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Navigation Act Royal Commission - Second Report (New Guinea and Papua)


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192.5.

THE PARLIAMENT THE OF AUSTRALIA.

Ol!' TliJi]

ROYAL CO MJVIISSIC) N ON N AVl(}J\_TlON-•

tN EvV UUI.NJ:Ll_ AND PAP UAJ

Presented by O

[Cost of PIJ;[Jer :-Preparation, not given; 900 copies ; approximate cost of printing and publitihing, £22.]

" --

Printed and Published for the GoVERNMENi' <.•f the COMMONWEALTH of AUS'rHALIA by H . .J. GREEN, Government Print 0r for the: State nf Victoria. '1\'0. 33.--F.9273.--PRICE 9D.

1323

111

OF AUSTRALiA.

GEORGE THE FIFTH, by the Grace of God, of the United Kingdom of Gnat Britain and Inland and of tl!e British Dominions beyond the Seas King, Defeni-er Faith, Ernpero1· of India:

GREETING:

'1'0 Our Ti"uity ii1ul -weli-beloved JoHN HENIW PROWS.Jj, Esqui're, J.II.P.; Senator WAL'rmt LESLIE DuNCAK; Senator CJuRLEB STEPHEN McHua1r; Senator HERllh'R'l.' JAMES MocKh' 01W PAYNE; lf&ANF ANSTEY, Esquire, M.P.; ALFRED SEABROOK, Esquire, M.P:; GEoRGE EDWIN YATES,

Esquire, M.P.

WHEREAS by Letters Patent iss1,ed in Our name by Our of Our Governor-General of the Commonwealth of Australia, acting with the advice of the Federal Executive Gotmcil, and in pursuance of the Constitution of Our 8aid Commonwealth, the Royal Comm·issions Act 1902-1912, and all other powers him thereunto enabling, We did, on the seventh d.a,J of September, in the year of Our Lo1'd One thousand nine httndred and twenty-three, appoint JoHN HENRY PROWSE,

Esquire, M.P., Senator WALTEB.LESLIEDUNCAN, Senator HAROLD EDWARD ELLioTT, G.B., C. M.G., D.S.O., D.C.M.;Senator CHARLES STEPHEN McHuGH, FRANK ANSTEY, Esquire, M.P.; ALFRED CHARLES SEABROOK, Esqtti·re, A-J.P., and GEoRGI!:

Enwrn YATES, Esquire, M.P., to be Commissioners to inquire into and report upoit the effect of the operation of the N avigat·ion Act 1912-1920 upon Australian trade· and industr.y and upon the development of the Commonwealth and the Territul"ies (including Mandated Territories) ofthe Commonwealth.

AND whereas the ·said Senator HEHBERT JAMES MocKFORD PAYNE has been appointed tube one of the Oommissioner8 j'or the pwrposes of the sa·id ji1·st-mentioned Letters Patent as fully and effectually to all intents and purposes as if kis name had inserted therein i1t the place of that of the said Senator HAROLD :EnwAHD G.B., C.M·.a., D.i:I.V.; D.O.Jll., resig·ned.

AND whe·reas We d·irected ·in tile S£tid Letter8 l'atetu that for the. pu·rpose of taki·ny et'idettce fotq Cormn-issione1·s shall be s-ujjicient to Wlt8tit-!tte a rmd ·IIW,!J proceed ·with the ·inq•ttiry under the jirst-mentionetl Letters Patent.

AND whereas it is desirable that two Co·nnnissio'11Al1'S slw,!l be sufficient to constitute a quor•ttm and proceed with tlte inquiry under the said first-mentioned Letters Patent :

NOW therefore know ye that We do by these 01w Letter·s Patent, iss1ted in Onr ruune by Our· Governor-Oeneml of Our (Jornmonwea.lth of Aust-ralia, act·ing with advice of the Federal E:vecutive Oo·uncil, and in llUI'SUance of the Constit·ution of Our swid Oo·m monwealtlt th'e Royal Comm·issions, Act Hl02-l912, und all other powers kim thereunto e·â€¢w,bliny, direct that for the purpose of e·vidence two Commissioners shall be sufficie·nt to constit·ute a q·uor·um and.may proceed with the hiqttiry

1tnder the said jirst-rnentioned Letters Patent.

WITNESS Ou1· R1:ght Trusty and Well-beloved HENRY WILLIAJI! BARON FoRSTER, a Member of Otw Mo.,t Honorable Privy Council, Knight Grand Cross of Our 'Most Disting·uished Orde1· of Saint Michael and Sa·int George, Gove1·nor-General and Commander-in-Chief in and over O·u1· Commonwealth of Australia, at Brisbane, in the State of and in the Commonwealth aforesaid, this

sip;teenth ilay. of A1tgust, in the year of 01t·r Lord One thousand lvnndred roul and hi the fifteenth year of Our l'eirtn.

By His Excellency's Command, 8. M. BRUCE, P·rime lJ:!in·ister.

.FORSTER. Governor-Oenem.l.

Entered on record by me, in Re(Jister of Patents, No. 25, page 27li, this fourteenth day of Auvust, One thousand nine

hundred and twenty-foul'.

.I. ULilll!JR.

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v

GOMMONWEA'"TH OF ;WSTRALIA.

GEORGE THE FIFTH, by the Grace of God, of the UnitedKingdomofGreat Britaito and ireland and of the British Dominions beyond the SeW? King, Defender of the Faith, Emperor of India t

TO Our TruiJty and Senqtor l;IEIIBERT JAMES MocKFORD PaYNE.

GREETlNG:

WHEREAS by Letters Patent if'sued in Our name by Our Deputy of Our Govern6r-General of Our Commonwealth of A1t1Jtralia, acting with tke adiiice.of Our Federal Executive Council, and in purauance of. the Constitution of Our aaid Commonwealth, the RtJyal Gommiesions Aet 1902--1012, and all other powers kim tkireid-to enabling, We did, on the seventh day of September, in the year of Our Lard One thoiuland nine hundred and tUJenttg-three; appoint JoltN HlilNJiY PRows:£, Esguit·e, M.P., SenatOr WALTER LESLIE DUNCAN; Senator HAROLD Err\VARii Eti:.to1'T, G.B., G.M.G., D.B.O., JJ.b.M.; Senator O:a:ARt:ms STEPHEN MoHtrGH; FB..um: ANSTEY, M.P.; ALlrRED CHARLES SE.ts:B.oo:il:, E8qu£Ve, M.P.; GEORGE EnwrN YATES, Esquire, M.P., to be Oomrnisswnera to inquz"re into and report upon tlie effect ojtlte operation oJtfte

Navigation Act 1912-1920 upon Au$tralian trade and indUBtry and upon the development of the.Oommonwealth and the Territories (including Mandated TerritMies) of the Commonwealth.

AND> Whereiu the said SilnrUIYr HAROLD lllbWARD ELtidri·, O.B., O.M.G., D.S.O., D.O.M., haS re&tgnea M8 appointment as such Oommiasioner, and such resignation has been accepted.

NOW, therefore, know ge that We do by theae Our Letters Patent, £8aueil in Our name by Our (}dveffior.(}eneral of Our Ocnnmonweallh of Australia, acting with the tulvice of Our Federal Executive Council, and tn J.liirsuance oj Ute .: Constitution of Our said Commonwealth, the Royal GommisiJiow Act 1902-1912, and all other powers him thereu#to enahUhtf, appoint you to be one of the Commissioners for the purpose o[tke sa.idfirst-mentwned Letters Patent as full!{ and effectually to all £ntents and purposes a$ mime had been insefted therein in the place of the Senator HAROLD EnWAR:O ELLIOTT, G.B., G.M.G., D.B.O., D.G.M.

WITNESS Our. Right Trusty aud W ell-bewved :ij;EN:&Y FoRSTER, .a Member of Our Mo.st Privg Go'!£ncil, Knight Grand Oroas ojOur Most i)iati1l{Juished Order of Saint

and Saint George, and Oomrnil,nder·in·Ohief in and over Our Commonwealth oi AUBtralia, at Brisbane, in the State of Queensland, and in the Gommanwealth iiforesairl, thi8 Qj A'II{['IJ#, if!< t"M 1/f«

and in lite gear ot Our r4ign.

lJy His Excellency' a Command, S.M. BRUCE, Prime Miniater.

Entered on recorcl by me in Begi•ter of Patents, No. 25, page 275, thiajourteenth day of Aug1Ut O'M thousand nine lmndred and tWf.ntt/·four. if.· ULMER.

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MAJORITY REPOR'I'.

To His Excellency the R£ght Ilotwmble HKNlW \V"IL"LIAM, BARON ]'ORS'rnm., rt Mernber of His NlaJ·esty's 11/[ost Honorable Pr·ivy Oonncil, Kn·ight GrCPnd. Cross of the Most Orde:r of Saint Michael and Saint, George, Governor-Gen('Jral ani!/

of the Commonwealth of Aust:ralia.

MAY IT PLE:ASE YouR ExcELLmNcY :

We, the undersigned Coxnmissioners 8ppointed by Royal· Letters Patent to inquire into and report upon the effect of the operation of the Navigation Act on trade, industry and development in Aus.tralia, and the Territories (including Ma,nda,ted Tenitories) of Australia, have the honour to submit our Second Report, which deals with the Mandated Territory of New Guinea the

Territory of Papua. .

