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Wednesday, 21 October 1970

Mr McEWEN - Part of the arrangement, which clearly should be recalled, was that whatever kind of ship the cargo was being carried in between Europe and Australia, the freight rate would be the same. If it was carried from Fremantle in a container ship or if it was carried from Cairns at much greater expense by conventional ship the freight rate would be the same, lt is completely obvious to everyone that if the container ship is more efficient, and there is no doubt in the world that it is more efficient than the smaller conventional ship, the costs being different but the freight being the same, what is happening is that the container ship is being paid rather more than its costs and the conventional ship less than its costs in freight rates to bring about this average - the same freight rates for all purposes. That is the concept.

Tremendous, unexpected and unpredictable costs have been added to the shipping costs of this trade. There was the industrial unrest, caused, I understand, by a dispute between land based unions in Tilbury which rendered this tremendously expensive container terminal completely inoperative for, I think, about 18 months. During that period all Australian cargo that went in container ships was landed in European ports and carried separately to Britain with no additional charge. That was a burden that just cannot be laughed off. The calculated cost of that industrial dispute, in which the shipowners were not involved, the seamen's union was not involved and no one in Australia was involved - it was an inter-union dispute on the land at Tilbury in London - was more than £Stg3m. This, of course, is a matter that one cannot escape having taken into consideration when freights are being determined. In addition to this, I am informed that the wages of British seamen have increased by 40 per cent in this period. Stevedoring costs in Australia have increased by more than 30 per cent in this period. The significance of stevedoring costs is to be seen when I remind the Committee that before we had the container service freight rates were determined on the costs of the conventional- shipping service and it was clearly established that about 40 per cent of the total cost of shipping to Europe by conventional ships represented stevedoring costs on the wharf. I repeat, there has been a 30 per cent increase in those costs. I am not complaining about it. I am stating it as a matter of fact which has to be taken into account in determining the freight rates.

What has happened is that the additional costs that I have mentioned indicate a justification for a freight increase of 20 per cent in respect of conventional ships. If the container service had not been introduced and if all our cargo was still being carried in conventional ships to Britain and Europe, my advisers say - and no-one has challenged this figure - that those additional costs would have indicated a 20 per cent increase in freight rates. What has happened is not a 20 per cent increase in freight rates but a weighted average increase since 1966 of 4i per cent - 4 per cent on wool, 5 per cent on fruit and 10 per cent on other general cargo. My advice is a weighted average increase of 44- per cent, but the indication for conven tional ships was for an increase of 20 per cent. But they have not had an increase of 20 per cent; they have had an increase of 4i per cent which means, clearly, that the lower costs of the container ships have been subsidising the freight charges of the more expensive conventional ships. There is not the slightest doubt that a breakup of the present freight charges would indicate that there should have been a much higher increase on conventional ships and perhaps no increase, or even a reduction, in the freight rates of container ships. But under the policy, which I hope no-one will challenge, of charging the same freight rate from Australia for our cargo to Britain and Europe irrespective of what type of ship it is carried in, the result has not been a reduction or standstill in freight rates for container ships and a great increase for freight rates of conventional ships, but an average 44 per cent increase overall. This quite clearly indicates the efficiency of the container service.

Some problems have arisen from the initiation of such a tremendous innovation in shipping as the container service. I am told, for example, that there has been a problem with refrigerated cargoes. There was a problem of taint in containers. This is the sort of thing that does occur when there is a great new innovation. That added to costs, but I understand that the problem has been overcome. There have been other problems. For example, I have told honourable members, and I repeat it. that it was intended to lift cargo from Hobart and bring it to Melbourne at no charge to the shipper, but I did not say, and I have also said this in this chanber before, that that would operate from the first day that the container services were introduced, because it involved a negotiation with the Australian shipping interests which were to carry the cargo from Hobart to Melbourne. This was a negotiation where obviously the Australian shipping interests were in a very strong position to demand a high freight rate because the policy intention had been revealed and the contract had not been negotiated by the container interests with the Australian shipping line.

The DEPUTY CHAIRMAN (Mr Hallett) - Order! The Minister's time has expired.

Mr McEWEN - Mr Deputy Chairman, I shall now take my second 10 minutes. I agreed to this course when the Leader of the Opposition was speaking. There have been delays in the arrangements that were intended, that still are intended, to lift the cargo from what are called the outports and bring it to the container ports at no charge to the Australian shipping interests. I hope that no honourable member will be so unreasonable as to think that in spite of this grand design to have the benefit of the high efficiency of containers, the benefit of a single freight rate no matter where the freight originated and the benefit of not having an extra charge for the cost of the conventional ship bringing the cargo from the outport, there is cause for a serious complaint because we could not wave a wand and bring this in in one day. Indeed, it is not the responsibility of the Government to do it. It is not within the power of the Government to do it. There is only one class of government which would dream of simply ordering private enterprise about - telling it what it will charge and what it will do. I was in this House when a Socialist government was in power - when it was selling the wheat growers' wheat to New Zealand at less than its value. Whatever it was, this is the mind of the Socialist government - it just decides what it would like to be done and, irrespective of the rights of private citizens, sets about compelling them to do it. We make no bones about the fact that we do not operate in that way.

I do not retreat an inch from Che statement that eventually - and I am told this can be expected next year - arrangements will be in operation which will bring cargo from the outports to the container ports along the lines that were originally intended. I think I have said enough to make it quite clear that notwithshtanding £Stg3m loss on the Tilbury incident, notwithstanding the 40 per cent increase in seamen's wage on this trade and notwithstanding the 30 per cent increase in stevedoring costs in Australia, over a 4-year period the increase in the cost of Australian shippers' freight to Europe and Britain has been, on the average, just a margin above 1 per cent per annum. Can anyone name any enterprise in Australia - whether it is in relation to the selling price of goods in the shop or the selling price of goods from the manufacturer, or wages or salaries - in which there has been an increase in charges of only 1 per cent per annum?

The truth of the matter Ls that as a result of the introduction of the container service, Australian primary producers and exporters have undoubtedly been saved from what would have been a very severe increase in freight charges. The speech of the Leader of the Opposition was designed to be politically offensive and, as I said when I rose to speak, it reveals either that he does not understand the facts of this combined conventional ship, container ship, one freight, shipping service - and he ought to understand it - or something much more serious. If he does understand it, then he stood up in the Parliament and misrepresented the position.

Progress reported.

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