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Wednesday, 1 November 1905

Senator KEATING (Tasmania) (Honorary Minister) . - I move -

That the Senate approves of an extension of the arrangements entered into on the 30th October, 1903, by the Commonwealth Government, for the carriage of mails between Australia, Fiji, and Canada, by the steamers of the CanadianAustralian Royal Mail Line, upon the following terms : -

(a)   That the period of the contract be further extended from 1st May, 1905, to 31st July,1906, with a proviso that if neither party gives not less than three months' notice of termination prior to the latter date, the contract shall continue until the31st July, 1907.

(b)   That the amount of subsidy payable by the Commonwealth be at the annual rate of , £23,863 12s. 3d. for the period from 1st May to 31st July, 1905, and at the annual rate of£26,626 16s. from the 1st August, 1905, the difference between the two amounts being the Commonwealth proportion of a total increase of£6,000 -per annum.

In moving this motion, I think it is desirable to briefly indicate how the present system of communication between Australia and Canada came to be established. So far back as 1893 New South Wales and New Zealand entered into a contract for the establishment of a line of steam-ship communication between Australia and Canada. So far as this side of the world was concerned, the parties to the contract were the Postmaster-General of New South Wales and the Postmaster-General of New Zealand, while the contracting steam-ship company was represented by Mr. James Huddart. In 1896 the contract was extended! for a further period of three years, while in 1899 it was again extended but for a period of four years. At this time the only Colony in Australia which! was directly included in the contract was New South Wales, and it was renewed with several very important variations. In the first place, Mr. Huddart retired1 from the position of contractor, so far as the steam-ship company was concerned. His place was taken by the Queensland firm of ship-owners, Messrs. Burns, Philp, and Company, and the contract was renewed,, not for three years, but for four years. The original contract prescribed that there should be a steamer running between Australia and Canada, via Wellington, Fiji, and Honolulu every calendar month. But on this second renewal of the contract, that provision was altered to a steamer every four weeks. At' this stage, when Mr.Huddart dropped out of the contract, his place was taken by Burns, Philp, and Company, and when New Zealand dropped out of it her place was taken by the Colony of Queensland. So that honorable senators will therefore see that the original contract, so far as it concerns us, was that betweenNew Zealand and New South Wales and Mr. James Huddart ; afterwardsNew Zealand and Mr. Huddart dropped out, and it became a contract between New South Wales and Queensland on the one side, and Burns, Philp, and Company on the other. In addition to these variations, Brisbane was adopted as a port of call instead of Wellington, for very obvious reasons. That renewedcontractin the course of time expired, in the year 1903, and at itsexpiration it was renewed by the Commonwealth Government for a period of two years. At that stage another alterationtook place in the parties. Burns, Philp, and Company dropped out in 1903, and the renewal was made with another steam-ship, company, the Union Steam-ship Company of New Zealand, who are now carrying on the contract under the terms of that renewal - and under the terms of the extension which is at present under consideration - under the name of the CanadianAustralian Royal Mail Line. In 1903 the extension was for two years, and the contract was to expire at the end of last July. Before the contract expired at the end of July, another extension was agreed upon by the then Postmaster-General and the contracting company. The particulars of that extension are these : The term of the extension is fifteen months, from May of this year till the end of July of next year ; and from May to July the subsidy to be paid was to be at the then current rate, which, as far as Queensland and New South Wales were concerned, made a total of £23,863 12s. 3d,.' For the remaining twelve months - that is to say, from the end of last July until the end of next:

