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Thursday, 26 February 1987
Page: 667


Senator Sir JOHN CARRICK(10.59) —The Liquid Fuel Emergency Amendment Bill 1987 is a very brief Bill indeed. The effective content of the Bill is less than one line. The Bill seeks to repeal section 54 of the Liquid Fuel Emergency Act 1983. Its objective is to take the sunset clause from the original Act. The antecedents of this need to be known in order that I can address some specific remarks. During the period of the Fraser Government and the period of the world energy crisis a committee was set up and very lengthy discussions took place between the Commonwealth and the States to deal with possible energy emergencies. Those discussions were very wide ranging and comprehensive and aimed to bring about mirror legislation, or complementary legislation, for the States, the Territories and the Commonwealth. The aim was that that there should be parallel thoughts to deal with emergencies. There was never any intention that an emergency confined to a particular State should be in any way intruded upon by the Commonwealth. Equally, there was the need to have team-work should there be a national emergency. The Commonwealth and the States had not reached that specific agreement in 1983 and, properly, an Act was brought about to give the Commonwealth certain powers.

So that there could be time in which the States and Territories could look at the problem and reach some commonality, a three-year sunset clause-section 54-was put into the original Act. The purpose of this Bill is to remove that sunset clause and to give an indefinite period of life to the Act. The coalition fully supports the removal of the sunset clause. I regret that a common approach has not been reached by all those involved. Nevertheless, it is vital that the Commonwealth should have these powers. These powers are necessary, not simply to handle a world energy crisis like that of the 1970s-which could happen again, and will-but also in the case of industrial turmoil and strikes. They are necessary in the case of major accidents to pipelines or to plant. There are a number of scenarios which would make absolutely necessary some orderly process by which to ration fuel in Australia. Therefore, I commend that principle.

Of course, that relates to the sharing of the limited amount of fuel that is available. Fundamentally, my worry in speaking to this Bill is that the Government of the day is failing wholly to address itself to the long term adequate provision of fuel for Australia, whether the provision of that fuel is diverted by accident, strike or otherwise. The primary domestic task of Government in Australia is to ensure that there is an adequate supply of energy, be it automotive propulsion energy or electric power generation energy, in season and out of season. In a country such as Australia where the potential of energy resources is enormous, it is outrageous that there should be any kind of threat or peril in this regard.

I remind the Senate that when the Fraser Government came to office in 1975 there was a real projection that within a few years the self-sufficiency of indigenous oil would fall vastly, to 40 per cent and below, and that Australia could be totally dependent on overseas oil supplies. That in itself would put Australia in very great peril. Apart from anything else it was quite impossible to envisage that Australia would have been able to import the fuel even if it were available. Here we are today with the most tragic adverse balance of trade that this country has ever had, and we are not doing anything to offset a huge peril that will occur within a few years.

We need to bear in mind this simple formula: For every 10 per cent fall in the self-sufficiency of oil in Australia, the import bill will go up by at least another billion dollars. That is an outrageous thing to contemplate. When the Fraser Government left office there was a major oil self-sufficiency in Australia. Indeed, indigenous oil, the lighter end of the barrel, was supplying more than Australia's needs, and tremendous efforts were going on to ensure that more and more conservation, conversion, and exploration could take place. What had been a handful of exploration in 1975-almost non-existent-had become a record number of oil wells and explorations, a record number of discoveries and record on-shore development. What has happened now?

The important thing for Australians to understand is this: The Bass Strait oil field, the Esso-BHP oil field which provides something like 90 per cent of our oil supply, has started to decline. It is projected to decline almost totally over the next five or six years. I doubt whether it will decline totally in that period as other techniques are found to upgrade the efficiency of recovery, but fundamentally it is declining, and declining severely, and no alternative supply has been found to take its place. It is incredible that this should be so, but something much worse is happening that greatly offends me and that is that at a time when the Bass Strait oil supply is declining this Government is exporting the oil. In other words, it is exporting oil which is surplus to our immediate domestic needs to the detriment of Australia in the next five to eight years. That in itself, in my judgment, is outrageous; it is quite tragic.

When I asked the Minister for Resources and Energy (Senator Gareth Evans) in the Estimates committee hearings `How much has this done to deplete our stocks?', he said that the total volume exported so far was only the equivalent of our future needs for six or seven months. Only six or seven months! Does anyone know what that converts to in tens of billions of dollars in the adverse balance of trade? Does anyone know what a situation Australia will be in in five or six years time if we are in peril and we have sold the oil out of the wells? My goodness, the Americans and others know something about this. They store their oil in the ground. They do not export their oil; they deliberately import oil and leave oil in the ground because of their security needs. What are we doing? Knowing that the Bass Strait supply is about to taper out, we are exporting that oil. Why? It is because we have an adverse balance of trade brought about by this Government and in the short term we are doing a quick trick. We are trying to earn some export earnings from oil against the fact that in the future, in the next decade, we will be in absolute peril. This is an outrageous situation. In the time since the Fraser Government went out of office, exploration in Australia has diminished enormously. All the Government will say is that this is because the incentive and rewards for exploration have diminished because of the fall in world prices. This is nonsense.


