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Wednesday, 6 December 1905


Senator PLAYFORD (South Australia) (Minister of Defence) . - I move -

1.   That the Senate ratifies an agreement entered into between the Government of the Commonwealth and the Eastern Extension Company, a copy of which was laid on the table of the Senate, 19th August, 1903.

2.   That the above resolution be communicated by message to the House of Representatives.

Honorable senators will recollect that in 1903, when Senator Drake occupied the position of Postmaster-General, he brought a similar motion to this under the attention of the Senate. That motion was debated on a good many occasions, and gave rise to some most interesting speeches. We had a very long speech from Senator Smith, and another from Senator Higgs, both of which were highly interesting and instructive at the time. The motion was discussed on11th August, 1903, and again on 27 th August, and it was not referred to subsequently, until 30th September in that year. In the meanwhile Senator O'Connor, who was Vice-President of the Executive Council, had assumed the position of a Judge of the High Court, and I was appointed to fill his place. The discussion on the motion at that time turned on one point. A Conference in connexion with the Pacific Cable Board was proposed to be held in London at some subsequent date, and the feeling amongst honorable senators was that we should not ratify this agreement until the Conference had met, had discussed the question, and had made anv recommendations which it might deem to be necessary. When I took office on 30th September, I moved -

That the Order of the Day No. 4, Eastern Extension Company's agreement further consideration in Committee of message No. 3 of the House of Representatives, be read and discharged.

In doing so, I said -

The Government have agreed to a Conference. I cannot inform the Senate at present as to when or where the Conference will be held, but I shall do so at the earliest opportunity.

There was considerable delay in the holding of the Conference, which did not meet until some time in July of this year, and we are now in possession of the report of its proceedings. Before I deal further with that matter, I may give a brief history of the events which led up to the framing of this agreement. I do not intend to go fully into the matter, because Senator Drake did so in moving a similar motion in 1903, and honorable senators, who spoke at that time, discussed the question from every conceivable aspect.


Senator Mulcahy - We were not all here in 1903.


Senator PLAYFORD - I shall not go into unnecessary detail, but I shall refer to the history of the matter sufficiently fully to enable honorable senators to thoroughly understand the whole position. When the proposal to lay the Pacific Cable was under discussion, the Eastern Extension Company had what might be called a monopoly of the cable communication between Australia and the rest of the civilized world, and they thought that by making a proposal to construct an All-Red line, from Cornwall to the Island of Ascension, thence to St. Helena, to the Cape, thence by a land line to Durban, from there to Keeling Island, and eventually to the shores of Australia near Fremantle, and continuing by a cable round the coast as far as Adelaide, they might make a satisfactory agreement with the Australian Colonies. They dealt at first with three of the Australian Colonies only, and proposed to enter into an agreement with them. They proposed to reduce the cost of messages to South Australia, Western Australia, and Tasmania. In the case of Western Australia and South Australia., they proposed to reduce, the cost of ordinary messages from 4s. od. to 4s. per word - a reduction of od. per word - - of Government messages from 3s. 6d. to . 3s. per word - a- reduction of 6d. - and of press messages from is. od. to is. 4d. per word. In the case of Tasmania they proposed a reduction on ordinary messages of from 5s. 5d. to 4s. per word, on Government messages from 4s. 2d. to 3s., and on press messages from 2s. 5d. to is. 5d. The agreement was made on 14th ApriL 1900, that is, -before the Pacific Cable was laid. It was not laid until 8th December, 1902, or practically the commencement of 1903. The other line, the route of which I have described, was laid on the 1st November, 1901. The agreement entered into between South Australia, Western Australia, and Tasmania and the Eastern Extension Company is contained in a number of articles. Article No. 1 provides for a reduction in charges. Article 12 relates to the laying of lines. Article 14 provides that the South Australian and Western Australian Governments shall provide suitable places for stations at Glenelg, Adelaide, Fremantle, and Perth, and that such rights and faculties as may be reasonably required must be provided. Under article 15, South Australia was to provide for the use of the company a special wire between Adelaide and the Victorian frontier, and another wire between Adelaide and the New South Wales frontier. These wires have been constructed, and there are connecting wires between the South Australian frontier and Melbourne, and between the New South Wales frontier and Sydney. Article 16 provides that the company shall, on and after the opening for traffic of the Pacific Cable, be entitled to open local offices, and collect direct from, and d'eliver direct to, the public, messages in Perth, Adelaide, and Hobart forming part of the Australian traffic. Article 17 provides that the senders of messages shall say whether their cablegrams are to go by way of the Cape route to England or by the Port Darwin route. Article 21 provides that the agreement shall remain in force until rescinded, by mutual consent, in writing. This is the most important part of the agreement between South Australia, Western Australia, and Tasmania and the Eastern Extension Company. I may say, in passing, that another agreement was subsequently entered into between the company and New South Wales, to which I will allude in a few minutes. The words " shall remain in force until rescinded by mutual consent expressed in writing " practically made it an interminable agreement. I suppose we should have some power of breaking the agreement by paying suitable compensation to the company, but I do not think we could break it unless we paid compensation for any loss which the company might consider that it had sustained in consequence of its being broken. It is a most singular agreement, inasmuch as it contained no mention of the specific terms under which it might be abrogated; it must be' by mutual consent, and must be in writing. The Commonwealth stands in the place of the three States that I have mentioned in respect of the agreement. We are bound by it as though each of the separate States was still a party to it.


