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Wednesday, 25 July 1906

Mr DEAKIN (Ballarat) (Minister of External Affairs) . - I hope to occupy the House for but a very short time. Indeed, I had intended to delay addressing myself to this question until the main motion was under consideration. But upon examining the amendment submitted by the honorable member for Barrier, I find that it involves the whole proposal of the Government, and that the vote which I hope will shortly be taken, will be one either for or against the contract which is being submitted to the House. Under these circumstances, if appears proper that I should now address myself to a few general considerations to which we desire to call attention. So far, the whole tone of the debate has been entirely satisfactory to the Government in respect of the all-important question of the business character of the proposed contract. The honorable member for Barrier, and those who with him have strongly urged the adoption of another course, have not entered any serious objection to this contract, as a contract, provided that private persons are to be dealt with. Honorable members who have criticized the Government proposal from the opposite side of the Chamber, have almost, without exception, indicated that their chief apprehension was that it appeared to be so favorable to the Commonwealth that they were justified in expressing some doubt as to | whether the contractors would think fit, to proceed with it. In short, the consensus of opinion is that this is the best bargain - so far as Australia is concerned - which has ever been embodied in a mail contract.

Mr Wilks - The same thing is said in reference to every contract.

Mr DEAKIN - When the last contract was under consideration I have a vivid recollection that many honorable members claimed that its acceptance involved an increased expenditure and was less favorable to Australia than the then existing contract. " However, it may reasonably be claimed that the proposed agreement with Sir James Lamg and Sons is the best mail steamer bargain ever made on behalf of the people of Australia. In this connexion it has to be recollected that one of our earliest acts by the Postmaster- General upon his assumption of office was to give notice to the Orient Company of his intention to cancel the present contract. In the view of the Government, the time of transit under that contract, the amount of the subsidy, and the size of the steamers employed in the service were all. capable of improvement years ago. Under the changing circumstances of ocean traffic, and in face of the increasing needs of this country, it washeld that the contract was so unsatisfactory that its existence could not be justified for a longer period than was necessary to enable us to invite fresh tenders. Practically under the instructions of the House, tenders were then invited for a purely postal contract. The complaint was made that in previous instances, whilst the contract was nominally one for a postal service, it in reality permitted certain ports in Australia and' certain States to reap an advantage which two of the States, namely, Tasmania and Queensland, did not enjoy. The consequence was that when the last contract was entered into, Queensland, at its own expense, made an arrangement for a continuation of the voyage of the Orient Steam Navigation Company's steamers to Brisbane - a fact to which the honorable member for Brisbane has just alluded at some length. Consequently we called for tenders for a purely postal contract, which, so far as we were concerned, should be fulfilled by the delivery of all the mails from the old world at Adelaide. Beyond' that port the course of the vessels lay within the discretion of theirproprietors. We should then provide an accelerated railway service to distribute the mails from there over the whole of the eastern Commonwealth. It was felt, however, that it was not sufficient for us to remove the objections which were urged against previous contracts, and that an endeavour ought to be made to obtain better conditions. We felt not only that the service should be speedier, and that the vessels engaged in it should be of a superior character, but that, if possible, economies should be effected. All that, I think, we can claim to have effectually accomplished.

Mr McWilliams - Does the scheme for the distribution of the mails to which the Prime Minister has referred include Tasmania ?

Mr DEAKIN - We shall distribute the mails from Adelaide over the eastern Commonwealth by means of the railway service. The special circumstances of Tasmania have not been forgotten, as the honorable member will find when some other matters come before the House for consideration. Our object hasbeen to secure a Commonwealth contract based upon broad Federal principles, establishing equality throughout the whole of the continent, and, so far as is compatible with the immense area to be dealt with, placing the people of the States upon a fair and' equal footing. This was a great deal to attempt, and a courageous facing of what was at the time apparently an extremely hazardous step. There is no occasion to delay the House - though it might afford a good deal of amusement to a sarcastic commentator - by recapitulating the criticism with which our original tenders were favoured Honorable members will recollect the prophecies which were indulged in to the effect that we should receive no offers outside those of the present mail companies, that they would demand an increased price for continuing the service which we were already obtaining, that we were not large enough as a community to make a demand for better service, and that we ought to be content to accept what we ha.:l and to pay more for it. From that time to the 'present outside critics have been striking the same key, and in a great variety of tones, prophesying disaster. So far as we can judge, after careful investigation, we are about to obtain not only a better contract, not merely larger steamers and a speedier and cheaper service, but also great advantages which were not included in the terms of the tender - which were not imposed upon the contractors, but from which we shall undeniably reap very considerable benefit. The vessels will be constructed according to plans to be submitted to this Government, and provision of the most recent and effective design is to be made for cool storage, probably three times as large as that of the vessels of the Orient Steam Navigation Company, and twice as large as that of the biggest Peninsular and Oriental steamers visiting our ports. It is very important that perishable produce shall obtain rapid transport to the mother country. Now, in addition to affording larger space for such cargo, a quicker service will be given than, is now possible. The recent inquiries of a committee in London show that any deterioration that takes place, generally occurs during the last week or ten days of a voyage, and, consequently, every day by which the journey can be shortened is so much gained. But, although, in providing for a postal service, we did not lose sight of these incidental advantages, it is not suggested that the proposed increase in accommodation will meet the export needs of Australia during the busy season, and we do not claim that by this arrangement we have done all we expect to do for the improvement of the means of sea carriage from Australia to Great Britain. The charges for rapid transit are necessarily somewhat higher than those ruling for transport by vessels of less speed,- taking, it may be, a longer route, as, for instance, the White Star liners, which journey by way of the Cape. But it was always our object to cope with the requirements of the export trade in perishable produce, of which the mail steamers will carry only a pant, and, therefore, on the 20th April ' to]-* last I sent copies of the following letter to the Premiers of the several States: -