Since our First Report was made to your Excelleney, Senator H. E. Elliott, l1as resignel1 as a member of the Commission, and Senator H. J. M. Payne has been appointed in his place. In view of the urgent and insistent nature of the representations made by the Administrator of New Guinea (Brigadier-General E. A. Wisdom), and also by the Lieutenant-Governor of Papua (Sir J. H. P. Murray), as to the alleged detrimental e:ffeot of the Act on the development

of these Tarritories, the Commission deemed it desirable that a personal investigation should be made as early as poosible. Owing to the sittings of Parliament it was. not practicable for all the Commissioners to proceed to the Territories of New Guinea and Papua, so therefore three of yom Commissioners, Mr. J. H. Prowse, M.P. (Chairman), Senator H. J. M. Payne and Mr. G. E. Yates, M.P., made

the journey for the purpose of taking evidence there. The three Commissioners left Sydney on the 16th August, 1924, and arrived at Rabaul, . the Seat of Government and the principal port in the Territory of New Guinea, on the 24th August. During the vessel's stay in Rabaul evidence was given by officials of the Administration,

merchants, planters, and others to the effect of the operation of the Act on vario\.lS phases of the Territory's development. In addition to taking evidence at Rabaul, your Coromissioners took the fullest opportunity, in the time at their disposal, to visit the surrounding districts. ·

The visit of the Commission was made as widely known as possible throughout the whole • of the Territory in order that an opportunity might be afforded any person who so desired to give evidence relevant to the enquiry. In order that your Commissioners might become fully acquainted with the character and

special features of the Territory, advantage was taken of the round trip of the s.s. Mataram to visit the principal out-posts, thus ensuring a comprehensive survey of the whole of the Territory. In a number of the places visited evidence was tendered by local planters and others. Your Commissioners, after completing their investigations in the Mandated Territory of New Guinea, proceeded to Papua on the return voyage to Australia, carried out a similar inspection of that Territory, and examined a number of witnesses.

For the purposes of this Report it is necessary and expedient to deal separately with each Territory, as although their interests and problems are practically identical, there are certain essential points of difference which it is desirable should be emphasized in order that the position \vith regard to each Territory may be clearly understood. .

PART OF NEW GUINEA.

GENERAl,.

The total area of the Territory is 91,000 square miles. It comprises a large number of islands and portion of the mainland of New Guinea, formerly held by Germany. The country is chiefly devoted to agriculture. The principal product is copra, and it cle11r that the future development of the Territory rlepends to a very large extent on the copra mdustry.

During the period tf German occupation practically the whole of the coco-n\lt plantatiQns were owned by German nationals. When the mandate over the Territory was given to Australia: F.9273.

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steps at" once taken to repatriate the Germans, and their properties were vested in the of .H:xpropria.ted Properties until such time as the properties are sold or otherwise

of. The Expropriation Board is the instrument by which the Custodian of Expropriated

Properties looks after the trust. It is the duty .of the Board to maintain the properties in as efficient and as economical a manner as possible, in other words, to prevent the asset from depreciating in value, and to sell the copra to the best possible advantage. It is not, however, the function of the Board to engage in additional planting, i.e., to increase the area of the existing plantations, or to plant entirely new areas. It is as well that this fact should be noted, as it has a very direct bearing on the future development of the copra. industry in the Territory.

ExPoRT oF CoPRA.

. The total amount of the copra. exported from the Territory for the year ended 30th June, 1924, was 32,643 tons. This represents an increase over the average of the previous four years of approximately 10,000 tons. This increase is partly due to the fact that a number of the coco-nut plantations contained young trees, which have now come into full bearing. It is estimated that it takes a coco-nut palm from seven to ten years to mature. . Taking the year ended 30th J nne, 1924, the amount of copra exported by the Expropriation Board was in the vicinity of 26:.000 tons. From this it will be seen that at the present time, and until the p1antations taken over by the Board are no longer under its control, the principal export of copra from the Territory • is on account of the Expropriation Board. The total value of copra exported naturally varies with the price of copra.; but taking the last year for which the figures are available-the year ended 30th June, 1924-the total value of copra. exported was £640;486. This works out at approximately £20 .

PRINCIPAL IMPORTS .•

The total value of the imports for the year ended 30th June·, 1924, was £427, 982. Reference to the official statistics of exports and imports shows that there has been a in the value of imports for the year under review, as compared with the preceding four years. The principal import of the Territory is rice, which is used as food for the natives. In addition to rice the chief imports from Australia and other countries are groceries, hardware, drapery, trade tobacco,

machinery, &c.

APPLICATION OF THE NAVIGATION AcT.

In common with a number of other Commonwealth statutes, the Navigation Act was applied by Ordinance to the Territory in July, 1921, shortly after the inauguration of civil administration. Under the provisions of this Act no vessel, unlesslicensed to do so,is permitted to engage in the trade between Australia and the Territory. This means in· effect that vessels calling at ports in the Territory, for the most. part employing coloured crews, cannot pick up cargo there for shipment to Australia or carry passengers to Australia unless they comply with the provisions of the Navigation Act. Vessels calling at Territory ports for direct shipment to places other than Australia are not, however, similarly·required to be licensed under the Act, and are free to trade with the Territory without any of the restrictions imposed under the Act. In order to clearly appreciate the effect of these restrictions on the trade and general development of the Territory, it is necessary,· first of all, to examine the position as it existed prior to the application of the Act.

SHIPPING SERVICES.

·(a) Prior to Navigation Act.-Prior to the application of the Navigation Act to the Territory vessels of any nationality were free to enter its ports without restriction, and to trade to and from Australia. In the course of his evidence the Administrator of the Territory produced a document written by former .German residents, which .contained an account of the pre-war shipping conditions. The following extract from this document shows the extent of shipping services, provided in pre-war days :___::" Before the war this colony enjoyed regular and time-tabled connexion

with (a) Australia (Brisbane and Sydney) four-weekly, (b) Manila, Hong Kong, and four­ weekly, (c) Amboina, Macassar, Batavia, and Singapore six-weekly. The steamers d1d not only call at Rabaul, but in regard to the service under (a) and (b) also four-weekly at Madang and eight-weekly at Maron, and were also to call from November, 1914, eight-weekly at Manus .. As to the service under (c), Eitape, Potsdamhafen, Madang, Finschafen, Morobe, Rabaul, W1tu,

and Kaewieng were visited both inwards and outwards, thus giving all the places mentioned an opportunity of getting not only their merchandise from Australia direct, aJso from all countries of origin, further affording them facilities to ship their produce direct to the consummg countries either via Sydney, Hong Kong, or Singapore." .

In considering the shipping services with the Territory in pre-war days, It also be b?rne in mind that the volume of trade was not so great as it is to-day. Evidence to this effect was

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by F .. .Jolley, Deputy Chairman of the Expropriation Board, who bas been a resident of the Territory smce 1907. He says:-- .

17749.' Was therr. any lack of shipping in 1914 ?--From 1907 to l!H4 there was a very good inter-1!>land anr1 overseas service.run by the Nordeutscher-Lloyd Company. 17750. But the trade would not be as.grcat then as it is to-day, would it ?-No; it; was much less. 17751. The trade has increased ?-Yes.

(b) Subsequent to Navigation Act.--Since the provisions of the Navigation Act were applied to the Territory there ha.s not been any decrease in the amount of shipping, but on the contrary, there has been a slight increase in the number of ships which have entered and cleared Territory ports for the years subsequent to 1921. The Administrator of the Territory has submitted the following evidence in regard to the existing shipping services :-

17495. By M1._ Yates.-The export of copra is increasing is it not ?-Yes. 17496. The export in 1920 was 26,000 tons; it is now up to 32,000 tons ?-Yes, and we anticipate that it will be 36,000 tons next year. 17497. There has never been any block in regard to getting your copra away, has there ?-No.

1749-8. There has always been sufficient freight offering ?-Yes, there has always been sufficient space.

This clearly indicates that there is no lack of shipping, and so far as this aspect of the matter is concerned, it appears that the only restriction which the Navigation Act imposes is to prevent overseas vessels establishing a service direct to Australia, making the Territory a port of call. The effect of this restriction will be elaborated fully in a subsequent portion of this

Report.

MAIL CoNTRACT.

It is considered desirable at this stage to refer to the Mail Contract which has been entered into between the Commonwealth Government and Burns, Philp & Co. Ltd., for the carriage of mails to the Territory. Recognizing the necessity for maintaining direct and regular communication between ·the mainland and the outlying Territories under Commonwealth jurisdiction, a contract was entered into with Burns, Philp & Co., who are engaged in the island trade, to carry mails and to provide certain other services for which a subsidy is paid by the

Commonwealth. Under this Contract Burns, Philp & Co. undertake to maintain a three-weekly service between Australia and the Territory of New Guinea, for which they are paid a yearly subsidy of £20,000. The two vessels engaged in this service are the Mataram, 3,300 tons gross, and the Marsina, 2,000 tons gross. In addition to the subsidy of £20,000 an arrangement was made with Burns, Philp & Co. that the Expropriation Board, which handles approximately 75

per cent. of the copra of the Territory, shall ship a certain amount of its copra to Australia by the subsidized services provided under the Mail Contract. The cargo-carrying capacity·of the two vessels engaged in this service 1,800 to 1,900 tons; Mars1:na, 800 to 900 tons. The vessels provided by Burns, Philp & Co. in the Territorial service are licensed under the Navigation Act, and it has beeri stated in evidence that the effect of the conditions imposed under the Act and the monopoly which Burns, Philp & Co. enjoy of the island trade, largely by

virtue of the Mail Contract, help to maintain high freights which are retarding the agricultural development of the Territory. DISABILITIES IMPOSED BY THE NAVIGATION AcT.

