["State Steamers", The West Australian, Tuesday 22 April 1913, page 7]
STATE STEAMERS.
OPERATIONS OF THE SERVICE.
THE FINANCIAL POSITION.
DEALINGS WITH STOCK SHIPPERS.
SOME SERIOUS STATEMENTS.
(By "Observer.")
In the effort to gain information concerning the financial experiences of the State Steamship Service or any other particulars concerning this service – perhaps the most important of State enterprises launched by the Labour Government – it is futile to seek the aid of the Colonial Secretary, the responsible Ministerial head, or that of any of the departmental officers. More than that, there is evinced on the part of Mr. Drew and of Mr. Sudholz, the manager of the service, what is almost a feverish desire to escape from even conversing with an accredited newspaper representative regarding the matter. The Colonial Secretary, learning of the purpose of my visit to his office, refused an audience. To him even the telephone was a danger and the protectorship of his clerk was requisitioned. Time and again Mr. Sudholz dodged a talk concerning the subject, appointments made being cancelled by telephone or disregarded altogether. So obvious were the efforts of both the Ministerial and administrative heads to refrain from imparting information that inquiries in other circles were compelled. The information gained revealed the justification, from their point of view, of the effort of the officials to avoid any publicity being given to what seems to be a serious situation.
Is the Financial Position Known?
It may be questioned whether either the management or the Minister really knows the financial position. A little less than 12 months ago when the State Steamship Service was engaging much attention from public bodies, the dozens of resolutions which were carried by various Labour organisations congratulating the Government "on purchasing steamers for trading to the Nor'-West, thereby developing the pastoral industry and reducing the exorbitant price of meat to the consumers in the metropolitan area," were accompanied by the following which came from the committee of the Fremantle Chamber of Commerce:--"That it be suggested to the Government that while protesting against interference in private enterprise the latter is of opinion that it is highly desirable that in any commercial enterprise embarked upon by any Government or municipality a proper system of accounts should be kept and audited and made available for public information through Parliament according to custom." Perhaps by the time that Parliament meets Mr. Drew will be in a position to furnish such a statement. In fact, through the medium of his clerk, he has informed me that he will make a statement to Parliament only, but he cannot complain if publicity is given to the assertion that if Parliament were now in session he would not be in a position to give a detailed statement of affairs and of the financial situation as it has progressed from month to month.
Some Financial Considerations.
That money is being lost through the State Steamship Service being so far a non-payable proposition is not denied. Up to the end of last month, when the service had been in operation for nine months, the receipts as shown by the monthly financial statements issued from the Treasury Department were £30,490 and the expenditure amounted to £36,959. There is thus indicated a deficit on working expenses of £6,469. Whether even on cash transactions the position is truly shown may be disputed. It is stated in some quarters that there are accounts which have been incurred at various times since August last that had not been met. Supplies, in one instance, incurring a payment running into four figures, had not, it is averred, been paid for when the figures quoted were made up, though in the case specially indicated the necessary cheque was issued a few days later. It might be contended that against these outstanding liabilities there were outstanding credits. The weight of what appears to be reliable information leads to the conclusion, however, that most of the amounts worthy of consideration in this connection with which the service could be credited had been paid so that they might be included in the credit side of the statement. Damage done to jetties and beacons which are controlled by the Harbours and Lights branch have to be paid by private companies fairly promptly. It is stated that vessels belonging to the State service have been responsible for extra expenditure by the Harbours and Lights authorities to the tune of close upon £2,000. This, so far, has not been shown as a debit against the Steamship Service. In fact, there is reason for the belief that an effort was made to avoid this considerable sum being shown as a debit against the service, but that the other sub-department, jealous of its own financial showing, offered such protest that the Acting-Premier directed the State Steamship Service management to stand the charge. These two considerations show an addition of about £3,000 to the expenditure side of the statement, and in the absence of any details, backed up by that which is freely asserted by commercial men who have some knowledge of the business that private firms have been transacting with the State Steamship Service, there is no telling how much further the sum will be swelled. It would probably be found that if all services of the nature referred to had been paid for the deficit on working transactions at the end of last month would, apart from other very important consideration, which it is proposed to refer to, be at least £10,000.
Depreciation and Interest.
On a fleet which has caused a capital outlay of about £100,000 there would naturally be insurances effected. The expenditure thus incurred has probably been included in the sum given in the financial statement issued by the Treasury. But there are other phases of the financial side of the position that have to he remembered. In addition to the deficit shown there has to be added an amount for depreciation. It is stated by an authority that large shipping companies, profiting by experiences, write down the lives of their vessels at 14 years. That, local shipping men say, is true with regard to passenger steamers because of the fact that they become obsolete much more rapidly than do cargo vessels. Admittedly the four vessels which comprise the State Service fleet are comparatively old, and this fact has to be kept in mind when allowing for depreciation. At the lowest estimation the amount to be set aside for depreciation on their vessels by the State should be 10 per cent., and this on a capital outlay of £100,000 brings forward the position that to the deficit there must be added £7,500 for the nine months' working. Then again, interest and sinking fund on the capital expenditure of £100,000 has to be reckoned. Here is another £3,375 which has to be debited against the nine months of business.