Sir, -I have the honour to invite your attention to the proposal put forward by me at the recent meeting of the Conference of State Premiers, to the effect that the Agricultural Departments of the States should be urged to immediately communicate with the exporters of perishable products, or others interested in them, in order that we might arrange to guarantee cither the whole or a certain proportion of the cold storage accommodation which will be provided by the steamers to be employed in the mail service between Australia and Great Britain.

2.   The matter is one of considerable urgency, as the Postmaster-General expects to receive the tenders for the mail service next month. Unless some early intimation is received through the State, Governments of the wishes of the producers, it will not be possible to make this a condition of the contract with the successful tenderers, and an unique opportunity may be lost for making most favorable conditions for an Australian export trade of products, for which the quickest possible transport is desired.

3.   Under the circumstances, may I ask that you will give instructions for the matter to be considered at the earliest possible date, both as to the quantity to be shipped, and the rates to be obtained ?

As the tenderers for the mail service could not expect that their subsidy would be more than an inconsiderable part of the earnings necessary to cover the expenses of their- operations, we thought that they would naturally desire to place themselves in the best position in respect to other competitors by making arrangements in advance for the supply of cargo. While it might have been somewhat risky for the Government of any one State, or even of two States, to undertake beforehand to fill a certain portion of the cool storage accommodation provided, it seemed to us that all the States together might make an advantageous bargain for it with the tenderers, because it would be only under the exceptional circumstance of a wholesale falling off in production throughout the Commonwealth that the accommodation could not be used. We left it to the States to adjust among themselves whatever cool storage accommodation they might deem, it fit to reserve jointly.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Suppose one State had reserved the whole of the space available ?

Mr DEAKIN - It was intended that each State should agree to reserve so much, and that they should draw up amongst themselves the conditions under which it was to be used according to circumstances. We thought that by making a bargain beforehand, cheaper rates could be obtained, especially for the whole space, than by individual bargains made later at current rates.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - If there were a surplus, how would the States arrange with the different shippers without giving a preference to some?

Mr DEAKIN - We left it to the Agricultural Departments of the States to say what would be the minimum space required for each State. The distribution of that space reserved would have been for the States to arrange as they pleased.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - I am merely pointing out the difficulty with which the States were faced.

Mr DEAKIN - I admit the difficul ty, but it is surely not insurmountable. It appeared to us to be worth the effort to obtain advantageous terms for our producers. In reply to my letter, the Premier of Tasmania forwarded this resolution from a meeting of fruit-growers -

This meeting of the Derwent Valley Fruit Growers' Association views with great concern the proposal of the Federal Government to arrange for the freight of fruit to F.ngland, and desires to strongly deprecate such proposed action.

He added that a similar resolution had been passed at Hobart, and thought it " undesirable to disturb the satisfactory arrangements which exist as far as producers of this State are concerned," regretting that his Government could not cooperate. The Premier of South Australia replied that it was impossible to estimate the requirements of his State, " as so much depends upon how the season may turn out." The Premier of Queensland forwarded a resolution of Queensland exporters, asking that the mail service should provide refrigerating space available for each State of the Commonwealth. The Premier of New South Wales forwarded the report of an officer of the Agricultural Department of the State, summarized in these words -

The conditions in this State do not seem to be favorable to the taking up of freezing space on steamers by Government authority.

The Victorian Premier replied that -

This Government regrets it does not see its way to guarantee to fill a certain quantity of space.