As has already been pointed out, copra is the chief export of the Territory. There is, however, no market for copra in Australia, and all copra sent to Australia must be re-shipped overseas to the world's markets, principally to European countries, which are. the largest consumers of copra. This means that freight is paid in the first instance on the copra from the

Territory to Australia; and then additional freight, plus handling charges, &c., from Sydney to the United Kingdom and Europe. This is one of the main objections lodged against the Navigation Act, that it practically compels the shipment of a proportion of the copra to Sydney, as the only vessels which can conform to the requirements of the Act are Australian-owned.

Attention is invited to the following evidence given by the Administrator in this connexion :--One Australian shipping line (Burns, Philp and Co. Ltd.) runs two vessels between the Territory and Sydney, one vessel 1

arriving each three weeks. Ndo fboreign veshselTcan. conformd tAo thte

of the ahnd cBannot l.

consequent y engage in \he coasting tra e etween t e erntory an us ra 1a. e consequence IS t at . urns, I

Philp and Co. have a monopoly of the passenger and cargo traffic to Australia, and are therefore able unchallenged to charge excessive freights. The result of this monopoly is that there is little inducement to foreign vessels to call. Were the restrictions removed, these vessels could anrl, in my opinion, would make Rabaul a port of call, and carry cargo to Australia as well as other countries.

The present freight rate charged by Burns, Philp & Co. on copra shipped to Sydney is 35s. per ton, but the Company allows a special through freight to London of 90s. per ton. The freight direct from Rabaul to European ports is stated to be about £3 per ton, so that an additional freight of £110s. per ton is paid on every ton of copra shipped via Sydney to European ports. In other words, it would appear that a saving of £1 lOs. per ton on every ton of copra exported from

the Territory could therefore be effected if copra were sent direct to European ports instead of via Sydney. IE thi:;; is RO, it simply means that the producers of copra are compelled to meet

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this additional cost of £1 lOs. per ton. J:n thJs connexion attention is invited to the following given by the Administrator :-

17 459. The freight from Rabaul to Sydney is 35s. applies t9 copra, cocoa, and trochns only,

and all ot.her freights are 60s. ; the rate from Sydney to Lonqon, including ha11(lling in Sydney; would be 55s. ; that is, a total of 90s. 011 a through bill of lading. 17460. That is 30s. more than the rate for which you could obtain a direct shipment to European markets?­ ; that is computing the direct freight at £3 per ton.

17461. At which figure you hold that freights oan be obtained ?-I think they can be obtained at a cheaper .rate. In that Cllose the diflere:p.cQ th.e p:esE;nt met4od of llA4 thfl di.rept.

to TJondon would be 30s. instead of £2 pre;>mnmg that the £,'1 fl.:e1ght tn I•mlclo;n lS Q Ql'fect, l thmlf 1t J11!ght be less. · ·

The wvidenoe of the Administrator on this point is also conoboratad by of the Expropriation Board, who says:-17775. Then there is the c;>bligatiqngpon t:[J.e Goveml}WJ1t lj.Jid the, to give to contractors;

does the giving of that contract cost more, as far as the Board is concerned, than would be the case-if !t not given? ,.,.,.- because Australia is not a market for qqr produce. The copra that goes to Aumalia is in .exooss of her require­

I will give you .il c.a!le ip. poillt. 'J'4fl tAAt Wl;)nt Q.ow!J. by the la2t trip of the M.flt4riJ!m was landed into

v(lsse,J1 !l

Governmel!t a seryice fwm Alll\!Pralia tq p,pd we hi1VB to nePQ Qljf copr.a down

to Sydney, or else we have to pay a higher subsidy. 17776. Does that not really mean t hat the freights you paying to Sydney is excess freight freight to Sydney is 35s. per ton. Whether or not that freight iil high I am really not in a position to say. That is purely n. p111.tter of compa.rWQ:P, ip.form{ttWil- on wjlich pal). only be from a plac!l hk& Australj{t, m: ot;I:te.r places where a fajr amouut of trad11 is beipg . .· .

177'77. Are you aware qfthfJ througij freight to IJondo11 ?"--The freight to Londo11 via $ydney is 90s. What is the direct freight from £310s. · .

FREIGHt . ON IMP():&T$.

Tlm T@:rritoJJy is plMed in a similar position in regard to import requirements. Such as And copra sacks, two of the principal · items required in the Territory, are

ftQm East to Australia, a.11d then re-shipped to . the Territory. According to official

feQut 8,000 tons of riee are imported annually. Evidence was given that a substantial flavb:J.g in. freight would if:rice and copra sacks mol'e particularly were 'imported direct tl"t>ffl. the country of origin, and that more advantageollfil purchases would he made if such cqmmodities were bmught direct instead .of t4r.ough an . agent in . Australia. Th.e Deputy Chairm.J:l,n of the E:x:prop.riation Board, in giving evidence on behalf of the Board, which is the largest of in the Ten:itory, states:-.. ·

What about your mass ()f our importa oome from Australia; but cel'tain big lines, sp.ch

rica, I<;ero,sene, jute ;tnd 3 few 9ther items like prints, tobaello, steel produpts, such as knives, hoe.s, and axes,

all come from places other than Australia. We, however, get the majority of our imports frmu but tboy have to be taken to Australia and then brought up here. ·

17786. Would you buy them more if you could get them direct from the country of origin ; a

iu point wh-ich I might mention is the l).rrapgemertt we have madP fo;r the purchase pf our ke1osene, and

oils., direct fr9n1 New York, · ·

ADVANTAGES OF DIRECT SHIPPING BETWEEN TERRITORY AND OvERSEAS PoRTs.

. The Navigation Act does not,. of course, prevent the direct shipment of commodities from the East or to t}le export of copra d1rect to European markets from Rabaul or other ports. The of the complaint is that the Navigation Act lh;nits competition to Australian shipping

trading with the Territory ; but that if the provisions of the Act were lifted, arrangements could be made for direct .shipping by vessels trading between Australia and the East or Europe, which would call at Territory In the opinion of your Commissioners there is sufficient trade offering to induce overseas shipping lines establishing a service with Australia, which would make Jl,a'bau] a port of .call instead of a terminal port, as at present. The view was expressed to the Commission t?at. m the event of the removal of the restrictions imposed by the Navigation Act such as the Dutch Packet Company and the Nippon Yusen Kaishan at prese.nt engage? 1n trade with. the. Eas.t and Europe the a port of call. .In fact, the

Adnnmstrator stated m h1s eVIdence that a certam lme of steamships, presumably tradmg between the East and Australi!l, has intimated that it would be prepared to call at Rabaul if 300 tons could be obtained regularly on each voyage. As copra is not a seasonal trade, it is clear that than the. amount required would be offering. The advantages to the Territory of a direct

service 1n probability be (a) inoreased shipping facilities, (b) more competition 1 and (o) reductJon 1n freights. . ·

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CoMPARISON OF PRICES RECEIVED FOR CoPRA IN RABAUL AND SYDNEY.

Evidence was given that better prices are secured in the Tenitory for copra sold f.o.b. Rabaul than can be secured by sending the copra to Australia and selling it in Sydney. This is borne out by the evidence of the Deputy Chairman of the Expropriation Board, viz. :-. 17840. When you sell that copra do you not get the London parity ?-Yes; and it is better than the Sydney

panty, that is to say, .it benefits us to the extent of 30s. to 35s. a ton by selling here instead of in Australia. We prefer to sell here and get our cash rather than ship to London, because in the latter case we have to wait eight weeks or more for our money. ·

17841. It is better to sell here than to send to Sydnev ?-Yes · it is better to sell here f.o. b. and get our cash. It is better to the extent of 30s. to 35s. a ton. • '

Similar evidence was given by other planters, and Mr. W. C. P. Harvey, the New Guinea Trade Agent in Sydney, who buys stores for and sells produce on account of the Administration and the Expropriation Board, and who therefore is in a position to speak with some authority on subject of copra sales, confirms the evidence which has been given that under present conditions the planter obtains better results by selling his copra f.o.b. Rabaul than by sending the copra to Sydney for sale. His evidence is as follows :-

18922. Can you give us particulars of a shipment under similar circumstances sent on a Burns, Philp through bill of lading ?-Yes; on 3rd .July we sold a parcel of copra in Sydney at £21 12s. 6d. on condition that the purchaser took over the through bill of lading, and that the Commonwealth paid freight at the rate of £115s. Between Ra baul and Sydney. The gross return to the Commonwealth there was £23 7s. 6d., ex. ship slings, Sydney. I consider that the difference between an f.o.b. sale, Rabaul, and ex ship slings, Sydney, is £2 9s. 9d., made up as follows :-Freight

£1 15s.; shrinkage, 12s. 3d.; lighterage, &c., 2s. 6d.; making a difference of £2 9s. 9d. as against Sydney.

FARES AND PASSENGER SERVICES.