July - the subsidy was to be at the rate of £26,626 16s. per annum. The notice that is required for the termination of the existing extension is /0 be at least three months ; and that three months' notice must be given not later than the 30th April, 1906. Unless such notice be given, the contract would remain in force for a further period of twelve months - that is, until the 31st July, 1907. I have just indicated that the subsidy to be paid for the twelve months from the end of last July until the end of next July is £26,626 16s. It is desirable, I think, that honorable senators should know exactly what has been the subsidy paid in the past for this service, and how it has been proportioned. From the very inception of the contract, New South Wales has been interested in it, at first in conjunction with New Zealand, and afterwards in conjunction with Queensland. In 1893 the service was first established. From the period 1893 to 1903 New South Wales paid annually towards this service ^10,000. From the period 1899 to 1903 - that is, from the period when Queensland first came in until 1903 - Queensland paid .£7,500 per annum, which amount had, between 1893 and 1899, been paid by New Zealand, making a total annual subsidy paid by the two Australian States, Queensland and New South Wales, of £17,500 per annum. But since the renewal that took place in 1903, the contribution of New South Wales towards the subsidy has Been £13,636 7s., and Queensland has been paying ^10,227 5s. 3d., making a total paid bv the two States of £23,863 12s. 3d. As I have already said, for the first three months of the fifteen months of this extension which the Senate is asked to ratify, payment is being made at that rate. Other countries are interested in this contract besides Australia. They are Fiji and Canada. For the ten years ending 30th April, 1903, the contributions paid by the countries interested were - Canada,. £25,000; New South Wales, £10,000; New Zealand (or Queensland), £7,500; and Fiji, £1,500; making the total annual subsidy to the company £44,000. In 1903, when the Commonwealth Government, on behalf of Queensland and New South Wales, renewed the contract for two years, the subsidy was increased ; and for the two years and three months ending 31st July last the following contributions towards the total subsidy were paid by the several countries to which I have referred : - Canada,. £34,090 18s. 8d. ; New South Wales, £13,636 7s.; Queensland, £10,227 5s. 3d. ; Fiji, £2,045 9s- > making a total subsidy of £60,000. In other words, two years ago the subsidy in respect of this service was increased from £44,000 per annum to £60,000 per annum, and in the case of New South Wales and Queensland there was, of course, a corresponding increase in the subsidy paid. I would point out to honorable senators that for the period, ending 30th April, 1903, out of the £44,000 per annum paid in respect of this service, Canada paid £25,000, and New Zealand and Queensland together paid £17,500; whilst for the period1 ending 31st last July Canada's contribution of the £60,000 was £34,090 18s. 8d., and the contribution of Queensland and1 New South Wales was £23,863 12s. 3d. It must be obvious to honorable senators that, although that subsidy is professedly distributed amongst the various countries interested on a per capita basis, Queensland and New South Wales are paying a larger proportion of the total than would represent the ratio between their total populations and the population of Canada. In other words, the population has not been estimated as the population of all Canada on the one side, and the population of New South Wales and Queensland together on the other side.

Senator Matheson - Why should it be?

Senator KEATING - I am not saying whether it should or- should not be, but I am stating a fact - that the populations have not been estimated in that way. Queensland and New South Wales have been paying seemingly rather on the basis of the Australian population than upon the basis of their own populations. Their proportion of the total subsidy would not be so near to Canada's contribution if they were only paying on the basis of their own population.

Senator Matheson - They are paying the same proportion as under the renewed contract of 1899 ?

Senator KEATING - Yes, I think so; at any rate, there is very little variation.

Senator Matheson - So far as concerns the payment of a contribution on a population basis, they entered into it with their eves open.

Senator KEATING - In the first instance, they entered into it in 1893, when New South Wales paid £10,000 and

New Zealand (and afterwards Queensland), .£7,500. 1 That made a contribution of ,£17,500 from the two States; and their contribution at present - or until the 31st July- is .£23,863 12s. 3d., out of a total of ,£60,000, showing that their proportion of this subsidy is related more nearly to the total population of Australia in comparison with Canada than to the population of the two States, New South Wales and Queensland, in comparison with Canada. In connexion with portion of the extended period that is now under consideration, namely, from the 31st' of last July until the 31st of next July, it is agreed to pay a subsidy of ,£66,000. Of that sum the Commonwealth's contribution will be ,£26,626 16s. The other countries that I have mentioned as being interested in the contract will pay as follow, namely, Canada's contribution willi be ,£37,090 18s. 3d., whilst Fiji will pay ,£2,282 5s. 4c!. In connexion with the previous extensions, New South Wales and1 Queensland, as I have already indicated, bore the cost of the subsidy. That cost it is now proposed to distribute.

