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Wednesday, 22 June 1904


Mr SPEAKER - Will the honorable member hand in his motion ?


Mr Poynton - I was not aware that I should require to give notice.


Mr SPEAKER - The honorable member has no need to give notice; but it is necessary, when rising to move any such motion as he has indicated, that he should hand in a statement conveying the terms of the motion, so that it may be read and the concurrence of other honorable members in his object may be obtained.


Mr Poynton - What I wish to move is, that the House at its rising adjourn until 2.30 o'clock to-morrow.


Mr SPEAKER - If the honorable member looks at the Standing Orders, he will realize that it is necessary for him to state the purpose for which he moves the adjournment, in order that the debate may be confined to the specific object set forth. If the honorable member, will now write out a few words indicating the subject with which he desires to deal, it will be possible for him to achieve his object.


Mr POYNTON - I shall do so.


Mr SPEAKER - I have received anintimation from the honorable member that he desires to move the adjournment of the House to discuss a definite matter of urgent public importance, namely, " the question of the subletting of mail contracts."

Five honorable members having risen in their -places,

Question proposed.


Mr POYNTON - About twelve months ago, I brought under the notice of the House the question of the subletting of mail contracts. I referred to a specific case in which Mr. Vines, commonly known as Cobb and Co. had sublet the contract for the carriage of mails between Ballarat and Rokewood to a man named Leviston. I pointed out that the sub-contractor, who did the. whole of the work and found the whole of the plant, received only£72, whilst the Department paid £160 to Cobb and Co. for carrying out the service. I was then informed by the Minister representing the Postmaster-General, the honorable member for Denison, that there was no sub-contract. I obtained further evidence, however, and further inquiries were made with the result' that it was found that a sub-contract had been let in contravention of rule 14 of the Post and Telegraph regulations. I subsequently received the following letter from the PostmasterGeneral's Department -

With reference to your recent interview with the Postmaster-General respecting the statement that Messrs. Cobb and Co. had sublet to a Mr. Leviston, at£72 per annum, their contract for the conveyance of mails between Ballarat and Rokewood, for which they receive a subsidy of £160 per annum ; and to the letter onthe subject addressed to you on the 8th inst. by Mr. Leviston, which you left at this office, I have the honour, by direction, to inform you that when inquiry was first made regarding this statement, ithe Deputy Postmaster-General, Melbourne, submitted a report of which a copy is attached, marked " A," but on representations 'being made by Sir Philip Fysh that you were in possession of the fact til : i t the contract in question was sublet as stated, the matter was again refer red to the Deputy Postmaster-General, and a copy of further reports is also attached, marked " B." The Postmaster-General approved that action be taken as recommended by the Deputy PostmasterGeneral, and instructions were issued accordingly. I am to add, it is regretted, that the full facts were not elicited when inquiry was first made in this case.

The report referred to reads as follows: -

I had an interview with Mi. Joshua Vines (Cobb and Co.), in regard to this contract. He stated that he employed Mr. Leviston for a stated fixed sum per annum to carry out for him the Rokewood mail service, he (Mr. Vines) being responsible to this Department as the contractor. I said to Mr. Vines : " It is alleged that you have sublet the contract; is that so?" He replied, " No. Mr. Leviston (I think that was the name he mentioned) is my employe."

From the additional information obtained, it seems to me that the arrangement made by the contractors is to all intents and purposes " subletting " the contract. This is the first case of the kind that has come under my notice. I would suggest that Cobb and Co. be requested to show cause why the contract should not be declared void under clause 14 of the general conditions of contract.

Clause 14 of the regulations reads -

The contractor shall not assign or part with his contract, or sublet the same or any part thereof, nor assign all or any part of the moneys payable or to become payable under the contract, or all or any part of any other benefit whatsoever arising, or which may arise, under the contract, e.vcept with the special licence and consent in writing of the Postmaster-General for that purpose first had and obtained ; and no such assignment without such licence and consent as aforesaid, or any agreement, contract, or covenant for the same, or any irrevocable power of attorney, or any power of attorney, coupled with an interest to receive any contract moneys, or uny part thereof respectively, shall have any effect or be recognised by the Postmaster-General, and the same respectively shall be void to all intents and purposes.