The Commission also inquired into the effect of the Act on the passenger and accommodation provided on the vessels licensed under the Act to carry passengers to and from the Territory to Australia. Your Commissioners received several complaints of insufficient and unsatisfactory accommodation, though it was stated that at certain periods of the year the traffic

was heavier than usual, and that on such occasions the service provided was not wholly equal to the demands made upon it. This, however, under any conditions is to some extent unavoidable. The opinion was expressed, however, and your Commissioners incline to the view, that if the Navigation Act were removed the more commodious and faster vessels at present engaged in the service between Australia and the East would probably call at Rabaul, and thus

encourage the winter tourist traffic, which would be a great asset to the Territory. With regard to fares, the evidence shows that the single fare to Rabaul charged by Burns, Philp, and Co. on their steamers is-saloon, £18 ; steerage, £12. For the round trip onthe Mataram the fare is £48. Under the mail contract Burns, Philp allow a rebate of 20 per cent. on the fares

of officials of the Expropriation Board and the administration. As there is no competition in passenger services between Australia and the Territory, there is no basis of comparison inregard to fares, and you Commissioners are therefore unable to express any opinion as to whether the fares charged by Burns, Philp, and Co. on their steamers are (a} reasonable, (b) excessive, or

(c) whether the present fares could be reduced. The position is, however, clearly set out in the following evidence given by the Administrator :-17544. With regard to the monopoly to which you referred-the monopoly represented by Burns, Philp and Co., you said that it meant heavier freight. Does that statement also apply to passenger fares ?-Yes; but I want to be

quite clear on that point. I do not claim that Burns, Philp and Co. can run their boats cheaper under present conditions. I merely say that under the altered conditions, if they were free to run their boats without the burden of the Navigation Act, they would be enabled or compelled to reduce their fares in competition with others. 'I do not for a moment contend that Burns, Philp and Co. can, under present conditions., run their vessels cheaper or reduce

their fares and freights.

EFFECT oN AusTRALIAN TRADE IF TERRITORY ExEMPTED FROM NAVIGATION AcT.

Your Commissioners fully recognize that if the Territory is exempted from the operation of the Navigation Act and the direct method of shipping encouraged, a portion of the present trade of the Territory may be lost to Australia. The lifting of the Act will, however, place Australian steamship lines at present engaged in the service with the East on the same footing

as their competitors from overseas, and it is quite probable, in the view of your Commissioners, that Australia will continue to receive a fair share of the trade of the Territory. The economical development of the Territory is to our minds of more importance than any probable temporary loss of trade to Australia accruing from the removal of the conditions imposed under the Navigation

Act. The evidence of the Administrator on this point is striking. It is as follows:-17534. It has been stated that if the Navigation Act did not apply, and you were able to import and export direct, Australia would lose a certain amount of trade that she enjoys at present in the Territory ?-Undoubtedly she would, but my own opinion is that most of trade is trade in which are not pr?duced in .A1_1stra_Iia, but goods

which come through Australia. I do not thmk that the loss of trade m goods produced m Australia IS gomg to amount F.9273.-2

to very much. She would certainly lose her profit in rice and gunny bags. She might also lose in such things as kerosene and oil, although I am doubtful on that point, because 1 think it >viii still be as. cheap to get our oils from Aust:ralia as it will be to get them direct from America. . .

17535. You contend then that, in regard to rice, Australia is gaining an advantage to your disadvantage 1-I say that the bulk of the benefit would come from commissions which are paid from one Australian to another Australian; that is to say, the Australian planter here is paying the Australian merchant a commission for bringing his rice round to Australia to her and makir.g a profit on it. We think we should be able to get our goods like that direct from the market without the intervention of the middleman or agent in Australia.

SERVICE PROVIDED BY BuRNs, PHILP & Co. UNDER MAIL CoNTRACT.

. In fajrness to the service at present provided under the Mail Contract it is desired to point out that one of the vessels of the addition to calling at Rabaul,

collects copra from a number of the principal out-stations. This is an advantage to the growers of copra in that only one handling in the Territory is involved. That is to say, if the Mataram did not call at the out-stations it would be necessary for the copra to be collected and assembled at Rabaul by small intra-island steamers, either in the service of Burns, Philp & Co. or some other shipping firm, or under the control of the Administration. This would probably increase the cost of shipping the copra to market. Burns, Philp & Co. claim that it is cheapet to collect the copra in the way the Mataram is doing, from the various out-stations, than to bring it in small intra-island steamers to Rabaul. Mr. Wallin, the Island Manager for Burns, Philp & Co., states :-

Question.-You go to a number of outports ; don't you think it would be better if a smaller ship brought the copra to the main ports instead of assembling it f9r the Mataram 1 Answer.-No; we are doing it cheaper by the Mataram calling at these outports than the Administrator was able to do with his small steamers ru:iming to the outports and asse!nbling the copra at Rabaul.

Your Commissioners received a great deal of conflicting evidence on the question ofwhether any saving in freight could be effected between (a) shipments via Sydney and (b) direct to European ports. The Administrator emphatically states that a saving of at least £110s. per ton could be effected on copra shipped direct, but Mr. Wallin, the Island Manager .of Burn:s, Philp & Co., contends that copra growers are receiving better treatment by sending their copra to Sydney and that no such saving in freight as is claimed could be effected. To use his own words:- .

The movement to magnify the importance of direct shipments of copra from the islands is not to be accepted blindly-a comparative freight advantage is not the primary factor it appears. This is discounted by charges incurred for extra storage, insurance, handling, shrinkage, depreciation, and interest, amounting to some 30s. a ton ;' and comparatively, our through freightrate of 90s. a ton via Sydney, with-a saving of these incidental-charges, is equal to 60s. a ton direct freight. In addition, regular .shippers by our island steamers average better'results in sales than is the case by holding for irregular shipment.

As an example of the difference of opinion which exists between residents in the Territory and the present contractors for the. mail services, Burns, Philp & Co., as to the saving which would result from the direct shipping method, the Expropriation Board stated that it is losing some £13,000 a year by shipping a third of its total output of copra direct to Sydney, as provided for in the contract with Burns, Philp & Co., for realization as· compared with selling locally for direct shipment overseas. Burns, Philp & Co., on the other hand, contend that. the Expropriation Board has lost sight of certain material. factors in connexion with shipments to Sydney, and that instead of a loss, the Board, on the contrary, obtains an advantage of some £10,000 a year in shipping its quota of 8,000 tons direct to Sydney. . .

In face of this and other conflicting evidence, your Commissioners· found some difficulty in arriving at a conclusion, but it does seem reasonable to assume that if direct shipping could be maintained between ·Australian and European ports calling at Rabaul, better results would accrue to the growers particularly as the removal of the Act would promote competition between rival shipping companies and almost inevitably bring about a reduction in freights, as the running costs would naturally be lessened, and the additional expenditure necessary for oversea vessels to conform to the requirements of the Act would be obviated. · ·

coNcLusioN.

The position summarized appears to be this. Australia is not a mark-et· for copra, which is the staple industry of the Territory. Most of the commodities which are required for consumption in the Territory are not grown or manufactured in Australia. In the circumstances it is reasonable that the Territory should be put in a position to secure direct connexion with those countries where the copra is consumed and from which its principal imports are derived.

If the Navigation Act were not in force, it is certain that shipping lines with an established service between Australia and the and Europe would find it profitable to dP.viate their vessels to the Territory. This would mean that rice and other general carg') coul,l be. taken to the Territory on the outward voyage to Australia,· and copra and other products lifted at Rabaul on the return voyage from Australia to Europe and the East.

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Moreover, the lifting of the Act would inevitably lead to a reduction in freights as a result of competition and decreased costs. Your Commissioners, after carefully considering the evidence received from the Administrator, Deputy Chairman of the Expropriation Board, private planters, merchants, and others, are of the opinion that the Navigation Act imposes a disability on the

Territory which it is felt was not contemplated at the time it was applied, and, while it is recognized that the throwing open of Territory ports to shipping from overseas may for the moment affect certain Australian interests, it is considered that the ultimate benefit to the Territory from the removal of the present restrictions will more than compensate for any such loss of trade

with Australia.

PAPUA.

GEN.ERAL.

Your Commissioners carried out a similar investigation in Papua to that carried out in the Territory of New Guinea, and every opportunity was afforded any persons desirous of giving evidence to state their views. .

Papua is, and has been a British possession since 1887, and the administration of that Territory has been controlled by the Commonwealth Government since the year 1906. · The two principal ports are Port Moresby and Samarai-the former is also the Seat of Government, i.e., the head-quarters of the local Administration.

Evidence was received in Papua from the Chambers of Commerce at Port Moresby and Samarai, also from the Lieutenant-Governor (Sir J. H. P. Murray) and a number of merchants, planters, and others. .

EXPORTS AND IMPORTS.

Papua is devoted largely to agricultural pursuits, and as in the case· of the Mandated Territory, the chief exportable product is copra. Official statistics of exports for two years prior to the war and for five years subsequent thereto disclose that there has been a steady increase fn the output of copra during that period. For the financial year 1912-13, 94 tons of a total

value of £16,912 were exported, as compared with 7,315 tons of a value of £136,659 for the financial year 1923-24. The total value of all produce exported from the Territory for that year was £239,408. It will therefore be seen that copra is the principal item of export and that it represents more than 50 per cent of the total value of exports. The other principal items of for the year under review are gold and beche-de-mer.