Senator O'Keefe - Does that" mean that if we. wish to terminate the agreement we can only do so by paying compensation ?


Senator PLAYFORD - I suppose that if we took from the company by Act of Parliament the rights which it enjoys under the agreement, we should have to pay compensation. The article which I have mentioned is one that I have never seen in any agreement before. There is no time fixed for the termination of the agreement ; there is no statement as to whether, if the agreement is broken in any respect, compensation shall be paid. If one party says, "We wish this agreement to lapse," the other party can insist upon its being maintained.


Senator Dobson - What is the date of the agreement?


Senator PLAYFORD - April 14th, 1900.


Senator Dobson - Did New South Wales become a party to it after Federation ?


Senator PLAYFORD - In one sense yes, but in another sense no. This agreement having been made between the company and South Australia, Western Australia, and Tasmania, negotiations were at the same time proceeding with New South Wales and with Victoria. Victoria absolutely declined to become a party to it, but New South Wales did not. She entered into the agreement after Federation was. accomplished, but before the Post and Telegraph Department had been taken over by the Commonwealth. Our Constitution provided that directly the Commonwealth was proclaimed certain Departments should be taken over. For instance, Customs and Excise were taken over at once. But other Departments might be taken over bv proclamation. The Commonwealth had been established some little time when Mr. Crick, who acted on behalf of the New South Wales Government at the time, entered into an agreement with the Eastern Extension Company in behalf of that State. I am informed - I do not pretend to know - that Mr. Crick was clearly within his rights in acting as he did in behalf of New South Wales, because the State Government was then administering the Department.


Senator Higgs - Who says, that he was acting clearly within his rights?


Senator PLAYFORD - I do not know that I can absolutely fix that opinion upon any one in particular, but I have heard it so stated by more than one person. Indeed, I think there can be no doubt about it. The Department at that time had not been taken over by the Commonwealth. It was being administered by the New South Wales Government. Therefore, New South Wales had a perfect right to enter into any agreement it chose. I do not think that can be controverted. The point was brought up when this subject was under discussion in 1903, and the opinion which I then formed was that, no matter whether the contract which New South Wales made was a wise one or not, the Government of that State had a perfect right to enter into it. The agreement with New South Wales was to take effect from the ist January, 1901. The agreement between the company and the other three States mentioned was made on the 14th April, 1900. The agreement with New South Wales contained all the articles which were in the agreement made with South Aus/tralia. Western Australia, and Tasmania, except parts 5, 9, 12, 17, and 21. Article 1 provides for a reduction of charges. Article 14 provides that New South Wales is to maintain a special wire for the use of the company between Sydney and the South Australian frontier. That has. been done. The article with reference to the reduction in. charges on cablegrams between New South Wales and Europe was to take effect on and from the ist January, 1901. I may add that, although the Eastern Extension Company had entered into an agreement to reduce its charges from 4s. 9d. to 4s. a word, in- accordance with its. contract with South Australia, Western Australia, and Tasmania, it had actually in the meanwhile reduced its rates from 4s. to 3s. 6d. per word for ordinary messages, and from 3s. to 2s. 6d. for Government messages. New South Wales at that time was paying 4s. nd. per word for ordinary messages. The company reduced that rate to 3s.. 6d. The rate paid on Government messages in New South Wales had been 3s. 8d. Under the agreement it was reduced to 2s. 6d. Press messages had been paying is, iod. That rate was reduced to is. 4d.