Senator Best - What did Victoria, Western Australia, and South Australia pay in the previous years?

Senator KEATING - They contributed nothing by way of subsidy.

Senator Matheson - Except poundages.

Senator KEATING - Poundage was paid in respect of mail matter sent. I will give those particulars directly. The total contribution paid from Australia - that is, from Queensland and New South Wales - will in future be borne by the several States of the Commonwealth upon a f er capita basis, and I shall mention what will be the proportion borne by each State in such event. New South Wales will pay £9.738 9s. 9d. ; Victoria, ,£8,088 4s. 2d.

Senator Matheson - Those" are not the figures in the Estimates for the current year.

Senator KEATING - They are the figures so far as concerns the twelve months, though not perhaps for the fifteen months.

Senator Matheson - I am referring to the figures contained in the Estimates of the Government.

Senator KEATING - Probably the figures referred to by the honorable senator make allowance for the poundages received, which would reduce the total. The Estimates, in other words, perhaps show the amounts net, but I am showing what would be the total contribution if we did not get the benefit of a few hundred pounds by way of poundage. New South Wales, as I have said, will Pay ;£9>738 9s- 9d- ; Victoria, ^8,088 4s. 2d. ; Queensland, .£3,486 2s. 3d. ; South Australia, ,£2,490 ira. 4d. ; Western Australia, ,£1,619 3S- 6d. ; and Tasmania, £1,204 5s- i making a total of ,£26,626 16s., which is the amount Australia is paying of the total subsidy of £66,000. Some reference was. made by Senator Matheson to a variation in the figures supplied in connexion with the matter. The figures to which the honorable senator has referred probably deal with what would be the net payment by each State, because some allowance is to be made for poundage, of which we get the benefit in connexion with mail matter sent.

Senator Matheson - From whom would we receive poundage?

Senator KEATING - From New Zealand. There is a difference of, I think, some . ,£223 in our favour, because we pay poundage in respect of some lines running from New Zealand to San Francisco that are subsidized jointly by the United States Government and New Zealand. The last extension of this contract was from 30th October, 1903, and was arranged by the Commonwealth Government on behalf of the two States of Queensland and1 New South Wales. That was for two years, but the present proposal is to extend the contract for a period of only fifteen months, leaving it to either party up to the end of April, next year, to give at least three months' notice of the termination of the contract. Failing that notice being given, the contract will remain in force for another period of twelve months; that is to say, it will not come to an end until the 31st July, 1907. The mileage fate;, worked out on the present total subsidy of ,£66,000, comes to 5s. 3d., and of this 5s. 3d. the Commonwealth's share amounts to a fraction over 2s. per mile. The ports called1 at will be those called at in the past - Sydney, Brisbane, Fiji,' Honolulu, and Vancouver. The time occupied in the1 transit of the mails from Australia to Canada averages 21 days 10 hours, and for the transit of mail matter to or from England, by way of this route. 37 days, as against 33 days by the Orient Steam Navigation Company, and 31 days 16 hours by the Peninsular and Oriental Steam Navigation Company's boats. Honorable senators will note that the extension proposed is not for any lengthy period, but for a period that will be just about sufficient to enable the parties interested to effect some arrangement likely to be more satisfactory than thu present one. I said just now that I would supply information as to the amount of mail matter conveyed by this service. During the year 1904-5, the international correspondence despatched from the different States by this service was as follows : - New South Wales, of letters, 2,0I 21bs

IOZ. ; other articles, 23,673^. 120zs., cost £13,636, representing the amount of the subsidy paid by that State. Victoria, of letters, 7801bs. 120zs. ; other articles, 10,443lbs. 40ZS., cost ,£689 3s. 8d. in poundage.

Senator Best - And it is now proposed that Victoria shall contribute £8,088 4s. 2~d.

Senator KEATING - That is so; but the honorable senator will notice that the difference between the weight of mail matter sent by Victoria and New South Wales is not represented by the difference between £689 3s. 8d. and £13,636.