He added that they would favour a line giving special facilities even at slightly higher rates than those ruling under their present contract. The Premier of Western Australia said that Western Australia is not in a position, at the present time, to make any reliable estimate of the cold storage space which would be required. Unfortunately, not one of the Agricultural Departments of the States found itself in a position to enter into what seemed to us a promising arrangement, whereby space might have been secured at less than the current rates likely to rule if no agreement is made. Without some such arrangements, when the space is most wanted, it will cost most to obtain it.

Mr Mcwilliams - There are four or five competing companies.

Mr DEAKIN - Competition exists, but I am informed that it is restrained within certain limits.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - The present rates are verv low.

Mr DEAKIN - I wish now to deal with an alternative proposal which, on the 30th April, we submitted to the States Premiers, in the following terms: -

Sir, -In connexion with my communication of the 20th instant, I have the honour to invite your attention to the further suggestion made by me at the recent Conference of State Premiers, with reference to the export of produce generally, and particularly of produce requiring cold storage.

2.   My previous letter dealt only with the mail steamers, but there is another class of vessels in respect of which it may be possible for the Commonwealth to make arrangements which will offer better facilities to producers at lower rates than those to which they have been accustomed. Vessels of the type to which I. allude would be capable of carrying far larger cargoes than can find space in the mail steamers, though their route will be longer. Thev have, or could provide, passenger accommodation suitable for the conveyance of immigrants to Australia on favorable terms.

3.   It is possible, if the companies concerned can be assured of sufficient business, that they will provide steamers larger and of a higher class than have hitherto been employed in the Australian trade.

4.   What is asked bv our exporters, both those who require the use of freezing chambers, and those who do not, is a reduction of freights, and this I have reason to believe may be secured if shipping proprietors can be supplied with some assurance that a certain amount of space will be regularly taken. This assurance need not necessarily be in the form of a binding guarantee, but might be rather of the nature of an undertaking to supply cargo, filling a specified space, for either a certain number of months or the whole of the year on the voyage from Australia to England.

5.   The difference in the climatic conditions of the States, and the fact that unfavorable seasons rarely affect more than a part of the Continent, would enable the undertaking to be fulfilled much more easily and regularly if all the States were acting together. Arrangements could be made for the distribution among the shippers of whatever space is allotted; which arrangements could be altered from time to time according as the quantity of goods available for export increased or diminished in any particular locality.

6.   It would be an additional inducement if an approximation could be made of the number of immigrants who- would be passengers on the re- . turn voyage.

7.   No definite suggestions can be made until i have further information from you, but I shall be glad if you will consider the matter, and favour me with your views, together with those of the producing and exporting classes, or their associations, with whom your Agricultural Department may be in touch in order that, if possible, proposals of a federal character can be prepared for submission to ship-owners.

8.   Even if no agreement be attained at once, an endeavour to induce the exporters of Austraiian produce to act conjointly for the furtherance of their common interests, must have useful results in the future.

9.   The advantages of united action in this matter are so great that this Government cordially relies on the co-operation of all the States in the effort to secure them. >

I may say at once that the replies received were practically the same as those previously sent to us. Several of the States gave us precisely the same answer, but Victoria added that it was felt that nothing could be done in the matter until a definite offer had teen received. My letter was not sent merely as a result of a theory of our own. I had actually had interviews with the representatives of more than one large shipping company partially represented here, and in one case with the representative of a company at present doing business ih Australia. These gentlemen gave me certain information as to the character of the present trade, and the facts governing prices, which made it appear very undesirable for a new company, unless extremely powerful, and prepared to sustain extraordinary competition, to enter into such a trade as this without some guarantee as to the support it would be likely to receive from this side.

Mr Johnson - May not the replies indicate a want of confidence on the part of the States in the Federal authorities?

Mr DEAKIN - It must be recollected that the States were not asked to put any faith in the Federal Government. All that we offered to do was to act as their agents in securing cargo space, and the States were not called upon to undertake any obligation unless they so desired. We simply gave them an opportunity to enter into a bargain, if they thought it worth their while to do so. The representative of one great line of steamers stated that the risks to which I have referred would have to be run by any company entering into the Australian trade, but that, if his principals could obtain an undertaking - not a binding guarantee, with penalties - that a certain quantity of produce would be shipped by their steamers during a certain portion of the year, they would be prepared to make the venture. It was our desire to make ourselves the medium of communication between these shipowners and the States. The owners came to us because they recognised that it would be necessary for them to deal with more than one State. They considered that competition would be feasible only if carried on by a fleet of steamers at least as large as those now trading to Australia, but they were not prepared to make the venture without some undertaking that their attempt to give us a better freight service , for Australian produce, at rates lower than those now prevailing, would receive support from this side. That was a fair offer, and we communicated it to the States. I am not, even by implication, insinuating that the States Governments are to blame, because the negotiations did not at once prove successful. What is wanting is, apparently, a sufficient spirit of co-operation among those who have produce to send away to the world's markets. Of course we knew, and the States Governments knew, that there were large business agencies connected with the export trade which might not find it to their interest to enter into any such arrangement as that suggested.

