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Wednesday, 18 July 1906

Mr AUSTIN CHAPMAN (EdenMonaro) (Postmaster-General) . - I move -

That this House approves the agreement made and entered into on the 7th day of July, 1906, between the Postmaster-General, in and for the

Commonwealth, and Sir James Laing and Sons, Limited, for the carriage of mails between Adelaide and Brindisi.

It is hardly necessary for me to speak at length since a very explicit statement with reference to this contract has already been made to the House by the Prime Minister,, and the agreement itself has been laid upon the table, so that honorable members no doubt are by this time fully seized of its effect. I should like to point out, however, that less than a year ago, namely, on 4th October last, it was my pleasure to move the ratification of another contractin respect of the Same mail service. At that time there was a general review of the conditions of past contracts for the carriage of mails between the State Governments, the British Government, and various steam-ship companies, and it is, therefore, not necessary for me to go back again into what is ancient history by giving the amounts paid in each case, and showing how, step by step, conditions have been improved, by obtaining accelerated speed, larger vessels, and a better service. I wish, however, to call the attention of honorable members to the contracts which immediately preceded and led up to the making of this one. The first contract of which I shall speak is that for a weekly service, made in 1897, between the Australian States, the British Government, and the Peninsular and Oriental and Orient Steam-ship Companies. The subsidy paid under that contract was £170,000, of which the Australian States paid £72,000 and the British Government £98,000. Under it, the maximum time for the journey of the Peninsular and Oriental steamers was 686 hours, and of the Orient steamers 696 hours, the mails being landed and embarked in Europe at Naples by the Orient Company and at Brindisi by the Peninsular and Oriental Company. That contract expired on the 31st January, 1905, and was followed by a contract between the British Government and the Peninsular and Oriental Company for a fortnightly service, the period of transit being accelerated from 686 to 662 hours, and the subsidy increased by about £10,000.' It is difficult to ascertain the exact amount of the increase, because the contract is for the carriage of mails to the East as well as to Australia, but the period of three years, for which it has force,may be extended to ten years, and it is provided that, if there is an extension, the British Government shall be entitled to a reduction of subsidy.

The period of three years after which the contract may or may not be extended terminates simultaneously with the period of the contract between the Commonwealth Government and the Orient Steam-ship Company, when; in all probability, the British Government will probably try to enforce a new set of conditions similar to those which we shall enforce under the contract which the House is now being asked to ratify. It is hardly necessary to remind honorable members of the difficulties and troubles which were experienced by past Governments before the existing contract with the Orient Company was entered into, because, no doubt, before the debate closes, my predecessor in office will give the House a very graphic description of his troubles and tribulations in that connexion. We know what excitement there was through the country before the matter was settled. Deputations representing various branches of commerce were constantly waiting upon Ministers, and the public were clamouring for some definite arrangement. I refer to the matter now only because I do not wish honorable members to forget the many difficulties which crop up in the making of contracts of this kind. There must be at least two parties to every bargain, and the demands and requirements of, each party take a great deal of consideration. In this case, I think that all that has been asked for is fair play, reasonable treatment, and a good service for a proper payment, and I think that I shall be able to show that these requirements will be met. The subsidy now given to the Orient Company is ^120,000 a year, an increase upon that paid under the contract with the Peninsular and Oriental and Orient Companies and the British Government, to which I have already referred. What brought about the existence of two separate contracts, one between the British Government and the Peninsular and Oriental Company, and the other between the Commonwealth and the Orient Company, was our legislation, indorsed by the people of this country, requiring that white labour only shall be employed on steamers subsidized for the carriage of Australian mails. This Government, immediately after the ratification of the contract with the Orient Company, gave that company notice of the intention to terminate it, one of the articles in the agreement being that two years' notice of the intention to terminate should be given by either party. We gave that notice early, because we thought that a better contract could be made, and wished to take time by the forelock. _ We did not desire to be again placed in a corner, finding ourselves at the last moment practically in the hands of. companies which, being the only ones in the trade, could dictate their own terms.

Mr Wilson - The Government may be in the same position again, if the ships required under this contract are not built.

Mr AUSTIN CHAPMAN - I think I can show that all reasonable and businesslike precautions have been taken to provide against a contingency of that kind. We have ascertained that those with whom we are dealing are responsible men, whose reputation in the ship-building world is second to none.

Mr Wilson - But suppose the necessary company cannot be floated?