Senator Best - There is a very substantial difference. What is the object of the alteration in the incidence of the cost ?

Senator KEATING - Victoria sent a little less than half the mail matter sent by New South Wales. Queensland's mail matter sent by this line was very much less than that sent by Victoria. Of letters, Queensland sent 420lbs. 11½OZS., other articles, 7:8601bs. 120zs., but Queensland paid during that year her share pf the subsidy, amounting to £10,227 5s. 3d. South Australia sent, of letters 7 75lbs 70ZS., other articles 4771bs. 90zs.

Senator Clemons - What is she to be made to pay for that lot?

Senator KEATING - Her share of the subsidy will be £2,490 us. 4d.

Senator Sir Josiah Symon - What did she pay before for poundage?

Senator KEATING - She paid, during the year under notice, £64 14s. Western Australia sent, of letters 13lbs. 20zs., and other articles 96 lbs., for which she paid in poundage the sum of £8 2s. Tasmania sent, of letters, 125lbs. 130zs., and of other articles 7791bs. 15J0ZS., at a poundage cost of £92 2s. id.

Senator Clemons - She will now have to pay about ,£1,500.

Senator KEATING - Her share of the subsidy will amount to ,£1,204 5s.

Senator Pearce - What is Western Australia to pay under the contract?

Senator KEATING - Her share will amount to £1,619 3s. 6d.

Senator Pearce - For about 15lbs. weight of mail matter.

Senator Clemons - For coming into the Federation.

Senator KEATING - The proportion of letters sent by this service during the year under review works out as follows : - New South Wales, 59 per cent.-; Victoria,. 22 per cent. ; Queensland, 12 per cent, y South Australia, 3 per cent. ; and Tasmania and Western Australia, 4 per cent. The proportion of other articles works out in this way : - New South Wales, 51.5 per cent. ; Victoria, 28 per cent. ; Queensland,. 7 per cent. ; South Australia, 1.5 per cent. ; and Western Australia and Tasmania, 2- per cent. Then the percentages of cost are as follow : - New South Wales, 55.18 per cent.; Victoria, 2.79 per cent.;. Queensland, 41.39 per cent. ; South Australia, 0.27 -per cent.; and Western Australia and Tasmania, 0.37 per cent. It will be seen that while New South Walessent 59 per cent, of the letters, and 61.5 per cent, of the other articles, she paid" 55 per cent, of the cost, and Victoria, while sending 22 per cent, of the letters, and' 28 per cent, of the other articles, paid, during that year, only 2 per cent, of the cost.

Senator Best - Has there been no consideration of trade?

Senator KEATING - I propose to deal! with that aspect of the question. Queensland, sending 12 per cent, of the letters, and 7 per cent, of other articles, pai d 41.39 per cent, of the cost; South Australia, sending 3 per cent, of the letters and 1.5 per cent, of the other articles, paid 0.27 per cent, of the cost. The figures for Tasmania and Western Australia appear to have been worked out together ; and whilst they sent 4 per cent, of the letters, and -a per cent, of other articles, they paid 0.37 per cent, of the cost. I do not wish honorable senators to consider this as entirely a mail contract. It is not a contract which from the point of view of a mail contract alone could be defended on any ground. That is to say, we should not be asked to contribute .£26,626 16s. a year for the benefit to be derived from this service as a mail service. The position, so far as the whole of the Commonwealth is concerned, is that, roughly speaking, the amount of money which we would have to pay for the mail matter sent by this service at poundage rates, if it still continued to exist, would be a little over £3,000. Instead of that, we are paying £26,626 16s., or something like £23,000 in excess of what we would actually have to pay at poundage ratesfor the transport of the mail matter we send. But I remind honorable senators of this feature in connexion with the contract. As I have pointed out, there are other parties to the contract, as well as the two Australian States which I have mentioned. There are Canada and Fiji. Canada pays a subsidy amounting to , £37,090 18s. 8d., and that subsidyis paid by the Canadian Department of Trade and Commerce, and not by the Canadian Postal Department. It is regarded as a trade subsidy. When this line of communication was established honorable senators will remember that a good deal was said about the necessity and desirableness of having an "all-red" route between Australia and Great Britain.

