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Wednesday, 31 May 1972
Page: 2389


The PRESIDENT - If the Senate is agreeable to that course, the 2 Bills may be debated together.


Senator Cotton - I am quite happy about that, if that is what the Opposition would like to do.


The PRESIDENT - Are honourable senators agreeable to that course? There being no objection, that course will be followed.


Senator WRIEDT - The Senate has before it 2 Bills. One is the Airline Equipment (Loan Guarantee) Bill 1972 seeking to guarantee, by the Commonwealth, loans of up to $US31m to be raised through the Export-Import Bank of the United States and other sources which are not specified in the second reading speech of the Minister for Civil Aviation (Senator Cotton) but presumably at the discretion of Ansett Transport Industries Ltd, for the purchase of 4 Boeing 200 series aircraft. The second Bill, the Loans (Australian National Airlines Commission) Bill 1972, provides for the Commonwealth to raise loans on behalf of Trans-Australia Airlines also from the Export-Import Bank of the United States, one-half coming from that Bank and the other half coming from other sources which I understand are mainly European.

Twe years ago there was some considerable difference of opinion between the 2 major domestic operators on the type of aircraft which should replace or supplement their present fleets. I understand that TAA was of the opinion that traffic growth in Australia warranted the importation in 1974 of what is commonly known as the airbus, that is, the DC 10 or the Lockheed Tri-star series. By contrast, Ansett maintained that one could not predict the increase in traffic in the years ahead, that a recession could occur in this country and therefore the purchase of these larger seat capacity aircraft would not be warranted. Events would seem to prove that Ansett's view of the controversy was the correct one. However, there may well be an upturn in loadings and traffic growth in Australia in the next 3 or 4 years which may result in a further decision being taken. But suffice to say that a decision has been taken and these 2 Bills seek approval for loans to purchase 4 Boeing 200 series aircraft for each airline.

Under clause 4 in the Second Schedule of the Airlines Agreement Act, the Commonwealth is required to guarantee loans to Ansett Transport Industries Ltd for jet aircraft. The purpose of this guarantee is to maintain a parity of available finance and equipment for the 2 airlines. As most of us are aware, ever since the introduction of the 2-airIine policy the Government has endeavoured to maintain parity in alf respects in the operation of these 2 airlines. The equipment, to all intents and purposes, is identical; the services are identical, and despite the recent changes which have taken place in flight scheduling nevertheless these services are very similar right down to the meals which are served on the aircraft. In the main this policy has served Australia reasonably well. Load factors have remained roughly parallel. TAA has kept an edge on Ansett Airlines of Australia over the years and currently has a load factor of 3 per cent more than Ansett Airlines. The Opposition believes that because of the attitudes which have been adopted by the Government over the years, certain factors have arisen which require the Government to take action to ensure that this parity is spelled out in more detail. For that reason, on behalf of the Opposition I move the following amendment:

Leave out all words after 'That', insert - consideration of the Bill be deferred until Ansett Transport Industries Ltd forms a separate company to conduct airline operations and related activities approved by the Parliament and provision is made for this company to report annually to Parliament'.

I think it is a fairly well known fact that the present operation of Ansett Airlines is incorporated in the overall operations of Ansett Transport Industries. If we believe that there should be parity between the airlines, and if the Commonwealth is prepared to involve itself uniquely in providing these guarantees for loans for the purchase of aircraft for Ansett, then it is only fair and reasonable that the accountability of Ansett Airlines should be clear and distinct. In the case of TAA the accounts do pertain specifically to the airline's operation. Therefore, I submit on behalf of the Opposition that this should be the case with Ansett as well.