Mr SPEAKER - Does the Prime Minister think that he can connect his remarks with the subject of the mair contract?

Mr DEAKIN - Yes. It has been stated that the cold storage space for which provision would be made in the new line of mail steamers would be sufficient to convey only a fractional part of our output. I have been endeavouring to show that we have not been blind to the further necessities of the Australian export trade, and that we did not consider that the mail contract met all our needs in regard to shipping communication with the old world. We thought that without interfering with the States, or with the individual freedom of producers, or without improperly trenching upon the business of the agents now engaged in the trade, we could place at the public disposal a cheaper service. We represented to the States Governments the advantages that would be conferred bv such a service, in the hope that the producers would be able to act together to a sufficient extent to afford encouragement for the establishment of a new line of steamers. We contemplated the establishment of a new line of steamers entirely apart from those engaged in the mail service. The proposed cargo steamers would not have proceeded by way of the Suez Canal, and would not necessarily have had any connexion with those who are responsible for the mail contract. Under the proposed arrangement, our produce would have been carried in larger and slower vessels proceeding by another route.

Mr Mcwilliams - If the steam-ship companies reduce their freights they will obtain as much cargo as they can carry.

Mr DEAKIN - It is scarcely necessary that I should remind honorable members that under the proposed mail contract, we shall gain sixty hours upon the present mail service, as carried out by the Orient Steam Navigation Company, and fifty hours upon the service carried out by the Peninsular and Oriental Steam Navigation Company. When we call upon the contractors, as I hope we shall, at the earliest possible date, probably during the first year of the contract, to provide the accelerated speed which will enable their vessels to convey mails from Brindisi to Adelaide in 6x2 hours, we shall make a saving of eighty-four hours in the time of transit, and thus permit of letters received bv any given steamer being replied to from Brisbane, as well as from Sydney and Melbourne in time to catch the same steamer upon her outward voyage. When this is achieved, we shall have made a great stride, in connexion with our postal communication, and in all its accessories, of the greatest importance to this community.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - If the speed is accelerated, we shall have to pay the contractors a subsidy of£150,000 per annum.

Mr DEAKIN - That is the maximum - the amount may be a little less.

Mr Watson - Would the Prime Minister say whether the second tender, the amount of which, I understand, was £150,000, would have provided for anysaving in time?

Mr DEAKIN - Speaking, from memory, no. One tenderer did undertake to effect a saving in time, but there were other difficulties in his way which proved to be insurmountable.

Mr Kelly - Does the Prime Minister maintain that under clause 5 of the contract, the contractors could be compelled to accelerate the speed of theirvessels?

Mr DEAKIN - Not under clause 5, but under the terms of the contract as a whole, it could be done. I may say that if there is any ambiguity in the terms of the contract Mr. Croker is perfectly prepared to put matters right. He has been keen for his principals, but quite fair to us. In. point of fact, one or two verbal amendments have already been made in the contract which will place matters beyond all possible doubt.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - It is not beyond doubt now.

Mr DEAKIN - It is in a sense, because the contract of which honorable members have a copy merely reduces to legal form a rough draft in which it was most distinctly provided that the Government should, have power to enforce an acceleration of speed I admit that in the legaily-phrased contract the expressions used might have been clearer. Our object is that this contract shall not only be far better than those that have preceded it, but. that it shall, as far as possible, be of a. Federal character.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Could the PrimeMinister say whether he considers clause6 to be perfectlv clear?

Mr DEAKIN - Yes, quite clear, and I. understand that the Attorney-General has satisfied himself that it is effective.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Would the extended period referred to therein, be included within the ten years, or would it possibly carry the contract beyond the ten years' period?

Mr DEAKIN - As I have alreadypointed out, that is quite immaterial,because the House is committing itself to the payment of the subsidy for a period of only ten years. No Government could go bevond that term without coming down to Parliament, and obtaining its assent tothe payment of the subsidy for a longerperiod.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - In that case, it would have been much simpler to terminate the contract?

Mr DEAKIN - Possiblv. We havebeen subjected to a good deal of criticism in connexion with this contract, due to our adoption of the clauses employed in successive contracts previously entered into the provisions of which were not subjected to the same close scrutiny that has been directed to them during this debate.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - If the arbitrators recommended an extension of the contract, and Parliament .did not approve of it, could the Government still demand an acceleration of speed?

