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Tuesday, 21 June 1949

Mr CHIFLEY (Macquarie) (Prime Minister and Treasurer) . - by leave - In the statement which I made to the House on the 7th June, I read to honorable members the text of the telegram which I had despatched to the Premiers of all States following the announcement of the High Court decision which invalidated the National Security (Liquid Fuel) Regulations. In that telegram, I informed the Premiers that because of the present acute dollar shortage and our obligation to the United Kingdom to play our part as a member of the sterling area in keeping dollar expenditure to a minimum, it would be necessary to continue to limit oil imports to about the present level. I added that is my view it was therefore most important that the States should immediately consider instituting an effective system of petrol rationing as soon as possible.I asked the Premiers to give the question immediate consideration and let me have their views. Following the receipt of these telegrams by the Premiers, the Premier of New South Wales, Mr. McGirr, took the matter up with the other State Premiers, who unanimously agreed that a conference of State representatives would be desirable. At Mr. McGirr's suggestion I convened this conference in Canberra on the 17th June.

In order to assist the Premiers to consider the issues raised by the High Court decision, I had a number of documents prepared, and I wrote a letter to each of the Premiers which set out briefly the essential aspects of the problem as the Australian Government sees them. I feel that the information provided to the Premiers should also be made available to honorable members, and I therefore lay on the table the following documents : -

(a)   Text of letter dated 10th June, 1949, addressed to the Premiers of all States.

(b)   Memorandum entitled "The General Dollar Shortage ";

(c)   Memorandum entitled "The Dollar Element in Petrol and other Petroleum Products"; (&) Memorandum entitled "The Effects of a Cessation of Petrol Rationing"; and

(e)   Text of letter dated 20th June, 1949, addressed to the Premiers of all States.

Honorable members will note from the document dealing with the dollar element in petrol and other petroleum products that since my previous statement was made the United Kingdom Government has agreed to disclosure of the facts that: (a) the net dollar sales of American companies to the sterling area and to British-controlled companies is running at an annual rate of about fotg.40,000,000, or about 160,000,000 dollars; in addition, there is a substantial dollar element in so-called sterling oil; (&) the total net dollar cost of oil to the sterling area is running at an annual rate of well over £stg.l00,000,000, or about 400,000,000 dollars.

At the request of the Premiers I took part in the full session of the conference last Friday afternoon, and discussed with them at some length the general background of the sterling area dollar position and the need for restricting the consumption of petrol and petroleum products in the sterling area in order to relieve the drain on the gold and dollar reserves of the United Kingdom. I also took the opportunity to deal with the offers from Caltex Oil (Australia) Proprietary Limited, Ampol Petroleum Limited, Alba Petroleum Company of Australia Limited and H. C. Sleigh Limited to import petrol from Bahrein against payment in non-convertible sterling. As honorable members are aware, I dealt with this matter in some detail in the course of a statement which I made to the House on the 16th June, when I quoted the full text of a written statement on the subject which had been provided by the United Kingdom Treasury and the United Kingdom Ministry of Fuel and Power. That statement established quite clearly that, although payment for oil supplied from Bahrein is initially made in sterling, the Bank of England subsequently has to provide dollars to meet the dollar obligations incurred by the supplying company, the Bahrein Petroleum Company Limited, bo that petrol supplied from Bahrein is, in fact, 90 per cent, dollar petrol.

Although no formal decisions were recorded, I think it is a fair statement to say that all the Premiers recognized the gravity of the over-all sterling area dollar position, and that they also recognized that any substantial increase of Australia's imports of petrol and other petroleum products would inevitably impose an additional drain on the gold and dollar reserves of the United Kingdom, which are also the central reserves of the sterling area.

A private meeting of Premiers was held on Friday evening to discuss the matter further and at the conclusion of this meeting, Mr. McGirr informed me that; while it had not been possible to arrive at any unanimous decision regarding future action, all the Premiers had undertaken to place the information supplied to them by the Australian Government before their respective Cabinets. Mr. McGirr also told me that the Premiers proposed to hold a further meeting to be called by him at a later date. In the meantime, the Premiers requested that the Aus tralian Government should examine the practicability of controlling the distribution of petrol through its import power. On this latter point the proposal put forward by certain Premiers was that the Commonwealth should become the sole importer of petrol and should use the oil companies as agents of the Commonwealth in the distribution of petrol and in its rationing to the ultimate consumers. Following discussion of the matter with the Attorney-General (Dr. Evatt), I have to-day despatched a letter to each of the State Premiers setting out the legal position as the Australian Government sees it. For the information of honorable members, I also lay on the table a copy of that letter.

To summarize the Government's view of the position, it is necessary, because of the seriousness of the general dollar position, to continue to place restrictions on the quantities of petrol and other petroleum products that may be imported into Australia. This can be done by the Australian Government, but in view of the High Court's decision, the constitutional position is now such that action to ensure equitable internal distribution of the limited supplies available can be taken only by the States. In the statement that I made on the 7th June, I said that companies and retailers engaged in the distribution of petrol and other petroleum products would be acting in their own interests, as well as in the interests of the community at large, if they confined sales to normal quantities and continued to ration available supplies as equitably as possible. I should now like to make a direct appeal to consumers to limit their purchases to the quantities towhich they would have been entitled if the Commonwealth rationing scheme had remained in operation. In the absence of any compulsory rationing scheme, it is evident that excessive demands must in the long run result in dislocation in the operation of essential industry and essential services. I might add that since the documents for the conference with the Premiers were prepared, some further deterioration in the dollar outlook has become evident. Honorable members will have seen published references to a statement made by the Chancellor of the Exchequer on the 16th June in which he said that Britain's dollar difficulties were becoming greater as theworld emerged from a period of acute shortages. Although they must be greatly increased if the dollar problem is to be solved, the volume and value of sterling area exports to the dollar area have been falling off over the last few months. There is, therefore, nothing in the present outlook which would in any way justify a relaxation of existing measures to conserve dollars.

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