Recently the Minister supplied answers to various questions on this matter. We can see that over the years there has been a parallel situation between the 2 major operators on Australian domestic routes. For example, in 1966 Ansett-ANA as it then was, carried 1.6 million passengers and TAA carried 1.7 million. In 1971 Ansett Airlines of Australia carried 2.6 million passengers and TAA carried 2.7 million. This means generally a fulfilment of what the Government had intended. The Labor Party does not subscribe to a view on whether there should be a monopoly of the domestic airlines system in this country. We oppose - this is spelled out clearly in our platform - any discriminations which may exist against TAA, and the 2-airline agreement undoubtedly provides certain benefits and privileges to Ansett Transport Industries. I travel regularly by Ansett. Sometimes I travel by TAA. 1 must say - I do not intend my remarks to be directed against one airline or the other - that the whole purpose of our consideration of matters concerning the domestic airline industry is to provide for Australian people the best possible airline services that we can, and airline services which will reach the greatest number of Australians. But there are no questions of the preferential rights that exist for ATI. I would like to read from a submission to the Senate Standing Committee on Industry and Trade by Ansett Transport Industries. As we know, this Committee recently inquired into the proposed takeover of ATI by Thomas Nationwide Transport Ltd. In that submission the preferential rights of ATI are spelled out clearly. They are as follows:

Under Clause 5 of the 1952 Agreement, the Company-

That is, Ansett - subject to the provision of efficient services with suitable time tables in accordance with the requirements of the Postmaster-General, shares the carriage of mail on competitive routes equally with the Commission (TAA).

Under Clause 6 of that Agreement, the Commonwealth agrees to ensure that, during its continuance, business conducted on government warrant in respect of the carriage of passengers or freight is freely available to both airlines and that the holder of a government warrant has a free option as to the service he will use.

Under Clause 10 of the same Agreement, the Commonwealth undertakes not to exercise any of its powers, under or by virtue of an Act or Regulation, so as to discriminate against the Company, and to accord substantially equal treatment to both airlines in relation to the grant of import licences and allocation of airport facilities. There is a similar provision in Section 15 of the Airlines Equipment Act 1958 which requires the Minister, in the exercise of his powers under that Act, not to discriminate in favour of either airline as against the other.

Finally, under Clauses 8 and 9 of the 1952 Agreement there are detailed provisions which ensure that the Commission and the Company will have an equal opportunity to purchase or hire surplus aircraft from the Commonwealth or any authority of the Commonwealth or Corporation (such as Qantas) in which the Commonwealth has an interest.

Mr President,I have taken the opportunity to quote directly from that submission to make it quite clear that there are certain privileges extended to Ansett as a result of Commonwealth legislation. For that reason it is fair and reasonable that the Commonwealth should have a proper accountability of the operations of the airlines section of ATI. It is unfortunate that the Commonwealth has not carried out the obligations which are placed on it under the provisions of the Act. For example, in the Airline Equipment (Loan Guarantee) Act 1969 we find a section which appears in the Bill with which we are dealing tonight. Clause 4 (d) of the Bill reads:

.   . undertakings to the satisfaction of the Treasurer are given that, so long as the loan or any interest on the loan remains unpaid -

(i)   officers employed in the Commonwealth Service will have full access at all reasonable times to the financial accounts of Ansett Transport Industries Limited and Ansett Transport Industries (Operations) Proprietary Limited when authorised in writing by the Minister for that purpose; and

(ii)   each of those companies will do everything within its power to ensure that the officers so authorised have similar access to the financial accounts of any company or firm in which that company at any time has, whether directly or indirectly, a controlling interest;

It must be a matter of great concern to everyone interested in this subject to read an article which appeared in the Melbourne Age' of Friday, 29th October last year, bearing in mind that the provision which I have just quoted from the Act - the same provision appears in the current Bill - has been put in for a specific purpose. Obviously the Government realised at the time that since ATI is an organisation operating outside the scope of the airline industry, it was necessary to write into the Act certain provisions whereby the Commonwealth would be able to ensure that the accounts of the airline operations of ATI in fact were in order, and these provisions are spelt out in detail. The newspaper extract to which I have referred reads:

A former chief accountant of Ansett Airlines-

I need not mention his name here - was placed on a three-year good behaviour bond by a Country Court judge yesterday for forging and uttering cheques worth $2,200.

The offences took place between July last year and May this year.

Mr FrankGalbally, said he was 'the victim of high business, modern tactics and ruthlessness, utter ruthlessness'.

He was in charge of a staff of 250 people', he said.

Mr Galbally,the defendant's counsel, said that his client: was the only qualified accountant employed by Ansett Airlines.

