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Tuesday, 14 September 1937

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) . - We have before us a bill which endeavours to do something in the way of opening up the oil possibilities of the Newnes shale oil-fields. When the bill to provide £250,000 to subsidize the search for flow oil was before this House, 1 said that I considered that, in the event of flow oil not being discovered in Australia, the first obvious locality in which a search should be made for oil was at Newnes.

Although I do not approve of a great deal of what is contained in this agreement, I think that the Government is to be commended for Laving attempted to carry out what I regard as a necessary work. In this connexion, one must pay a tribute to the persistency with, which the honorable member for Macquarie (Mr. John Lawson) has advocated the claims of Newnes since he has been a member of this House.

The question that we have to decide is, whether we shall accept this agreement. I am a member of a party which believes in the principle that industry shall be developed by private enterprise. From my viewpoint, however, we are here introducing an entirely new principle, which it would be bad for , this country to establish, if private enterprise is to be assisted with public money to an amount of 15s. in the £1 in the prosecution of certain ventures. I do not know whether this venture will be a failure or not; there seem to be very divergent views on that point. Some of my friends opposite appear to think that the gentleman concerned is likely to make a fortune out of Newnes, while others apparently fear that the real trouble will be the loss by the Government of everything that it puts into the project. Quite probably, the truth lies somewhere between those two extremes, but at what point it is impossible for anyone to say.

One point that has not been dealt with very fully, even by the Minister, lies in the rather unusual statement in the sixth line of the preamble to the agreement, which says that the 'Commonwealth is desirous of inducing the development of the shale oil industry for national defence purposes. I regard that as an objective with which every honorable member of this House will be in complete accord. But, if it be a. question of developing Newnes with a view to ensuring national defence - and Heaven knows there is great necessity for the discovery of oil in Australia to ensure the protection that \.'e need - there are other means at the disposal of the Government which could have been tried before entering into this agreement. For example, one question that arises in my mind - I have raised it in this House, but have never had a satisfactory answer given to me - is, what part, in the economic life of Australia does the Commonwealth Oil Refineries Limited play? I have never been able to discover what useful purpose is served by that company. It was founded as the result of an agreement between the Commonwealth Government and the AngloPersian Oil Company. That agreement contains some rather remarkable statements. For example, the ownership of Commonwealth Oil Refineries Limited is. 10 the extent of a bare majority of iiic shares, in the hands of the Commonwealth Government, yet the majority of the directors are the nominees of the Anglo-Persian Oil Company! That brings me up against an amendment which I believe is to be moved from the Opposition side of the House. The Opposition proposes to commit itself to the rather foolish suggestion that the Commonwealth shall have a minority representation on the directorate of the Newnes shale oil concern, notwithstanding the fact that- it will provide slightly over 50 per cent, of the capital involved, and the Government of New South Wales will find a further 25 per cent. The experience behind us in connexion with the Commonwealth Oil Refineries is such that we should not be justified in accepting such an amendment.

In my opinion the Commonwealth Oil Refineries should have been detailed by the Government to develop the Newnes shale deposits. There was no necessity for the making of the agreement incorporated in this bill. If honorable members care to examine the report of the Chairman of the Royal Commission on Petrol, they will be convinced, I believe, that in the opinion of that gentleman the Commonwealth Oil Refineries has worked hand in glove with the four other big oil companies in Australia. We are therefore entitled to ask whether, from a taxpayer's point of view, the investment of Commonwealth money 'in the Commonwealth Oil Refineries has not been an entire frost.