Mr DEAKIN - Yes, up to the ten years' limit; but, of course, the question of expense might be an important factor. We have secured the favorable terms provided for in the contract, because it exlends over a period of ten years. We could not have made such a good bargain if the agreement had been made for a term of only four years. As I was saying, a Federal character- will be imparted to the new service, not only by our effort to put the postal service on an absolutely Federal basis, but bv the fact that the steamers will be registered here, and fly our own flag. Moreover, the conditions that thev shall be manned by white seamen will be strictly observed. I have great sympathy with the remarks of the honorable member for Kalgoorlie, who contended that the steamers should be manned solely by Australian or British seamen. The fact that such a provision is not embodied! in the contract is not due to any remissness on the part of the Government. On the contrary, if other proposals made by us to the British Government had been accepted we should have been able to do this, and to bring our shipping service into greater harmony with that of the old country, while more closely studying the requirements of the Empire. Although no stipulation is made in that regard, however, I have yet to learn that the new fleet will =not be manned by British seamen.

Mr Bamford - Will the fact of the vessels being registered here render it necessary for the contractors to pay Australian rates of wages?

Mr DEAKIN - The payment of Australian rates of wages can be enforced only in our own waters. We may make them apply whilst the steamers are trading on our coasts, but the moment they leave our shores on oversea voyages they pass beyond our jurisdiction.

Mr McDonald - Will any shares be held in Australia?

Mr DEAKIN - I shall tell presently all I know of that matter. In order to reply to some criticisms as to the expenditure in which Australia will be involved by the acceptance of this contract, I propose to read a few figures which also bear on the development of the shipping of the mother country. There is at present' on the British Register shipping amounting to 9,000,000 tons, whose value is estimated at £150,000,000, and whose gross earnings amount to £90,000,000 a year. In respect of that shipping the mother country provides, by, vote of Parliament, £1,127,000 a year - £860,000 for mail services, £200,000 for subventions which enable the British Government to claim the services of ships built to her order in time of war, and £53,000 in subsidies for no other consideration than the encouragement of trade. The total payments by the Government of Great Britain therefore amount to about I per cent, on the estimated capital value of the shipping of Great Britain. On the other hand, Germany pays 9 per cent, in subsidies, in addition to indirect concessions by the State railways, as well as in- other directions. To take two concrete examples, I find that a special freight is charged upon German State railways in respect of goods of German origin and manufacture intended for export.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - There are special freights on most of our railways in respect of goods for export.

Mr DEAKIN - The honorable member refers to the rates in respect to wheat and other products?

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - We carry all sorts of produce for export at special rates.

Mr DEAKIN - Whilst in Germany rails are carried at 3s. 2d. per ton for a given distance, it costs 8s. 4d. per ton to carry the same rails over a like distance in Great Britain.

Mr McDonald - The railways in 'Germany are owned by the State, whilst in Great Britain they are private enterprises.

Mr DEAKIN - Quite so. Again, in Germany machinery would be carried over a given distance at 7s. iod. per ton, whilst in the United Kingdom the charge would be 36s. 4d. per ton.

Mr Cameron - That is an argument in favour of-

Mr DEAKIN - I am now quoting facts.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Where did the honorable and learned gentleman obtain them?

Mr DEAKIN - From one of the latest numbers of Dun's International Review, My point is that, though the British Governmentpays only £ per cent, upon the capital invested in the shipping of the United Kingdom, the German Government pays as much as 9 per cent., and gives other indirect concessions that, probably, raise the total to to per cent, or ri per cent. The remarkable development of German shipping, which is one of the economic features of the present time, is largely due to the fact that it receives ten or a dozen times the encouragement that the United Kingdom has hitherto found it necessary to give to its shipping.

Mr Batchelor - The German people are not paying as much as the English people are.

Mr DEAKIN - When attention is drawn to the expenditure proposed here, the fair measure is not the country which has, so to speak, the command of the sea, and has reached that proud position by careful State nursing and wise provision for the last two or three centuries, as well as by the industry and ability of its people. We find that people like ourselves who are in the early stages of their naval development, but who feel their dependence on a marine service, are forced for that reason to put forward greater efforts. France not only gives subsidies amounting to 12½ per cent. to her shipping, but affords other encouragement. For instance, an extra duty is levied on transhipped goods imported from abroad in other than French ships.

Mr Glynn - The subsidies given by America have not done much for her import trade.

Mr DEAKIN - For several reasons which it would take too long to deal with.

Mr Glynn - There are fiscal reasons.

Mr DEAKIN - They apply in so far as they render America self-supporting, instead of dependent on imports from abroad. The shipping trade of America mainly relates to exports. Its import trade is relatively inconsiderable. That is one disability. But for the Civil War - but for the Alabama and the Shenandoah - I venture to say that by this time the American merchant fleets would have occupied the position which the American navy holds to-day among the great powers of the world.

Mr Glynn - That is not the general verdict.

Mr DEAKIN - That, and their concentration on more profitable developments, has had the result named.

Mr McWilliams - The American Civil War took place nearly half a century ago.

