the annual report of Ansett Transport Industries Ltd. for the year 1964-65 -

Establishment finance and costs in our television subsidiary - particularly in reference to programmes - has been much higher than envisaged. The net profit- that is of Ansett Transport Industries Ltd. - is after writing off substantial operating losses for the 11 months' commercial operations of Channel 0 Melbourne.

In the present financial year, Ansett Transport Industries Ltd. will have to pay off its losses on South Pacific Airlines of New Zealand, which was owned, as to 49 per cent, of its shares, by Ansett Transport Industries Ltd., and which has now gone into liquidation. The Commonwealth's guarantee is not to Ansett-A.N.A.; it is to Ansett Transport Industries Ltd. Accordingly, through licences to operate, through licences to import, through leases on Commonwealth aerodromes, through a restriction of air navigation charges, and through a multiplicity of other civil aviation provisions, the Commonwealth ensures that the sum total of the operations of Ansett Transport Industries Ltd. in television, hotel keeping, tourism and road transport, will all be conducted at such a level as to provide a 10 per cent, dividend.

The financial accounts of Ansett-A.N.A. - formerly Australian National Airways Pty. Ltd. - are not presented to Parliament. The financial accounts of Ansett Transport Industries Ltd., the holding company for this and some 50 other companies, are not presented to the Parliament. The AuditorGeneral does not audit the accounts of Ansett Transport Industries Ltd. Only 60 per cent, of the investments of Ansett Transport Industries Ltd. are in airline operations. By restricting air navigation charges, with which this Bill is concerned, and by a host of other concessions, the Commonwealth ensures that the 60 per cent, of operations are kept so profitable as to counteract any losses, operational or establishment, in the host of other activities for which Ansett Transport Industries Ltd. is the holding company.

I have made this analysis because the complaint is so often made that air navigation charges are responsible for the increase in air fares in Australia. The Commonwealth decides whether air companies will operate, where they will operate, with what they will operate and on what terms they will operate. All these matters are determined in such a way as to ensure this 10 per cent, dividend for A.T.I, as a whole. I reiterate that the increase in air navigation charges this year will be £620,000. The increased income that the air companies will make as a result of the 6 per cent, increase in their fares, which was permitted to AnsettA.N.A. by the Government and imposed on T.A.A. by the Government last October, will be of the order of four million pounds.

One must dispose of this suggestion that air fares are going up because this Parliament increases air navigation charges. The increase on air navigation charges permitted by this Parliament has been limited for 10 years expiring in 1971. By that time the air navigation charges will still meet no more than one eighth of the air navigation expenses paid in Australia - the expenses, not the capital.

Sir Wilfrid Kent Hughes (CHISHOLM, VICTORIA) - How much?

Mr WHITLAM - One eighth, or I2i per cent.

Sir Wilfrid Kent Hughes (CHISHOLM, VICTORIA) - And when will that percentage be reached?

Mr WHITLAM - I estimate it will be reached in 1971. In the first year of the present system, 1961-62, air navigation charges met 8.9 per cent, of air navigation expenditure. Last year they met 10.7 per cent, of air navigation expenditure. My estimate is that by mid-1971 the percentage will be 12i or 13. We must expect that air navigation charges will meet merely oneeighth of the cost of providing services for air travellers - radio and meteorological services and the running costs of the airports themselves. This is the most indulged form of transport in Australia. It is the one to which we ourselves mostly resort, and we resort to it because we do so on warrant - on what would be called in private enterprise "expense account". I am not disparaging air transport. All I wish to point out is that air travellers, mainly as they are expense account travellers, are indulged by the Commonwealth Parliament to an extent that travellers by all other forms of transport are not indulged.

I have constantly stressed the necessity to co-ordinate and to rationalise transport services in Australia. Some of them are State Government services. Some of them are Commonwealth Government services. Some of them are a combination of private enterprise and State Government or a combination of private enterprise and Commonwealth Government services. There is, how ever, no machinery for co-ordinating the services overall. None of these services could be provided on the surface, around the coast or in the air without Government prescription of one kind or another. Of all forms of transport, however, air transport is the one that is most completely controlled by governments. It is impossible to run an an airline without importing aircraft. The Commonwealth Government decides whether an aircraft will be imported and on what terms it will be imported. Again, it is impossible to operate an airline without using an aerodrome, and this Government operates every aerodrome in Australia. We know that it is in the highest degree unlikely that we will ever be able to operate air services in Australia except with aircraft imported under Commonwealth licence or without the permission of the Commonwealth to operate from the aerodromes it builds. Accordingly the capacity to regulate transport in the air is greater than in any other field of transport. The degree of control is already much greater than in any other form of transport.

The greatest difficulty in transport today is in the cities. The expense of transport in Australian cities is much greater now than it ever was, not only in terms of dollars and cents for the fuel or the fares, but still more in the time lost. It takes longer to get into or through an Australian capital city now than it ever did despite new freeways and better roads. If governments are to subsidise or rationalise transport in Australia the great field that should attract their attention is urban transport.

In this Bill we are dealing with a form of transport which is pampered, indulged or considered more than any other. It is clearly a very important form of transport. Business and governments in Australia would be crippled without the splendid internal air services that we have. It is, however, appropriate in considering this annual Air Navigation Charges Bill to consider the extent to which the general transport situation is distorted in the whole of Australia. Governments are primarily responsible for this. We do not oppose this Bill. Our hands are tied for another five years in this form of legislation. The Australian public which uses air services must continue to be grateful to the vast number of their fellow citizens who subsidise by £4 12s. every ticket they buy.

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