I brought this specific case under the notice of the Department, and after a considerable amount of trouble, the true facts were brought to light. Now I have evidence before me that not only one, but fifty-one, contracts have been sublet.


Mr Mahon - But complaint is made in regard to only one.


Mr POYNTON - It is not a question of complaint being made, but a matter of principle. The point is whether we should allow any firm to enter into contracts for the conveyance of mails, and then, by subletting to other persons, secure the performance of the whole of the work for less than half the sum paid by the Department. The case to which I have referred, affords evidence on the face of it that either the man who is really doing the work is not receiving the remuneration to which he is entitled, or that the Commonwealth is paying too much for the service.

The papers indicate that it has not been thought necessary to ascertain what amount is being received by the remaining fifty subcontractors. The inquiry seems to have been for the most part conducted in the interests of the contractor rather than of the general public. It is now contended that because a large number of persons are' affected nothing should be done; that to cancel these contracts at the present juncture would be to cause considerable public inconvenience. A plain statement of the facts was submitted to the Crown Solicitor, who declared that to all intents and purposes the case was one of sub-contracting.


Mr Mahon - What do Cobb and Co.'s legal advisers say?


Mr POYNTON - I shall deal with that matter presently. The Crown Solicitor unhesitatingly declared that the agreements were equivalent to subletting, and contrary to clause 14. On learning of this opinion, Cobb and Co. suggested to the Crown Solicitor that he should take into consideration two sections of the Act, which, in their opinion, had some bearing on the matter. I submit, however, that those sections have absolutely nothing to do with the case which I have brought forward, and that view is supported by the opinion of the Crown Solicitor. The first opinion given by the Crown Solicitor reads as follows: -

I am of opinion on the facts submitted that the agreements made amounted to a subletting of contracts, or part of the contracts, within the meaning of the clause in Cobb and Co.'s contracts.

The sub-contractors had to carry on the contract, or part of the contract, provide plant, employ drivers, &c, and do all that sub-contractors are usually required to do. Calling the subcontractor 0. servant does not, in my opinion, alter the fact that the contract is sublet.

The contractor, Vines, had in this case entered into what was described as an agreement to hire, and it was therefore contended that he coulcl not be charged with having sublet any part of his contract. The Crown Solicitor was emphatically of opinion that the position was not altered by that fact. I do not blame the present Postmaster-General, but the papers show that the heads of the Department have been very eager to secure information to prevent the cancellation of the contracts. In every case in which the opinion has been expressed by the Crown Solicitor that the contract should be declared void, a further effort has been made to rake up evidence to support the contention that it should be allowed to continue; but the only result has been to prove additional cases of subletting. It was clearly shown that subletting had been resorted to, but the point was raised whether the position of the contractor was affected by clause 29. The matter was once more referred to the Crown Solicitor, who advised as follows : -

I am of opinion that under section 14 the subcontract is declared void, but under section 29 any breach is punishable by a deduction of a sum not exceeding £10.

Also, by clause 28, it is provided that upon any breach of the conditions (in addition to the penalties, &c), it shall be lawful for the PostmasterGeneral to determine the contract, &c.

The Department was not satisfied with that answer. The matter was referred back to Vines, who took up a very humble position, claiming that he had carried out the contract for forty years without complaint, and that that fact should be taken into consideration. The Department made a precis of the most favorable portions of Mr. Vines' statement, and submitted it for the further opinion of the Crown Solicitor, who, with a full knowledge of everything that could be said in favour of the contractor, expressed a further opinion -

The contractors claim that the arrangement made it not a subletting, and they evidently did not look upon it as a breach of their contract. I still regard it as a subletting . with strict supervision of the work of the contractor, and my opinion is strengthened by the admission on page 3 -" Our employes, in addition to the wages agreed upon, having in some cases the rights of traffic and other -privileges, which in most cases, are of considerable value."