Senator Gray - Were those reductions voluntarily made?


Senator PLAYFORD - I am not sure that the company was compelled to make the further reductions mentioned, but :t was done probably with an object. That object was, 1 believe, from the very start unmistakably a business one. The com. pany wanted - naturally from its point of view - to kill the Pacific Cable if it could*. Another reduction was made immediately afterwards - in June, 1902. The rates were then further reduced to 3s. for ordinary messages, as compared with 3s. 6d. ; to 2s, for Government messages, as against 2s. 6d. ; and to is. for press messages, as against is. 4d. The company also reduced the rate for messages from these States to the British Government to is. 7 Jd. per word. When these reductions were made as affecting New South Wales, Western Australia, South Australia, and Tasmania; Queensland and Victoria were still paying - Victoria, 4s. iod. a word for ordinary, messages, 3s. ?d. for Government messages, and is. iod. for press messages ; Queensland, 5s. jd. for ordinary messages, 3s. iod1. for Government messages, and is. 1 id. for press messages. Honorable senators can well imagine that the people of Victoria did not like this state of things. Victorian merchants did not like to see New South Wales merchants paying 3s. per word for their messages whilst they themselves1 were paying 4s. iod. They, therefore, made representations to Sir Edmund Barton, who was then at the head of the Commonwealth Government, that something ought to be done. He looked into the matter very closely, and, after considering the terms of the agreement, and the fact that it was interminable, he came to the conclusion that it would be a good deal better if the Government entered into an arrangement at once for a fresh agreement for a limited period of years, at the end of which time it could be terminated without any further trouble. He made a proposal to that effect to the company which was agreed to. An agreement was drawn up which contained exactly the same articles as are contained in the New South' Wales,, and the South Australian, Western Australian, and Tasmanian agreements, with the exception that it terminates at a certain time, and that it gives the same privileges to Victoria and Queensland as the other States had secured under their agreements with the Eastern Extension Company.


Senator Turley - When does it terminate?


Senator PLAYFORD - It was made in 1903 for ten years, at the end of which time two years' notice must be given of its termination. Therefore, it will terminate in 191 5, as I read it.


Senator Pulsford - That makes it an agreement for twelve years?


Senator PLAYFORD - Or it may continue for an indefinite period if no notice to terminate is given. Either party may give notice to continue the agreement, or, in other words, if it is not desired to alter the agreement, no notice need be given.


Senator Pulsford - Could not notice be given at the expiration of the eighth year?


Senator PLAYFORD - No.


Senator Staniforth Smith - The agreement may be terminated in fifteen years.


Senator PLAYFORD - Yes, absolutely.


Senator Staniforth Smith - That is, ten years from now ?


Senator PLAYFORD - But, according to that reading, the termination of the agreement must be in 1915. This is a very singular, and not a very clear, clause of the agreement. It is clause 25, which was inserted by Sir Edmund Barton, as follows : -

This agreement shall remain in force until the 31st day of October, 1915, and henceforth until terminated by two calendar years' notice in writing by either party, such notice to expire at the end of some calendar year.

