7th Parliament · 2nd Session
Tho President (Senator the Hon.T. (livens) took the chair at 11 a.m., and read prayers.
– I ask the Acting Leader of the Sonate whether, before the Nauru Island Bill is considered in Committee, he will endeavour to obtain for honorable senators the cost of freight from Nauru Island to Sydney or to England, the cost of labour engaged in the production of phosphatic rock, . and particulars of interest of that kind which will enable us, when dealing with the Bill in Committee, to consider it with more information than we had on the second reading.
– And what we are likely to have to pay for it.
– I am afraid there is no chance of obtaining that information.
– I wish to give honorable senators the fullest information concerning the Bill. If any honorable senator will intimate to me what information he specially desires, I shall do my host to obtain it before the consideration of the Bill in Committee is resumed.
– I ask the Minister to obtain, if possible, information as- to the cost of mining and placing the phosphatic rock f.o.b. at Nauru Island; the cost of freight from the island to Australia ; the cost of treatment of the rock in Australia; and the cheapest possible price at which it can be supplied to our farmers.
– I should like to add to Senator Gardiner’s request one for similar information under pre-war conditions.
asked the Minister representing the Minister for Trade und Customs, upon notice -
Have the Government yet appointed a Director of Navigation; and, if so, is the officer a landsman or a Bailor?
– The appointment of a Director of Navigation has not yet been made .
Senator MAUGHAN (for Senator
Ferricks) asked the Leader of the Government in the Senate; upon, notice -
– The answers are -
Motion (by Senator Russell) agreed to-
That leave be given to introduce a Bill for an Act to amend the Commonwealth Electoral Act 1918.
Order of the Day for the resumption of the debate on motion by Senator Pearce, “ That the papers be printed,” read and discharged.
Bill received from the House of Representatives.
Motion (by Senator Russell) proposed - .
That so much of the Standing and Sessional Orders be suspended as would prevent the Bill being passed through all its stages without delay.
– I have no desire to initiate a discussion on the suspension of the Standing Orders, because I assume that it is not the intention of the Government to rush through measures of this importance. So far as this Bill is. con- . cerned, so long as provision is made for carrying it through all its stages without unnecessary delay, I assume that the business of the Senate will be proceeded with in the usual way. Ifthat be the intention of the Government, I shall offer no objection to the . suspension of the Standing Orders.
– I wish only to go as far as the motion for the second reading of theBill.
– I understood that that was the position. I wish to fee) assured - that the Government do not intend to take advantage of their majority to preventthe fullest discussion of measures of this kind, the importance of which cannot be over-estimated. With the Minister’s confirmation of what I anticipated will be the method adopted by the Government, and the expressed intention to give an opportunity for the discussion of the Bill. I shall not object to the suspension of the Standing Orders.
– Am I to understand that the motion submitted specially relates to the Bill which has just been received by message from the House of Representatives ?
– The motion applies only to that Bill.
– I wish to be able to move the second reading of the Bill’ today, and then adjourn the debate until next week.
– I hope that in this chamber of review there will be no attempt on the part of the Government to push this measure through in the indecent fashion in which it was pushed through in another place. I think that a matter so grave as the amendment of the Commonwealth Constitution should not he rushed through either Chamber of this Legislature. I hope that this Bill will’ not be passed in a hurried or perfunctory fashion by the Senate, but that it will receive the fullest discussion. Whilst I have no wish to embarrass the Government in any way, and 1 am quite prepared that the will of the people of Australia shall be expressed in due course in regard to matters which appear to many to be so important, I must say that if I do not oppose the motion for the extension of the Standing Orders, it is because I take it that an honorable pledge has been given by the Minister that, in accordance with the ordinary procedure in this Chamber, the fullest opportunity for discussion and ventilation of the provisions of this Bill will be afforded. I hope’ that no attempt will be made to rush the measure through in a. manner unworthy of the dignity of the Senate.
– And also that we shall not be asked to -consider it at unreasonable hours.
– Yes, I echo the request for reasonable hours.
– The motion is not submitted for the purpose of restricting discussion, but in order to save time in preparing for the consideration of the Bill next week.
– We do not want to have all-night sittings over it, either.
– I intend, if the motion be agreed to, to proceed with the Bill so far as to move its second reading, and I shall then agree to the adjournment of the debate on that motion. That will give honorable senators an opportunity to. look through the Bill during the week-end. I trust that they will make the best use of the week-end, so that we may be able to push on with, the consideration of the measure next week, and deal with it within a reasonable time.
Question resolved in the affirmative.
Bill (on motion by Senator Russell) read a first time.
– I move -
That this Bill be now read a second time:
Most of’ the matters dealt with in this measure will be regarded by honorable senators as very old friends, whom they have met very often.
– It is to be hoped they will receive the same treatment as before.
– The modifications of previous similar’ proposals provided for in this Bill will probably be of more interest to honorable senators than will the proposals for amendment themselves. The first proposition is to amend section 51 of the Constitution by omitting from paragraph i the words “ with other countries and among the States,” and by adding at the end, “Provided that the alteration of this paragraph shall not be construed to empower the Parliament to make laws with respect to the control or management of railways the property of a State, or the rates or fares on such railways.” As honorable senators are aware, under the Constitution the Commonwealth is prevented from legislating in connexion with trade and commerce except with other countries and between the States. Owing to the many limitations that have been placed upon the Commonwealth, our powers in the direction of trade and commerce are, for all practical purposes, worthless. While we have the nominal power to legislate in regard to trade and commerce, that power virtually ceases at the Customs House. It has been pointed out from time to time that Australian commerce is a matter that cannot be dealt with on geographical lines, and yet it has been impossible to have a uniform law throughout the Commonwealth. The Commonwealth has not to legislate for other than Inter-State trade. It is generally admitted that there should he one control, because the State authority operates only within the borders of the State and the Commonwealth cannot interfere with the internal trade and commerce of the States. It is desired, therefore, to place trade and commerce, with certain limitations, under one national authority. It is true that our present power goes a long way, but it is desired to extend it, and we should trust the Federal authority, as was done in the case of Canada. It can be safely assumed that the Commonwealth will exercise its powers with wisdom and judgment, and not endeavour to interfere with purely State matters. It is hopeless to proceed in an effective way under present conditions, and I feel sure that the bulk of our honest traders recognise that the present limitations are undesirable. The present Bill is a step in the direction of making this a National Parliament in everysense. Trade and commerce is the life blood of any nation, and to say that a National Parliament shall deal only with trade and commerce between State and State destroys its national powers. Nearly all important questions come under the heading of trade and commerce, and we are called upon to tolerate a ridiculous position so long as this Parliament is deprived of its true national rights.
– It is not thought so in America, which has a population of 100,000,000, and that country is one of the richest in the world.
– Probably America has a good deal to learn; and I believe if an amendment of the Constitution were submitted to the American people,the verdict would be in support of an alteration. The proposal in regard to trade and commerce is to leave the Commonwealth absolutely free to legislate in any direction it thinks fit, except as to State railways.
– Does not this virtually renew the powers given under, the War Precautions Act?
– It cannot make the Commonwealth more absolute.
– I am asked whether the powers underthis Bill are not the same as those given by the War Precautions Act. To some extent they are, but under the War Precautions Act there were certain limitations. The rights and privileges of the States were, not interfered with unless interference was absolutely essential under war conditions. It would have been an abuse of power to try to permanently enact by war legislation what we could do in a democratic way by amending the Constitution on a vote of the people.
– This Bill goes further than the War Precautions Act.
– There are certain limitations ; but we are under a moral obligation not to abuse our powers. It is not the intention to extend the powers of the Commonwealth, with the idea of destroying the rights enjoyed by the States under their Constitutions. Although there are limitations upon us we may find it essential to use powers similar to those conferred upon us during the war period.
– This Bill confers such powers.
– It will if it is indorsed by the people; but, subject to certain limitations. Its provisions shall not be so construed as , to empower the Parliament to make laws with respect to the control or management of railways the property of a State, or to interfere with . the rates or fares on such railways. That is a sound proposition, because the railways are within the States and are under public control.
– Is not State trade, of which the railways are an instrumentality, already under democratic control?
– Yes, subject to certain limitations. A State cannot conduct trade and commerce ‘beyond its own borders, and under existing conditions the Commonwealth has no power to interfere within the borders of a State. The power requisite for the efficient government of Australia does not exist to-day. Section 51 of the Constitution is also amended by omitting from paragraph xx the words “foreign corporations and trading or financial corporations formed within the limits of the Commonwealth,” and inserting in their stead the words, “ corporations, including (a) The creation, dissolution, regulation, and control of corporations; (b) corporations formed under the law of a State, including their dissolution, regulation, and control’; but not includingmunicipal or governmental corporations, or any corporation formed solely for religious, charitable, scientific, or artistic purposes, and not for the acquisition of gain by the corporation or its members; and (c) foreign corporations, including their regulation and control.” That is to give the Commonwealth Parliament complete control over corporations.
– It gives power to deal with profiteers.
– It includes all corporations or firms operating under State laws to-day. -The decision of the High Court is that we have no power to control corporations operating in more than one State. Now, practically 75 per cent, of the trade and commerce of Australia is controlled by Corporations operating in more than one State, and, therefore, the States have control over the 25 per cent, of trading concerns conducting business within their borders.