Some rather interesting points about the agreement in this bill deserve consideration. First, the Commonwealth Government is to find 10s. in the £1 of the money to be risked. This money is to be regarded as a loan and is to bear interest at the rate of 4£ per cent. The honorable member for Echuca (Mr. McEwen) dealt very effectively a few days ago with the possibilities arising from the agreement in this regard, and also the provision that the rate of interest on the debentures will be very little more than the rate of interest which the Commonwealth has to pay for the money. When private enterprise has to be subsidized to the amount of 10s. in the £1 a big risk is involved. Incidentally the risk in this case is of an unusual kind. This Parliament has already provided £250,000 to assist in the search for flow oil in Australia. Very little of that money has so far been spent, although two experts made available by the AngloPersian Oil Company have been engaged for two years in a geological survey of Australia to ascertain whether the geological features of the country are favorable to the existence of flow oil here. It seems to me that if we pass this agreement in its present form one amount of money will be used to cancel any good effect that may be secured from the expenditure of the other amount.

Sir Frederick Stewart - At least we shall have two irons in the fire.

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) - Has the honorable member for Parramatta (Sir Frederick Stewart) considered paragraph 24 of the agreement, which provides that in the event of flow oil being discovered within the Commonwealth, adequate compensation shall be paid to the National Oil Proprietary Limited?

Mr Paterson - The paragraph provides that the Governments of the Commonwealth and of New South Wales shall favorably consider granting adequate relief to the company.

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) - At any rate, the matter will have to come before the Executive, and it is bound, under the terms of the agreement, to give favorable consideration to any request of that nature. It cannot adopt a neutral attitude.

Mr Paterson - It can do ' nothing without the consent of Parliament.

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) - I do not know what effect the consent of Parliament is likely to have if the amendment, of which notice has been given by the Minister for Defence (Sir Archdale Parkhill) is agreed to, for it provides that Parliament shall here and now appropriate all sums necessary for the purposes of meeting the liability .-- the Commonwealth arising out of this agreement. I have never known of a more remarkable provision. If it is included in the bill it will be tantamount to giving this and every succeeding Government a blank cheque to carry out the Commonwealth's obligations under the agreement.

My views on this subject are very strong. I shall not voice them at the moment, but if the amendment is persisted in at the committee stage of the bill I shall say exactly what I feel.

I am not concerned very much about the provision of the agreement to grant remissions of duty on materials required by the company, for it is quite in keeping with my own idea that rather low duties or no duties at all should be imposed upon equipment necessary for the establishment of new industries in Australia. I am not concerned either about the proposed amendment of the Income Tax Assessment Act to give this company easier conditions than those which generally prevail in regard to depreciation.

The provision of the agreement in regard to the dominant nationality of this company suggests to me, however, that we have reached another dead-end in government policy. Last year when the bill for the provision of £250,000 to stimulate the search for flow oil in Australia was under consideration, I made a strong but unsuccessful endeavour to limit the assistance to Australian companies or British companies. I could get no consideration whatever from the Government on that point. Yet, to-day we are informed that one of the virtues of the agreement now before us is that the company must always be British, that every shareholder and director must be a British subject, and that even the senior executive officers of the company must be British. That may seem all right; but I direct the attention of honorable members to the provision of the agreement that the Memorandum and the Articles of Association in regard to the ownership of the company may not be altered without the consent in writing of "the Commonwealth or the State". The obvious intention of that provision is, I take it, that the Articles of Association shall not be amended without the consent of both the Commonwealth Government and the Government of New South "Wales, but the word " or " is used, not the word " and ". It seems to me therefore that either the Commonwealth Government or the Government of New South Wales may approve of an alteration of the Articles of Association and it will become effective. Surely the consent of both governments should be necessary to abrogate the provisions relating to the ownership of the company.

What the Government is to get out of this concern in the event of default amounts to nothing. It will lose the £334,000, plus any arrears of interests.

Mr Lane - It is a sort of bounty to the industry.

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) - I should not be greatly concerned about that, if we were likely to achieve any definite results; but it seems to me that the cost of employing the individual workers in this concern will be altogether prohibitive. No work that the Government could pursue could be fraught with greater possibilities of good to the country than the search for flow oil; but this agreement should, in my opinion, he examined by a select committee of the House, or by a committee composed partly of honorable members and partly of gentlemen with technical knowledge capable of advising the Government on the rather complex questions arising out of it. I am prepared to vote for the reference of the bill to a select committee, but if the Government does not agree to that course of action I shall vote against the motion for the second reading, and trust that some other more satisfactory method may be adopted to develop our shale deposits.