It has been held by some that we are compelled to wait until the termination of the contract in 1913, before two years' notice may be given, while by others it is held that the two years' notice may be given, for instance, in 191 1. I have looked up the correspondence on the subject, and I find that Sir Edmund Barton, writing to the Governor-General of the Commonwealth on the 25th March, 1903, said -

The term of the new agreement will be ten years, subject thereafter to two years' notice on either side.

From this it will be seen that Sir Edmund Barton's reading was that notice to terminate could not be given until the expiration of the contract in 1913-


Senator Higgs - Then it would not be possible to terminate the agreement until 1916 ?


Senator PLAYFORD - It could be terminated in 1915.


Senator Higgs - But we must wait until the end of a calendar year.


Senator PLAYFORD - We are close to the end of a calendar year now, and we can easily arrange that matter. I have given honorable senators a brief history of the events which have led up to the. present position. Sir Edmund Barton considered that iti would be a great deal better to have an agreement, made by all the States, terminable in a given time, than an interminable contract, in which only four of the States were involved, and which could not be upset, unless, possibly, at considerable expense. We now come to the Conference, & report of which was laid upon the table of the Senate on the 13th September of this vear. There are really only two points which we need take into consideration. One of these points is contained in paragraph 6, as follows : -

Sir E.Barton claimed, in his letter to Mr. Seddon, of rst June, 1903, that " by reducing the term of the agreement to a reasonable period, the Commonwealth has obtained for the Pacific Cable a very great advantage, which cannot fail to be of immense and increasing value." But we feel that this advantage is not definitely secured so long as any doubt remains whether the agreement will or will not be actually terminated after it has been in operation for ten years. We, therefore, earnestly trust that the Commonwealth Parliament will not ratify the agreement unless clause 25 is amended so as to read " This agreement shall remain in force until the 31st day of October, 1913, and no longer."

I shall comment upon that point a little later on. The second question is contained in paragraph 7, as follows : -

We are advised that the recital in the preamble of the Commonwealth Agreement, that it is desirable to substitute one agreement for certain other agreements, including the New South Wales agreement, and the similar agreement with South Australia, Western Australia, and Tasmania, cannot safely be relied upon to prevent the revival of those agreements on the termination of the Commonwealth Agreement. We therefore think that an express provision excluding such revival should have been inserted in the Commonwealth Agreement ; and we trust that such a provision will be inserted before the agreement is ratified.

The gentlemen who formed that Conference or Committee, fell into a great mistake. The members were the Hon. Alfred Lyttleton, Under Secretary of the State for the Colonies; Earl Jersey, representing Australia; Sir William Mulock, representing Canada ; and Sir Sandford Fleming, representing New Zealand. As to whether the termination of this agreement in 1915 will revive the agreement between the Eastern Extension Company and the States of South Australia, Western Australia, Tasmania, and New South Wales, I have the opinion of the AttorneyGeneral, Mr. Isaacs, who as plainly as possible states that there is not the slightest ground for any supposition of the kind. The opinion is a long one, but I need only read the following : -

In my opinion the State agreements and the provisional arrangement will, on the ratification of the Commonwealth Agreement in its present form, be superseded and gone for ever-

Of course, there is no doubt about the matter. and the termination of the Commonwealth Agreement will not revive them. They could only be revived by express agreement between the Commonwealth and the company to that effect.


Senator Sir William Zeal - That is only an opinion.


Senator PLAYFORD - It is a very valuable opinion.


Senator Sir William Zeal - Is it?


Senator PLAYFORD - I have looked up the terms of the agreement, and there appears to me to be no doubt that the AttorneyGeneral, to whom, of course, we have to trust in matters of this kind, is quite right. It was for these reasons that the Eastern Extension Telegraph Company were never asked to include these points in the new agreement. In the first place, we were quite sure that the Eastern Extension Telegraph Company would not agree to that course, and, in the second place, we did not think there was any necessity to make the request. This agreement was passed by the other House without a division, and, practically, without any objection.


Senator Staniforth Smith - The other House would not pass the agreement now.


Senator PLAYFORD - I dare say it would ; at any rate, we have heard nothing to the contrary. Honorable senators have heard something about the pooling of the receipts, in regard to which Senator Higgs asked a question the other day. At that time the Government were not able to supply the information.