– That is the reason why we have not a uniform company law.
– That is one reason. We are excluded from the field altogether. It is ridiculous to have different company laws in the various States.
-Why have you not passed a uniform insurance law; you have power to do that.
– I am quite prepared to use my influence in that direction. Clause 4 provides that section 51 of the Constitution is to be further altered by omitting from paragraph xxxv the words, “ conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State,” and inserting .in their stead the words “ industrial matters, including (a) labour; (6) employment and unemployment; (c) the terms and conditions of labour and employment in any trade, industry, occupation, or calling; (d) the rights and obligations of employers and employees; (e). strikes and lockouts; (/) the maintenance of industrial peace; and (g) the settlement of industrial disputes.” That is to give complete power, so far as it can be defined, for the . Commonwealth to deal with industrial matters. These are questions which affect the life, health, and well-being of the workers of this country. Any one who ‘will give a moment’s consideration to this matter will clearly recognise that the biggest problem facing, ‘not only Australia, but the whole world, is that of industrial unrest. With perfect candour I can say that, considering the war conditions and the lack of effective machinery for dealing with industrial disputes, I am not at all surprised at the- unrest prevailing. Under our present system our Arbitration Courts are congested, and many organizations have to wait ten or twelve months before their cases can be heard. It is impossible to get a common rule, and, in consequence, large numbers of employers have to be brought before the Court. Conditions such as that should not obtain in any democratic country. This proposed amendment of the Constitution will give the Government power to legislate on industrial matters in any direction they think fit. It is not intended to interfere with such local matters as can be effectively dealt with by the States, but to use the power for national purposes in connexion with the control of large industries where there are likely to be disputes. The work of the Arbitration Court may have to be extended, but I hope the far-reaching powers will enable more rapid and, may I say, just decisions to be given. The laws controlling seamen’s compensation operate whilst the men are working within a State, ‘but if they should go beyond the limits of one State there is no power to legislate in their interests.
Clause 5 provides that the Constitution is to be altered by adding at the end of section 51 the following paragraph: - “ (xl.) Trusts, combinations, monopolies, and arrangements in relation to - (a) the production, manufacture, or supply of goods, or the supply of services; or (&) the ownership of the means of production, manufacture, or supply of goods, or supply of- services.” This power will enable us to deal with the distribution, for instance, of superphosphates if we so desire. Although we possessed this authority under the War Precautions Act, it is necessary that it should be embodied in our constitutional powers. There may be a desire to continue certain of the trading operations of the Commonwealth for a year of two. The people interested in the Butter Pool, for instance, might wish to continue the present arrangement. If so, we should have the right, as a Government, to cooperate with that or any. other industry. At present there is some doubt as to our power to trade in certain directions, notably in the production of cloth by our woollen mills. But, in view of the allegations of profiteering and an absolute shortage of material, there can be no doubt at all as to our moral right to utilize these national enterprises in the interests of the people.
In the 1915 proposals power was sought to include railway servants. This ppwer is not sought for now; but- I point out that these amendments need not be regarded as the last effort in this direction. Personally, they do not eo so far as I desired but an absolute majority of the States and of the people is required to amend our Constitution, and as three unsuccessful attempts have been made already, the present compromise may be accepted in order to. achieve some results. I believe in preserving the spirit of our Constitution by recognising that certain powers belong of right to the Commonwealth, while certain other powers rest with the States. These powers should not be exercised by Federal and State authorities concurrently. They belong either to one or the other legislative authority, and I believe that those matters which belong properly to the Federal sphere should be brought within the ambit of our Constitution. I have no hesitation in commending this proposal, and I believe the people will give an almost unanimous vote in favour of it, because it represents a compromise in regard to certain questions, and if adopted will give ussomething resembling a national Constitution.
There is a limitation of the period within which the powers now asked for may be exercised, unless a certain course of action is taken.
– Have we any constitutional power to pass amendments, of the Constitution limiting the period of their operation ?
– I do not think there is any doubt on that point. The proposed amendment will be of a temporary nature because it is desired that a democratic Convention shall be summoned at an early date to review the Commonwealth and States Constitutions, but we are unable to wait until that Convention gets to work, as it is necessary to deal at once with certain urgent problems with which Australia is faced. After the experience we have gained in recent years I feel confident that an improved Constitution will emerge from the proposed National Convention. Concerning the point raised by Senator Gardiner, I remind him that in relation to certain matters limits were fixed in the Constitution when it was adopted, and as we are assured of the co-operation, of the. States in endeavouring to secure the amendments now proposed, I do not think the question of constitutionality is likely to be raised.
– But there is no provision in the Constitution vesting us with authority to make constitutional amendments for a limited period.
– There was a limitation of time in the Constitution concerning the States in Tegard to the per capita payments and other matters. The Convention which is proposedto be summoned will be a distinct driving force in the amendment of our Constitution to meet future needs.
– But is this hot a democratic Parliament ?
– Then what advantage is to be gained by the election of a Convention ?
– The people are entitled to know what is ahead of them. If they were informed that members were to be elected for the purpose of amending the Constitution, they would give particular attention to the constitutional views espoused by the several- candidates. We appear to have secured unanimity with reference to these proposals. While our friends opposite may think,perhaps, that they do riot go far enough, otherhonorable senators believe, no doubt, that ‘hey go too far, but they may be regarded as a working compromise for. thepurpose of dealing with the critical situation facing Australia in common with other countries of the world, and there is, I believe, a general desire to have them incorporated in our Constitution.
– Would there be any objection to the views of the extreme section’ being submitted to the electors side by side with the Government proposals ?
– I think that, in regard to our . National Constitution, there is no greater extremist than I, but I recognise that we are more likely to do something in the interest of Australia by the adoption of a reasonable course1. I- believe this Bill will achieve our- purpose.
Debate (on motion by Senator Gardiner) adjourned.
In Committee: Consideration resumed from 2nd October (vide page 12931).
Clause 1 (Short title).
Senator RUSSELL (Victoria- Vice-
President of the Executive Council and Acting Minister for Defence) [11.42]. - Honorable senators yesterday asked for certain information concerning the agreement, but in the short time at my disposal prior to the meeting of the -Senate to-day I was unable to obtain it. I do not desire to finalize the measure to-day, but I would like honorable senators to pass it through Committee, and take it up to the third reading stage, so that on Wednesday next I may have an opportunity of furnishing the information asked for, and if, in the light of that information, they wish to recommitany particular clause, I shall favorably consider, their requests. If, also, there is any difficulty concerning any particular clause in Committee, and postponement is desired, I will endeavour to meet the wishes of honorable senators.
Senator GARDINER (New South
Wales) [11.43]. - I am pleased at the manner inwhich the “Minister is meeting us on this question and dealing with the Bill in a non-party way ;but I see a difficulty, in the absence of information asked for, in attempting to pass certain clauses which may be regarded ‘as1 vital. Honorable senators on this side have no desire, by discussion, to prolong thepassage of the Bill, but, before we pass it, we - as well as some honorable . senators on : the Ministerial isidewant . certain information. If the Minister will agree to thepostponement ofcertainclauses which may . involve lengthydiscussion untilthe information we want is obtainable, I see no objection to his arrangement, but if he expects us to pass the whole Bill through Committee, I must protest, and I am goingto call for a division on all clauses that in any way pledge us to an expenditure of money, without ‘knowing how far we shall be expected to go. I suggest that, if there are clauses upon which there is reasonable prospect of lengthy debate, those clauses he postponed. I assure the Minister that I shall not delaythe passage of the Bill next week. It is only reasonable that the debatable clauses should be held over until the fullest possible information has been presented to the Committee.
– There is wisdom in theremarks of Senator Gardiner. The discussion of the Bill demands the utmost care. We should be exceedingly cautious lest we involve Australia in a vast expenditure upon an unknown proposition. I concur in the fairness of the proposal to postpone debatable clauses. At the same time, honorable senators who may desire to propose amendments should be given opportunity to indicate them, so that the Minister might know what is in the mind of the Committee. All the wisdom of Parliament is not concentrated inthe Government.
Clause agreed to.
Clause 2 agreed to.
Clause 3 -
The agreement made between His Majesty’s Government in London, His Majesty’s Government of the Commonwealth of Australia, and His Majesty’s Government of the Dominion of New Zealand, in relation to the Island of Nauru (a copy of which agreement is set forth in the schedule to this Act) is approved.
Senator GARDINER (New. South
Wales) [11.48]. - This clause may involve prolonged debate. Its consideration to-dayshould be postponed. We should not be asked to approve of the agreement without firstsecuring the fullestavailableinformation. It is possible that,as an outcome 6f additional particulars supplied by the Government, my own. attitude towards the measure may be changed.
– I recognise the reasonableness of therequest, and am quite willing that consideration be postponed. This clause involves the main principle of the Bill.
.-While expressing my pleasure that the Minister should agree to postponement, I ask if he will be willing to hear the views of honorable senators with respect to suggested amendments? Clause 3 is really the essence of the Bill. It is my purpose to endeavour to amend it ‘by addingthe following words: -
Provided, however, that the Commonwealth of Australia reserves to itself the right to retire from ‘this agreement if it is found that the terms for acquiring the . rights of the Pacific Phosphate Company are not satisfactory.