Senator Matheson - At what date was that ?

Senator KEATING - In 1893, when Mr. Huddart was negotiating with the New South Wales and New Zealand Governments.

Senator Matheson - Why did not all the Australian States contribute, if that was the case?

Senator KEATING - I do not know. If New South Wales was more patriotic than were the other States, of Australia in that regard, there is no reason why she should be punished now. There can be no doubt that sentimental and patriotic considerations had a good deal of influence in the establishment of this line of communication in the first instance, but I think that unless very good reasons were shown why such a service should be discontinued', and unless it could be pointed out that the maintenance of the service would be highly disadvantageous, we should hesitate for a very long time indeed before we cut off this communication which has existed in the past. What we ask in connexion with this matter is that ratification shall be given by the Senate to the arrangement entered into for the extension of this contract until the 31st of July of next year. I have pointed out that, so for as the transport of mail matter alone is 'concerned, this contract would be wholly indefensible.

Senator Matheson - The honorable senator has not said anything about the trade point of view.

Senator KEATING - I shall come to that presently. The honorable senator seems to be very impatient ; but I desire to deal with these matters in their order. I say that, as a mail contract alone this would be indefensible. It was established, in the first instance, partly for sentimental and partly for patriotic reasons, and by persons animated with the hope that it would eventually lead to increased commercial relations between Australia and Canada. So far as Australia is concerned, I do not think the development of trade has been what the least sanguine person in Australia anticipated. According to the figures, the trade between Australia and Canada during 1900- 1-2-3-4 was as follows: - In 1900, the imports from Canada amounted to£237,707, and the Australian exports to Canada to £67,857, or a total volume of trade of £305,564; in 1901, the imports from Canada increased to . £330,788, and the Australian exports to Canada decreased to £37,543, showing a total of . £368,331;in 1902, the imports from Canada increased still further to . £346,560, and the exports from Australia to Canada further decreased to £33,622, or a total of , £380,182; in 1903, the imports from Canada further increased to . £352,939, and our exports further decreased to £24,837, or a total of £37 7,7 76; and in 1904, for some reason or other, there was a reversal of the process, and Canada's exports receded to £222,064.

Senator Matheson - That was less than in 1900.

Senator KEATING - It was less than the exports ever were during these years.

Senator Dobson - Were the larger amounts not due to the grain imports?

Senator KEATING - I am not in a position to answer the question; but possibly honorable senators, who have given some minute attention to thetrade relations of the Empire, may be able to do so.

SenatorPulsford. - The larger importations were due to the drought, when considerable quantities of wheat were purchased, and the decrease is owing to our better seasons.

Senator KEATING - In 1904, the value of the Australian exports took an upward turn to £29,352, showing a total volume of trade for the year of £251,416. I am not in a position to speak with any authority as to the explanation which has just been suggested by Senator Pulsford; but I have here the chief items of import from Canada during 1.904. These imports comprise apparel .and textiles, £20,656 ; boots and shoes, ,£9,854; drugs, chemicals, medicines, and perfumes, £17, 747 ; fish, £23,495; agricultural implements and machines, £26,926; machines and machinery, £10,498; timber, £59,966; and bicycles and parts, £13,648. In the same year, the chief items of export from Australia were butter, .£3,054; coal, £4,347 ; cocoa-nut oil, £2,022; skins and hides, £4,684; undressed timber, £2,307 ; and wool, £2,620.

Senator Dobson - The export of wool ought to be more than that, unless Canada gets her Australian wool by way of, London.

Senator KEATING - It is probably the case that the greater part of the Australian wool for Canada goes through the United Kingdom. Honorable senators will see that the history of this contract, and the relations between Australia and the various companies, show many points for consideration.

Senator Matheson - Does the Minister defend the contract from a trade point of view?

Senator KEATING - I say that it would be highly undesirable for us to terminate the contract now, without giving ourselves an opportunity to look round and make the best and the most of existing arrangements.