I know this sounds incredible, but it is the truth. The article continues that Mr Galbally said that the accountant: had personal and ethical problems while employed by the airline. 'One was to manipulate financial statements and finances. . . . '

That article does not make very pleasant reading. I have been a member of the Senate Select Committee on Securities and Exchange for the last 2 years. I am no longer surprised by anything that happens in big business. The provisions in the Act are spelt out quite clearly. The Commonwealth's responsibility, if it is to provide the guarantees for the loans, is to ensure that the accounts of the firm involved are a true and accurate record of what is taking place.It would appear that these facts have not been known to the Commonwealth. They should have been known. I suggest that if the Auditor-General had been doing his job correctly the Government would have been aware of what was going on. I say again that it is a fair and reasonable proposition which the Opposition has put forward in its amendment. This is a unique situation in which the Commonwealth is prepared to involve itself, as it has done in this case. It is only fair and reasonable that the airline concerned should give a proper account of its airline operations.

In fact, the Minister for National Development (Mr Swartz) in his reply during the second reading stage to the speech of Mr Charles Jones, the shadow Minister for Shipping and Transport, said quite clearly that he had a good deal of sympathy for the sentiments expressed in the amendment moved by the Opposition in that place. He agreed also that the Minister for Civil Aviation (Senator Cotton) had a good deal of sympathy for the proposition. So in essence if we are to maintain in this country a system of 2 parallel airline operators to whom equal privileges are flowing, there should be no discrimination one against the other. I noticed only recently, for example, that the amounts paid by the Commonwealth Government to the 2 airlines in respect of travel undertaken by Commonwealth public servants is weighted very heavily in favour of TAA. This situation may arise as a result of a decision on the part of individual public servants. If that is the case, that is the way it should be. But if we are to abide by a policy whereby we wrap the entire airline system in this country in cotton wool and we give both of these operators a gravy train ride - this is what it amounts to - to the exclusion of anybody else who may be interested in this field, the Commonwealth ought to make sure that what it is doing provides for complete equity between those 2 airlines. I suggest it is not doing this, although in the main we do have relative stability in the airline industry.

Some 2 months ago the Senate referred to the Senate Standing Committee on Industry and Trade the question of the take-over bid for Ansett by Thomas Nationwide Transport Limited. Unfortunately, that inquiry was aborted by action taken by the Victorian Government. When the interim report of the Standing Committee on Industry and Trade was presented to the Senate the leaders of the 2 main parties gave an undertaking that this matter would be brought back into the Senate the following week. Unfortunately, that did not occur.

That inquiry, about which I could say a great deal which would probably not be pertinent to the current debate, related to the question of air freight. Thomas Nationwide Transport Ltd maintained that one of the main reasons for wanting to be in the airline business was to carry freight and to build up the carriage of freight by air generally. If a comparison is made of the growth of air freight in this country with that in the United States, it reveals that air freight is the poor sister of passenger carrying in Australia. The annual report for 1970-71 of the Department of Civil Aviation contains freight figures which show that between 1966 and 1970 short ton miles travelled in Australia increased from 41,200,000 to almost 56,000,000, representing a rise of 36 per cent in the 5-year period. By contrast there was a revolution in air freight in the United States of America although not over the same period as the one to which I have referred. 1 do not have the figures for that period, but the ones that I do have reveal that between 1960 and 1968 there was an increase of 340 per cent as against 36 per cent in Australia. The disparity is too great to be ignored.

Some years ago a gentleman named Gordon Barton claimed that he was competent to operate air freight services in this country as an independent operator. He was unable to do so for the Commonwealth refused him permission to import suitable aircraft even though the Commonwealth and, I think, the Privy Council had decided that he was in fact entitled to do so. The reason for the decision is that the 2 main operators, TAA and Ansett Transport Industries, look upon air freight as an appendage of their passenger operations. As three-quarters of the air freight carried in this country is transported in passenger aircraft, the 2 main airlines are not concerned with the development of air freight in Australia. Their concern is for carrying people. Why should the transport industry of this country, and the people who wish to develop the air freight business, be denied the opportunity to develop that business because the 2 main operators, the Department of Civil Aviation and the Commonwealth Government do not want it?