Senator Gareth Evans —Ha, ha!


Senator Sir JOHN CARRICK —I wish to record the cynical chuckles of the Minister. This is a Minister whose job it is to increase exploration in Australia. He has imposed prohibitive taxes and charges which inhibit exploration. So the chuckles are rather inappropriate at this moment. This is a Minister who has set up one of the most absolutely uneconomic and unfair systems-the front end bonus loading.

In my time as Minister, when we wanted to decide who should get a lease for a field we called for tenders. We received submissions from people and we looked to see the background integrity of those people-their past performance, their financial ability, and their ability to do something immediately-because that is what was wanted. That is not what happens now. I recited Kipling to the Minister when he brought in this measure: `He that has the longest purse shall have the longest life'. That is the principle-I take it to be a corrupt principle-in giving a lease. The fellow who pays the most gets the most. He pays it in the short term and he can then sit on his lease; he can pretend and do all sorts of things. There is no proof at all that he will handle the situation properly. The only thing is that in quick trick he has some money, which he will not get at the end anyhow because in terms of profit and company tax it will be deleted as an ordinary working expense.

In fact, exploration has fallen enormously. I love the way the Minister keeps talking about the fall in oil prices when over his four years in office he has consistently put up the price of oil and petrol in Australia, steadily, bit by bit. I remember that pleasant, gentle fellow-he of soft and whispered words-Paul Keating, who used to be my opposite number, who used to inveigh against import parity prices. He was going to win the 1980 election by opposing that policy, and indeed with the policy that it would be outrageous for anybody to pay beyond 34 cents. He went stamping around Australia, standing on a platform saying that import parity pricing was wrong. Who is the saviour of import parity pricing today? It is the Keating-Hawke-Evans Government, and where is the price of oil today?


Senator Gareth Evans —That is a formidable trio.


Senator Sir JOHN CARRICK —I understand the embarrassment of Senator Evans, and if it will relieve his embarrassment I will withdraw his name from those of Mr Hawke and Mr Keating. Where, in real terms or otherwise, are oil prices in Australia today? This Government and this Minister have put up prices, they have nearly doubled, and the Minister takes some consolation in the fact that they will drop prices a cent. The fact is he has indexed excise on oil, so that happens all the time. This is the pattern of a government which should be promoting massive exploration throughout Australia, but in fact exploration has more than halved. The results are bad indeed, not due to the explorers themselves but due to the fact that the Government is giving no direction and no incentives to the explorers. At a time when we need more and more exploration the Government has a record like that of the Whitlam Government. At the end of the Whitlam Government only one oil rig was working in Australia. I enjoy Senator Button asking us to contrast the performance of Labor and Liberal; nothing gives me greater pleasure.

If we are to make sure that in Australia we can put off an emergency, perhaps indefinitely, by having adequate oil or adequate alternatives to oil, whether from overseas or from Australia, not only will exploration have to be of major importance but also conservation and conversion. The outrageous situation is that conservation in Australia has fallen away. It is sad to say that when we examine the estimates of the Department of Resources and Energy we see that more and more it has fallen into lassitude under the inertia of the Minister and nothing is happening in terms of saving energy in Australia or indeed converting to other fuels. How outrageous it is that when this Government came to office Australia had a plan to convert commercial vehicles, including government vehicles, to liquefied petroleum gas-a conversion plan which would have saved 14 per cent of oil-based fuel in a country which is awash with LPG. The Government inherited a program whereby 3,000 government vehicles a year were going to be converted. There was no question of whether or not it would have been economic. Ninety per cent, if not 100 per cent, of Canberra taxis now use LPG, as well as 80 per cent of Melbourne taxis and something like 60 to 70 per cent of Sydney taxis. The efficiency and economy of this program would have been enormous. Yet what did the Government tell us in the last Estimates committee hearings? I think the Government said that some 300 vehicles were converted. That is an absolute outrage and a deliberate walking away from what is the greatest potential crisis facing Australia.

Australia today is confronting one single problem which the Government will never identify, and that is that Australia is being out-competed by the world outside because its costs of production are lower than ours. It is not because its wages are lower than ours; indeed, in many cases its wages are as high or higher. It is simply because its productivity is greater. For the most part these countries import our minerals, take our energy resources, cart them over tens of thousands of miles of ocean and process them, generate electricity, process the minerals and sell the resultant products back to us cheaper than we can produce them ourselves. Why? Because we are not efficient and because the Government itself will not give the lead. Australia has everything in terms of minerals, it has everything in terms of potential energy and nothing in terms of Government initiative, a Government goal, or a perceived goal.