Mr DEAKIN - What is Australia doing? It is estimated that we are paying for this contract, over and above the poundage rates, £80,000 a year.

The capital that will require to be invested on the service we are obtaining has been fairly estimated at £4,000,000, and £80,000 on £4,000,000 represents 2 per cent. on that sum. The encouragement, therefore, that Australia proposes to give to this line of oversea steamers is but 2 per cent. as against the 12½ per cent, given by France, and the 9 per cent. given by Germany to their shipping, taking all of it into account, irrespective of other advantages.

Mr Watson - Why£80,000?

Mr DEAKIN - Because the remainder is estimated to represent the poundage rates.

Mr McDonald - Still the company will secure that remainder.

Mr DEAKIN - Weshall pay £45,000 for services rendered; we shall pay the other £80,000 per annum for the class of service we obtain. If we, in Australia, separated as we are by thousands of miles from Europe, and requiring, like the United States, far more accommodation for our export than for our import trade, pay only 2 per cent. as. compared with the efforts of other enterprising nations, that is a small outlay for the development of a service of this character.

Mr Cameron - Is there not a percentage given for other services?

Mr DEAKIN - I have said so. In England, as I have shown, the subsidies in respect of the carriage of mails represent eight-tenths of the total sum paid, and, although large amounts are paid by France and Germany for the purpose of maintaining their naval reserves, the chief expenditure takes the form either of postal encouragement,or direct mercantile development.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Are not the British and foreign payments made in respect of the whole of the shipping of the countries named, whereas the Prime Minister is reckoning the rate in. the case of Australia upon this particular investment.

Mr DEAKIN - I am doing that because this is our only investment in this direction. We have practically no other oversea shipping. With what else can I compare it? Thisline is to be registered in Australia. It willfly the Australian, flag. It will be an Australian oversea service, and, so far as I know, the only oversea service flying the Australian flag, and partly, perhaps, in Australian hands. That is why I can only make an imperfect comparison. The honorable member for Parramatta last night questioned the capacity of the tenderers to fulfil the contract. He had been informed that they were merely builders of sailing vessels and tramp steamers. I can assure the honorable member that he is very much mistaken. I gave a list of the various companies for which they have built mail steamers.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - The honorable member did not speak of mail steamers. He simply usedthe word "steamers."

Mr DEAKIN - They have supplied steamers to mail shipping companies. I have since examined Lloyd's Register, and find that they have built a number of mail ships for English, American, and Japanese lines. The last achievement of Sir James Laing and Sons was to build a vessel of 1 0,660 tons - the Slavonia - one of the famous Cunard line.

Mr Thomas - A vessel of 10,660 tons would not be a famous Cunarder.

Mr DEAKIN - I refer to one of the famous Cunard line, which has never lost a ship. Vessels of twice that size, of course, are built for that line.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Does the Slavonia belong to the Cunard line?

Mr DEAKIN - I presume so. I understand that the names of the vessels of the company always end in " ia."

Mr Tudor - That is so with the vessels of the Allan line.

Mr DEAKIN - That is what has been done in James Laing and Sons' own shippingyard. That firm has a history of more than a century. It has steadily grown from comparatively small beginnings, and become one of the powerfulyards on the East coast. Sir James Laing and Sons, who are the contractors whom we hold responsible for this contract, are not the only persons connected with it, or from whom we hold security. In the first place, our negotiations, necessarily conducted on the spot, were with Mr. Croker of thiscity, who is their representative. He ist as is well known, a professional man of high standing, who represents large shipping interests in all parts ofthe world. Our first contract was with Mr. Croker. He himself is liable for it and under it he undertook that his principals would enter into this present agreement which he has signed as their agent. We have first of all Mr. Croker and his agreement ; we have next SirJames Laing and his agreement, backed up by the bank guarantee of £25, 000 in addition to the£2,500 we have already received. In addition to that, Sir James Laing and Sons, who have taken a leading position as the firm responsible for this contract, are associated, so I am informed - on the authority of Mr. Croker as their agent - with the following eminent British ship-builders : - Vickers, Son, and Maxim, one of the largest ship-builders in the United Kingdom.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Associated under this contract?

Mr DEAKIN - Under this contract. They are also associated with Lord Armstrong, representing Lord Armstrong, Whitworth and Company and William Beardmore and Company. We have thus four of the best known and best established shipbuilding firms in England associated in this matter.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Associated in what way ?

Mr DEAKIN - They are partners, to some extent, in the tender. Sir James Laing takes the responsibility of the contract, and, after Mr. Croker, we look to him and his company.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - That is as to the payment of the £27,500?