– Is this measure, as it has been submitted to the Federal Legislature, identical with the Bill which the Imperial and New Zealand authorities have undertaken to introduce in their Parliaments? .
– I shall raise no objection to honorable senators indicating amendments which they may have in mind. I point out to Senator Thomas thatthe agreement set forth in the schedule bears the signatures of Mr. Lloyd George, Mr. Hughes, and Mr. Massey. I admit that the Commonwealth Parliament is in a somewhat awkward position. There may be a genuine desire and very good reason for altering the terms of the Bill and its schedule; but the fact remains that the agreement cannot be entered into until the Federal Parliament has ratified it in this measure.
Preamble of schedule agreed to.
Article 1 -
The administration of the island shall be vested in an . Administrator.
Thefirst Administrator shall be appointed for a term of five years by the Australian Government; and thereafter the Administrator shall be appointed in such manner as the three Governments decide.
The Administrator shall have power to make Ordinances for the peace, order, and good government of the island, subject to the terms of this agreement, arid particularly (but so as not to limit the generality of the foregoing provisions of this Article) to provide for the education of children on the island, to establish and maintain the necessary police force, and to establish and appoint Courts and magistrates with civil and criminal jurisdiction.
– I am not disposed to agree to the vesting in any one man of such enormous powers as are here indicated. I am aware that Mr. Lloyd George, Mr. Hughes, and Mr. Massey have set their signatures to the agreement. But neither Mr. Lloyd George nor Mr. Massey is the guardian of the Australian purse; this Parliament is the guardian. Before the terms of this Article are accepted, the Government should inform Parliament of the approximate cost and upkeep of the administration of the island. The appointment of an administrator will create an office, and involve the appointment of a staff. No one will expect the administrator to live on the island, year after year, without a change. No one will expect him to stick to his job on this little island quite so closely as the High Commissioner in London. The factor of health must be considered.
– The administrator might be a working supervisor on the spot.
– Such an individual would probably he more suitable than an administrator appointed from outside. I am convinced that if the good Australian money which is about to be sunk in this project were invested, say, in Western Australia’s timber and mineral resources, there would be vastly greater returns to the Australian taxpayer. Here we are about to bring into being another costly Department. I am anxious to learn the approximate sum to be expended upon the administrator, his office, and his staff.
– Why should the cost of administration be excessive?
– The administrator will need to be possessed of rather more than ordinary ability. We shall not secure a first class man, who will be willing to shut himself off from civilization, unless he receives a first class, salary. It is possible, of course, that the Government may appoint an official who is already on the spot. The Pacific Phosphate Company may have one of its own officers ready to take over the job.
– It may be a distinct advantage to appoint a man from the island who has had experience there.
– Such a man would probably prove an excellent Administrator. Under this Bill we are asked to accept conditions that we are not justified in accepting upon the information that is before us. I understand that Nauru is well-settled and well-equipped, and if one may judge from the plant which has been installed there, no greater output can be obtained from it than has hitherto been obtained by the private company that has been operating it.
– What is the formation of the denosits ?
– Rock, which, by some chemical process has received its phosphates from innumerable sea birds during the course of centuries past. The island has probably been submerged at some time or other.
– Senator Bakhap cleared up that matter yesterday.
– I am merely endeavouring to put the position as it presents itself to me. Recognising as we do that the coral reefs in this locality, have become impregnated with phosphates in the way I have described, we cannot fail to realize that the phosphatic deposits of the island do not continue to any depth.
– Does tie honorable senator know the statement has been made that the present output from the island can be increased threefold without any trouble whatever?
– Prom reading articles which have been published in the press, and speaking without prejudice, I am disposed to think that no greater output can be secured from the island annually than has been obtained by the company which has been operating these deposits- In addition, a- good deal of the island has already been worked out.
– The honorable senator cannot tell me that.
– I am speaking” of information which I have obtained from reading. Some of the articles which I have read speak of the “worked out portions.” Of course, I can quite understand the attitude of honorable senators who are content to authorize the expenditure of the people’s money upon faith alone. To them, the fact that Mr. Hughes entered into this agreement in London is a sufficient warrant for accepting it blindly. . I do not intend . to argue with such persons.
– Mr- Hughes is hot the only signatory to it.
– So far” as Australia is concerned he is. Let us suppose that we were asked to authorize the expenditure of Commonwealth money upon the Kalgoorlie mines.
– The honorable senator’s remarks are somewhat wide of the article under discussion.
– The article itself is so wide that it really opens up a very extensive field of debate. It really involves the acceptance or rejection of the Bill itself.
– If the honorable senator is allowed more than ordinary latitude upon this article, I have no guarantee that the other articles will be skimmed over.
– And I do not intend to give you any such guarantee. Let us suppose that a proposal were submitted for the appointment of an Administrator for Kalgoorlie because of the prospective value of its reefs, and the gold which was to be obtained from them. Would we not send the most expert assayers there, would we not have every reef tested, and would we not have the old workings thoroughly examined in order to ascertain whether they had been entirely exhausted. But under this Bill we are asked to appoint an Administrator in connexion with a mining venture, although not one man in this Chamber knows the value- of the deposits which the Government propose to operate. I am not going to vote for the appointment of an Administrator in the absence of knowledge. If the Government have not that knowledge at their disposal, it is a very good reason for deferring the consideration of this Bill. We .have to accept responsibility for our action, and yet we are asked to sanction the appointment of an Administrator to manage a concern of the value of which we know absolutely nothing.
– The question of the appointment of an Administrator is certainly an important one, but at the present stage it would be ‘very unreasonable to expect the Government to put forward a clear cut system for the working of these deposits. The island has just been taken over by the three high contracting parties to the agreement-‘ Anything, therefore, in the nature of a working system is practically impossible. I have no doubt that in time such a system will be evolved. In this connexion I would remind honorable senators that we have recently added to our Pacific possessions very considerably. Hitherto we have controlled Papua, which constitutes only about a third of the island of New Guinea. But now we have secured twothirds of it ; and in addition we have obtained some of the other possessions of Germany in the Pacific.
– This Bill does not provide for the administration of those islands.
– It provides for the administration of Nauru, which may be part and parcel of the administration of the Pacific Islands. It is ridiculous to assume that an Administrator will be sent to Nauru with all the paraphernalia of Vice-Royalty. The administration will be carried on from a bigger settlement.
– Is not this agreement specifically limited to Nauru ?
– The administration of the island may. be either from Rabaul or Port Moresby, or some other central point. It would be ridiculous to establish an Administrator at Nauru Island.
– I can assure the honorable senator that that is what the Bill provides.
– If anything of that kind is contemplated I shall be indeed surprised. My own idea is that we shall have to establish something in the nature of a Department at Nauru for the working of these phosphatic deposits.
– Butthe Pacific Islands are our own, whereas: the mandate for Nauru Island belongs to Britain.
– The mandate has been given to the British Empire, not to Britain.
– But Australia has no voice in it.
– Oh. yes. The Governments of New Zealand, Australia, and Great Britain have equal rights in its administration. That administration, I think, will consist merely of a working staff under the Administrator at Papua or the Pacific Settlement. To go further than that would be ridiculous.
– What did the French do in New Caledonia ?
– They did quite a number of things. The honorable senator might as well ask me what Gladstone did in 1873. His interjection is very like the flowers that bloom in the spring - it has nothing to do with the case. It would be too much at this juncture to expect the Government to be . prepared with a complete scheme for the administration of the Pacific Islands. We can assume that they will be guided by common sense, and that affairs at Nauru Island will probably be controlled by a staff such as would be appointed for the conduct of a Department of Works.
– I cannot regard- the appointment of the Administrator- as a matter of so much importance as Senator
Gardiner suggests.For once I am in agreement with Senator de Largie, and I believe that for the first five years there is nothing to prevent the Administrator of Nauru Island being, in fact, the person charged with the administration of our mandate in respect to all the captured German Possessions in the Pacific. If that course be followed, there can be no question of the establishment of an extensive staff as an exclusive charge upon the administration of Nauru Island. No Government in its senses, and I do not assume for a moment that our National Government is not in its senses, would think of establishing a special Administrator at Nauru Island, with the whole paraphernalia of an Administrator of large colonial Possessions, for the control of a business enterprise, which, after all, in respect of turnover and. profit, would be of no greater importance than a big boot industry or a biscuit factory. The Government will have the responsibility of cutting their coat according to their cloth; and I see noreason why this enterprise should be loaded unduly with administrative costs, even under this agreement. In the circumstances, T suggest to Senator Gardiner that the matter is not of sufficient importance to justify an absolute “No” to this proposal. There are, however, in the schedule two articleswhich I shall ask the Minister to postpone.
– The honorable senator will not be in order in referring to them until we come to them.
– I shall refer to them later on, and will confine the further remarks I have to make on the Bill to those two articles.
– On the point raised by Senator Gardiner, let me say that the honorable senator will derive some comfort if he will read the next article of the agreement. Not a penny piece will leave this country for the support of the persons who will be appointed to control affairs at Nauru Island. It is apparently intended that this shall be an ideal communal proposition. Those who will be in control must make the proposition pay, or they will get no salary.
– The agreement does not say so.
– The agreement provides -
All the expenses of the administration (including the remuneration of the Administrator and of the Commissioners) , so far as they are not met by other revenues, shall be defrayed out of the proceeds of the sales of the phosphates.