Mr AUSTIN CHAPMAN - I ask the honorable member to allow me to finish my statement. When I have laid the facts before the House, I shall be glad to hear his criticism. It is almost pleasing to me that some one has at length been roused to the expression of unfriendly criticism. When the conditions which we laid down were first made public, it was said that the Government, to placate a certain party in this House, had made provision for the purchase at any time of the ships used in the service. That criticism was silenced bv pointing out that a similar provision exists in the British contract, and io most other contracts. It was also said that we were asking for teo much, and that our conditions would not be accepted by any tenderer. Mr. Paxton, a representative of the Svdney Chamber of Commerce, said some time afro that no company would tender for a service under the conditions laid down. But, in a letter published in this morning's news.papers he SalE that the conditions obtained by the Commonwealth are too good ; that we have all the best of the bargain ; and that it is a one-sided contract; although, in the next sentence, he declares that those with whom we have contracted intend sell the concession - an absurd statement, in view of his first position. Every one of the conditions which we originally laid down has been accepted, and several others have been added, the additions being such as exist in the present contract with the Orient Steam Navigation Company, and have been sanctioned by this Parliament. I should like to know if Mr. Paxton's criticism has received the indorsement of the Chamber of Commerce, because it is important that the community should, understand whether such bodies represent the commercial interests of the country generally, or. as I am afraid they appear to be, 'they are really partisans. Of course, if they become partisans, and the fact that they are so is admitted, their criticism can be rightly valued.

Mr Knox - Mr. Paxton says that the contract is an excellent one.

Mr AUSTIN CHAPMAN - Yes but in his next sentence he says that the other party to it will sell the concession, and make a lot of money out of the sale.

Mr Johnson - Does not the PostmasterGeneral think that thev will do se?

Mr AUSTIN CHAPMAN - I have yet to learn that it is a crime for ship-builders in England, and men in the shipping business in this part of the world, to come together to bring into existence an Australian line of steam-ships, which will increase the competition in ocean transport between this country and Great Britain. Those who complain that a ring or combination now exists for the prevention of competition should welcome the new arrangement. These who have faith in Australia will agree with me that "there is plenty of room for the new Australian line as well as for the Orient Steam Navigation and the Peninsular and Oriental Companies. According to the statements of the chairmen of the Peninsular and Omental and Orient Steam Navigation Companies, and a number of big financial institutions, a great expansion of business is expected in Australia, which means that there will be more produce, more passengers, and more mails for ocean-going steamers to carry. Evidently those who have entered into this contract think that something of that kind, is about to happen, because they have bound themselves to provide boats of heavier tonnage than those now carrying our mails, to give an accelerated speed, and to meet all the requirements of the travelling public.

Mr Johnson - How can an expansion of business be rightly anticipated with an Anti-Trust Act in operation, whose effect will be the stoppage of importations and the restraint of trade?

Mr AUSTIN CHAPMAN - The honorable member has fully discussed the provisions of the Anti-Trust Pill : we are dealing now with the conditions of the proposed new mail contract. In the first place, in order that there might be the keenest competition in the tendering, we advertised our conditions in Great Britain,

