SPEECH BY THE PRIME MINISTER, THE RT. HON. R. G.
MENZIES, IN THE HOUSE OF REPRESENTATIVES, ON
WEDNESDAY, 25TH OCTOBER. 1961
I do not propose to devote any time to what has fallen from the
honourable member for ivacquarie ( Mr. Luchetti). suite frankly, I have never
heard him to worse advantage. He went through a process like the legendary
tiger of lashing himself into a fury with his f ill. In the course of doing so,
he came out strong I think that is the phrase as the champion of privat.
enterprise. This was a magnifirant effort on his part, because when his
party establiblhtd Trans.-lnstralia Airlines, and I hope that is not forgotten,
it sought to establish it legislatively as the one single airline in Australia.
To hear people who sought to do that and were frustrated only by the processes
of the law come out now as dhampions of free enterprise is really more amusing
than unpleasant. The reason why 1 am taking part in this debate is that there has
been an attempt in the last few days to create an air of scandal about sometlin.
to do with my distinguished colleague, the Minister for Civi. L Aviation
( Senator Paltridge), a man i, I might adept thefrase of the honourable
member for Macquarie ( Mr. Luchetti) of undoubted integrity, a man whose word
cannot be doubted, a public-spirited man. 1 refrain from running through the'
whole calendar that he put to Us.
Today I notice that what I might call the juvenile, irresponsible
evening newspapers of Sydney have really gone to town about this. There is a
crisis! Somebody is going to resign! I do not know whethcr it is myself
Mr. Ward I hope so.
MR. ' ENZIES I know you hope it will be me. The honourable member for tast
Sydney ( Mr. 1Ward) hopes that I will resign. That is his one chance of getting
rid of me. I just want to say this about this matter: What is the allegation?
I think it is , ery important that the people of Australia who happen to be
interested in this matter should understand what is the allegation. It
appears to me that the Minister for Civil Aviation tried to persuade, or,
rather, to order East-West Airlines Limited to accept a take-over offer made by
Mr. Ansett, or by his company when? In May 1960: It was an offer which was
rejected by the company and which the company protected itself against very
shortly thereafter by altering its articles of association to provide that
shares could not be transferred except with the approval of the directors
themselves. In other words, they had an offer, they rejected it, they took
steps under their articles of association to make it quite certain that no offer
thereafter could be accepted except with the approval of the directors
themselves, meaning by that, Mr. Shand, ? Mr. Pringle and these other gentlemen we
have been hearing about. All that took place in the middle of 1960. That is
the allegation. Unless it is alleged and I should like to hear it if it is
that tb,, reafter the linister has been putting pressure on them, delivering
ultimatums to them to accept offers which have not been made, because, if there
is one thing that is clear about this it is that the only offer to take them
over that was ever made was made in May 1960. That was rejected, steps were
taken to see that it could not successfully be renewe4 and not since then his
any offer of a take-over been made to them. I have a very considerable respect
for the intelligence of the MinisLer for Civil Aviation. He is a man with a
great record in the administration of this department. He is a man who has
done a great deal for civil aviation in Australia, and if I thought that he
could be ordering people to accept a non-existent offer made by non-existent
people, I would seriously worry about his state of mind. Yet that is the
allegation. If the honourable member for Lalor ( Mr. Pollard), who is
interjecting, does not mind, that is a very important matter. These charges
have been made, I propose to deal with them, and I have made my first point on
that matter. The man against whom this charge which, on the face of it, is
fantastic, as I have just indicated, is made is now represented as somebody who
wants to crush out of existence, this airline. I just want to remind this
House that this is the man who brought into existence for the first time a
system of subsidizing these feeder airlines. But-for what Senator Paltridge
did in his administration, backed by the Government, East-West Airlines Limited
would probably never have made a profit at any time because their profit, even
in the years when they have had a profit has depended on the subsidy paid by
the Commorwealth. I am not quarrelling with that. I thought it was a very
wise d3cision, but it really ought to give people son room for thought to
consider that the man who goes to the trouble of devising a system of subsidies
to maintain East-West Airlines Limited can all of a sudden want to destroythem.
Mr. Ward Ansett gets the bulk of the subsidies.
MR. 1 7NZIES There are all sorts of people who get the subsidies who run
feeder airlines. I am talking about this. I kncw you don't want me to talk
about this matter but I am talking about East-West Airlines; and East-West
Airlines Limited, under his policy not only has received a growing subsidy
through the years since 1957 but have also received, on his recomnendation,
through his instrumentality, more than half of the fleet they possess because,
in point of fact, of the total flect of four D. C. 3s and erie Fokker Friend: hip
used by East-West Airlines Limited that company is indebted to the Commonwealth
for two D. C. 3s and one Fokker Friendship. I am not auarrelling with the
efficiency of this Company. I think they are a very much needed enterprise.
