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Thursday, 15 October 1964

Dear Mr. Shand,

You asked me to record for you my instructions before we began our talks.

The Government desires that East-West Airlines be maintained as an independent, viable airline. For this purpose it requires a profitable route structure. This requires a reallocation of air routes in New South Wales.

I am required to study the existing structure and recommend a reallocation which will achieve the objectives of the Government as stated above. In recommending the reallocation I am to have regard to the need to keep Commonwealth subsidy to a minimum and to give the public the best possible air service.

A similar letter was sent to Captain Middlemiss of Airlines of New South Wales Pty. Ltd. Contrary to what I expected, having regard to the undertaking given to me on Tuesday morning, the executive of East-West Airlines Ltd. said that it wished to withdraw and consider the basis of negotiation. Then I received a letter stating that it believed that another basis should be found, and so forth. No further meeting took place until the afternoon of the 12th.

At the second meeting facts and figures about the air routes were given to my technical officers. They now have that information from the airlines. The DirectorGeneral and the officers of the Department are now studying this information with a view to making a recommendation to me so that I oan introduce co-ordinated air services in New South Wales, in the interests of the taxpayers of Australia who have to foot the bill for subsidies. I think that that is the proper thing to do in the interests of the Australian taxpayers. Why should licensing be allowed to run willy-nilly if, working on the basis of keeping both airlines viable and profitable, we can work out integrated and streamlined services that will be a more economical proposition from the point of view of the taxpayers of Australia who, as I have said, have to find the subsidy money? 1 want now to refer to one or two matters mentioned by the Leader of the Opposition. When I first knew the Labour Party, the big toad wolf was always Broken Hill Pty. Co. Ltd.

Senator Wood - Then it was the Colonial Sugar Refining Co. Ltd.

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