There has been no attempt on the part of the Department to ascertain whether these men receive other considerations. A statement to that effect appeared in the press ; but the person first mentioned by me immediately sent a reply that he had not received any consideration. It was at fiist alleged that Cobb and Co.'s plant was being used : then it was said that he had been given the goodwill of the road ; and, finally, that he was an employe of the company. The man, however, emphatically denied that any- one of these statements was correct, and that denial was accepted by the Department.


Mr Mahon - But does he deny that Cobb and Co. withdrew their coaches from an opposition route and left him without competition ?


Mr POYNTON - As a matter of fact, he was on this road long before he accepted the contract in question. When the Department ascertained that there were fiftyone cases they should have endeavoured to obtain the facts in relation to the other side. The Department, however, sent letters to two or three persons,, and learned that the contractor was undoubtedly subletting. The Crown Solicitor further advised -

The employes (?) arrange to do the work the contractors agreed to do for a fixed sum ; they have, in addition, the rights of traffic and other privileges that contractors had. Surely a subcontractor could not have more?

A remarkable position was taken up by the Department. They endeavoured to obtain the support of the Crown Solicitor to their proposal that the contract should be allowed to remain in force until it expired, next year, by effluxion of time. The Crown Solicitor was asked to give an opinion as to whether the contractor might be allowed to continue, but refused to do so on the ground that a question of policy was involved. He said -

The request to allow the employes or subcontractors to continue until existing contracts are determined is outside my province, but it does not appear that the contractors thought that they were legally qualified in entering into the arrangements they did.

The Department asked that a clause should be placed in the conditions of contract to prevent the recurrence of subletting, and, in reply, the Crown Solicitor wrote - -

If a form of contract is submitted for revision, I could insert a clause that would in future prevent contractors unknowingly subletting in a way it appears to me to have been done here.

The suggestion that Cobb and Co. were not aware that the agreements made by them were equivalent to subletting, was a mere subterfuge. If they entered into them in ignorance of the fact that they were committing a breach of the law, why did they deny, in the first place, that any subletting had occurred ? Why did they leave it to be shown, beyond doubt, that sub-contracts were being let before they pleaded that they did not know that they were committing a breach of the- law? This matter is of sufficient importance to demand a thorough investigation, for where it is possible to trace fifty-one cases of subletting, it should bt possible to trace more. The Commonwealth is not possessed of such ample funds that it can afford to waste money on a powerful company. It is most difficult to secure any extension of telephone or telegraphic facilities ; and surely we should consider the public, who require more conveniences than they at present enjoy, and refuse to give special consideration to any powerful firm. I am not in a position to say how much these gentlemen have pocketed out of the transaction, but I know that the amount paid in respect of the first mail contract mentioned by me is£160 per annum. The sub-contractor, who finds the plant and does the whole of the work relating to the contract, receives only£72 per. annum. The highest contract in the list is , £235 per annum; but the Department have not made any effort to ascertain what the subcontractors receive. The only case in which they have received any information with regard to that matter is the one which I brought forward.


Mr Mahon - If the other fifty are satisfied, would the honorable member disturb them ?


Mr POYNTON - Undoubtedly. Surely the Minister would not countenance subcontracting to this extent ? Surely he would not allow a mail contractor to secure a group of contracts and farm them out to small men at one-half the contract price?


Mr Mahon - It is not going on for ever.


Mr POYNTON - Certainly not. I hold that the contract could be determined without inconvenience to the public. Why do not the Government make an effort to see whether they cannot secure a good service bv letting another contract? The fact is that, from these letters, it can be seen that Vines has some powerful influence at work in the Department, and when this precis has been submitted to the PostmasterGeneral, he will see that it does not clearly represent the case. Are honorable members prepared to allow a large contractor to take up forty or fifty mail contracts, and farm them out? Is that the manner in which we propose to deal with the Commonwealth services? It was admitted that this was the first instance of any such practice brought under the notice of the Department, but so glaring and unfair was the position disclosed - and the late Postmaster-General, the honorable member for Denison, will bear me out - that it was deemed sufficient ground for cancelling the contract. But the circumlocution went on. Directly there was a decision by the Crown Solicitor advising that a certain course should be taken, a letter was sent to Vines and Co. asking if that firm had any further statement to make, and the Crown Solicitor was practically begged to find some way to allow them to carry on the contract to the end of the term. This matter ought not to be allowed to rest. I am powerless to act beyond bringing the facts under the notice of the House, but I believe that honorable members will not al low this parcelling out and sweating in connexion with our mail services. If the subcontractors are receiving sufficient remuneration for the work done, why, in the name of common sense, should we be so liberal with Commonwealth funds as to put these large amounts into the pockets of the original contractors ?