Mr DEAKIN - Yes. But behind them we look to these firms whose ship-building yards are able, not only to complete this necessary fleet in a short time, but to build any further fleet required. Honorable members appear to have hardly looked at the special guarantees provided in the contract - in articles 33, 38, and 39. We have now £27,500 in hand. For the due fulfilment of the agreement, the contractors must give us a guarantee equal to one-fifth of the amount of the tender. In other words, a bond of £25,000 is required. Then, if the contractors propose to build ships - as they do under this contract -they are required, under sub-clause 2 of clause 39, to " enter into a joint and several bond with two responsible and approved sureties to the Postmaster-General in the penal sum of £25,000 for the due commencement and faithful performance of the contract in accordance with the tender and conditions by the contractor." Should the contractor, in the opinion of the Postmaster-General, fail to make sufficient progress with the construction of the vessels, the latter may at once call upon him and his sureties to enter into a new bond to increase the amount from £25,000 to £50,000, and, failing compliance with that demand the PostmasterGeneral may cancel the contract and

Mr Watson - What time will elapse before the Government can call upon the contractors to forfeit the final amount?

Mr DEAKIN - In the first place they may be required to increase the amount from £25,000 to £50,000 within a week. They must find that sum if such a demand were made, or the contract would be cancelled, .and they would be liable to a further penalty.

Mr Watson - What would be a reasonable period to allow before calling upon them to forfeit the final amount?

Mr DEAKIN - That is a matter which is left to the discretion of the PostmasterGeneral.

Mr Fisher - That means the Government.

Mr DEAKIN - Exactly. Consequently we are as well secured in connexion with a contract of this kind as we can be. When tenders were invited it hardly seemed possible that we should be able to secure a fleet of ships of this character, or possibly larger penalties might have been provided. But, considering that with Sir James Laing and Sons it is not a question of money - that that firm has never yet failed in its word-

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Does the Prime Minister really think that, these shipbuilders intend to run a mail service, and to enter into competition with other vessels ?

Mr DEAKIN - I have the assurance of their representative here that they are concerned in this contract, and I hope and believe that their efforts in Australia will not be confined to this contract alone. Under the agreement an entirely new company headed by expert shipbuilders will enter Australian waters - persons possessing both the ability and the capital necessary to carry out the largest designs. They have evidently realized what the prospects of Australia are. They recognise that its production is likely to increase by leaps and bounds. They have doubtless taken into account the advances which have been made by the steam-ships which are doing the carrying trade of the world, and are ready to provide us with a more progressive service than we have yet enjoyed

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - Will there be any Australian capital sunk in this venture?

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - The Prime Minister is not aware whether our coastal companies intend to invest in it?

Mr DEAKIN - I see the statements which are published in the press, asdoes the honorable member, but cannot say what foundation there is for them. I dc not know whether the inquiries of the honorable member for Barrier and his colleagues upon the Shipping Commission led them to note the circumstances under which some of the lines now subsidized in Europe? are being carried on. For instance, theNorddeutscherLloyd's line is not merely 1 supported by the German Government. The Government of that country have taken many steps which probably meet with theapproval of the honorable member for Barrier, but they have not gone to the extent of attempting the State ownership of that company's vessels. Nevertheless., their control of the NorddeutscherLloyd'sships practically amounts to a State ownership.

Mr Thomas - I said so.

Mr DEAKIN - But did the honorable member state that the freight rates and the passenger fares have to be assented to by the German Government before they canbe altered in any way ?

Mr McDonald - And the shares mustbe held by German subjects.

Mr DEAKIN - Also the ships must be built in German yards, and must bumGerman coal1. That is a policy of Germany for the Germans. The German Government, I, repeat, subsidizes those vessels, and assists them to enter into competition with other lines, but makes no attempt to assume the actual control of them.'

Mr Thomas - When I was speaking, I said that in the opinion of Mr. Kenneth Anderson, the vessels of the NorddeutscherLloyd's line were practically owned" by the State.

Mr DEAKIN - That is so. But I want the honorable member to recognise that, while that circumstance supports his argument up to a certain point, the very fact that the German Government deliberately stop short there shows that they must have good reasons for so doing. If they believed that their ownership could best be served by themselves taking over the vessels; of that line and manning them, there isnothing to prevent them from doing so.

Mr Hutchison - The Socialist section of the Reichstag is not strong enough to compel them to do that.

Mr DEAKIN - The fact that so intelligent and thoughtful a people as the Ger- mans stop short just where they do in this particular enterprise which is practically State owned evidences that they recognise the wisdom of going no farther.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - It is not a question of what the German Government think, but of what this Government think.