It is clear from this that the partners to this agreement -Great Britain, New Zealand, and the Commonwealth- are not to be called upon to pay anything in the shape of a subvention jto this proposition. It must pay for itself.
-So faras the expenses are not met by other . revenue.
– That is to say, other revenue derivable from the island. That is not a reference to the revenue of the Commonwealth, or we should otherwise be wasting the . time of the Senate in considering this proposal, and the three contracting parties are being deluded.
– If the products of the island, including phosphates, copra, and all else, do not pay the working expenses of the administration, will the Administrator haveto go without pay?
– Yes, absolutely, according. to this agreement.If he does not make the proposition pay, he must himself go without pay. This must be’ made a payable proposition,or his salary will suffer in proportion.
– If the expenses are not met, the deficitwillbe made up by adding to the ‘price of phosphates to the users.
– That is a most important point, and I shall refer to it. First of all, it is laid down. that Nauru Island, as a phosphate-producing territory, shall pay the cost of administration. This is to be met out of the proceeds of the sales of phosphates and other revenue derivable upon the island. It is conceivable that the man in charge of this island may adopt faulty business methods, or surround himself with an unnecessary staff, at heavy expense, and so load the cost of phosphates derived from Nauru as to increase the price to farmersin this country, in Great Britain, and in New Zealand. In the event of anything of that kind, I suggest that recent experience in Victoria, and especially at Echuca, proves that the farmers of this country will kick very effectively if on any such accountthey are called uponto pay an excessive price for phosphates. We are concerned in seeing that Nauru Island is the valuable proposition that it is supposed to be, and that it shall remain a valuable asset for the producers of this country. That it canonly be if we can obtain phosphatic rock more . cheaply from . that source of supply than we could obtain it elsewhere.If our farmers cannot get cheaper phosphates from Naur.u Island than they could get elsewhere, this proposition will be ofno use, and we shall beonly wasting our time in considering it. Senator Gardiner is perfectly justified in inquiring. into . the financing of this proposition; but he will see that, under the agreement, Nauru . Island is to rest on. its own base, and be . responsible . for its own debts. If this proposition is not worked economically and onsound business lines, those administering it must go short of theirsalaries to theextent of theirfailure to make it a payable proposition. If the price of phosphates is loaded by the expense of an unnecessary administrative staff, our producers will have their remedy, and it will be to obtain phosphates from some ‘Other sources. We shall have that check upon the cost of administration at Nauru. Unless the management ison economical andbusiness lines, it is only a delusionand a snare to tell us that the Nauru Island proposition is a good one. I have no doubt that it will all come out right in the wash. If those in control of the island do not behave themselves, we shall not get a cheaper phosphate forthe producersof this country; and, ifwe do not, all thetalk about Nauru Island is only fudge. Those incontrol will, under thisagreement,be inthe -position of a man who, under an did Norwegian law, if he would not work,was put into a bath,into which water was run so fast that he had to ‘keep on baling hard -to save his life. These people ‘will have to work, or they will get no pay. Out farmers will watch this proposition, and, if they cannot obtain phosphatic rock from Nauru Island at a reasonable price, they will obtain it from Ocean Island, Christmas Island,’ or Japan. We have some responsibility to see that our producers get cheaper phosphatic. rock from Nauru Island than they, can get elsewhere, and thatcannotbe secured if the. cost of management of the island is not kept within reasonable bounds.
– I cannot agree with the opinion expressed by honorable senators opposite that the Government need not appoint a special Administrator for Nauru Island. I do not think it is possible, under the terms of the agreement, for the administration to be conducted from Rabaul, Port Moresby, or any such place. If that were possible, there is no reason why it should not be conducted from Melbourne; I direct the attention of honorable senators to the second paragraph of Article 1 of the agreement, which provides that -
The first Administrator shall be appointed for a term of five years by the Australian Government; and thereafter the Administrator shall be appointed in such manner as the three Governments decide.
If, as Senators de Largie and Pratten have contended, the Administrator of our mandate for the captured German Possessions in the Pacific generally might also be the Administrator of Nauru, how could the three Governments be given a say in the appointment of the Administrator after the first period of five years? The other parties to the agreement could have no voice in the appointment of the Administrator of our mandate for the Pacific Islands.
-They would acquiesce in our appointment.
– The agreement does not provide for that, and I point out that provision is made for the appointment of three Commissioners to keep the scales evenly balanced between the three parties to the agreement, so far as their respective interests in the matter are concerned. The Administrator may be a working manager, and probably it would be better if he were; but, in my opinion, according to the terms of the agreement, he must be stationed on the Island of Nauru.
– The first Administrator is to be appointed for a term of five years by the Australian Government, and thereafter the Administrator is to, be appointed in a manner to, be decided by the three Governments, and I cannot see how, in the circumstances, he could, at the same time, be the Administrator of our mandate for the Pacific Islands generally. Article 1 provides that the first Administrator shall be appointed by Australia for five years, and thereafter in such manner as the three Governments decide. He must be a separate individual from the general Administrator of the Pacific Islands. The Article continues-
The Administrator shall have power to make Ordinances for the peace, order, and good government of the island, subject, to the terms of this Agreement, and particularly (but so as not to limit the generality of the foregoing provisions of this Article) to provide for the education of children on the island, to establish and maintain the necessary police force, and to establish and appoint Courts and magistrate^ with civiland criminal jurisdiction.
Are these institutions to be supervised from Melbourne, Rabaul, or Papua?
– Who is the Administrator of Woodlark Island?
– The Administrator of New Guinea. There was no such schedule in connexion with the control of Woodlark Island.
– It was handed over to the Commonwealth’ Government, and Nauru could be placed under the control of Judge Murray.
– There are halfadozen islands near Rabaul similarly controlled.
– Not highlydeveloped islands like Nauru.
– The members ?if this partnership are all to have a voice in the supervision of their interests. On the island of Nauru various institutions are established, and the supervision of them must necessarily entail a good deal of work and responsibility. I submit with all seriousness, and some degree of soundness, that these institutions should be under the control of a separate individual. The Article states that the Administrator shall have power to provide for the education of children on the island, to establish and maintain the necessary police force, and to establish and appoint Courts and magistrates with civil and criminal jurisdiction. Institutions of this nature in such an outoftheway place could not he supervised or effectively controlled at a distance.
– It is done in the case of Rabaul. .
– It has been done in the Northern Territory, and we know’ that the control was anything but satisfactory.
– That is a strong argument in favour of this Article. The Northern Territory failed when the Administrator was in residence there.
– We know the evils that existed in the Northern Terri.tory. where the Administrator was not actuated by a desire to do justice to the people in that Territory. In administering Nauru from a distance there is the possibility of official corruption. The irregularities that existed in the Northern Territory were apparently unnoticed in Melbourne by the Government of the day, and it is easy to imagine how much more corruption might go on at Nauru if the Administrator were not there to supervise operations. The Northern Territory and Papua are closer, but although we are prone to think that w© know what is going on there, we really do not.
– The average magistrate in Papua could supervise the work.
– I do not think that it is the intention of the Bill, and I doubt very much the wisdom of giving a magistrate the full powers contained in this Article. It will be seen that the Administrator shall have power to make Ordinances for the peace, order, and good government of the island, and if Senator de Largie favours giving that power to an ordinary magistrate resident on one of the other islands, great risks would be entailed. In the best interests of the supervision of the island, an officer should be resident there with the whole responsibility upon him, and the duty of devoting his full time to the welfare of the undertaking. Even if he were paid a high salary, it would be economical in the long run. I am very afraid of what may occur in these outlying places judging by what I know has gone on in the Northern Territory, which is much closer to the Seat of Government in Melbourne. I very much doubt the wisdom of giving these officials the power to make Ordinances, even if such Ordinances have the sanction of the official, head, to say nothing of the sanction of this. Parliament. Administrators aTe often a law unto themselves, and I do not think it wise for this Parliament to give an Administrator such extensive powers. It was a mistake to allow the Administrator of the Northern Territory such extensive powers. There is much in the argument of Senator Gardiner, and I am not prepared to sup port the statements of Senator de Largie and Senator Pratten.
– It will be absolutely necessary to appoint a responsible officer, but it does not follow that such officer should be continually resident on the island. If there had not been a valuable deposit of phosphatic rock on Nauru, the island would have been under our sole control, and included in our mandate. If Nauru had been included in the mandate a resident Administrator would not have been appointed, and this island would have been controlled from Rabaul, in conjunction with other adjacent islands. Although it may be necessary to have the operations carefully supervised, it does not necessarily follow that the supervising officer shall reside there continuously. In my opinion, Senator Ferricks’ argument does not hold good. I can clearly see that there is full power for the Administrator of the other islands to administer Nauru, and the charge of administration shall be apportioned between the three respective Governments. The cost of administration will not be a charge upon the business proposition. The governmental cost will certainly be controlled by the terms of the Peace Treaty, and if the island were included in our mandate we would be solely responsible. I do not think the cost of administration should be made a charge i. pen t he industry. If it were so, we should be embarking upon an entirely new proposition, and forming an independent State. I do not think that that is the intention of the agreement. In regard to Senator Ferricks’ remark in connexion with the appointment of an Administrator, I cannot see how the other contracting parties can be excluded from the agreement. Article 1 provides that Australia shall appoint an Administrator for the first five years, so Senator Ferricks must see that there can be no permanent exclusion. He bases all his argument on the fact that the three Powers are specified. A private. . company, partly British and partly German, was working the deposits, although the island was really in possession of Germany.