And copies of them were distributed all over the world. It was made known that a postal service only was asked for, the mails to be carried between Adelaide ar.d a port in Southern Europe, with an extension of the journey of the steamers to an approved port in Great Britain. Parcel mails are carried by sea for the whole distance between Great Britain and Australia, and therefore we require that the steamers carrying our mails shall go on to an approved port in Great Britain, in order that, by sending our parcels by sea, we may save the heavy cost of transport across the Continent of Europe. That is purely a postal matter. We asked for an acceleration of speed, and imposed a number of other conditions, which we thought would be in the interests of the Commonwealth, and at the same time enable those who tendered to provide a good service. In anticipation of objections that our conditions were too harsh, a provision was inserted that tenderers might offer to provide a service under any conditions they liked as to route, speed, or terminal ports, subject always to the stipulation that thev must man their steam-ships with white labour, and to the understanding that a preference would be given to the contractors offering to carry on the service with vessels of the highest speed. I think that honorable members and the public generally will approve of the latter condition, because extra speed means extra trade. It will bring us closer to the markets of the world, and into more intimate relations with other parts of the Empire, I have referred to the very few criticisms that were' directed to the conditions immediately after1 they were issued. It seems to me that that was the time at which any objections should ha;ve been urged. I notice that the Government have been taken to task for not having imposed any conditions with regard to the carriage of cargo. I was absent from Australia for several months, during which period this matter was handled by mv colleague, the Vice-President of the Executive Council. m conjunction with the Prime Minister. T know, from the documents that have been brought under my notice since my return, that every effort was made bv them to afford the States Governments an opportunity to express their wishes in regard to the con- ditions of contract. The negotiations which were carried on reflect the greatest credit upon the Vice-President of the Executive Council, and I am .glad to say that the mail contract is' described by one of the Brisbane newspapers this morning as one of the most important executive acts since Federation was established. When I returned from England, I found that nearly everything in connexion with the mail contract had been arranged, and the credit in connexion with the transaction' is due to my honorable colleague who had charge of my Department during my absence, and I have much pleasure in paying this tribute to the ability and judgment which he has displayed.. I desire to call attention to the fact "that when the contract with the Orient Steam Navigation Company was under discussion, the late Premier of Queensland, Mr. Morgan, stated that if the contract had been made for a service terminating at Adelaide, and all the States had been placed on an equal footing, Queensland would have raised no objection. In connexion with the present contract, tenders were invited in plenty of time, and as I have said, very little criticism was directed against the conditions proposed. We received only, five tenders, and in accordance with the conditions, which provide that only the three lowest tenders shall be disclosed, particulars relating to those only have been placed before honorable members. One tender was informal, and there was one other besides those regarding which information has been given. Honorable members will readily understand that business men who enter upon these great undertakings do not care to come into conflict with one another, and that, furthermore, no public good can be served by publishing the particulars of the tenders, except to the extent provided for in the conditions. Whilst one can understand the eagerness of honorable members to obtain particulars whilst negotiations are proceeding, matters must be dealt with upon a business footing. It is the duty of the Government to make the best possible bargain with the contractors, as it is the aim of the contractors to do the best they can for themselves. Business men who conduct important negotiations such as those which have just been concluded, would laugh at the idea of placing the other side in possession of valuable information. I join my honorable colleagues, the VicePresident of the Executive Council and' the Prime Minister, in saying that, in " the


course of negotiations, we were met by the representative of the contractors in the most liberal spirit. He was anxious to secure a good contract, but always remembered that there were two parties to the bargain, and that what was required was an efficient service at a reasonable cost. I take it that we all recognise that the introduction of a third shipping combination, into the Australian trade will tend to the advantage of the community, by bringing about more competition, and, probably, a reduction in rates.' I believe, moreover, that the contractors will not only have a strong commercial backing, but also strong support from the public. It seems to me thats it is a good thing for us to have a line of steamers, manned by white men, with the Australian flag flying at the masthead. The new line of steamers will be, I believe, partially owned in Australia, and I think that we should give the contractors "every assistance reasonable in carrying out their undertaking.,

Mr Johnson - At what port will their steamers be registered ?

Mr AUSTIN CHAPMAN - At' some port in the Commonwealth. That should be sufficient for the honorable member, because I do not think that it is desirable to introduce any provincial feeling into the matter. It will be seen that, beyond the advertised conditions, the agreement contains three paragraphs, 14, 15, and 16. These are practically identical with clauses 32, 34, and 35 of the agreement with the Orient Company, and, consequently, have already received the approval of this Parliament. Clause 1.4 provides that the Government will use their good1 offices with the States Governments to secure to the mail contractors facilities equal to those granted to other ship-owners. No one can take exception to that. Clause 15 refers to fresh legislation. Clause 16 contains the usual provision as to what may take place in the event of a declaration of war. The contract provides that we shall have complete control over the carriage of all mails, and that all the postage received in regard to letters shall belong to us. No mails can be put on board at any port without the approval of the PostmasterGeneral. The contract is for a term of ten years. The alternative period mentioned in the conditions of tender was seven years. It has been complained in the past that, owing to the short period for which the contracts were entered into, it would not pay any new combination to construct ships necessary to perform the service, and the Government were thus left at the mercy of the old contractors. Provision is made that if, at the expiration of five years; any competing line of mail ships is providing an improved and accelerated service, we shall be entitled to call upon the contractors to provide an equivalent service. A subsidy of £125,000 is provided for a 636 hours service, and the contractors are entitled to extra remuneration to cover the cost of an acceleration of speed to the extent of twenty-four hours upon the trip one way ; but the total sum payable to them is not to exceed £25,000 per' annum over and above the contract price.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - There is nothing in the contract that would enable the Government to demand an accelerated service.

Mr AUSTIN CHAPMAN - The contract will give us power to demand an acceleration of speed.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Clause 5 does not seem to me to be clear upon that point.

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