Mr DEAKIN - Exactly. Nevertheless, that is an argument that I am justified in commending to the attention of those honorable members. The combination which is behind our proposed contract is strong enough to undertake all the tasks which confront them, and strong enough to enter into that other development of steam-ship communication to which I have alluded. The limits of this debate will not permit me to refer to it further than to say it is my own clear conviction that in Australia we are neglecting one of the finest opportunities for co-operation presented anywhere. By means of our State Agrricultural Departments and State railways, we are brought into such close touch with the producers that they ought to be able, with the help of their representative associations, to act together* in the several States, and to deal through us not only with this new mail company in regard to its cool storage accommodation, but with vessels of a larger tonnage and slower speed - sufficiently swift to place the produce of Australia upon the markets of the world upon much better terms than we have hitherto enjoyed. I believe that the inquiry of the honorable member for Barrier and' his colleagues has accomplished good in opening our eyes to the influence of sea communications upon the prosperity of a -country which depends as largely as we do upon its export trade. Practically we pay our debt by means of that trade. Nothing of such general interest to Australia as the cultivation of that trade oversea can escape the consideration of its public men. Here is one means - the means of co-operation - which, with the existing machinery possessed by the organizations of producers in the different States, can enable them to offer inducements which will provide them with better and cheaper communication.


Mr DEAKIN - The seasons have to be taken into consideration, but in my opinion, if I may be permitted to use the phrase, we are growing out of the seasons. By means of the new system of dry farming, which has been dealt with by the honorable member for Echuca, b,y irrigation, and by the application of better knowledge, I believe that the production of this Continent will increase four or five-fold.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - The Prime Minister had better keep out of the clouds.

Mr DEAKIN - I think that I am upon very solid ground in making that statement. What has developed the butter industry in Victoria, except our butter factories, and particularly our co-operative factories? If they had not had a most untoward experience in regard to their bounties they would have, developed that industry still further. When we are afforded an opportunity of obtaining an Australian line of steamers - even if it be only the beginning of larger things - we should avail ourselves of it. I venture to say that that article in the contract in which the Postmaster-General undertakes to use his ,good offices with the States Governments to secure to the new line of steamers the best possible treatment is a very proper provision to introduce. I have heard some expressions of fear lest the new company should join combinations which are said to exist, or should become in itself a monopoly. As has been expressly pointed out, our power to take over the whole of the vessels engaged in the service is our answer to any such fear. When it can be shown that the line which we have assisted to build up commences to injure our trade, honorable members will have much stronger title to ask us to interfere.

Mr McDonald - If we purchase the boats from the contractors, should we take over the mail service which they are providing

Mr DEAKIN - Necessarily. When we have bought out the other party the contract will be with ourselves.

Mr McDonald - Would the contract end if we purchased the boats?

Mr DEAKIN - Certainly.

Mr McDonald - We have not heard under what clause that . could be done.

Mr DEAKIN - The terms are clearlyset forth in the contract:.

Mr McDonald - Where ?

Mr DEAKIN - They are clearly set out in print before the honorable member. I have already occupied the House too long, or I should read them.

Mr McDonald - We may purchase the vessels, but would that end the contract?

Mr DEAKIN - Certainly. The honorable member suggests that the purchase of the boats does not annul the contract, though the power is itself a term of the contract, but,, in my opinion, that must be its effect.

Mr Fisher - If that is not clear, will the honorable and learned gentleman make it so?

Mr DEAKIN - I think that it is clear, but if it is not I shall have it made so. If we are to secure fair terms for our shippers it will be done only by cooperation amongst producers and exporters, assisted by Government action. The treatment which the proposed Australian.' line will receive from Australia will depend upon the manner in which it treats our producers and exporters, and performs its contract with the Government. I hope that the service will be conducted in such a fair and generous manner that our future Governments and Parliaments will feel justified in using all their influence to foster it. and to give it all the other business we can. An opportunity is afforded to the new company to-day which has been 'given to no other company, because we are only beginning to appreciate the importance of our sea traffic. If it deals with us fairly and reasonably, not becoming a monopoly, or joining a combination, and fulfils, not merely the letter, but the spirit of this agreement, as I believe it will, because of the names behind it, it will be our duty, in the interests of our producers, to encourage and support it. The Government can, and ought to, stand behind it and help it on. We shall expect its directors to take a manly, independent stand in respect to proposals to combine with other companies, and, if by its means we succeed in breaking down the operations of the oversea rings, as we hope by other means to put an end to any unfair Inter-State combination, we shall perform one of the greatest services which can be rendered to those who live by the produce which they gain bv the sweat of their brow. In this State, at all events, thev have not in the past been too well served by their agents. Thev have been dependent on shipping services in which, though at times competition has brought down rates even unnecessarily low, have often mulcted them, directly or indirectly, of too much of their earnings. We hope to accomplish much for our producers by the establishment of this Australian line, and if, when ratifying the contract, we give the promoters to understand that fair and generous dealing on, their part will meet with a similar return from us, we shall, by passing the motion, have done one of the best acts that this Parliament can perform..

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