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Tuesday, 24 July 1906

Mr JOHNSON (Lang) .- The consensus of opinion amongst honorable members seems to be that, if the terms of the contract are faithfully observed, the Government will have made a very good bargain. It is wrong to assume, as the honorable member for Coolgardie did, that the Opposition holds two diametrically opposed opinions on the subject, namely, that the Government have made a very good bargain, and that they have made a very bad bargain. Our opinion is that the contract will be a good one if its provisions are faithfully observed by the contractors. But some of us believe that some of the clauses of the agreement could be amended with benefit to the Commonwealth. It has been pointed out by a gentleman intimately connected with, and having a large experience of the shipping business, that the construction of the fleet of steamers necessary for the performance of the service will occupy at least three years. Now, the service is to be inaugurated on the 1st February, 1908, or in about eighteen months' time, when the necessary vessels are unlikely to be ready. In view of that fact, the deposit of £2,500 is quite inadequate.

Mr Ewing - A deposit of £2,500 and another deposit of £25,000 have been made.

Mr JOHNSON - Not in cash.

Mr Ewing - Yes, in cash deposited in London. £27,500 is the amount which the company stands to lose if it does not proceed with the service.

Mr JOHNSON - I do notthink that cash to that amount is in the hands of the Government, although the equivalent of it may be:

Mr Ewing - It is the same thing.

Mr JOHNSON - I do not think that it is. Interest would not be paid on its equivalent. A bank before paying interest on such a deposit would require actual cash.

Mr Ewing - The money is available if the company does not do what it has promised to do.

Mr JOHNSON - In any case, the amount seems disproportionate, seeing that we are to pay £125,000 per annum for a ten years' service, or, in the aggregate, £1, 250, 000. If the Commonwealth had to fall back upon the next lowest tender it would be involved in an additional expenditure of £300,000, even assuming that the tender would hold good after the acceptance of another tender. Therefore it seems to me that our interests have not been sufficiently safeguarded. It may be that it is not too late to make an alteration. Mr. John Paxton, whose criticism of the contract was published in the press a few days ago, referred to a matter which formed the subject of a question asked by me this afternoon, namely, the authority of Mr. Croker for signing the contract on behalf of Messrs. James Laing and Sons. Mr. Paxton says -

The agreement was not one which was required to be signed under seal, and assuming that Mr. Croker had the necessary authority the agreement should be perfectly binding. He assumed, however, that in respect of such an important piece of business the Commonwealth would have taken the precaution through their representative in London to obtain from Sir James Laing and Sons Limited, under the hand of their chairman or secretary, an extract minute from their official minute-book giving the precise wording of the authority which had been delegated to Mr. Croker. He did not think it at all likely that Mr. Croker would affix his signature without full authority, still using a phrase that was employed by barristers, " For more abundant security's sake," the Commonwealth should see that this aspect of the matter was made clear.

It would appear from the statement of the Prime Minister that this precaution was not taken. The Government were content to make Mr. Croker responsible for the performance of the contract. I do not pretend to any expert knowledge upon technical points of this character, but, in view of the criticism passed by Mr. Paxton, who is a thoroughly experienced man, I was surprised to learn that the Government did not consider 'it wise to adopt the course indicated. Of course, this is purely a contract for the carriage of mails between Brindisi and Adelaide, but I think it would have been wise to provide that the mail steamers should call at Melbourne, Sydney, and Brisbane. In ali probability, the steamers will go on to two of those ports, because the trade inducements held out to them will be sufficient to make it worth their while to extend the voyage. We cannot forget, however, that the Queensland Government had to make a special payment to the Orient Company to secure the extension of that company's service to Brisbane, and possibly the new contractors may make similar demands upon Victoria and New South Wales and Queensland. That is the reason why I think it would have been wise to make Melbourne, Sydney, and Brisbane ports of call for the mail steamers. We propose to pay the contractors £125,000, or £s>000 per annum more than is now received by the Orient Company. In return for this, the contractors undertake to shorten the period occupied in the conveyance of mails between Brindisi and Adelaide by sixty hours, and supply a fleet of greatly improved and larger steamers.

Mr Ewing - At present we pay £1.20,000 for the carriage of our mails within 696 hours, and, under the new contract, we shall pay £125,000 for the carriage of our mails within 636 hours.

Mr JOHNSON - Quite so; but I notice that it is provided in clause 7 -

That during the prevalence of the south-west monsoon, the "period of transit" from Adelaide to Brindisi shall be extended by thirtysix hours.

Mr Ewing - That concession is granted to the present contractors.