Senator Matheson - But does the Minister say that the trade results have been satisfactory ?

Senator KEATING - I do not; but I was pointing out that the contract demonstrates many things. In the first instance, although we propose to pay our proportion of the £66,000 per annum to this shipping company, I do not think anybody would be rash enough to say that that company is doing very well out of the contract. This contract originated in 1893, when New Zealand and New South Wales were the parties, so far as Australasia was concerned, with Canada and Fiji as the two other parties. The contract was renewed during 1896, for a further period of three years,- and, in 1899, when an opportunity was presented to renew it, what do we find? New Zealand went out of the contract, and the place of that Colony was taken by Queensland. Incidentally I may mention that we are given to understand that New Zealand would very much like to be taken back as a party to the. contract.

Senator Dobson - Cannot we let New Zealand become a party ?

Senator KEATING - It is not for us to do that now, because there 1must necessarily be a certain amount of negotiation. The company, which at present carries out the contract, is, I understand, willing to re duce the amount Australia is paying by some £6,000, if their vessels are allowed to call at a New Zealand port. That is a factor we must keep in mind in connexion with the ratification of the contract. We are only asking ratification for a limited period, so that opportunity will be given by negotiation to modify the existing contract in such a way that it will be more acceptable, and of more benefit to us. When New Zealand ceased to be a party, in 1899, Mr. Huddart, who had been the projector of this service, also ceased his connexion with it after six years' experience. Messrs. Bums, Philp, and Company then took up the contract, and held it for the extended period, from 1899 to 1903. Messrs. Burns, Philp, and Company, being a Queensland firm, naturally had some advantages which an outside firm could not enjoy. But what followed? At the end of 1903, Messrs. Burns, Philp, and Company dropped out of the contract, which was then taken by the Union Steam-ship Company, who have carried it out for. the last two years. We are now asking that the contract, subject to the terms set out in the notice of motion, shall be ratified by the Senate for a period ending, on the 31st July next year. I have already pointed out that in the interval we may be able to make arrangements whereby New Zealand ma}'' become one of the contributing States, and thus reduce the payment made by us by about -£6. 000. There are other factors which must be considered. Since the contract was entered into, neither the class of steamers, nor the frequency, of communication, has been) very much improved. At first the steamers ran even' calendar month, whereas now they run every four weeks, while the speed is not very great, averaging 13 or 14 knots an hour.

Senator Dobson - I understand that New Zealand pays a poundage on the mails carried for that Colony; is there a uniform rate?

Senator KEATING - The poundage fate is that fixed at Berne by the International Postal Union, and Ave receive about ,£600 in poundage from New Zealand. That Colony and the United' States jointly subsidize the San Francisco line of steamers, and for mail matter which goes from the Commonwealth by that line we pay a small sum in poundage, which leaves a balance in our favour of the ,£200 or £300 referred to by me just now in reply to Senator Matheson. Honorable senators will therefore see that, as I have said, this contract has not to be regarded entirely from the point of view of postal services.

Senator Best - Nor from a trade point of view, according to the figures which have been quoted.

Senator KEATING - I pointed out that the trade results have not, by far, been all that was anticipated. Honorable senators know why this line of communication was first established. Sentimental considerations, rightly, I think, operate in the minds of many people very strongly indeed, and will prevent them doing anything to break the existing means of communication. If by any action on the part of this Parliament or Government, or of any other Australian Government, this present means of communication between Australia arid Canada were abolished, it might be very difficult to obtain a new contract on even anything like the terms to which I have referred. On the other hand, I have shown that ample opportunity will be given between the present time and the end of July of next year to take advantage of our experience, and of the knowledge which we have of what New Zealand and the Union Steam-ship Company are prepared to do if a New Zealand port of call can be included. I do not think, I say again, that anybody could defend the contract from a postal point of view alone. It is evident that Canada does not regard, the present arrangement as a postal contract in the strict sense of the word, or, otherwise, the cost would be debited to the Canadian postal administration, whereas, as I have pointed out, it is debited to the Trade and Commerce Department. If we regard the ,£26,000 as a trade subsidy, even though that subsidy has not been productive of the good results we might have anticipated, it becomes a question whether we can impose this burden on the two States of New South Wales and Queensland.