Similar information has also been furnished in respect of imports into Papua for the years and 1913--14 and for the years 1919-20 to 1923-24 inclusive. The total imports range

irom 7,000 to 10,000 tons with a value ranging from £200,000 to £500,000. For the financial year 1923-24 9,789 tons of inward cargo were received at the two ports of entry, Port Moresby and Samarai. SHIPPING SERVICES.

With a view to instituting a comparison between the shipping services provided for the years prior to and since the application of the Navigation Act to Papua, official statements were prepared by the Papuan Administration and presented to the Commission. The following statement speaks for itself :-COMPARATIVE STATEMENT OF NAVIGATION SHOWING THE NATIONALITY, NUMBER, AND TONNAGE OF BRITISH AND

MERCHANT VESSELS ENTERED AND CLEARED AT THE PORTS OF THE TERRITORY (SHIPS OF. \VAR AND GoVERNMENT VESSELS NOT INCLUDED) FOR THE TEN YEARS ENDED 30rH JUNE, 1923.

;'essels.

Number. Tonnage.

Nationality. [ '

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1""'( 1.-4 .-I .-I .-4 _. 0 0 O)IO)iCJI"'I 0) I;:: P""L .-t .-. 11""'4 - ,....., I I ) I l ' I , I British .. 863610 1171981 861l0Sil27· 143; 159,776; 262,897 96,753 72,414 57,955 60,1081 59,189[ 67,6241' 74,206 77,6\6 Foreign •• 66 33 48150 20 _\- -' -1 .. 1198,730 99,729 151,134 1 158,2941 63,772 - - : - - .. 1- 1-1 I I I I ' Totals .. 21417l137lgg\8iji'l0Sil27i 143 1 ,358,506, 362,626\247,8871231,0081121,727 60,1081 59,189, 67,624, 74,206: 77,676 i j , I J , I I 1 J I J These figures that the Navigation Act has limited the opportunities for oversea vessels to call at Papua. The Lieutenant-Governor of Papua (Judge Murray), who has held that position since 1904, and is therefore familiar with the nature of the shipping facilities provided to Papua both prior to and since the war, stated in evidence that the most prosperous years for Papua were from 1910 till the outbreak of war in 1914, during which period Dutch vessels called at Port Moresby and German vessels at Samarai on their voyage from Batavia and Hong Kong to Sydney. i

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MAIL CONTRACT-SUBSIDIZED SERVICE.

In considering the question of shipping services to Papua attention is invited to the agreement made between the Commonwealth Government and Burns, Philp & Co., for the carriage of mails to Papua. The contract provides, inter alia, that the contractors shall deliver mails regularly to Papua, maintaining a monthly service as part. of the Pacific Island Mail Service,

in consideration for which a subsidy of £12,000 is paid by the Government. The vessel employed in this service is the Morinda (1,500 tons gross register). Under the terms of this contract Burns, Philp & Co. charge a freight of £1 15s. per ton on all copra carried to Sydney, and in addition have since quoted a special through rate to the United Kingdom and the Continent, via Sydney, of £4 lOs. per ton.

EFFECT OF NAVIGATION ACT ON AGRICULTURAL DEVELOPMENT.

Your Commissioners received a great deal of evidence in regard to the effect which the Navigation Act has had on agricultural development. The Lieutenant-Governor of Papua, who has consistently advocated the exemption of the Territory from the provisions of the Act, was emphatic in his views that the Act imposes a severe handicap on Papua and is contributing in a large measure to the present lack of prosperity. In his Annual Report to Parliament for the financial year 1922-23, the Lieutenant-Governor, in referring to Papuan agriculture and the

general outlook of the Territory, states :-On the whole the outlook is not promising. Certainly the first thing to do is to get rid of the Navigation Act. If this is done things may, and probably will, right themselves; but I fear that I can p.old out no hope of agricultural development so long as we have this handicap to. carry.

Papua prospered well in the years when communication was unhampered and the seas were "free "-that is in the years Australian, German, and Dutch were competing for our trade. These days may come again, and with them may come a return of prosperity. But it is a great pity that the break has occurred. I think myself that the Navigation Act will one day be removed, but I am afraid that its effects will remain for a very long time.

The Chamber of Commerce at Port Moresby, in a comprehensive statement which was read to the Commission, traversed the whole history of agriculture in Papua and the circumstances leading up to the present unsatisfactory state of affairs. The Chamber represented the views of the planters and merchants of the Territory. The following extract from their statement .summarizes the position:-

The planters of Papua have had a fearful struggle to carry on-only one as far as we know (and that company has since gone into liquidation and reconstructed) of the plantation companies has paid a dividend during the whole period of eighteen years that this Territory has been under the control of the Commonwealth, and the great majority have either }lad to reconstruct or go into liquidation. Now, owing to the Navigation Act, they are unable to reap the full advantage of the increased production.

On the one hand, Papua is subsidized by Australia, and on the other hand, it is penalized and handicapped by the application of the Navigation Act, and treated as a foreign country as far as all tariff questions are concerned. The inclusion of Papua within the provisions of the Navigation Act is, we maintain, wrong in principle. It was framed and put into operation for the specific purpose of protecting Australian white labour interests. Papua does not compete with Australian labour interests, and in any isolated cases in which it rnay, Australia is amply protected, inasmuch as we, in tariff matters, are treated as a foreign country, and there is· therefore no apparent object in applying

the Act to Papua.

EFFECT oF AcT oN FREIGHT RATEs-ExPORTS.

One of the principal objections to the Navigation Act is that it confers a monoply on Australian shipping, and that owing to the conditions which it imposes on ship"'owners the freight on copra and other commodities exported from Papua is excessive. In the first instance it is stated that the subsidy which is paid to Burns, Philp, and Co. under the Mail Contract secures to that company practically a monoply of the trade of the Territory owing to the fact that it is required to maintain regular communication with Papua and that this contributes to the high rate of freights. In the circumstances very little encouragement is offered to overseas shipping companies to compete for the trade of the Territory, and this is also another factor in the maintenance of high freight rates. The present freight rate of copra from Papua to Sydney is £1 15s. per ton, but subsequently, as a result of representations made by the Papuan authorities, Bur'i:ls, Philp, and Co. have agreed to carry copra on a through bill of lading from Papua to London via Sydney at the rate of £4 lOs. per ton. The contention of residents in Papua is similar to that of residents in the New Guinea Territory, viz., that the dispatch of copra to the United Kingdom and Europe via Sydney, which is not the most direct course, is not only unnecessary in view of the fact that there is no local market in Australia for copra, but that it decreases the weight by shrinkage, and in addition increases the freight, handling charges, &c. One striking example of the statement that cheaper freights can be obtained by the direct shipping method was brought under the noti?e

of the Commission at Port Moresby. The owners of the Pruth, one of the vessels of the Ham Line-a British ship-had arranged to carry copra direct from Papua to the United Kingdom at the rate of £3 2s. 6d. per ton. Although the necessary arrangements had been completed the

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shipment did not materialize as the Pruth was wrecked on the reef outside Port Moresby. The Chamber of Commerce at Port Moresby in their evidence stated that offers had also been received from other shipping companies of £2 lOs. per ton on copra from Port Moresby or Samarai to San Francisco.

There seems to be little doubt on the evidence that cheaper rates of freight could be obtained by the direct shipping method than by bringing the copra to Sydney for transhipment to the United Kingdom and Europe.

EFFECT OF ACT ON FREIGHT RATES-IMPORTS.

Similarly to New Guinea, a great deal of the commodities which are consumed in Papua · come from the east. For the most part such commodities are obtained from Australia and not direct from the country of origin. This means that they are first of all brought from the East to Australia and then reshipped to Papua. Evidence was given that this procedure greatly

increases the cost of commodities to the consumers consequent on the extra freight payable from Sydney to Papua, and that it would be more profitable to obtain supplies direct from the East. The Chamber of Commerce at Port Moresby summarized the position as follows :-Rice, copra sacks, and other things which we must import from Asia are taken past our very doors to Sydney and transhipped back to Papua, involving extra handling charges and a double freight. and then on the question of the effect on freights, stated the following:-

Turning to the question of the high freights from Sydney to Papua (£3) per ton-higher than the freight from London to it may be mentioned that in 1914 the price of second-grade rice supplied by Burns, Philp, and Co. was £17 17s. Bd. per ton c.i.f. Port Moresby. At that time the Dutch Packet Company's steamers were calling at Port Moresby and the British New Guinea Development Company Limited, importing through them, were able to sell a

better quality of rice (No. 1 Siam) at £11 lOs. to £12 a ton, showing the immense difference between direct shipments from Asia and via Sydney. Rice is, of course, an essential, and on arrival at Sydney is handled by expensive European labour, transferred by motor lorries to bond stores, then rehandled in the same manner to island steamers, greatly adding to its cost.

All our production costs are materially increased by the unnecessarily high cost of imported articles, and as all our products have to compete in the markets of the world with other countries employing coloured labour, and whose produce is delivered to the markets direct by ships carrying coloured crews, we are placed at a very serious disadvantage.

Reference was also made to a shipment of oil by the Pruth which reached Port Moresby direct from the United Kingdom, and the followin is a comparison of the landed cost Port Moresby ex Pruth and ex Morinda from Sydney about the same period:-

Benzine .. Kerosene 150 Kerosene 130

:From Sydney. From United Kingdom.

£ s. d. £ 8. d.