Mr JOHNSON - Its effect is to materially reduce the advantage conferred upon us by the new contract. Even if that provision is in the present contract, I think that, in view of the additional sum that is to be paid by us, the new contractors should have taken the risk of any delay owing to the prevalence of the south-west monsoons.

Mr Ewing - The honorable member knows that there are times when ordinary speed cannot be maintained.

Mr JOHNSON - I am perfectly well aware that when a vessel is passing through a monsoon she cannot be forced along against a head sea and a. head wind at her ordinary speed. But when ship-masters have reason to expect, as in this case, that they will meet with adverse conditions, they can drive their vessels at more than ordinary speed both before entering and after passing through the monsoonal regions, and thus make up for loss of time. Probably those who are responsible for drawing up the agreement failed, owing to their lack of nautical knowledge, to take this point into consideration. I presume that the steamers will be equipped with sufficient power to drive them at a rate of speed in excess of that required to keep strictly within the contract time. As a matter of fact, I gathered from a conversation I had with the captain of the R.M.S. China, that, whilst the Peninsular and Oriental steamers can comply with the requirements of the contract by maintaining a speed of sixteen knots per hour, they are capable, if necessary, of steaming eighteen knots per hour throughout the voyage. That being so, the new steamers should be capable of giving us an accelerated service strictly within the terms of the contract, despite any delay that may be involved when passing through the south-west monsoon. Clause 8 provides -

That the port of registry of the mail ships to be employed in pursuance of this agreement shall be a port within the Commonwealth of Australia.

No provision is made for the crews being signed on and off in Australia, which is a very important matter from a Commonwealth standpoint. In unfolding the terms of the contract the other day the Postmaster-General made much of the fact that Australians will be very much interested in the new venture. If that argument be worth anything it would be worth a good deal more if the contract had provided for the signing on and off of the crews in Australian ports- not necessarily at the port of registry, but at the starting point of these vessels from Australia. As the agreement stands, the crews will probably be signed on in London at the London rate of wages, and consequently Australian seamen will not derive any very great advantage from it. If it had been intended that they should receive any benefit, provision should have beenmade for the signing on and off of crews for the round voyage in Commonwealth ports. That would have insured the employment of Australian seamen at Australian rates of wages. Clause 9 stipulates -

That the plans of the new mail ships to be built to carry out this agreement shall within a reasonable time be submitted for the approval of the representative of the Commonwealth Government in London.

Now, the phrase " within a reasonable time " seems to me to be a very loose one indeed. Who is to define what will con stitute a reasonable period? In a contract of such an important character, a definite period should have been specified, within which plans for the building of the vessels should be submitted to the representative of the Commonwealth Govern ment in London. As matters stand, months may elapse before those plans are submitted, and all kinds of excuses may be urged for not submitting them earlier. Under the agreement, Sir James Laing and Sons can hawk their concession about for the next twelve months, at the end of which period they may be no further forward in the matter of the construction of the ships than they are now. It does not seem to me that,under the agreement, the Government have any means of compelling them to submit plans within what may be termed "a reasonable period" - that is, within three or four months of the ratification of the contract by this Parliament. Clause 11, which is perhaps the most important provision in the agreement, appears to have created some apprehension in the minds of certain honorable members, judged by the questions which were asked this afternoon in reference to the tonnage of the vessels. That clause provides -

That each of the mail ships to be employed in pursuance of this agreement shall be of at least 11,000 tons registered tonnage, and that each of such mail ships shall be capable of steaming at a minimum speed of fifteen knots per hour.

Now, in shipping parlance, the words " eleven thousand tons registered tonnage" have a well-defined meaning. Registered tonnage is a very different thing from gross tonnage. The gross tonnage of the largest vessels of the Peninsular and "Oriental Steam Navigation and Orient Steam Navigation Companies visiting Australian ports, is something like 10,000 or 11,000 tons, but their registered tonnage is only between 5,000 and 6,000 tons. I think that Mr. Paxton himself has something to say upon this point.

Mr Ewing - What does the fact to which the honorable member has referred, convey to his mind ?

Mr JOHNSON - A A ship of 1 1,000 tons registered tonnage would convey to my mind a ship of about 16,000 to 18,000 tons gross register - in other words, a vessel which would have a gross tonnage of at least 5,000 tons more than any vessel of the Peninsular and Oriental Steam Navigation Company or Orient Steam Navigation Company coming to our ports. When a ship is said to be of 1,000 tons register, it means that she is a vessel of about 1,500 tons gross carrying capacity. The gross tonnage of any vessel is always a great deal in excess of its registered tonnage. I see now that Mr. Paxton did have something to say upon this point, and to make the position perfectly clear, perhaps it would be as well for me to quote his statement. He says, referring to clause11 -

It provides that each of the mail ships to be employed in pursuance of this agreement shall be of at least 11,000 tons registered tonnage. Now, I do not think that even the Government realizes what this means, and I am very certain that excepting the few closely connected with shipping business not many understand what the words " registered tonnage " mean or appreciate the value of the clause. It really means that the vessels to be employed will require to be more than twice the size of such steamers as the Mongolia and the Marmora, whose registered tonnage is a little under 5,000.