One thing that should be borne in mind in view of the large amount of money to be spent on this project is that the extraction of oil from shale has passed beyond the experimental stage. A good deal of literature has been supplied to honorable members on the subject.

Sir Frederick Stewart - The production of wheat has passed the experimental stage, but the Government still has to provide bounties for wheatgrowers.

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) - I have no doubt that the production of wheat has passed the experimental stage in some parts of Australia, but I could takethe honorable member forParramatta to some parts of South Australia where it, is still in the experimental stage. If the honorable gentleman has a few thousand pounds to lose, I could provide him with some properties in the northwest of Victoria and in parts of South Australia on which he could lose it at a greater Tate than in many other undertakings.

Mr LANE (BARTON, NEW SOUTH WALES) - The honorable member for Barker (Mr. Archie Cameron) did not oppose the provision of bounties to wheatgrowers.

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) - I have done so. If the honorable member for Barton (Mr. Lane) had any concern for the truth in these matters, or if he had a memory upon which he could rely, he would know that I have on several occasions in this House said that neither Commonwealth nor State Governments could afford to subsidize the wheat industry in country where the Lord never intended wheat to be grown. But the honorable member for Barton could hardly be expected to remember that.

In a pamphlet on the extraction of oil from shale, that has been supplied to us, it is stated that in Scotland from 15 to 25 gallons of oil is obtained from each ton of shale treated. In Manchukuo, the J apanese are making 'a success of a proposition which is yielding only from 11 to 16 gallons of oil from a ton of shale. It is claimed by the Newnes people - whether rightly or wrongly, I do not know - that the Newnes shale is capable of producing from110 to 140 gallons of oil a ton.

Mr JOHN LAWSON (MACQUARIE, NEW SOUTH WALES) - About 98 I should say.

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) - If the statement of the honorable member for Macquarie (Mr. John Lawson) is true, a serious misstatement occurs in the pamphlet published under the name of the Newnes Advancement Development League. But even if we took a total of SO gallons, we should have a yield three times that of the Scottish shale and five t imes that of the Manchukuo shales. Yet we are told that this industry cannot succeed unless it is given preferential treatment by the Government for 25 years. The Crown is to be obliged to forgo excise duty at 51/2d. a gallon for the period, or alternatively, in the event of the reduction of the excise duty, to pay a bounty equal to the reduced excise duty on 30,000,000 gallons of oil.

Mr Paterson - The preference we are proposing is not so great as that given to the Scottish shale oil. There, the shale oil has a preference of8d. a gallon sterling, which is10d. a gallon Australian.

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) - But surely the Minister must realize that our shale is alleged to be three times as rich in oil as is the Scottish shale..

Mr Lane - That should give us a better chance of success.

Mr ARCHIE CAMERON (BARKER, SOUTH AUSTRALIA) - I shall not debate the subject at length. I have indicated my attitude to the bill. I do not offer any criticism of the Government for having entered into an agreement. I simply say that possibly there has been an error of judgment attributable to a rather enthusiastic desire on the part of the Government to develop the oil possibilities of Australia in one way or another. We have no such drastic laws in operation in Australia in regard to oil as operate in some countries to the north of us. One nation - Japan - requires that every oil company shall always keep six months' supply of oil on hand. Otherwise it may not sell a gallon of oil. Here, however, there seems to be no attempt to hold the whip over those octopuses which operate under the name of oil companies. It is unquestionable that oil will present one of the biggest problems to be confronted by the Australian Government before very long. I am not at all satisfied with the methods of tackling it that have been adopted up to date. Unless this bill is referred to a select committee I shall vote against the second reading of the measure.

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