COMMENT FROM THE CAPITAL CABINET DIVERGENCIES ABOUT A NATIONAL SHIPPING LINE?

Press, Volume CVIII, Issue 31761, 19 August 1968, Page 16

COMMENT FROM THE CAPITAL CABINET DIVERGENCIES ABOUT A NATIONAL SHIPPING LINE?

(By Our Parliamentary Reporter)

WELLINGTON, August 18.—The question whether the establishment of a New Zealand national shipping line could be a viable proposition has been brought back into sharp focus by events of the last few weeks. Last Monday the question evoked some discussion at Cabinet level which probably will be continued at tomorrow’s meeting. The discussion reflects a variation of Ministerial opinion as to feasibility, and about the direction the development of a State-owned shipping line should take

Until recently, the National Party attitude on the settingup of a shipping line was clear-cut. and the issue was closed. .All investigations had indicated that to begin a Government or corporation-owned line anywhere else but on the New Zealand-United Kingdom run would be to invite disaster; and that to invite a duel with the Conference Lines would similarly be dangerous.

A number of feasibility surveys had been made, all of which established the following facts:— 1. The building or purchase of three or four fast refrigerated cargo liners was an expensive business. 2. The Conference Lines had a great deal of capital submerged in the route already, and would not willingly yield ground.

3. The State-owned line would be in almost constant difficulties concerning the back-loading of cargoes from the United Kingdom: 4. Claims by the Conference Lines that profit margins in modern-day freighter operation are small have not been discredited.

Members of the Govern- ! ment caucus were advised ac- ; cordingly, and at least one paper was issued acquainting members with Government views. This plainly said: “A Government shipping line is out of the question." It is worth noting, however, that these investigations were made before devaluation. They also considered only the Britain-New Zealand run, with its heavy emphasis on large refrigerated cargoes. Mr Shand’s View Recently it has become apparent that some members of Cabinet have differing points of view. On August 5, speaking to the Timaru Harbour Board, the Minister of Labour (Mr Shand) said: “There is a growing agitation for a New Zealand-owned shipping line, to employ New Zealand seamen on overseas trade. I have a lot of sympathy with this point of view. “For many years past, New Zealand rates of pay, conditions of work and manning scales made it uneconomic to attempt to operate a ship on New Zealand articles in international competition. I believe it would now be possible to achieve a modification of these rules which would make such operation practicable. “I don't think we should'

rush into it, nor do I think we should try to begin at the most difficult end by entering into the most unprofitable trade. We should aim in shipping to do what we have done in civil aviation—and insist on reciprocal rights for our shipping line whenever another country wishes to trade here.

“The nature of shipping is such that We will always have conferences in preference to unregulated competition. 1 hope to see New Zealand claiming a proper share of such conferences, but there is a great deal of research to do before a venture of this kind can become a reality.” New Factors

In these words, Mr Shand introduced several new concepts which, if they had been considered previously, had not been allocated much status. The first is that the Seamen’s Union and other Labour organisations, having long supported the idea of a Government-owned shipping line as a secure job-source as well as a project operating for the benefit of New Zealanders, might be persuaded to modify New Zealand wages and conditions to give the New Zealand-based line a better bargaining chance in international competition. The second is that, by use of the bargaining-power of the big primary produce cargoes, the new line might be admitted to an assured place among the Conference Lines. Discordant Note?

The argument which occurred at last Monday’s Cabinet meeting may well have centred on the propriety of Mr Shand’s remarks.

It has been noted that, though at least three other Ministers are vitally interested in the State-owned shipping line problem through their portfolios, the Minister of External Trade (Mr Marshall) has tended to make all the statements relating to this subjectThree reports on the National shipping line concepts, or aspects of it, are under preparation. The Ministers whose department are conducting the surveys are Messrs Shand (Labour), Scott (Marine) and Gordon (Transport). The remarks made by Mr Shand at Timaru relate almost specifically to his Labour portfolio, and to his personal opinion that (subject to qualifications) the operation of such a line might be viable. It is understood, however.

that other investigations have not served to dispel the aura of risk which surrounds the whole enterprise. A Stateowned shipping line might be successful. If, on the other hand, it failed, the failure could not help but reach disaster proportions This possibility is covered by Mr Shand’s remark: “I do not think we should rush into it."

Australian Precedent Much has been made of the fact that the Australian national line has fixed assets of more than $88,000,000. a fleet of 36 ships, and made a net profit last year after tax of 8.7 per cent. A prominent Australian shipping authority says, however, that this has come about because, after a long period of trial and error, Australia made the best use of some circumstances peculiar to the Australian Commonwealth. These include Australia's own shipbuilding potential, Australia’s capability for producing some of the cheapest constructional steel in the world, and the discovery on the Australian coast comparatively recently of much highquality ore of various kinds. “The carriage of specialised cargoes round the Australian coast in the absence of competition, essentially a service for Australians by Australians, is the basis of our success,” he said recently. “This came after three decades of failure by the original Australian Line, using genera! cargo vessels of various ages. I would not like to go through that time again.” It is understood that at least one of the surveys being made today is investigating possible routes, including trans-Tasman and SouthEast Asian. All problems are being studied, particularly the important ones of backloading and intermediate cargoes. Early results, it is understood, have not been encouraging.