– And managed from Berlin.
– The Minister, said that the German interests had a voting majority in the company.
– If the company had been managed from Berlin, then there is nothing in theargument that it could not be satisfactorily managed from some point nearer to the deposit.
– Tell me what necessity there is for the appointment of an Administrator ?
– Because some one must beresponsible for the undertaking.
– But we could have the Minister here, on the floor of the Blouse.
– Butsomebody must be responsible for the good conduct of theconcernand general well-being of the inhabitants.
– There is no reason why the Commissioner to be appointed should not be the Administrator ofNew Guinea or Papua.
– That is my argument. I am endeavouring to distinguish between what I might call the political control of the island and the industrial control, in relation to these phosphatic deposits. I see nothing to object to in the article under consideration.
.- I callthe attention of the Committee tothe contradictory nature of two of the articles. In Article 1 we are told that the administration of the island is to ibe vested in an Administrator, to be appointed for, in the first instance, a term of five years ; and that he shall have power to make Ordinances for the peace, order; and good government- of the island. I strongly object to any individual being vested with power to make Ordinances which are. not to be submitted to Parliament for approval.
– Which Parliament?
– This Parliament.
– We are only one of three partners interested in the island. How is it practicable to have an Ordinance laid on the table of three Parliaments?
– We have worked in conjunction with other Parliaments before. In 1912 we passed the Navigation Act, but by the Imperial Government we were not- allowed to proclaim it. No State in Australia can pass a Navigation Act without the consent of the Imperial authority’. The Governor-General has to reserve all such measures for the Royal assent. The agreement provides for the appointment of an Administrator, who shall have certainpowers.
– What are the powers ?
-The appointment of native police, for one thing. We are also told thatthe island is to be selfsupporting, and that as a matter of fact, we are going to make a profit out of it. I directattention to the fact that in Article 11 the price of phosphates, f.o.b. , is to be fixed by the Commissioners on a basis to cover expenses and cost of management; but the island itself will only contribute towards the cost ofmaintaining police force, magistrates, a Judge, interest on capital, sinking, fund, and so on. It appears, therefore, that Articles 1 and 1 1 are somewhat contradictory, and the schedule altogether has been loosely drafted.
– I am glad that opened up the. discussion . of the schedule, because Senator Guthrie has drawn attention to the enlarged powers to be invested in the Administrator, who, without any check from this Parliament, may , draft Ordinances which willbecome the law of the land. Suppose we send there a man who thinks it is a good thing to flog the natives ?
– The mandate will not allow that to be. done.
– Well, suppose the Administrator thinks it desirable to inflict some other form of punishment not mentioned in the mandate, and he drafts an Ordinance accordingly. What power is there to prevent him ? Will the Minister accept an amendment tothe effect that all Ordinances must be laid on the table of the Senate?
– I wish I could do that; butas three Parliaments are concerned, it would not be practicable.
– Senator Guthrie has pointedout that we will have no control over the Administrator in regard to the Ordinancesmade for the man working on the island, and Senator de Largie has put- up the extraordinary propositionthat the island can be administered from some otherplace.
– Why not? .
-Forthe simple reason that theAdministratoror his deputy, must be on. the spot, because this island is highly developed industrially.
– I suppose it is not any more highly developed than Woodlark Island or Papua.
– Does the honorable senator know that there are Japanese doctors and Australian nurses working in the same hospital, much to the discomfort of the nurses ?
– And all within a’ small area.
– Yes, too small. There are also Chinese labourers, Indian Coolies, Japanese, English, Irish and Scotch labourers; all, according to a magazine article I read on. the matter, ideally provided for. Any one acquainted with’ life on the islands knows that the natives have such a love for law that the most trivial dispute between husband and wife will be taken to the Administrator ; and if we have an Administrator with common sense who is able to settle all these disputes, we will get good service and create a healthy public opinion there. We should have a tactful man, because in an island only 5,000 acres in extent, and containing a population of about 5,000, disturbances involving the Commonwealth in serious difficulties might easily be created.
Sitting suspended from 1 to 2.30 p.m.
– Some of the arguments’ raised during the course of the debate have been amusing. Senator Lynch indicated how little he understood the duties of administration when he suggested that the expenses involved by administration should be met out of the proceeds ofthe island. He inferred that if the island did not pay, the Administrator would get no salary. That is an absurd proposition. No administrator would accept the post on such conditions. The Administrator, will have nothing to do with working the deposits’. He will find his hands full in his purely administrative and magisterial capacities. He will have the practical governance of a civil population, which will include Australians, Americans, Chinese, Japanese, and Indians. If any profits are made in working the deposits, no doubt they will go towards paying the cost of administration.
– Not only profits, but expenses must be met out of the charges’.
– Suppose that the Administrator’s salary is paid out of the charges, and that there is a loss on the whole undertaking. We would still be required to pay the Administrator’s salary. What will be the duties of the Administrator? Senator de Largie suggests that the Administrator of New Guinea could look after Nauru Island. His hands are more than full to-day. Another honorable senator has indicated that the job is merely one for a magistrate. It will be necessary for a magistrate to be on the spot all the time. The Administrator will need to take seasonal holidays, but the duties of a magistrate’ must not be interfered with by such interruptions. Considerations such as these must all be placed on the bill of costs. It is the duty of the Government to present a clear financial statement, and not to ask us blindly to agree to a proposition which, tomy mind, is highly objectionable. I have already said that the project savours of the activities of the rich uncle from Fiji. Although the great name of Lloyd George and the greater name of William Morris Hughes are attached to the agreement, that does not absolve the Federal Parliament of its obligation to investigate this gold brick scheme. The company which has been’ working the deposits has developed its plant in a most up-to-date manner. Even, so, I understand that the greatest quantity of phosphates despatched from Nauru in any one year amounts to 105,000. tons. I see no prospect of the’ three ‘Governments securing greater returns. If this were an ordinary mining venture, ‘no; one would put his money into it untilhehad secured the advice of investigatingexperts. I believe this Bill seeks toplay a confidence trick upon the people of Australia. If those confidence men who work the boats in Sydney and watch the trains for simple country visitors were to learn how honorable senator’s have swallowed this proposition, they would be waiting for us on the Senate steps. They would know where the “ mugs “ are.
– The trouble is that many “mugs” outside think that the confidence men are in the Senate.
– And that is often true; but the fact remains that honorable senators would not put their own money into this scheme without learning a great deal more about it than they know at present.
Senator de Largie twitted me with being a champion of private enterprise. I am not an advocate of communal enterprise when a proposal is so overloaded with risk that it may fail. How are fertilizers likely to become cheaper to the Australian farmer as the result of the joint operations of the three Governments ?
– Can you not trace the nefarious operations of the profiteer in this business ?
– I do not see them so far. The greatest quantity of phosphates which we can expect to receive in any one year, as our share of the output from Nauru, will be 42,000 tons. The people of Australia will, in effect, be middlemen. They will require -interest upon their money; and the farmer will have to meet the interest bill. I can quite understand Senator Lynch supporting the proposition if it is likely to provide farmers with cheaper (phosphates; but he must not forget that our farmers cannot expect to draw from Nauru more than 42,000 tons per annum.
– Why not more than that quantity?
– Australia’s share amounts to 42 per cent. The company has not succeeded in producing more than about 100,000 tons in any one year. Therefore, we cannot look for more than 42,000 tons as our annual proportion. Phosphate deposits are not valued by the ounce, as are precious metals. They are valued by the ton, and must undergo a series of ‘ processes before being ,placed ‘ upon the market. The labour involved in the production of a ton of fertilizers is probably infinitely greater than that employed to secure a quantity of gold or silver of equal value.
– There is not so much dead stuff to handle as in the mining of gold or silver.
– It is all dead stuff. The phosphatic rock must undergo almost innumerable processes of handling and treatment before it acquires a marketable value.
– Labour charges amount to a large proportion of the cost of a ton of phosphates.
– That is quite true. I am disgusted with the whole proposition. The Australian people must be considered a lot of simpletons. If Nauru Island were so situated that we could undertake activities to-morrow, and if it were merely a matter of transferring the phosphatic rock from the island to the Australian market, ready for immediate use, the project would still require cautious investigation. It has been suggested that the administrator should be a working manager. He can be nothing of the kind. His tasks will be altogether apart from the working of the phosphatic deposits. He will have to handle men ; he will require tact in solving difficult problems. Costly mistakes may be made if the administration of the island is left to an administrator stationed upon another island Possession 1,000 miles away. I hope honorable senators will realize that they are in danger of being tricked, and that the Australian people’ are likely to lose a very large sum of money.
– The remarks of the Minister (Senator Russell) and Senator Plain have suggested that if Australia fails to take advantage of the opportunity to secure a share of Nauru Island’s phosphatic deposits it may find itself in a quandary concerning where to secure adequate supplies.
– I did not indicate that for one moment. I said that our sources of supply might in the future become subject to monopoly.