Mr Mauger - Sub-contracting is bad under any conditions.


Mr POYNTON - In the Department of Home Affairs quite recently, a contract was cancelled . for some violation of rules. No honorable member will argue that the hired agreement spoken of complies with clause 14 of the Regulations. The other two clauses referred to have quite a different bearing, dealing, as they do, with contractors who, while doing the work themselves, incur a penalty for riot carrying it out in its entirety. Clause 14 is most emphatic both as regards hired agreements and other methods of the kind which may be adopted. Time will not permit of my laying all the correspondence before the House. When I referred to the matter on the last occasion, the then Prime Minister, the honorable and learned member for Ballarat, replied on behalf of the Postmaster-General, the honorable member for Denison, who was then in Tasmania. The honorable and learned member for Ballarat, having, as Prime Minister, had the matter brought under his notice, was as surprised as myself that it had not been attended to, and he said on that occasion -

The honorable member was good enough to inform me last evening that he proposed to ask this question, and I have, therefore, communicated with the Post Office officials upon the subject. I was surprised, as he must have been, to learn that the matter had not been finally dealt with. The information supplied to me is that the Department had satisfied itself of certain facts in the case, and had proceeded to take some action, when it was met by a legal difficulty

I submit that the Department has never met with any legal difficulty. If it can be shown to me from the documents here that, according to the Crown Solicitor, any legal difficulty has arisen, I will admit that there is some cause for the delay. The honorable and learned member for Ballarat went on to say - a legal difficulty, which was referred to the Crown Solicitorfor advice. That advice has been given, and action upon it will probably be taken upon the return of the PostmasterGeneral.

What was the " legal difficulty " referred to? It was the question as to whether this contract could be continued until the end of the term. The Crown Solicitor had stated emphatically in two previous opinions that this was subletting, and when he was asked as to the effect of clauses 28 and 36, he replied that there was a penalty of ,£10, or the contract could be determined.


Mr Mauger - For how long are the contracts ?


Mr POYNTON - This particular contract terminates some time in 1905. I expect that wherever Cobb and Co. have their coaches running the same practice will be found in connexion with contracts. It is twelve months since I brought this matter under the notice of the House, and it is about nine months since the Crown Solicitor, for the second time, stated that under clause 14 the contract was voided. This firm, however, has continued to carry on the work under the conditions I have described. I now leave the matter in the hands of the House. I am quite positive that if inquiry were made, it would be found that these practices are not confined to the fifty-one contracts which have been mentioned. Do we, as representatives of the people, believe in sub-contracting? The group system naturally plays into the hands of the large contractors, shutting out, as it does, all competition at the hands of small contractors. There is evidence in the documents before us that Messrs. "Vines and Co. asked a man to name a price to them, and when he did so, they tendered at that price; but the man who really did the work had to sign an agreement to take so much less than the amount he had suggested in the first instance. I trust that the PostmasterGeneral will see the necessity for immediate action. If such practices were carried on by a small contractor, there would be no hesitation in cancelling the contract; but simply because this happens to be a big, powerful firm-


Mr Mahon - Nothing of the kind !


Mr POYNTON - We are now told that these practices are carried on, not in connexion with one contract, but in connexion with fifty-one contracts, and it is urged that, considering the present conditions have prevailed for so long, they ought to prevail till the end of the term. My support will never be given to the continuance of such practices, which place the small men at the mercy of the large contractors. The subcontractors are bound hand and foot to find all the necessary plant and do the work for half the money which the original contractors receive from the Government. I trust that honorable members will insist on this matter being thoroughly sifted in order that it may be ascertained how much money the original contractors are pocketing, not for doing work, but for simply writing out tenders.







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