I do not argue about these things. I acknowledge them with pleasure.. But, of
the four D. C. 3s and one Fokker Friendship used by them, East-West Airlines
Limited happen to be indebted to the Commonwealth, through the instrumentality
of Senator Paltridge, the Minister for Civil Aviation, for two D. C. 3s and the
one Fokker Friendship more than half of their operating fleet. So that, in
terms of capital equipment, the bulk of what they have has been found through
him. As for the subsidy they enjoy, they had none until he came along and
produced one. That is the short position about the relationship between the
Minister and this airline, and it is quite clear that, but for this subsidy
payment, this airline would certainly have been unable to pay a dividend on
capital at any time.
I told the House that the Ansett offer, which was an offer of 56s. a
share, was rejected by the company. The company, very naturally, I think, said
" I o, we want to stand on our own feet. . e have local interests and we are
going to preserve them". That, I think, was an admirable point of view. I do
not ouarrel with it at all. After the offer had been rejected, as I have saic,
the articles of association were amnended to make the renewal of any such offer
practically impossible.
The next thing that I want to say is this: Early in March this year,
the Government announced that it was making a review of rural airline
services. That meant, of course, that, subject to subsequent negotiation with
the Commonwealth, there would be, perhaps, some alteration of routes, some
reallocation of air routes, and, under those circumstances, what happened was
that the Director-General of Civil Aviation, Mr. Anderson, on 23rd March, 1961,
wrote again to Mr. Shand setting out the details of East-WJest Airlines
Limited's subsidy for 1960-61 and informing East-Jest Airlines Limited that the
subsidy contract was being terminated pending the outceme of the review being
undertaken by the N. S. 4. Government. T2hat was an elementary business precaution
because it would depend entirely on the re-arrangements that were ultimately
made as to what the subsidy ought to be. This is said to have been a throat
specially directed to East-;' est Airlines Limited. The fact is that a letter was
sent to the Ansett company within two or three days of that advising that
company in those precise terms of a sinilar position that the existing
subsidy contract would be terminated and that it would be re-negotiated as
socn as possible when the recommendtion , f the N. 3. W. Government had been
received. So, Sir, that is that. lo have hoard a good deal of allegations
about that matter but those are the simple facts.
Now, Sir, having said that, I just want to return to this allegation,
which appears to be at the heart, if there is a heart, of this strange series
of charges. Following the rejection by the board of East-West Airlines of the
Ansett take-over bid in June, 1960, it was quite clear that the issue was
dead. But thereafter conversations occurred between the Minister and
representatives of the board of East-West. The first of them indeed, it was
the first personal contact that Senator Paltridge had had with the board of
East-West Airlines was in Canberra in about July 1960; It is a pity to have
to go into all this ancient history, because all this has been vamped up
towards the end of 1961. it was in July 1960, it was on that occasion that my
collocsuo, HIo Minister, saw Mr. Pringle, a director I think vice chairman
of the board of East-West. Mr. Pringlo spoke to him about the Ansett bid and
undertook to tell him the reasons, as a matter of interest, wiy the corpany
had rejected the bid.
Mr. Haylen Ah'
MR. MENZIES -It s figtftlUy funrny, is it not? He tol. d tho Minister why the
company had rejected the bid. The Minister replied, as any Minister would,
that consideration of the matter was entirely one for the board and was not
one on which the Government could be expected to have a view. During the
course of this meeting, Sir, Mr. Pringle indicated that the board did intend to
have some further discussion with the Ansett group about a variety of matters,
because people who are running airlines of this kind in the same State have a
number of matters on whichthey may wish to arrive at agreemsnt, working
arrangements of one kind or another. He asked Senator Paltridge whether he
could arrange this meeting fur him. The Senator said that he preferred not to
do that, because he did not want to have any part in any negotiations that Mr.
Pringle might be contemplating with Ansett. That was his bu-'.-nss.
" evertheless, Mr. Pringle wrote to him in April in these terms. I
direct particular attention to this because this let me remind honourable
members is a man writing as acting chairman of directors, a man who is
supposed to have been threatened in July that he must get on and he must be
taken over by Ansett, although the offer had long since disappeared. This is
the man who is a threatened man, and this is his letter
" Firstly, I would like to convey to you our appreciation for the
friendly and frank talk we had in your office in Canberra on the occasion
when Archie and I visited you."
Archie, I think, is Mr. Smith, the manager of the airline.
" The purpose of my writing you this personal letter is to inform you that
I am taking my directors for a stort holiday to Bramptca Island on
Sunday, 21st August, 1960, where we will be remaining for a period of
seven days. It has occurred to me that this could provide the ideal
opportunity for a friendly tal& with Mr. Ansett along the lines mentioned
in Canberra."
That i s about the working arrangement. This is the threatened man'
" It is felt that such a meeting would be the only way in which we could
ascertain whether or not there is any chance of this company working out
some mutually acceptable agreement with the Ansett group."