Senator Higgs - Of course, the Government knew nothing about it !


Senator PLAYFORD - Since thenhowever, the Government have received some information. In consequence of the two companies working here, both are put to considerable expense, which would not be caused if the receipts were pooled. The Eastern Extension Telegraph Company have to keep open offices, with a staff for the purpose of collecting and despatching telegrams.


Senator Dobson - In Melbourne?


Senator PLAYFORD - Yes.


Senator Dobson - Then the Government have ignored what the Senate decided.


Senator PLAYFORD - In what way? All that the Senate decided was that we shouldnot consider the point until the Conference was over.


Senator Dobson - The Government have given to the company the very thing the Victorian Government refused.


Senator PLAYFORD - But Victoria is very pleased over the matter. A special wire had to be laid down between Melbourne and Adelaide, and the Senate passed the appropriation for that special wire, in order to give effect to the agreement.


Senator Clemons - When ?


Senator PLAYFORD - Some years ago. However, I do not wish to go into that question, but merely to deal with the matter of pooling.


Senator Higgs - Senator Playford induced the House to pass that appropriation by stating that it was not intended for the Eastern Extension Telegraph Company.


Senator PLAYFORD - I do not recollect ; if I did, I must beg the honorable senator's pardon. I know that the Eastern Extension Telegraph Company have a wire, but whether it is that particular wire or not, I cannot say. A wire was provided which suits the purposes of the company as between the two places.


Senator Higgs - So long as it suits the Government purpose, I suppose it is all right !


Senator PLAYFORD - What we know is that the company have had a wire for a considerable length of time, and that until this provisional agreement was entered into the Melbourne people were paying considerably higher rates for their telegrams. When the tentative agreement was entered into by Sir Edmund Barton, effect was given to it immediately ; and I think the Senate know of the fact. The Senate also knew that the Eastern Extension Telegraph Company had special offices and special consideration given to them, and certainly that they had a special telegraph line, which they were using by means' of their own operators.


Senator Best - I think that the company have had a special office for two or three years.


Senator PLAYFORD - As to pooling, the Pacific Cable Board offered that they should receive 35 per cent, of the receipts, and the Eastern Extension Telegraph Company 65 per cent., for the period of the agreement.


Senator Matheson - On what date was this proposal made?


Senator PLAYFORD - I do not know the date, but I believe that it was made very recently. The Eastern Extension Telegraph Company said they would not entertain the proposal except for a period of thirty years, or more, and then only on the distinct understanding that at the end of the term all the State agreements into which they had entered - the agreements made with South Australia, Western Australia, Tasmania, and New South Wales - should be revived.


Senator Macfarlane - They do not want the Commonwealth to ratify the agreement.


Senator PLAYFORD - I do not believe that they care whether we ratify the agreement or not. ' In my opinion, it will be more advantageous to us than, to them if we do. I believe they have perceived that there was. no necessity for them to enter so hurriedly into the agreement. Thev imagined that they would meet with a great deal more competition from the Pacific Cable than they get. We do not want to approach the company and ask them for a variation ; we wish the agreement to be carried out exactly as it was approved by Sir Edmund Barton, and confirmed by the other House. Why do we not wish to vary the agreement? Because we are anxiousnot to have an interminable agreement. Suppose that the Senate did not pass the motion, and that the arrangement fell through, in what position would the Commonwealth be left? Victoria would be released to a certain extent. We could prevent the company from having a special wire between Melbourne and Adelaide, and between Melbourne and Sydney, but we could not prevent them from sending telegrams through the Department. Nor could we stop them from canvassing for telegrams. They are a great deal more up to date than are the Pacific Cable Board, I am sorry to say. The latter do not act on business lines. If a merchant sends a number of telegrams to Europe or England, the Eastern Extension Telegraph Company will open an account for him, and he can pay monthly ; but if he wishes to send a cablegram by the Pacific Cable, he has to pay cash every time he wires,.