Loss of Over £20,000.
These are considerations that appeal directly when the State steamship service is being considered. There are others, too, that demand attention if the enterprise is to be considered in comparison with those undertaken by private companies. When the Adelaide Steamship Company, under contract, attended to the South Coast Service they had not the facilities provided that are now enjoyed by the State service. For instance, there has been built at Hopetoun a jetty which cost something like £6,000. This work was carried out to facilitate the trading of the Government steamer Eucla to that port and was, perhaps, prompted by the loud complaints that came from the residents there shortly after the State Service was inaugurated. The cost will probably be charged against the Harbours and Lights Department, but, as that £6,000 was expended in the interest mainly of the State Steamship Service, a proportion of the amount could reasonably be charged to State steamship capital expenditure. There is given to the Government enterprise the services of officers of other departments that would assuredly be denied private companies even if large monetary considerations were tendered. The Chief Harbour Master, Captain Irvine, and Mr. Butcher, the engineer surveyor, are among officers attached to another branch that render valuable services to the State Steamship business, and these services are not charged for. Rent for the premises occupied by the officials of the service should appear as an item of expenditure, but it is open to question whether this has been included. There seems to be nothing unreasonable in the conclusion that rather than the deficit on the working transactions being £6,500 odd it is considerably over £20,000.
The S.S. Una.
Apart from the financial side of the question, there are circumstances which lead to the conclusion that the anticipations of the Government are not being realised. There are four vessels, the Western Australian, the Kwinana, the Eucla, and the Una. The last mentioned was purchased at a cost of £2,000. This is, it is stated, a sum much in advance of that for which she was under offer not long before the Government purchased her. Another thousand pounds was spent on her. She has never been used, and for the past six months has been tied up to the wharf. It is beyond question that ships that are laid up depreciate in value at an alarmingly rapid rate. It is difficult to discover what it is intended to do with her.
Some Trading Transactions.
When the Nor-West trade was entered upon by the State steamers it was anticipated that the rates would be cut, and this was realised not only so far as our coastal trade was concerned but also with regard to inter-State shipments. Produce and timber have been conveyed to other parts of Australasia at rates lower than those charged by the private companies, but it is open to question whether these trips have shown a profit when all the facts are remembered. It is recognised that tonnage rates have risen throughout the world, and here we have experienced, notwithstanding the cutting of rates by the State concern, an increase, in some instances, of 25 per cent. The cargo of timber which was taken by the s.s. Kwinana from Bunbury to three New Zealand ports was accepted at at least a 20 per cent. lower rate than the other companies were prepared to quote. When the vessel was at Wellington there was not any money to pay the officers and men. Mr. Johnson, the Minister for Works, took the trip on her, and it is freely rumoured that after he had twice cabled for money to his Government an advance was made by the New Zealand Government to the accompaniment of many inquiries on the part of the people there as to the financial position of a State, or the methods of the conduct of its affairs, that could permit of such a position arising. Tonnage to-day is scarce. "It is gold," one shipping man avers. Yet, instead of getting the best revenue in freights and thus assisting in swelling the revenue of the State, the steamers are taking cargo at what are regarded in shipping and trading circles as ridiculous prices. There have been established in the State fertiliser works, and these are regarded as industries which are calculated to assist in the agricultural development of Western Australia. Farmers are calling for superphosphates here, but recently one of the State steamers took a cargo of artificial manures manufactured here to the East for the use of the producers there and on terms which traders of experience contend will show a loss on the shipping transaction itself. The ruling rate for the conveyance of sheep from Carnarvon to Fremantle is 2s. 6d. per head. The s.s. Kwinana was sent up to bring down a shipment for a prominent pastoralist who was lucky enough to have 2s. per head quoted to him by the Government. Delays in arriving at the port of shipment placed the management of the State service in the position that the owner of the stock demanded and secured a refund of 9d. per head, and therefore got his sheep to Fremantle at exactly half the price that he had formerly paid. There was not at the time, however, any noticeable depreciation in the price of mutton to the consumer, but it is fairly certain that the taxpayer had to contribute towards the saving of the 1s. 3d. per head to the squatter. A well-known firm engaged in the meat trade chartered the s.s. Kwinana from the Government to carry a full load of sheep from Sydney to Fremantle with the option of paying an additional amount if two ports of shipment were declared. The only item to be allowed exclusive of sheep was coal and other supplies for the use of the ship during the voyage. Melbourne was declared as the optional port. When the vessel put in there the State service officials, it is alleged, set to work to secure other cargo. The result was a hampering of space for the stock, the vessel was delayed, and cargo being taken aboard against the chartering party, the latter refused to pay. The result may be protracted litigation. Similar experiences have been reported with regard to the conveyance of stock from the North-West. The s.s. Western Australia was chartered by a firm to convey bullocks under agreement that certain spaces in the vessel were available. Another firm contracted to load bullocks at a port, nearer Fremantle during the same voyage. It is asserted that the special space conditions were not observed, and that when the second mob were to be put aboard only portion could be taken for the reason that what should have been the first consideration – the available accommodation – had been lost sight of. Before Geraldton was reached water supplies ran out. The fittings of the vessel, being of light timber, failed to hold the thirsty beasts with the result that they broke loose. Some were trampled upon and injured to such an extent that losses were considerable, while the condition of affairs was so bad that the intervention of the Inspector of the Society for the Prevention of Cruelty to Animals was compelled. The cattle lost in weight considerably because of this treatment. The owners of the two mobs are said to be defying the State service officials, and with both shippers serious disputes are in progress--so serious, in fact, that more litigation is rumoured if not already in train.