– My impression was that the importance of bur ratifying this agreement lay in that it would assure to Australia a proportion of the phosphatic wealth of Nauru. But there are islands containing excellent phosphatic prospects lying much nearer to our coasts. Quite recently investigators have been pursuing their inquiries upon this subject, with the result that phosphatic rocks have been discovered in various places. Hoban Island, off the North Queensland coast, for example, has been acquired because of the existence of -such deposits there.
– It seems to me that my honorable friends opposite have been drawing the long bow in regard to matters which are not of very great importance. One of them inquired, “Where is the need for the appointment of an Administrator at all?” But I take it that there must be some head appointed, and that the’ Administrator will not have the status which some honorable senators seem to apprehend. I do not imagine that he will live on the island. The idea of affording Australia the opportunity to appoint the Administrator for the first term set out in the agreement is that a person may be appointed to the office who is already acting officially in some part of the’ Pacific. I would rather have one big man administering the affairs of all the Pacific Islands than I would have a dozen little men administering the affairs of some of those islands. I should strongly resent any proposal to rappoint a Governor to a small island like that of Nauru. Further, I do not think that the Commissioners to be appointed will live there. I do not expect to see more than a general manager resident on the island, with the Administrator visiting it now and again. My own idea is that none of these officers is likely to reside at Nauru. Some honorable senator spoke of the police powers of the agreement. But those powers are merely intended to enable us to deal with native labour. Under the mandate we undertake to protect the native - to keep alcoholic drinks away from him, and generally to give him a chance. It has been said that the Ordinances for the island should come before Parliament. I share that view, and I would point out that ordinarily regulations and Ordinances are subject to veto or amendment by Parliament. But in the present instance, if that practice obtained, the Parliaments of three countries would have an equal right to exercise the power of veto, and as a result we should never arrive at finality.
– We have much the same thing under our Navigation Act.
– The Administrator of Nauru will not have as much power as had many of the skippers under whom the honorable senator has sailed. The only permanent official who will be resident at Nauru will probably be a practical general manager of the works. The Administrator will visit it from time to time, and will have a launch in which to travel from island to island.
– A yacht.
– Why not a longboat?
– I have been a good deal in the Pacific, and have tra velled many miles in the Merrie England, which is a vessel of only180 tons. I admit that occasionally we experienced a knocking about, but upon eighty days out of 100 any boat can be loaded in the Pacific, the harbor facilities of which are not nearly as bad as they have been represented to be.
– Any vessel cannot be loaded at Nauru upon eighty days out of every 100.
– I am not so sure of that. For eight months of the year the winds blow steadily from the south-east. I can assure honorable senators that there is no intention on the part of Ministers to establish anything like a new form of government on the island. We are dealing with an agreement which has already been entered into, and if we do not. ratify it I fail to see how we shall ever achieve finality. I believe that we can get phosphates from other places, but the supplies are chiefly controlled by private enterprise. We shall be taking a big step forward if we can guarantee to our producers that they shall be able to secure ‘ their fertilizers at a reasonable cost. If any of the Nauru Island phosphates are sold to outsiders the profits so derived will be divided amongst the three high contracting parties. I take it that the plant, which is installed on the island ought to be adequate to all requirements. Hitherto, Great Britain has imported about 60,000 tons of phosphates annually from the Pacific. The fact that she has entered into this agreement shows that she intends to draw her supplies chiefly from Nauru Island. That will involve an immediate duplication of the plant already installed there, which, in turn, will mean increased production. The first thing that the three parties to this agreement have to do is to take possession of the island and all that is thereon. They will then be in a position to say to those who have interests there, “We are now prepared to discuss with you the amount of the compensation which we shall pay you for the acquisition of your rights.” Probably months will elapse before finality is reached upon that subject. This Bill will do little more than confer upon the Government the authority to negotiate. I think that Ministers may be safely trusted to guard the interests of the people in this matter. To my mind, a great opportunity is presented to. us, and. I feel sure that with every day which passes, we shall more fully appreciate the fact that in attempting to establish our basic industrieswe have sought to eliminate the dozen profitmongers who ordinarily stand between those industries and the producers. Therefore, I ask honorable senators not to press for an amendment of this article. They must trust the Government to make arrangements for the production of these phosphatic fertilizers at the lowest possible cost in order that the community as a whole may be benefited, and not merely a few individuals.
.- The more I learn of the conditions which obtain at Nauru Island the worse the proposal of the Government appears to be. In writing of the operations of the private company which has hitherto worked the phosphatic deposits therej the author of an article in Stead’s Review says -
Any one can see its balance-sheets, and from these we learn that the, actual net profit on the working during the year 1918 was £44,882 Is. 3d. This was made almost entirely on the sale of phosphate raised in Nauru and Ocean Island. As Ocean Island yields almost twice as much as: Nauru, we would be well on the safe side if we estimate the profit made by the company on its Nauru enterprise at £20,000 last year.
The Vice-President of the Executive Council appeal’s to think _ that the Government will be. able to deal with these deposits on a bigger scale than the company which has previously operated them.
– The islands were practically isolated during the war on account of the scarcity of shipping.
– Glancing hurriedly through the article from which I have quoted I learn that, although the Minister in the course of his speech on the motion for the second reading of the Bill, said the value of the company’s shares would be less than £3,000,000, the Commonwealth will have to pay at least that amount. In the circumstances, I suggest that he should consent to an adjournment of the debate until next week in order that he may ascertain for himself the facts connected with this proposition with a view to placing them before the Government. When the Prime Minister reads the criticism of this mear sure by honorable, senators he will surely recognise that. he. ought not to put his. supporters in the position of being obliged to subordinate their own judgments to party exigencies. Good government at the present time would certainly not. ask us to pay 42 per. cent. of £3,000,000 for this proposition, when it is clear that, the possibilities of increased profits are so small. This article says that the company make 6s. per ton profit, and if we have to pay interest on the millions which we are likely to have to pay the company, there will be no great margin left to enable us to provide cheapphosphates for the Australian farmer.
– Might it not be a matter of having phosphates ‘to supply to the farmers, irrespective of whether there was a. profit or notl
– My information from confidential documents is that the company made a profit of over’ 13s. per ton.
– When I come across an intelligently written article which, professes to deal with balance sheets and exact figures, and says where information on the subject is to be obtained, I am disposed to attach some weight to it. The article goes on to say:
The company had an exclusive concession from the German Government to work phosphate on Nauru; and, on the strength of that, has expended some £700,000 on buildings and equipment on the island.
– It is evidently a well-developed enterprise.
– And we shall have to pay a well-developed price for it. The article further goes on to say -
What the cash value of the concession is it is difficult to say. The company to date has issued 375,000 £1 shares, fully paid up. These, two months ago, were quoted on the London market at £5 10s”; 375,000 at £1, on which 10s. has been paid up, quoted at £3 each; -
– It looks like a pretty good thing.
– My quotation continues - 200,000 6 per cent, and 7 per cent, preference shares of £1 each. Putting these last at par value, we find that the approximate market value of the shares is £2,018,750, or, say, £3,000,000.
We cannot expect to obtain this property at a price under that amount.
– We must pay its value for everything worth having.
– That is so; but in these circumstances it is nonsense to talk about our farmers getting cheap phosphate from Nauru Island.
– Does the honorable senator not think that the value of the shares would sink if no profits were to be made ?
– I do not claim to be a business man, but it appears to me that this Parliament is like a simple child from the country being urged by a confidence man to speculate because these shares will boom. This is a confidence trick. It is a pure swindle, and this Parliament is asked to pay for it.
SenatorSenior. - The honorable senator’s deductions are not reasonable from the figures he has quoted.
– The Minister has said that the proposition may. be secured for considerably less than’ £3,000,000, but I have given honorable senators figures that show that the price we shall be called upon to pay will approximate£3,000,000. It isstated that no less than £700,000 has been spent on plant and: equipmentalone. There is then the share value, because, I suppose, it will not be contended that thecompany will repudiate its obligations in respect of shares.
– Surely the honorable senator does not suggestthat we would have to pay on the present market value of the shares, and also £700,000 for the plant connected withtheenterprise.
– My contention is that, with that plant and equipment already establishedat Nauru Island., we cannot look forward to a better output. Our share of the cost is likely to be over £1,000,000.
– Is there anyevidence of the comparatively recent inflation of share values ?
– I asked the Minister in charge of the Bill to postpone its consideration in order that we may have time to obtain information concerning this proposition. I do not blame the Minister for his action in view of the usual rush at the close of a session, but I do not know of any reason why this matter should not be allowed to stand over until after the elections. I do not know why, in the meantime, we should not send Senator Thomas, or some other honorable senator who will not be con testing the elections, such as Senator Pratten:. who is a business man - to investigate this proposition, accompanied by an expert in phosphates.
– I would put the acid on it.
– Exactly; and it would be time and money well spent if men in whom we have confidence, and whose reputations must stand the fierce light of ‘ public investigation, were instructed to report upon this proposition. I have mentioned honorable senators from my own State, but I would put equal trust in such business men as Senator Pair bairn, . representing Victoria, or Senator Buzacott, representing Western Australia.Such men, accompanied by a man engagedin the business, could supply a valuable report, upon which . the Senate might act. Will the Minister tell us that Great Britain or New Zealand would object to the delay? Must this proposal be rushed through without time for a practical business investigation of it?