Senator Matheson - That is the fault of the Federal Government. ,


Senator PLAYFORD - It is not.


Senator Matheson - The Federal Government are the agents for the Pacific Cable Company.


Senator PLAYFORD - Certainly not; the Pacific Cable Company have a Board, which manages its affairs.


Senator Matheson - Where are the company's offices in Melbourne?


Senator PLAYFORD - I do not know. I only know that we give to that company an advantage which we do not extend to the other, and that is to send all unmarked messages, by their route.


Senator Matheson - I know of no office of the Pacific Cable Company in Melbourne.


Senator PLAYFORD - The company should have an office here. It would be a business arrangement if they had. Suppose that I wished to send a cablegram to a place in Europe, what have I to pay? I have to pay 33. a word to the Eastern Ex: tension Company, and from 3s,. 6d. up to 4s. 3d. a word to the Pacific Cable Company. That is a very curious way of doing business.


Senator Best - Does not the Eastern Extension Telegraph Company make considerable rebates to good customers?


Senator PLAYFORD - I do not know; certainly they have no right to do that, because it is provided in one condition of the contract that they shall be bound by the Berne Convention with regard to telegraphic matters, and it precludes the making of rebates.


Senator Staniforth Smith - They have written to me, denying that they make any rebates.


Senator PLAYFORD - I contend that if we ratify the contract, we shall be in a better position, not to-day, but in the future. So great is the advantage which the agreement offers that, after looking into the whole matter very closely, I have every confidence in asking the Senate to ratify it. : Senator STANIFORTH SMITH (Western Australia). - We must all admit that Senator Playford has put the case as strongly as it is possible to put it on behalf of those who advocate the ratification of .this agreement. He has been on a Conference with regard to the Pacific Cable, and has studied this matter for a great many years, and therefore, advocating warmly as he does, the ratification of the contract, he is enabled to put the case as strongly as it can possibly be submitted. We, in endeavouring to answer his arguments, have not the advantage of the official information which is possessed in the Department, and therefore we are not able, perhaps, to refute as fully as could otherwise be done, the various statements which he has made. I think that ever since the Pacific Cable was laid down,, the attitude of the Commonwealth towards this great British enterprise has been unsympathetic and unfederal. We, as the largest partner in the undertaking - owning, as we do, one-third interest - are much to blame for the apathy we have shown. A previous Government came to an agreement with the Eastern Extension Telegraph Company, which vitally affected the Pacific Cable Company, and against the unanimous representations of every one of our partners, as well as the Secretary of State for the Colonies, they endeavoured to force the agreement through each House of this Parliament. The Senate, rightly, I think, refused to ratify the agreement until an expression of opinion had been obtained from our partners in this joint enterprise. A Conference has been held, and its report contains certain recommendations. It is proposed now by the Government to practically defy our partners, to disregard their decision, and to ratify the old agreement just as if no Conference had been Held. What was the good of our going to the expense of holding a Conference if the Government were determined to ratify the old agreement, no matter -what decision might be come to by our partners ? If we are not going to carry out our Empire obligations - and this certainly is a most important one - not only shall we destroy the usefulness of this Pacific Cable, and 'make it a financial incubus on the partnership, but. it would probably result in this being the first and last enterprise which would be undertaken jointly by the various people of the Empire. So far, we have been actually assisting the Eastern Extension Telegraph Company to defeat our nation-owned Pacific Cable, and that fact is, I think, mentioned very clearly in the report of the Pacific Cable' Conference.

We consider that this result must be directed mainly if not entirely to the fact that the Telegraph Company has been granted special wires, and has been allowed to open offices in Sydney and Melbourne under the New South Wales agreement of 16th January, 1901, and the Commonwealth agreement of 8th June, 1903.

In other word's, we have had no compunction in granting valuable privileges to the Eastern Extension Telegraph Company, and withholding ,them from the Pacific Cable Company. We have given the former a special line from Melbourne to Adelaide.


Senator Playford - We are perfectly willing to give the other company a special line if it is wanted. We offered it to them.







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