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Tuesday, 2 October 1984
Page: 1048

Senator WALSH (Minister for Resources and Energy)(5.45) —by leave-Senator Chaney has indicated that I have not seen the paper, so I cannot respond to it. But I guarantee to have a look at it. In regard to the other comments he has made there has been, of course, an absorption allocation policy ever since oil has been produced from Bass Strait-for most of that period under non-Labor governments. In recent years the situation has been that the spot market price is usually above the Australian administered import parity price. That has changed back recently to the situation which applied with regard to price relativities in the early years of Bass Strait production. For that reason -I do not have time to go into all the details under the circumstances-the Government has had to consider the import duties Bill to which Senator Chaney referred.

With regard to the proposed amendments to the Petroleum (Submerged Lands) Act and the reference that Senator Chaney made to good oil field practice, the Victorian Government raised some concerns about this. I understand, although I have not directly confirmed this with the Victorian Minister, that the Victorian Government is now satisfied with the proposed amendment proposed by the Government to the original Bill which was introduced into the House of Representatives. I had a quick glance at an amendment of which Senator Chaney has given notice of his intention to move. From my quick study of it, it imposed a far more rigid condition-that is, that under no circumstances must the requirement of good oil field practice be overlooked. I will consider that further, but at this stage I do not believe the Government would accept it because there are circumstances in which there is a trade off between good oil field practice and the need to maintain petroleum supplies in a real emergency, which could even be a defence emergency. As Senator Chaney has indicated he would concede there are some conditions whereby the need to satisfy an emergency might outweigh the absolute maintenance of good oil field practice.

In regard to the new allocation scheme, it is not correct that there have been no discussions with the industry or that the only discussions which have taken place have been between departmental personnel and the industry. Certainly there have been many discussions with departmental personnel at which I have not been present, but there have been a number of discussions at which I have been present, the most recent being only half an hour ago. I have seen the telexes and members of my staff at Parliament House have examined the submissions which have been made by the industry. It is necessary for the matter to go to Cabinet before very long. I cannot forecast or state with any certainty what the outcome of that Cabinet decision will be. There will be, I believe, a movement towards a freer market and a longer term intention of freeing up the market even further. But it would be unwise in the Government's view-or at least in my view and I believe in the Government's view-in one move to deregulate completely the Australian oil market and open up the possibility of significant instability and much greater movements of crude both in and out of Australia with consequential social losses.

On the question of the industry response, I think it is correct that one or two companies-I am talking here about both the production and the refining sides of the industry-have advocated a completely free market. The great majority of the companies, however, have expressed a preference for a free market, but have either recognised that there are valid reasons for deviating from a completely free market to some extent or, I think in the majority of cases, have actually argued that there should be some exceptions to a free market because there are circumstances which justify some degree of government regulation. For example, so far as I can recall, no company has suggested that the smaller on-shore producers-at least with the exclusion of Barrow Island-should be completely exposed to market forces because small on-shore producers which do not have the infrastructure for exporting oil would be in a very unequal bargaining position in attempting to sell crude in a completely free market to Australian refiners.