– As Senator Gardiner was allowed some little latitude in discussing article 1 of the agreement, I claim a similar privilege in order to set out some figures that I have been able tofind with respect to the actual and potential value of this property. An article appeared in the Argus on 15th March last, under the signature of Mr. A. W. D. Tocke, which gives the following particulars: - For the four years ending June, 1918, the total quantity of phosphate guano imported from Nauru into Australia amounted to 147,060 tons, valued at £331,910; but it must be . remembered that during that period shipments were greatly restricted through scarcity of tonnage, etc. Under normal conditions, it is claimed that 100,000 tons could be exported annually. I propose to base a few figures upon that statement. I have further ascertained, from what I consider good authority, that the production of this phosphatic rock costs, free on board the steamer at Nauru, 23s. per ton. I have been informed that the normal average profits of the company on the export of this rock from Nauru represent approximately 7s. per ton. This figure is reasonably near some which have already been quoted during the discussion of the Bill. At 7s. per ton, and assuming the normal output of the island with the present plant to he 100,000 tons annually-
– The honorable senator should take into consideration the fact that there was a scarcity of shipping during the period he has referred to.
– I am not now dealing with the shipping, but with the normal annual production and the average profit.
– Normal production is controlled by shipping.
– I assume that there would be plenty of freight to ship the normal annual production of the island. If 100,000 tons of phosphatic rock is shipped from the island annually, and if the average normal profit is 7s. per ton, the profit from this output would amount to £35,000 per annum. Everything depends upon the capital sum which the Commonwealth will be called upon to pay as its share of the purchase of this proposition. Various figures have been given, and I propose to take a figure which, so far as can be seen, is not likely to be seriously disputed. I suggest that this company expects, and may possibly obtain, a sum of at least £2,000,000 for all its right, title, and interest in the phosphate industry in the Island of. Nauru. Assuming this, and assuming the normal annual output to be 100,000 tons, the following figures can be easily deduced: - The interest on £2,000,000 would be £100,000 per annum, and consequently 20s. per ton would have to be added to the cost of production. A sinking fund of 2½ per cent, would add another 10s. per ton-. There would then be the present production cost of 23s. per ton. We might add 2s. per ton as the average cost for administration, and a further5s. per ton for repairs, depreciation, contingencies, and sundries.
– How much for bootlaces ?
– The honorable senator has not been listeningo me closely. I suggested a cost of 5s. per ton for depreciation, repairs, sundries, and all other contingencies. I am sorry if honorable senators are unable to distinguish between depreciation of capital and depreciation of capital expenditure. The figures I have given would make the total cost of phosphates f.o.b. at Nauru 60s. per ton. If the output were 150,000 tons per year, the additional cost for interest and sinking fund would be correspondingly less, but the other costs would remain the same, and the production cost of phosphates f.o.b. at Nauru would be 50s. per ton. If the output were 200,000 tons per year, clearly the interest cost and sinking fund on capital would again be less; the other figures would remain, and the total production cost f.o.b. at Nauru would then be 45s. per ton.
I have given three suppositions as to the output of phosphatic rock from Nauru, one showing a cost of 60s., another 50s., and another 45s. per ton f.o.b. at the island. Before the war the phosphatic rock was sold at 30s. per ton, and during the war period at 40s. per ton. In view of the evidence placed before the Senate by Senator Gardiner and of the interjection by the Acting Leader of the Government in this Chamber, I think we can reasonably say that the profit that this company made on the 30s. and 40s. per ton mentioned was at the least an average of 7s. per ton. We now come to the point of what is the capitalized value of the profit on this amount. I will go back to the original statement of the authority I have mentioned that the normal average output is 100,000 tons. If we have 100,000 tons on which there is a profit of 7s. per ton we get the total expectant net profit of £35,000 per year. If we capitalize that on a 5 per cent.sis it is £700,000, on a 7 per cent.msis, £525,000, and on a 10 per cent. basis, £350,000. During the whole of my business experience I have never been accustomed to pay out in cash, nor have I. heard of anybody else paying out in cash, the whole of a capitalized value such as I have suggested. The custom in connexion with mining is, when the prospectus is issued and a thorough investigation has been made as to the value of the. property and the yearly profits of the company, for the promoters or the owners of the lease or mine to sell out to the public on a basis of three years’ profits. In ibusiness, too, when the proprietors of a successfulundertaking are converting the business into a joint stock or public company and float their capital interest into shares, it is very often that they say that their good-will or interest in the concern is worth three years’ of the profits. So, if we have a private business that has been making, say, £2,000 a year, and it is converted into a joint stock company, the reasonable thing for the proprietor of the business to ask for goodwill is on the basis of three years’ profits, or, say, £6,000. On that basis, what is this worth? It is not worth £2,000,000. It is not worth even £1,000,000, but is worth only the capitalized profits that are being made out of it. I have quoted those figures to endeavour to throw some further light on the matter. I also wish to point out that if the interest of this company is to be adjudged at anything like the sum of £2,000,000, Australia’s share in the purchase of this venture will be. £840,000 assuming we are to pay 42 per cent. of the cost. The figures in the company’s balance-sheet, as quoted by Senator Gardiner, do not indicate that the profits of the industry are anything like the profits that should be expected from the investment of such a huge amount of capital. Consequently, the position comes back to this: that if we pay an abnormal price simply because the shares have been sold on the London market at a very high rate, because London manipulators thought that they could make some one pay a huge sum for their interests, we shall, instead of helping the farmers, be saddling them with a burden of at least. 10s. per ton on the whole of the phosphatic rock obtained from Nauru Island for all time.
– Order! The honorable senator’s time has expired.
– I ask theMinister to report progress, particularly in view of the information that has been submitted to the Senate.
– I made afair offer to the Senate, and agreed to postpone any article if a request were made.
– It is only forty minutes before we reach the usual time for adjournment.
– We have not yet passed one article.
– I suggest that we should at least postpone articles 7 and. 8, which relate to finance.
– I made a fair offer, and agreed to postpone any article ; but, so far, no such request has been made.
– I am sure the Minister will admit that we have reached the stage when we should have more in formation. No time will be gained by passing any particular article. I shall have no desire to “ stone-wall “ the Bill when we are in possession of full information, but I am certainly opposed to the Bill being rushed through in this way.
– I have made a reasonable offer; but up to the present we have not passed even one article.
– The Minister should postpone further consideration until a closer investigation has been made. If he would do that, there would be no necessity to pass any of the articles at this stage. If the Minister persists in going on, I shall certainly call for a division.
– I do not want a division. Postponing an article is different from reporting progress.
– I suggest that articles 7 and 8 be postponed, as they relate to finance.
– There are other articles before those. In view of an approaching election, there may be occasion for some expedition; but I believe that if the Government view the position seriously, they will not want to proceed further at this stage.
– The Government have made a reasonable offer, and are determined, if possible, to pass the “Bill.
– In view of the information given to the Senate, it would be advisable for the Government to send some responsible person to inspect the property. If that were done, the ratification of this agreement could be postponed until after the elections. Thi3 would be a convenient time to report progress. I have said all I wish to say on this particular article. I do not wish to put honorable senators in the position of voting against their judgment, and that is the position they will be in if we call for a division. if, as the Minister says, the Government are going on and will see it through, it makes it necessary for me to say exactly what I think about it.
– The Government have entered into an agreement, and I offered to postpone any article if requested to do so; but I have been asked to postpone the whole discussion by reporting progress. The request is not a fair, one; the Government have to take charge of the business.
– I realize that; and am endeavouringto work in harmony with the Government. I was dealing withthe financial aspect of this proposition. We know the money that has been expended on the venture and ‘the value of the shares, and that renders it not only probable or possible,butalmost a certainty that the purchase price will be £3,000,000. That is a fair basis on which to begin.
Senatorde Largie. - What is that based on?
– On the share sralue and the money that has been spent. Personally, Ido not see how the company could sell the property under the yalue of the shares, and the share value is, approximately, £3,000,000.
– It is aridiculous figure to mention.
– It is; but has the honorable senator gone into the question?
SenatorEarle. - The value of the concern willbe based on itsearning power.
– Itshould be. If theMinister will make thatstatement in theSenate, andsay that that willbe the bedrock price upon which the undertaking will be purchased, he will not get any opposition from me.
SenatorEarle. -Common sense dictates that.
SenatorGARDINER.- I know; but common sense isnot always displayed in connexion with businesstransactions.
– I have no hesitation in giving the Senatethe assurance that the Government will endeavour to purchase at the lowest price.
– That is a general assurance.
– I will give that assurance, and am prepared to fight for the lowest price.
– I know the Minister will; but will he give the assurance that he will not go beyond £250,000?
– If £750,000 has been expended on buildings, there must be something there.
– There is a lot there, and last year’s earnings, with all that capital invested in plant, returned a profit of £16,000. The figures I am quoting are, taken from the October number of Stead’s Magazine.
– A profit of about 2 per cent.
– Werethe operations interfered with by the lack of shipping?
– That, is quite possible; but the largest profit was £70,000, and a portion of that amount was derived from’ the operationson Ocean Island. The article states’ that most of that profit was made owing to low freights, as the company had contracted for; the shipment of material at a cheap rate, and were thusenabled to increase their profit. If they had been compelled to pay the ruling . rate that profit would have gone. Surely the Government will give the Senate time to analyze these figures.
– Who is the writer of the article from which you are quoting?