I am aware of the difficulties associated with air freight. I am aware of the arguments about backloadings, and all the rest of it, but I am equally aware that in the past 12 months 3 times the amount of air freight was offered to the airlines as was carried by them. The Government should offer some explanation for this situation. If Thomas Nationwide Transport Ltd or Gordon Barton, or anybody else for that matter, can prove a capability to operate an independent air freight service in this country, the organisation concerned should be given an opportunity to do so. The whole of the airlines system should not be wrapped up in cotton wool, and we should not be spending our time caring about what TAA or Ansett Transport Industries want. If they want to treat air freight as something second rate, that is their business, but it should not preclude the independent operator who wants to function in this field from doing so. I do not know what the Government is doing about it and

I do not know whether it is considering any recommendations placed before it by the Department of Civil Aviation on this matter. I certainly hope that the Minister may be in a position to explain in some detail what is being done, and that he can justify why air freight operations in Australia are permitted to remain in the hands of 2 airlines that are primarily concerned with the carrying of people, not freight.

An examination of the figures to which I have referred for the United States of America indicate that there has been some-, thing akin to an explosion of air freight operations over the period L mentioned. No similar explosion has occurred in this country. From information supplied to me it seems that those who would like to develop an air freight industry here cannot do so because the 2 major . airlines are concerned more, with carrying; people, less with the carriage of freight. With the greatest respect I suggest to the Minister that he give serious consideration to the arguments I have raised. We cannot go on imagining that TAA and Ansett Transport Industries will be able to hold all the air traffic in Australia for ever and a day. The time must come when a third operator on the main line trunk .routes for which provision is made in the agreement, will enter the ,air freight field, and possibly, the passenger field as well. When that time arrives I agree that we must, ensure that sufficient freight or passengers are available to justify it. It may well be, that sufficient freight is already available^

One last point that I want- to raise concerns the operation of intrastate aerial services in Tasmania. All other. States in the Commonwealth benefit from intrastate aerial services. The one State that is very close to losing this type ' of ' 'service is Tasmania. Some years ago TAA was operating this service in Tasmania but when it found that it could not make .profits from that field it moved out of it. "Ansett Transport Industries has never undertaken to operate this service. I emphasise that the Tasmanians are as entitled to an intrastate aerial service' as other Australian citizens. The Tasmanian Government ' exercises the authority to determine whether' Ansett and TAA shall carry passengers ' between Hobart and Launceston. Every' State Government has the right to issue- a licence to permit the mainline operators' to operate services like that. The stage has been reached when that right will need to be reconsidered and given to the Tasmanian intrastate service.

If either TAA or Ansett Transport Industries is not willing to operate some of the more difficult services around Tasmania but still wish to scoop off the cream between Hobart and Launceston, obviously there will have to be some rethinking on their position. I understand that the current licence expires in 1974. Tasmanians are just as entitled to be able to fly to their north-western and western regions as other Australian citizens in any other State in the Commonwealth are able to fly to remote areas in their States. The Tasmanians will not tolerate a situation where the 2 mainline operators provide the services that they want to operate to the exclusion of needs in other parts of the State. If it becomes necessary, these services will be operated in Tasmania by Tasmanians.

I issue a warning that although basically the 2-airline policy has served this nation reasonably well over the years, it has imperfections. Those imperfections ought to be ironed out of the present policy. I hope that as a result of the present rethinking by the Government, action will be taken without fear or favour. I trust that the Government will be not bogged down with concern about whether we are pitching for Ansett Transport Industries or for TAA. What must be done is to provide the best aerial services in Australia for the majority of Australians.


The PRESIDENT - In order that there be no confusion by honourable senators who have entered the Chamber since the second reading debate on this Bill began, I should like to inform them that we are dealing with Orders of the Day Nos 11 and 12. By agreement of the Senate they are to be debated concurrently. Senator Wriedt has circulated an amendment which relates to Order of the Day No. 12, and I have assumed that his foreshadowed amendment will be dealt with formally under that Order of the Day. I trust that the Minister will bear this in mind when replying to the debate.







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