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Thursday, 21 August 1980
Page: 597

Mr GILES (Wakefield) - General Motors-Holden's Ltd in Adelaide would not share the view of the Deputy Leader of the Opposition (Mr Lionel Bowen) and Chrysler Australia Ltd in Adelaide certainly would not do so. So much depends on the quality of the article produced, the efficiency of the plant and the dedication of the workers. The Deputy Leader of the Opposition has said nothing that touches on the interests of the consumer. He has tunnel vision.

In September 1979 the Australian Meat and Livestock Corporation took action- properly, within powers provided to it by this Parliament - and in its wisdom did not redesignate Refrigerated Express Lines as a conventional carrier of Australian meat to the East Coast of the United States of America. It does not give me much pleasure to criticise a statutory authority that has been very successful but I think that in this case it is necessary to do so. 1 wish today as I grieve to question the wisdom of the decision by the Corporation, which I believe was ill advised. I believe that of much greater importance is the danger of excluding competition rather than letting market forces apply in any matter, particularly in the freight rates game as that affects this exporting country.

In regard to the first point, it is fair to state that as a concept containers have not proved to be as cost saving as once anticipated. In fact in a document circulated, I believe, on Monday to all members of Parliament and senators, Refrigerated Express Lines states that, as the only remaining conventional shipping line member of the East Coast of the United States conference, it can currently cut shipping costs by at least 1 1.5 per cent and that, in fact, when it was operating prior to this outrageous decision it was cutting costs by nearly as much as that.

REL, of course, cannot prove its point on that until it is redesignated and, in the interests of exporters and beef producers, it should be. Let me demonstrate that point.

On Wednesday of this week, the Australian Financial Review published an article headed Atlanttrafik losing on Wyndham run'. I should point out that these ports were upgraded quite recently to include container facilities and Atlanttrafik was given the right by AMLC to conduct that trade. In years gone by REL conducted this trade by conventional means with a subsidy of approximately $25 a ton to do so. When the port was containerised, the container firm I have mentioned applied for and was awarded a subsidy of $90 a tonne to conduct that trade by containerised means. The Australian Financial Review article to which I have referred says that that firm is now finding that trade uneconomic and that it has made the statement that a subsidy of $147 a tonne is necessary to break even - and, I imagine, a lot more to be profitable.

Who pays this subsidy? lt is paid by the other companies which make up that conference and so comes from their own operating charges. In other words, the freight charges around Australia have to bear the finance for that subsidy. If this does not occur it will be taken from the price for cattle paid to Australian producers, or both. At the break even point of $147, on my estimation the subsidy could be in excess of $ 1 ,300,000. In other words, if 320,000 tonnes are exported to the United States of America and 85 per cent of that trade goes to the eastern seaboard, the increase in freight around Australia would be $4.80 a tonne. The producer of beef would surely have to bear this increase as a downward pressure on prices so offered.

Many small ports in Australia have already lost the services of this conventional shipping line and shippers' councils throughout Australia are angered by the AMLC decision. On the back of the document circularised to all honourable members of this House there is a series of letters supporting REL and commenting unfavourably on the AMLC decision. Honourable members will note on page 1 1 of that document that it is stated that in the past five years European freight prices have risen by 74.84 per cent or, in round terms, by 75 per cent. On the east coast to America run prices have risen during that period by 37.6 per cent. It does not take a genius to realise that the difference so demonstrated was due to the presence of REL as a shipping line of Australian meat on that USA conference line to the eastern seaboard. In fact, if honourable members analyse the figures on the submission sent to them they will find that the European trade was at a lower freight rate than the American rate five years ago and is now higher. I think it will be obvious to this House that the great difference in those freight levels is due to the presence of REL on the east coast USA trade and to the fact that it is fighting back very hard to try to get redesignated onto that route. I believe that is holding the current level of freight prices on that particular run. One could argue, and I have heard it argued, that now that the container concept has come into being, there is a better distribution of meat from the ports of Broome and Wyndham to elsewhere in the world because containers can be shipped to, say, Singapore, be recontainerised and so redesignated. That may have been the case up to a week ago, although my information from shippers in that area does not substantiate that, but it will certainly not be so in the future given the extra subsidy that that particular container firm will now have to demand to remain economic. So where are we? We are left with container firms servicing this country which was meant to contain costs, but they are having to increase their freight rates thereby affecting producers and shippers of this nation. It is time that those in authority in the AMLC realised that market forces should be allowed to apply and that the levels of freight rates, under free competition, apply to the benefit of Australian industry, in particular the beef industry. 1 conclude my remarks by just adding that frankly, I think it is an absurd situation that has arisen. The AMLC has taken action properly using powers vested in it by this Parliament. But the argument goes much further. The argument quite clearly is whether this country can afford to do without firms that transport our goods economically. If anybody, whether it be the AMLC or anybody else, takes such action, then I believe we will destroy, perhaps not this year or next year but at some stage, the very negotiating point that is so badly needed by an island continent. I hope the AMLC can be prevailed upon to remove its objection and to redesignate REL on that trade route.

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