Senator Matheson - In what light does the honorable senator now regard the contract ?

Senator KEATING - I am inclined to think upon the facts that it is a trade subsidy.

Senator Matheson - And it has been so regarded all along bv the two States.

Senator KEATING - Quite so. The two States entered into the contract in the first place, mot for the sole purpose of facilitating postal communication either with Canada or the old country, but in order to develop the trade relations between New South Wales and Queensland, on the one hand, and Canada on the other.

Senator. (Matheson.- And 'Queensland and New South Wales regarded it. as a special trade subsidy.

Senator KEATING - That may be. We are now asking for a ratification of the extension of the contract for a certain period.

Senator Best - For a renewal.

Senator KEATING - A renewal or extension! subject to certain terms. If we deal with this as a trade contract, and not as a postal contract, it is more than open to doubt whether we can debit the cost to two States of the Union, because 'then we should be discriminating in a way contrary! to the Constitution-. The figures I have quoted may not be satisfactory even to those who were the least sanguine ; but it is desirable that honorable senators on such a motion should be made acquainted with not only the history of the contract, but with all the facts, whether these be favorable or unfavorable.

Senator Walker - Under this contract will Australian postal matter go free from Vancouver ?

Senator KEATING -I understand so; but if I am misinforming the Senate I shall correct the error before we go to a division.

Senator Dobson - May not this route become the main one for sending letters to Great Britain?

Senator KEATING - Undoubtedly it may. When we ratified the Orient Steam Navigation Company's contract a short time ago it was decided to terminate it at the earliest opportunity. On the other hand, if may Le necessary to have our principal means of postal communication with Great' Britain through Canada, and if we still had this company as a contractor for the Commonwealth, undoubtedly we should be in a better position to bring about any such result than we should be in if a contract for the carriage of mail matter between Australia and Canada had to be entered upon de novo. In the light of these circumstances, I ask honorable senators to agree to the motion.

Senator Pearce - ls it intended to make an allowance to the States which do not derive a benefit from the contract?

Senator KEATING - It is simply proposed to distribute the burden of the contract on a -per capita basis, as has been done recently with new works and buildings, and other matters which cannot truly be spoken of as being administered as at the time of the transfer of the Department to the Commonwealth.

Senator Pearce - But in the case of the contract with the Orient Steam Navigation Company the Government made an allowance to Tasmania and Queensland.

Senator KEATING - We are. acting on exactly the like principle in this case. The contract with the Orient Steam Navigation Company was one for the carriage of mails from Naples to Adelaide; and, apart altogether from any other consideration, every State was contributing to that service on a per capita basis, including Queensland and Tasmania, which were never visited by the mail ships under the terms of the contract. On the other hand, this is in fact a trade contract primarily, and a mail contract incidentally, and, being a trade contract, we cannot discriminate between the States unless we are prepared to violate the Constitution. Consequently, the burden of the subsidy must be borne by the States according to their population.

Senator Best - The renewal of the former contract would not be a violation of the Constitution.

Senator KEATING - We cannot renew the contract' for the two States as a Commonwealth act without violating the principle of the Constitution against discriminating between States.

Senator Dobson - From what date has the subsidy been charged on a per capita basis ?

Senator KEATING - It has been charged from the end of May last, and the determination to adopt this plan was announced by the late Prime Minister on his visit to Brisbane in the following month. I think it is the correct and only course which can be adopted in connexion with the ratification of the contract. We do not ask that the contract shall be ratified for an indefinite period, but for a period sufficiently long to enable the Commonwealth. Government, and those who are interested in the matter to arrive at an arrangement which will be much more satisfactory in the light of our past experience.

Senator Dobson - If the Minister's law is right, may there not have to be adjustments made prior to May last?

Senator KEATING - That may or may not be the case; but that is a matter which would have to be dealt with administratively hereafter.

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