That is to say, allthese arrangements that I was describing.
" I do not know Mr. Ansett personally and I would, therefore,, be most
grateful if you could pass this information on to him at an appropriate
time. * ith kind personal regards. Yours sincerely
1 must say, Sir, that 1 have heard that threatened men live a long time, but I
have never in my long experience known a man who had been threatened in this
fashion, the fashion that is now alleged, write a l tter of that kind. The
Minister having said, this is not my business", Mr. Pringle himself got
directly into touch with Mr. ' alker, of Ansetts, and his board in fact had some
discussion with Ansett officers at this paradisical place Brampton Island
wherever it is.
In March of 1961, that is, about six months aft:. r he had seen Eastwest
Airlines at Brampton Island, Lnsett again announced quite flatly that
there was no renewal of his take-over bid for East-West Airlines and
therefore, Sir, it naturally came as some surprise to my colleague, the Ministar
Mr. Pollard What did Dave Drummond say?
Mr. Speaker Order:
MR. 1ENZIES It came as a great surprise to my colleague, the Ministe:, when
ir. Shand, who had seen him at Orange in July of 1961, again raised the question
of an Ansett -take-over bid.
Mr. Pollard But what did Dave Drummond say?
Mr. Speaker Order! The honourable member for Lalor will restrain himself.
MR. MENZIES Senator Paltridge told him that he was not aware of any offer.
i^ r. bhand said that he was referring to th3 offer made a year before. Senator
Paltridge then told him that if he wanted to try to reactivate the old offer,
tat was his business and the business of his board, and not the business of
the Minister. Then, Sir, after this discussion in Orange, Ar. Shand wrote a
latter to the Minister which is, I think though not quite as fascinating as
the first not without interest.
Mr. Bryant " Dear Shane"
MR. MENZIES " Dear Shane" that is how it begins. vWondrfull This is written
to a man who had been threatening and bullying and trying to force them out of
their property. It is the most ludicrous thing in the world. The letter
starts, " Dear Shane". I pronounce it " Shawn", but that is a mere technicality.
" I have given a lot of thought to the talk we had in Orange. I
called at your office when in Canberra last week and found you had
departed for South Lfrica. 1 hope your trip was as interesting as the one
I had there recently. I have been to see Donald Anderson
That is the Director-General, and in all these transactions he is " Dear Donald".
It is all a very happy family business!
" I have been to see Donald Anderson and had a long talk with him.
I now realise some of the tremendous difficulties that you have to cope
with, and hasten to assure you that small as our organization is we want
to help the progressive development of this country and not hinder it.
" Your Department, especially yourself and Donald have done much to
help us develop. I do thank you for all your kindness in the past and
hope you can spare some cf your time to see me in the near future."
It is really the most fascinating story of a wicked, bullying, fraudulent,
lying iinistcr-isn't it that you ever heard in your lifo
Mr. Browne Did he finishwith " fours faithfully"?
MR. ' ENZIES No, " fours sincerely"
Mr. Freoth What was the date of that latter?
MR. MNZIES 12th July of this year.
I do not want to pursue this matter. I set out to deal with the
substance and not with some of the frills. The substance of this matter is tht
it is now said, for reasons that I could only guess at, having regard to the
news of the last day or so, that from the middle of 1960 my Minister was
putting the heat on and delivering ultimatums and trying to force these people,
against their own judgment, to be bought out by a large air industry. Let me
rehearse the facts just once. An offer was made in 1960 and was rejected
out of hand by the board. The articles of association were altered so that no
offer would thereafter be made to the shareholders without the approval of the
directors themselves. No offer was thereafter made. There were two
conferences with these people and each ended up in the writing of letters in
these terms and in this atmosphere. I am asked, as the responsible head of
the Government, as a man who takes groat cride in the loyal service and high
integrity of his r4inistjrs, on this flimsy talk that has been going around to
suspend or dismiss the Minister for Civil Aviation; to appoint a royal
commission to investigate charges which can only be described in all their
nudity, in the way that I have described them the naked facts about them.
I needed only to do that to explain to the House, and I think to the people,
why I certainly will not dismiss this inistor; why I certainly will not go
through Ull this hocus pocus about appointing a royal commisjon about nothing.
That is my position on this matter. I hope that I have made it clear and not
at undue length. 1 understand that the Minister is, in another place, tabling
a mass of corresoondence on this matter. Honourable members who want to read
it may do so. I have not, of course, undertaken in my limited time of half an
hour to cover the whole of this correspondence that has gone on. I am entering
into no charges against the honourable member for New England ( Mr. Drummond).
He is entitled to his own views on this matter and I am entitled to mine. And
my views on this inatter are t. r clear as crystal. If somebody wants to get rid
of Senator Paltridge on these flimsy allegations, I invite him to get rid of
me at the same time.