1 4 Ol per case 0 17 9

0 17 6 per case 0 14 10

0 14 11! percase 0 13 10

Sa:ving of-£ 8. d.

0 6 3!

0 2 8

0 1 li

Similar evidence was also given by the Hon. E. S. Huntley, General Manager of the New Guinea Copper Mines Ltd., in regard to the effect on the development of the mining industry of the present freights on imports:-18408. What disadvantage do you consider your copper-mining concem suffers through the inadequacy of the shipping from-the inconveniences I have already mentionedin connexion with the mail and passenger service,

everything in the nature of supplies that come from overseas has to go down through Sydney, be transhipped there, and brought back here. 18409. Do you think that if the restrictions were removed, and machinery and food requirements and such things as are imported into the Territory were. placed on a n;ore competitive ?asis, it tend to de:relop the mining industry in the Territory Take Items such as nee; the cost nee, I am confident, IS £4 lOs.

a ton dearer owing to its having to go to Sydney and come back here. than It would be. If It were landed here by trading vessels which pass our doors-vessels such as the Java steamers m the old days. From the evidence which has been quoted and which is typical of 1)he eviderce given throughout the Territory no doubt is entertained that freights would be obtained cheaper if

supplies of rice were imported direct instead of via The evidence of F. W,allin, Island Manager of Burns, Philp, and Co.,1however, affords stnkmg contrast to the evidence given by local residents of Papua. His evidence is as follows :-The Sl:wing by freighting rice direct from Singapore to Papua and New Guinea has also been unduly stressed. As mentioned in my former evidence, the bulk of the rice imported to Australia comes from Rangoon or Saigon in full tonnage cargoes at cheap rates, and Sydney is consequently as placed as and Singapore as a

secondary distributing centre for these particular grades of nee, and, bemg a cooler climate, nee stored here keeps better. As regards Mr. Staniforth Smith's statement the price of delivered .to the Expropriation Board at Rabaul, which mav be correct in respect of one mdlvidual transactiOn, we can give evidence that about the same time rice was also supplied from Sydney by our Company's)teamer at £17 per ton delivered at Rabaul.

1\'Ir. Harvey, the New Guinea Trade Agent of the E:x:propri.ati?n Board, generally confirms the evidence of Burns, Philp, and Co., but considers that the :firmwas m:fluenced to quote £17 a ton

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for rice delivered at Rabaul owing to the effect of the direct shipment from Rangoon. With due regard to the evidence given by Burns, Philp, and Co., and the New Guinea Trade Agent, your Commissioners consider that the Navigation Act does materially increase the freight on supplies to Papua, as it does seem reasonable to assume that overseas vessels could, and would, find it profitable to call at Papua en route to Australia with cargoes of :dee and other commodities, and that this service would be more economical as compared with shipments via Sydney .. It has to be borne in mind in considering the evidence of Burns, Philp, and Co., that this Company is engaged in the trade with the East not only as carriers but also as buyers of merchandise for the Islands, and that they are not likely to view favorably any proposal which is likely to deprive them of any of their trade with the East and the Islands.

EFFECT oF AcT oN PAsSENGER AccoMMODATION.

Enquiries made in regard to the passenger service provided for Papua show that the people ofthat Territory are not so well catered for as their neighbours in the New Guinea Territory. The only vessel which calls regularly at Port Moresby and Samarai is the Morinda. This vessel as already stated carries mails under a subsidy. from the Commonwealth Government, and maintains a three-weekly service between Australia and Papua. In the opinion of residents of Papua this is not sufficient for requirements, as, on a number of occasions, difficulty has been experienced in securing a passage to Australia. A further handicap which is imposed is that residents of Papua desirous of visiting the East, and persons from the East wishing to visit Papua, have first to proceed to Sydney at considerable expense and unnecessary delay. This, it is stated, is due to the lack of direct shipping facilities brought about by the operation of the Navigation Act. The shortage of passenger accommodation in Papua is also to some extent explained by the fact that vessels coming from New Guinea and calling at Papua en route to Australia are generaJJy full.

. PRoBABLE SHIPPING SERVICES IF AcT REMOVED.

If the Navigation Act did not apply to Papua, overseas vessels at present engaged in the trade between Europe, the East, and Australia could call at Papua en route, leave their requirements, such as rice, copra sacks,_ &c., and lift their copra on the return voyagefromAustralia, Your Commissioners endeavoured to obtain some evidence as to what would be the effect of the lifting of the Act in regard to additional shipping facilities, i.e., whether direct shipping would ·be encouraged, but no definite indication of the kind of shipping services which would be provided

could be obtained. Almost without exception, . however, the witnesses examined by the Commission considered that adequate shipping would become available under such circumstances, and intimated that they would be prepared to take any risk which might be.invcilved in obtaining regular shipping as a result of the throwing open of the trade of Papua to competition. The Lieutenant-Governor himself was quite cleaT on that point, as will be seen from the following evidence:-

18517. By the Ghairman.-In the event of the Commonwealth Governme-nt freeing the Territories of New Guinea and Papua from the operation of the Navigation Act, would you, having a great interest in this country, be content to take the risk of the service that you might receive under ordinary open competition 18518. You would sooner take that risk ?__:_Yes.

The views of the Port Moresby Chamber of Commerce, whichis representative of theplanters and merchants in Papua, on this phase of the matter, are as follows:-18125. Your statement in general sets out firmly the objections of your Chamber; has your Chamber considered whether it would be prepared-and I assume from your report that it would be-to meet the repeal of the Navigation Act at any time ; I take it you would be prepared to take the risks of such shipping as would be encouraged to Papua and the ex-German Territories ?-Yes, absolutely.

18126. Do you consider that you are voicing the views of the planters and your Chamber generally when you say that you feel that you would get adequate shipping in an open market ?-We have had abundant offers from shipping companies. · 18128. Do you think that casual shipping would give the mail service that is desired ?-Yes; for the simple reason that we would have boats travelling along this coast which would go to Cairns, and link up with whatever company was trading to Cairns, and we would get regular mails. We would have our own local boats.

SUBSIDY TO PAPUA.

In addition to the subsidy paid by the Commonwealth Government to Burns, Philp, and Co. Ltd. for the carriage of mails between Australia and Papua, a subsidy of £50,000 is paid by the Commonwealth Government to assist financially in the development of Papua. Evidence was given that in the event of the lifting of the Act it_was considered that the mail subsidy could be discontinued, and that the impetus given to trade and development generally in Papua would in course of time render unnecessary the payment of the annnalfinancial grant by the Commonwealth Government. While this phase of the question is purely hypothetical, the Lieutenant-Governor was quite emphatic on the matter.

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EFFECT OF AcT ON FUTURE DEVELOPMENT OF pAPUA.

The Lieutenant-Governor states that no progress in the .development of Papua can be expected until such time as the Act is removed; in fact, he goes so far as to say that if the Act is not reperrled the copra industry will never revive. Evidence was given that, although the export of copra has increased, this is due to the fact that a number of plantations are coming into fu11 bearing, but that there has been no additional planting for some· years. A large number of the

plantations are held by companies in which Briti.sh and Australian capital has been invested, but it appear. :; from the evidence that only one company in the whole of the Territory has ever paid a dividend. The further development of Papua, in the opinion of the Lieutenant-Governor and others, depends to a large extent on the introduction of fresh capital, but that, until such time as Papua can compete commercia1ly on a similar footingwithothereopra producing countries, little or no progress can be expected. The evidence

available in Papua for the extension of various kinds of agriculture, and also that there is an adequate supply of native labour available to meet requirements.

EFFECT oF WHITE AusTRALIA PoLICY ON IsLAND TRADE.

A view which has been put before your Commissioners, and one which has impressed them, is that the economic conditions in the Territories are so dissimilar to those which obtain in Australia, that the "White Australia" policy, which demands better conditions for the workers as expressed in the Navigation Act, should not apply to Papua and New Guinea. The effect

of the Act is to impose certain limitations on shipping between Australia and its Territories, which makes it more difficult for Papua and New Guinea to enter into successful competition with other countries employing native labour, such as Fiji, the Solomons, &c., owing to the high freights charged from Papua to European ports, and the difficulty in obtaining direct shipping facilities ..

CONCLUSION.

Your Commissioners have come to the following conclusions:-1. That the application of the Act to Papua is seriously retarding the progress of that Territory. · 2. That the application of the Navigation Act to Papua is wrong in principle

and unfair in its incidence, and further, that there is no justification for treating that Territory as part of Australia for the purposes of theN avigation Act whilst treating it as a foreign country for the purposes of the Customs Tariff Act.

RECOMMENDATION.

Your Commissioners recommend that the application of the Act to the Territory of Papua and to the Mandated Territory of New Guinea be removed, by means of an Order in Council, declaring that the carrying of passengers or cargo between ports in the Territories and Australian ports shall not be deemed engagement in the coastal trade. In submitting this recommendation, your Commissioners feel that they are acting in the best interests of the Territories,

and that, if the recommendation be carried into effect, it will be a material step in their development.

Your Commissioners have the honour to be, Your Excellency's obedient Servants,

JNO. HY. PROWSE (Chairman). H. J. M. PAYNE.