Useless and Expensive Trips.
When the Adelaide Steamship Company was being subsidised to the extent of £6,000 per annum for the carriage of Nor'-West mails, their steamers during the "off" season ran from Broome to Derby only occasionally, there being comparatively no cargo for revenue earning purposes. The State-owned steamer runs from Broome to Derby every trip, thus covering approximately 500 miles at a cost of several hundred pounds for practically no purpose. It is contended that the subsidy received for mail carrying will be more than eaten up by the useless running of vessels which are admittedly great consumers of coal, while the quantities of supplies for the running that has to be carried will, when there are cargoes offering, preclude the vessels, through deficiencies, from accepting them in any fullness. Early this month the vessels commenced to run to Port Darwin once a month, in conformity with the mail carrying contract entered into with the Federal authorities. It was anticipated by the Premier when the State tender was accepted, that there would be diverted to Western Australia a great deal of the trade from the Northern Territory, which is now given to the Eastern side of Australia, but there does not appear to be a sufficient volume of trade to make this, for the present at least, a matter for congratulation. The mail subsidy alone can hardly pay for the coal and the other supplies that will be consumed on these extra journeyings.
Preference by Other Departments.
Preference to the State steamers is shown by other departments of the Public Service. The result is not always to the credit of the State finances. That which is gained by the preference is very likely more than counterbalanced by the losses. A return showing the amounts paid by the other departments to the State Steamship Service and the amounts that would have been paid to other companies for the same services would furnish much that would be interesting. It might be found that there had been incurred heavy charges in demurrage, storage, and handling, in order that this preference might be exercised. Not so very long ago there were standing in the railway yards at Fremantle trucks loaded with timber that could have been sent away by vessels sailing before the State steamer, but the preference for the State-owned vessel was displayed. When too late it was discovered that the State-owned steamer could not take the timber, with the result that it had to he held for another vessel. All this time the use of the rolling-stock was denied the railway authorities. A large shed on the Fremantle wharf is being used for the storage of gear and appliances used by the State Steamship Service. It will surely be that charges equal to the earning capacity of that shed will be debited against the State Steamship Service, and it would be interesting to know whether that item has been included in the amount of expenditure shown in the Treasury return.
Nor'-West Cattle Trade.
Throughout the State the Labour organisations hailed with delight the decision of the Government to establish the line of steamers for the conveyance of stock from the North-West, it being the fond hope that the price of meat would be considerably reduced. Nearly 12 months have gone by, but the consumer is paying more for his beef to-day than he has been paying for months past. One of the vessels that was fitted up for the North-West trade and that was to play a prominent part in the conveying of cattle to the metropolis, is away East somewhere. In February last a writer who used the nom de plume of "Groper" made some severe statements regarding the State Steamship Service, and to them Mr. Drew made reply. One of the Minister's remarks was:--"Now, anyone who takes the slightest interest in the subject must be aware that the season for the shipment of live stock from the North-West commences about April 1 and ends about November 1, and that any attempt to ship during the hot months would be fraught with all the probabilities of disaster." Stock-owners and shippers are calling for space on the steamers. They want the s.s. Kwinana, and are naturally asking why, when the Minister knew that the season started a month ago, she was not in the Nor'-West ready to bring down the cattle, so that it could be demonstrated whether the anticipated cheap meat supply would be realised. There is plenty of patronage. Months ago the stock-owners and shippers were ready to charter her for trips that she could already have made. And it is in no small degree due to the fact that the is not here engaging in the trade in which it was boasted she was going to do such effective things, that meat is as dear to-day as it has ever been. This phase of the State enterprise – the much-vaunted cheapening of meat supplies that was to be brought about – is a subject worthy of a further article.