– Stead’s is a well-known magazine, and the article is not written in a spirit ofantagonism towards theGovernment.
-The editor is responsible.
– And he is bitterly opposed to anything the Prime Minister does.
– He quotes from the balance-sheet. If the two properties, Ocean Island and Nauru, could not showa profit of more than £70,000 in the past year, when freight was obtainable at a cheap rate; the proposition isnot a very attractive one. If the Minister analyzes the statement closely he will realize that it is not one from a biassed writer. I want honorable senators to review these things, because, in my opinion, we are being invited to enter into a wild-cat venture.
– If we could have got the ships last yeaT, we could have taken another 50,000 tons of phosphates.
– If we could have got the ships. And ifthis proposition is loaded with another £l,000,000, or £2,000,000 of capital, we will want very much more than that to cover overhead charges, and meet all expenditure. We do not want to put” money into this venture, which I regard as suspiciously dangerous. “In fact, we do. not want to invest Commonwealth money in anything at all. Money is too valuable to be risked in hazardous enterprises. I have asked the Minister to adjourn the. debate in order that further information may be obtained. If the adoption of the scheme could be postponed, and if the Government sent three responsible men to the island to make fullest inquiries, we would then have reliable information, and be in a better position to judge of the value of the proposition. It appears, however, that the Government want to rush into it. And they want to rush into an election. I do not desire to talk of scandal during the campaign, and so I say that when huge public interests are at stake, the greatest care should be taken before the Government commit the Commonwealth to expenditure. The Government should fix a limit to the expenditure, and tell Parliament they do not intend to go beyond it. That is a fair proposition. I shall call for a division upon every article in the agreement. I remember that, even after the fullestinvestigation into the proposal topurchase the Shaw wireless works, in Sydney , and when the Government of which I was a member were acting npon expert advice, there were subsequently newspaper comments upon the transaction, and a Commission of Inquiry was appointed, to investigate certain charges. Similar allegations will, no doubt, be made against the Government in regard to this proposal if the Government invest the people’s money in it. On the scanty information given to honorable senators up to the present, it might be skid that the Prime Minister did not enter into the agreement without knowing all about it. If he did, it is his duty now to place all idle information he obtained before Parliament, and, as he has not seen fit to do so, I now invite the. Minister in charge of the Senate to tell honorable senators everything that he knows about it. I shall not vote for any article in the schedule, until I know upon what information the Prime Minister attached his signature to the agreement. We have had some reference to a statement made by Mr. Massey, the Prime Minister of New Zealand. It appears to me that some wealthy company in England had command of sufficient influence to induce the Governments to enter into this scheme, which I am entirely opposed to.
– Last night, during tie second-reading debate, some marvellous figures were produced by honorable senators who are opposed to the proposal. The figures given to the Committee this afternoon are quite as unreliable.
– What is your authority ?
– My knowledge of Senator Pratten and the many reckless statements he has made. On several occasions he has presented remarkable figures. In connexion with this proposal he has been talking of a probable expenditure of £3,000,000, and Senator Gardiner has repeated the figures.
– I did nothing of the kind. I said that the company may ask for £3,000,000.
– The Leader of the Opposition and Senator Pratten have argued themselves into a. frame of mind that is absolutely ridiculous. I candidly admit that I do not know anything about this concern, but, as one accustomed to mining, I think I know as much as Senator Pratten about this kind of work. Indeed, . it would not be presumptuous on my part if I said I knew a great deal more than Senator Pratten.
– About Nauru ?
– About the practice of mining.
– Then stick to your book.
– I am; for I do know something about mining. If the subject under debate were the manufacture of jam, then I would give way to SenatorPratten ; but as this is a mining proposition, I think I may say that I know as much about it as Senator Pratten does.
– Where was I wrong ?
– In a concern of this kind, there cannot possibly be a very extensive plant.
– There is capital value of over £700,000 for plant, railways, and equipment.
– I should like to know what it consists of. Have they got a fleet of vessels?
– There is a wharf 30 feet high, running out- into the sea.
– That would not cost a very large sum of money.
– Then there is a railway; also trucks, engine, and plant.
– Last night we had statements of £500,000 having been put into the venture, and this afternoon that figure jumped to £3,000,000. The statements as to cost of production, royalty, and administrative charges are altogether too unreliable. Senator Gardiner speaks of it as a wild-cat proposition, and even some supporters of the Government last night, at first, appeared inclined to vote against the Bill, but after a calm consideration they realized their error, and voted for the second reading. I hope there will be no further delay. We have had a fair debate, and no reason has been advanced for any postponement of consideration.
– I would not have arisen again but for the obviously personal and somewhat insulting remarks by the sycophantic Government Whip. I have been told by him that I did not know what’ I was talking about, when I quoted certain figures in an attempt to get nearer to a reasonable capitalization value of this island. I now make this challenge to Senator de Largie. I will hand to him the Hansard proofs of my remarks, and if, on Wednesday next, when the Bill is again under discussion, he can come along with any connected and reasonable refutation of the figures I presented, I shall have pleasure in voting for the Bill.
– Senator Pratten mentioned, I think, that 5s. per ton should be allowed for depreciation on the output.
– No; I said2½ per cent. should be allowed for a sinking fund. The 5s. per ton was for depreciation of plant, repairs, equipment, and contingencies.
– The mention of that amount, I remember, invoked loud laughter from various parts of the chamber, suggesting that the honorable senator had quoted an extravagant amount. I now desire to point out that, under another agreement, the Government are committed to pay, not 5s. per ton, but £1 per ton for depreciation and managerial supervision; I refer to the sum allowed to the Colonial Sugar Refining Company, in regard to the contract for handling and refining raw sugar for the Commonwealth Government, and I point out also that Senator Crawford said that 5s. per ton for wear and tear, and de preciation of plant was rather a moderate estimate. We must bear in mind, too, that wear and tear and depreciation of plant are likely to be much greater inthe treatment of phosphatic rock than in the refining of raw sugar, because the latter process merely consists of melting the raw sugar to a liquid state, passing it through charcoal filtration plant, solidifying and drying the liquid. Senator Pratten’s estimate of 5s. per ton appears to be fairly accurate, and I should say that his other figures are not very far from the mark. We have had too much of late of Bills being brought into the Senate merely to give effect to agreements already made, thus taking the conduct of public business out of the hands of Parliament, and relegating it to outside bodies or conferences. Under our present system it is not likely that the Government supporters would say “ No “ to the ratification of what, after all, is their own instrument, but this practice is really superseding the functions of Parliament. Article 1 is vital, and if it is adopted by this Committee, control of the island will pass to an outside official in the guise of an Administrator. There is far too much government by civil officials already in Australia. If we agree to Article 1 it will be useless at any future date to protest against the agreement. The Government should postpone further consideration of the Bill until a thorough inquiry has been undertaken. I do not believe in signing a blank cheque. Although Senator Russell has given his assurance in good faith, he is but one member of the Cabinet; and the Australian Government is but a partner in the proposed scheme of control. . I have more than once expressed the view that Australia, during the war, has not been fairly treated with respect to her commercial and mineral, output. The praise lavished upon Mr. Hughes for his alleged achievements in behalf of Australian commerce has been unjustified. We should not make any more mistakes. If the. agreement is ratified one section of the Australian people - the farmers - will be called upon to meet the interest bill. It would be fairer if the Australian taxpayers as a whole were called upon to meet the cost. Seeing that Australia is to be given a mandate over a wide zone of Pacific possessions, is it not reasonable, or, at any rate, possible, that other phos- phatic deposits, equally as rich and extensive as those at Nauru, may be discovered 1 I have already indicated that a valuable deposit has been discovered on an island off Bo wen, on the Queenslandcoast, and that activities are in progress whereby the product from that island is being placed upon the market. I do not know what Australia may be called upon to pay, as her proportion, in buying out the company at present operating at Nauru.
– Mr. Massey said the company had asked for ?3,000,000.
– Whatever be the amount, I shall have no hand in presenting a blank cheque for the Australian Government to fill in.
– As the debate has developed, honorable senators are becoming better informed with respect to Nauru Island and its phosphatic deposits, but not withregard to the prospective obligations of the Australian people. One thing is clear, namely, that we shall simply be securing rights over the raw material. It will still be necessary, if the rock is conveyed to Australia, to undertake considerable expenditure in the erection of a plant, or plants, for the treatment of the phosphate. That is a factor involving still further increase in the cost of the product.
The followingpaper was presented : -
River Murray Waters Act 1915.- River Mur ray Commission.- Report for the year 1918-19.
Bill received from House of Representatives, Standing and Sessional Orders suspended, and Bill read a. first time.
Bill presented, and (on motion by Senator Russell) read a first time.
Assent to the following Bills reported,; -
Trade Marks Bill.
-(Senator the Hon. T. Givens). - The hour being 4 o’clock, in accordance with a sessional order, I put the motion -
That the Senate do now adjourn.
– Mr. President-
– Order! There can be no discussion upon this motion.
– It would be wiser to give me five minutes now. It will cost the Government more than halfanhour next week.
Question resolved in the affirmative.
Senate adjourned at 4 p.m.
Cite as: Australia, Senate, Debates, 3 October 1919, viewed 22 October 2017, <http://historichansard.net/senate/1919/19191003_senate_7_90/>.