We, the undersigned Commissioners, did not have an opportunity of hearing the evidence taken by those Commissioners who visited Papua and the Mandated Territory, but we were present during the taking of a large amount of evidence with regard to those Territories in Sydney, Melbourne, and Townsville. In addition to this we have carefully perused the whole of the evidence taken in Papua and the Mandated Territory, and with all these facts before us we have no hesitation in signifying our agreement with the above conclusions and recommendations.

Melbourne, 3()th June, 1925.

Your Commissioners have the honour to be, Your Excellency's obedient servants

WALTER DUNCAN, ALFRED C. SEABROOK.

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To His Excellency the Governor-Geneml of the Commonwealth of Au,strralia.

y OU:fl, ,:

I regret that T a,m unable. to agree with the conclusions nnd recommencltl,tions of: the majority, ahcl therefm:e report as follows ;----

NEW GUINmA .

. 1. Present ShiJ!ping Service:-The only service between Australia and this Territory is supphed by Burns, Philp and Co., with two vessels, the Mataram (3,300 tons gross) and the Marsina (1,750 tons gross), which between them give a three-weekly service from Sydney. The Mataram proceeds to Rabaul, Kaewieng, Madang, and other ports in the Territory, while the Marsina goes

to the Solomon Islands and takes in Rabaul. For these services under the mail contract a subsidy of £12,000 is paid by the Commonwealth Government for the Mataram and another of £8,000 for the Marsina. In addition, another £8,000 is paid to the company for a special service by the Melusia to the Solomons; this is not a mail subsidy, but is given to encourage trade between the

Solomons and Australia. A similar subsidy of £15,000 is paid for the service between Australia and the New Hebrides. This contract and the subsidies termina.te on the 31st July, 1925, but are subject to renewal under similar or different conditions .

. 2. Trade Generally.-The export trade of the Territory is confined almost solely to copra, of whwh 32,600 tons, valued at about £640,000, were exported for the year 1923-24. Other exports are insignificant. The total imports for the same year.amounted to 17,147 tons, valued at about £428,000, and about half of such imports ·came originally from outside Australia (mostly

from England and the United States), but practically the whole of them come through Sydney. During the. year 1923- 24 Burns, Philp and Co. shipped 15,800 tons of general ca,rgo from Sydney to New Gumea, and took away 12;336 tons. . 3. Freight on Cop-ra.-The prosperity of the Territory depends wholly _upon the copra

mdustry, and development depends upon the sale of copra on a profitable basis. The product must be shipped to the world's best market at the lowest possible freight rate. The freight on copra from Rabaul to Europe via Sydney is £4 lOs. per ton, including transhipping charges, while the direct freight from Rabaul to Europe is about £3. It would therefore appear that to ship via Sydney would entail a loss of £1 lOs. per ton. ·

4. The Expropriation Board.-The majority of the coco-nut plantations in the Territory are vested in the Expropriation Board. _0ut of the 32,600 tons of copra exported du_::ing 1923-24 over 25,000 tons came from the properties controlled by the Board. The Board disposes of its copra through two channels-firstly, by sales f.o.b. Territory ports, and, secondly, to Sydney or London through Burns, Philp and Co. Seventy-five per cent. of the copra sent to Sydney is transhipped to Europe. In accordance with the terms of the mail contract, all cop.ra from certain

out-ports must be shipped by Burns, Philp and Co. As against the paid to this company, . a special freight rate of 35s. per ton on copra from Rab!l'ul to Sydney Is allowed, and a special through freight to London of 90s. per ton. Board ships about 8,000 tons of copra per annum through Burns, Philp and Copra sold c.d. Sydney by the Board for amounted to

8,060 tons, at an average pnce of £21 per ton: The charges. were-(a) freight, (b) export duty, £1 5s. ; (c) handling.?harges, 5s. ; (d) 5s.; th1s. reduces the net pnce received to £17 5s. per ton. The remamder of the Boards output, ammmt!ng to 17,554 was sold f.o.b. Territory ports at £20 3s, The duty was £1 5s., and the net pnce £18 18s. This shows a loss of

£113s. per ton on 8,060 tons, i.e., £13,299.lost to the on. account of the with _Burns, Philp and Co, In other words, a proportiOn of the freight IS giVen to Burns, Ph1lp and Co. mstead of a higher subsidy. 5. Complaints against the Navigation. opposition to the Navigation

Act exists in New Guinea, the grounds of obJectiOn bemg-(a) That the Act gives a monopoly to the firm of Burns, Philp and Co. , and that this monopoly is injurious to the Territory. (b) That the Act increases freight rates.

(c) That if the Act continues to be applied it will so increase the cost of marketing products that it will not pay to plant, and will kill existing industry.

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Another objection raised by the Administrator was " that by reason of the heavy freightR to n.nd from Australia it is diverting trade from the latter and driving it into foreign hands '' ; hut, as this objection is in direct conflict with the Administrator's own statements, and is contradictory to the objection (a) which he also put forward, and, further, is not borne out by trade statistics, it is hardly possible to regard-the contention seriously.

6. the Act gives a Monopol;y to the Firm of Bu,rns, Philp and Co.-The

statements in support of this objection were very general in character, and no concrete evidence in regard to it was produced. Not only was it claimed that the monopoly was exercised by Burns, Philp and Co. in regard to shipping, but also in connexion with the copra trade which is alleged to be in their hands. It was also stated that the planters are in the hands of this firm, and could sell to others only with difficulty. It was, however, not denied that the Navigation Act in no way prevents oversea vessels lifting copra at any port in the Territory, and, moreover, that such ve3sels are lifting it for oversea ports in increasing quantities. It is also evident that Burns

Philp and Co. are by no means the only buyers of copra. From a return supplied by the Tra.de Agent of the Expropriation Board it is disclosed from the 1st J. une, 1924, to the 25th September, 1924, less than four months, a total of 8,100 tons of copra were shipped from New Guinea, of which only 585 tons were shipped to Sydney, the remainder being purchased f.o.b .. Territory ports on a "through bill" to London; and of this quantity 5,740 tons were purchased by W. R. Carpenter and Co., 1,440 tons by Burns, Philp and Co., and 920 tons by Dalgety and Co.

That the Navigation Act does not prevent British and foreign vessels coming to the Territory and lifting copra for oversea ports is shown by the Administrator in his report to the League of Nations for 1922-23, paragraph 105 of which states :- _

A noticeable feature of the oversea trade has been the ·increase in the numbet of ships of foreign nationality visiting the port of Rabaul. During the previous year only two such ships entered the port, but this year the number increased to seven, and 9,220 tons of copra, of a value of £178,789, W!lre exported thereby. In addition to the foreign trading ships referred to, two British ships, other than the Australian vessels subsidized under the Islands l\fail Contract, called at Rabaul and lifted 3,054 tons of copra, of a value of £66,813.

Since that report the number of such vessels has still further increased.

7. Objection (b)-That the Act Increases Freight Rates.-The freight rates between Sydney and the Territory are high, but. there are other factors besides the Navigation Act, .and, as Your Commissioners showed in their first report, the application of the Act to vessels on the Australian coast was responsible for an increase in cargo rates of only a few pence per ton out of the large freight increases ·since the war. All shipping costs and operating charges vastly in9reased before the Navigation Act came into force ; and the vnlume of trade between Sydney and the Territories is not yet sufficient _to keep the boats running _without subsidy. Your Commissioners employed an auditor of the Commonwealth Public Service to examine the books of Burns? Philp and Co., _ to which full access was given, and he reported, inter alia _ ·

The verified financial results of the Papuan, New Guinea, and Solomon Island shipping activities of this Company show, collectively, a Joss of 2 ·173 per cent. on market values for the year 1922-23, from which it will be seen that no undue advantage has heen taken hy Burns, Philp, and Co. Ud. of the provisions of tlJc

Navigation Act. · ·

8. Objection (c)-That ifthe Act be continued to be applied, it will so increase the cost of marketing products that it will not pay to plant, and will kill existi'fbg industry.-There was no evidence in support of this sweeping statement which was made by the Administrator ; it is purely hypothetical, and is not borne out by the following figures :-

Year.

1920 1924

Outward Cargo Tonnage.

23,500 tons 33,000 "

Neu' Gu,in,ea-Nu,rnber and Net Tonnages of Vessels cleared. Year.

1920 1924

Vessels.

29 30

Net Tonnage.

28,906 tons 68,870 "

In June, 1923, the Prime Minister instructed certain public accountants, Mes·srs. Yarwood, Vane, and Co., together with Mr. G. Mason Allard, to make an investigation into the state of affairs of the expropriated properties in the Territory of New Guinea, and to report (inter al1:a) whether "conditions exist which are inimical to their proper development." These gentlemen presented a valuable r.eport containing the minutest .detail of every factor bearing o:r; the copra industry, and summarized the causes of the present depreciated value of the properties as:-

(a) The state of the copra market when tenders were called. (b) The feeling of uncertainty in respect of properties in Mandated Territory. (c) In certain cases the indefinite position in regard to titles.

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(d) The difficulty experienced in obtaining. outside financial asRistance, largely due to reasons (b) and (c). · ·

(e) Possibly that taxation in the Territory is regarded as heavy.

. . one reference in the whole Report is made to the Navigation Act, and itR aileged. bhghtmg Influence on the development of the Territory.