Mr EWING (RICHMOND, NEW SOUTH WALES) - The Marmora is advertised in the newspapers as a vessel of 10,500 tons.

Mr JOHNSON - That is her gross tonnage. The steamers provided under this contract will require to be more than twice the size of the Mongolia and the Marmora, which are the finest ships of the Peninsular and Oriental Steam Navigation Company's fleet visiting Australia at the present time.

Mr Ewing - It will not do any harm if the vessels are of that size, I suppose?

Mr JOHNSON - Not at all. I should be very glad to see them here, and I do not think that anybody would complain of their presence. I am., however, informed, upon the most reliable authority, that it will take at least three years to build these steamers, and, consequently, I fear that the contract cannot be entered into within the specified period, because there are not sufficient ships of the required tonnage afloat available which could be chartered for the purpose of carrying our mails. Mr. Paxton, in dealing with this question, said -

As a matter of fact, the total number of ships afloat at the present moment of the required tonnage would not be much more than sufficient to comply with the conditions of the contract. At the moment, I cannot give you the name of a vessel which would indicate the precise size called for. The nearest I can think of is the White Star liner Arabic, of 15,801 tons gross and 10,062 tons registered tonnage. The Kaiser Wilhelm der Grosse, which Sydney people know pretty well, is of 5,521 registered tons, and, therefore, as nearly as possible half the size of the steamers called for by the new contract. The idea that such steamers can be built for any such sum as£400,000 is simply preposterous. They will cost at the very least half a million apiece, and probably a great deal more, but the precise sum depends to a certain extent on the fittings and machinery.

I was induced to read the latter part of Mr. Paxton's statement, because of the assertion in the report of the Shipping Commission that mail steamers suitable for a Commonwealth service could be constructed at a cost of £400,000 each. I have no wish to unduly occupy the time of the House in dealing with this motion ; my sole desire is to emphasize points that appear to me to be deserving of consideration. In clause 15 we have the provision -

Should the earnings of the mail ships be diminished and or the expenses of running the mail ships be increased either or both and whether prospective or actual by an amount of not less than Five thousand pounds (£5,000) per annum at any time during the currency of this Agreement in consequence of Commonwealth legislation relating to shipping enacted subsequent to the date of this Agreement the Contractors shall be at liberty at any time after such enactment to determine this Agreement on giving six months' notice in writing to the PostmasterGeneral of their intention so to do. Provided always that if so required the Contractors shall furnish the Postmaster-General with a statement of the amount and particulars of such diminution of earnings and or increase of expenses such statement to be certified by a chartered accountant to be mutually agreed upon.

This clause may or may not have been cunningly devised to give the contractors a certain advantage. I refer more particularly to the use of the words " legislation relating to shipping." Those words, in my view, and in that of some eminent lawyers, do not necessarily imply legislation dealing directly with shipping. All commerce relates to shipping, and all interference with, or restrictions upon, commerce, have a direct relation to shipping of the most vital importance, since a shipowner's earnings could be reduced to the vanishing point by such legislation. In the course of conversation with me, the other day, a gentleman eminent in legal circles, expressed the opinion that the words " relating to shipping " had been deliberately inserted in the clause in order that the contractors might take advantage of legislation passed subsequent to the signing of the contract, which might diminish or interfere in any way with the inflow of imports to Australia. He cited the Australian Industries: Preservation Bill as a measure which, in effective Operation, would have the result of diminish ing the earnings of a shipping service, and which, to that exent, would therefore relate to shipping. To obviate such a contingency, he suggested that the clause should lae so altered as to make it clear that it related only to legislation applying direcly to shipping. The point is an important one, and I trust that the Minister will make a note of it, with a view to seeing whether other words, which more clearly define the intention, could' not be substituted.

Mr Ewing - In any event it would have to be cleared up.

Mr JOHNSON - And it is better that the point should be brought under notice at the present time, when it is possible to make the meaning of the clause clearer. If its general provisions be faithfully observed the contract is one to which no exception can be taken, and if it be brought to a successful issue the Commonwealth will be able to congratulate itself upon having its mails delivered by a very fine fleet of steamers, on terms which, so far as the price paid and the services rendered for that price are concerned, are very much in advance of those of the existing agreement.

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