9. Rice.-Rice is imported for the natives, and is provided for indentured labourers­ lOt lb. a week to each labourer. The price of rice from Sydney is £17 a ton plus £3 freight-a total of £20 per ton. The price from Rangoon direct is £13 · 15s. plus £3 15s. freight--a total £17 lOs. per ton. The Expropriation Board imports annually about 3,000 tons, so that the

direct importation would mean a saving of £7,500 per annum.' Recently the Board had an opportunity to import 650 tons direct from Rangoon to Rabaul, and landed it a,t the same price at which it was being quoted in Sydney ; that is, the freight· of £3 per ton from Sydney to Rabaul was saved. In the absence of a shipping service between Rabaul and Singapore the rice is brought from Rangoon via Fremantle, Melbourne, and Sydney, and then transhipped to Rabaul.

PAPUA.

10. P1·esent shipping se-rvice.-The shipping service between Papua and Australia is provided by Burns, Philp, and Co. It is a monthly service from Sydney by one vessel, the Mo-rinda (1,500 tons gross), calling at Brisbane, Port Moresby, and Samarai, and several out­ ports in Papua. For this service a Mail Subsidy of £12,000 per annum is allowed to the company.

11. Trade.-The two chief exports of Papua are copra and rubber. In 1923-24 the copra production was 7,300 tons, valued at £136,600, and 300 tons of rubber, valued at £33,300. These figures show an increase in production, for in 1913 the export was 1,200 tons of copra and 3 tons of rubber. The imports for 1923-24 amounted to 9,500 tons, and the total exports 8,600 tons.

The 1913-14 figures are-Exports, 2,571 tons; imports, 8,480 tons. The explanation of the low trade figures is that agricultural development did not begin until 1907, and by the end of 1914 30,000 acres had been planted out. This acreage produces more each year as the plantations reach maturity, but it is claimed that no further advancement can be expected with the present lack of shippi!lg facilities and high freights.

12. The P-rogress of Papua.-Papua has never been prosperous, so the allegation that the Navigation Act has killed its prosperity is fallacious. Agriculture did not begin until 1907, and by the outbreak of war in 1914 about 30,000 acres had been planted with coco-nut, but there was little export. In the year 1905-6 the exports were valued at £80,000, and of this amount £60,000 represented the gold production. By 1914 the value of the annual exports was about £125,000,

out of which £50,000 was for gold. So before the war it is clear that agriculture, although growing, was insignificant. It is now alleged that the Navigation Act has compelled it to remain insignificant. The chief opponent of the Act is the Lieutenant-Governor, who in 1914 reported to Parliament as follows:-·

Lessees are, by the terms of their lease, hound to cultivate a certain proportion of the area they hold, and so as soon as they have sufficient land to comply with these conditions they are lilwly to give up rlmrrlopnwntal work until the rubber or coco-nuts they have planted are old enougl1 to bring in a return for tJ1eir ·

Then, it is expected, development will again advance---but tl1is and all otl1rr prognost1rations lw talren as snh]PI't to the possible effects of the war.

There was stagnation during the war, and after the war came the big drop in the prices of rubber and copra, which is admitted by the Lieutenant-Governor, while he blames the Navigation Act for the blow to the industry. The fact that the plantations are coming into full bearing raised the value of exports in 1923 to £179,500, out of which £22,500 represented gold production.

While the low price of copra is responsible for the condition of that industry, it is disappointing to find that other industries have not flourished. The most promising products were sisal hemp and rubber, and yet the production is comparatively small. About 440 tons of rubber produced during last year, and all of this has to be shipped to for sale, the Austra.han

consumption is 1,500 tons a year. The re.ason why Australia not take It Is that. Java and the Malay States, with the cheapest labour lh the world, can sell their product to A';lstraha cheaper than our own Territory can. Sisal hemp grows well in Papua, and 6,000 acres of It were planted out, and yet the growers cannot sell it in Sydney in competition with the Java product.

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13. The Case a,qainst the N amgation Act . ..-...-. Papua's complaints ft:re almost identical with those of New Guinea, and, in addition, in Papua the whole of the stagnation in agriculture is laid at the door of the Navigation Act by reason of the fact that the costs of production are made too great by high freights and other increased charges. It is stated in evidence that all the plantation companies are in financial difficulties, and that many have gone into liquidation. It is profitless to elaborate the subject further. The fundamental fact stands out that in all branches of agriculture in Papua the costs of production are too great in comparison with those of adjacent black-labour countries. That these costs are only remotely affected by the operation of the Navigation Act is certain. With such a small amount of cargo offering, inwards and outwards, it is not likely that much shipping will compete for it. Papua is a poor country compared with New Guinea ; moreover its industry is in its infancy. It has never seen prosperity either before or after the Navigation Act, and to make it a sturdy territory is must be spoon-fed. But in their attitude to the Navigation Act the I .. ieutenant-Governor and merchants of Papua are like the patient burning with fever-inclined to blame the bl;1nket.

14. Report of the Interstate wholly concur in the conclusions of the Interstate Commission which in 1918 reported on Trade in the Pacific. With regard to shipping and its relation to trade the following was the conclusion arrived at :--As to the future there will probably be a tendency to create more direct shipping communications. France, tl1e United States of America, and Japan are likely to be active in this connexion. German shipping will no doubt

be developed as far as possible along former lines. Australian and New Zealand island shipping is faced with present factor tha,t its outward carrying trade from the islands consists principally of copra to entrepots for re-exportation and not for looal use; except to a limited extent. The competition after thf' war for copra and other island products will be keen and more cosmopolitan than ever. Traffic will be developed along the nearest and most flUitable routes to the natmal markets for copra. As the exports grow in. quantity through the plantations coming. to fruition, direct shipments instead of transhipments in Sydney may tend to increase. No governmental intervention by way of subsidies or otherwise would alter the

venue of the natmal copra markets, but what markets will be the natural markets for copra. of the South Pacific after the war is by no means certain. The world's market for copra will be found to have undergone. some changes. San Francisco, for instance, is now in the business, and means to stay in it; and, during the war, the crushing of copra for oil has considerably expanded in Great Britain.

The present paramount influence of Australia and New Zealand in the island trade, in which very large sums of capiMI have been invested, the increasing Australian and New Zealand production of food stuffs and manufactured articles for the islands, and the more extensive utilization, within the Empire, of Empire products, should make it necessary to assure British and Australian vessels being able to compete with foreign subp,idies and manning conditions, and to maintain a :firm hold on tne South Pacific carrying trade.

CONCLUSION.

While the Mandated Territory is more able to stand on its feet than Papua, it is evident that every assistance which can reasonably be given to both Territories should be afforded. Both are peculiarly situated, and their economic standard is entirely different to that of Australia. There is no doubt that the application of a good deal of Commonwealth legislation has had the effect of increasing production costs, and, while the application of the Navigation Act to . these Territories is necessary to Australia from a national stand-point, it is clear that Australia, and not the Territories, should pay for it. To throw open the ports to cheap foreign shipping in competition

with our own mercantile marine would mean that the trade would be lost to Australia, and, while that trade is at present insignificant, if it were now given to certain foreign countries strong points for such countries would be established at our back door. For grave national reasons we cannot allow the trade of the islands along our northern littoral to pass into foreign hands. It is not the monetary but the strategic value of the trade that is important, and to look a few years.ahead when Australia will be a great industrial country requiring raw materials opportunity of the Territories, with their raw materials alongside of us, will have arrived. It is necessary, for the ultimate security of Australia and the Territories themselves, that our shipping and trade in the Pacific must be protected; but, at the present time, because it is our national safety. that is at stake, the Territories should not have to pay the price. When an object is necessary for the safety of a country that country must often make concessions which may appear financially unsound. It is not expected that our defence policy should add directly to the consolidated revenue.

From the evidence it is clear that the real shipping disabilities from which the Territories are suffering would be removed if a new cargo service were inaugurated from Australia to Papua and thence to Singapore, provided that sufficient subsidies were granted in order to provide an adequate service and a reasonable freight rate.

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RECOMMENDATION.

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. Knowing that the present policy of the Government will not permit of the Common vvealtl1 8h1ppiug Line providing a service for the Territories to Singapore, it is felt that it is useless to recommend accordingly. I therefore recommend that, in the absence of a more favorable offer, the tender of Burns, Philp and Co. be accepted. The outline of such tender is :-

Melbourne,

(a) A new cargo service of quarterly sailings from Sydney to Papua, Darwin, Singapore, and return to Sydney via Papua and the Mandated Territory. (b) A new motor ship to replace the Matararn in the Mandated Territory service, with regular calls at Samarai (Papua) en route, commencing at the beginning

of the year 1926. · .

(c) A year thereafter a second motor ship or suitable steamer to replace the Morinda in the Papua service. (d) These alterations as set forth in (a), (b), and (c) are accompanied by an offer of reduced freights as specified in the tender, and in consideration of the increa,sed

service and the redLtction in freights an ttdditional 8ubsidy to be allowed of £25,000 per annum for a three-years' term or £20,000 for a five-years' term.

1st July, 1925.

G. E. YATES.

YouR ExcELLENCY: A section of the Commission, consisting of Mr. J. H. Prowse, Mr. G. E. Yates, and Senator H. J. M. Payne, was deputed by the Comnrission to proceed to the Territories and inquire into and report upon the effect of the Act thereon. Under those circumstances, therefore,

the undersigned Commissioners do not feel justified in signing any report dealing with New Guinea and Papua.

Melbourne, 2nd July, 1925.

FRANK ANSTEY, OHAS. S. McHUGH.

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