The Government says the only thing wrong with this country is falling export prices. That is what it blames everything on, but that is nonsense. What is wrong with this country is that the costs of production are such that we cannot stop the flood of imports coming into Australia. We cannot employ the 600,000 Australians who are unemployed around this country, and that is a tragedy. Over seven years of the Fraser Government the average unemployment rate was something like 5 and a bit per cent. Under this Government the rate is running at about 8.8 per cent. What is the Government doing about this situation? The primary task of government is to ensure that families are employed, that youngsters coming on to the market have jobs; yet bit by bit the manufacturing industry in Australia falls away. Every year under Senator Button's administration the manufacturing industry shrinks and we lose more jobs. We have the energy sources; we have the mineral resources which we can extrude and process on the spot, yet we cannot do so as cheaply as countries that do not have these resources and have to cart them away. Yet they bring them back to us and sell their products at a lower price.

The Government and the Minister concerned ought to be giving a lead, ought to be putting a fire in the bellies of Australians in terms of cutting down costs, in terms of increasing productivity. The Government is doing nothing about it. The lack of conservation is outrageous. Even the Minister admits that the simple program that we put in motion to put time switches on Canberra buildings, so that they would not all be floodlit like some extravaganza mardi gras every night, has failed. It was a simple program to conserve energy in buildings. The Government has not done anything about a program to fine tune air conditioning in order to save an enormous amount of energy. One can go to any major capital city in Australia and look at the Christmas tree scintillation of lights and realise that nothing has been done. Australians are wasting an enormous amount of energy. The Minister knows of the need to overcome the problem of the enormous debt incurred by governments in building power stations throughout Australia. The best way to overcome this record debt is to conserve energy and so eliminate the need to build another power station.

When I sat as temporary Chairman of the International Energy Agency it was agreed that any country like Australia, America, Canada, France, Britain or Germany could save 30 per cent of its energy if only it had the will. Indeed, if it could save that 30 per cent not only would it waterproof itself against emergencies but also it would get right to the heart of the costs of production. Nothing is happening. The fact is that there are all sorts of lip service to these industry energy audits, to turning off the lights. Anybody who goes for a stroll in Canberra will see what I mean. There is nothing at all in terms of having consultations between the States and Canberra to achieve better, efficient use of energy. Indeed, the Zeidler Committee of Inquiry into the State Electricity Commission of Victoria, which at the end of the Fraser Government foreshadowed the link between Victoria and South Australia and a grid on south-eastern Australia, is still only talk within the Government. Nothing at all has been done of practical significance.

I read this morning that Mr Wran is going to fix it. In case the Minister needs to be reminded, Mr Wran is going to fix it in the Commonwealth Scientific and Industrial Research Organisation. He is going to have an investigation of alternative fuels. Ha! Four years into the show? I remind the Minister that over in New Zealand we used to have something of an informal co-partnership in terms of the Mobil experiment in Maui gas. Somebody ought to tell Mr Wran that that massive experiment has been going on. But no, because CSIRO is strong on public relations and poor on product, we learn today that one can take natural gas, turn it into methanol and then turn it into petrol. Mr Wran has discovered it-I read that today! What a nonsense situation. We were getting all the information that was coming out of the huge Mobil experiment in New Zealand. In fact, in Australia we had vehicles test running and test driving on methanol and on natural gas. We had all these things going but, if it comes to public relations, we can rely on the fact that CSIRO will be all up front in the shop window and nothing back in the storeroom. It is incredible that after all these years it should trot out a discovery that one can turn natural gas into methanol and then into petroleum.

If the Minister had picked up from where we had left it and had gone on with the job, we might have had something going here now. We have now a lesser use of liquid petroleum gas altogether by commercial vehicles, and certainly almost no use by the Government, and this is outrageous. The pricing policy of liquid petroleum gas was such that a commercial vehicle doing long milage would save enormously-at least one-third in costs as well as 14 per cent in the use of fuel. It will not be very many years before saving one per cent of the light end of the barrel-that is, the kind of oil that Australia is producing-will be of enormous importance in terms of our adverse trade balance. Even though year after year at the estimates we pummel the Ministers-Senator Walsh and Senator Gareth Evans-on this, the Government has not moved on this. The judges of the Archibald Prize or the Wynne Prize would give them the natural monopoly of still life. They are totally inert when there is a crisis for Australia.

One of the great dangers is that, because at the moment there appears to be a glut of oil at relatively low price, governments will do nothing. Let me just say one frightening thing to this Senate. It is estimated-and the Minister can refute it if he wishes-that by the mid-1990s or before, the Organisation of Petroleum Exporting Countries will control 75 per cent of the exported fuel to this free world of ours. Is that a situation that the Minister wants? Is he going to commit Australia to a pricing situation similar to that of the 1970s? Let me just point to that terrible time of the 1970s when oil quadrupled in price in one year. Country after country that I visited had to use more and more of their money to buy oil and had less and less of their money to purchase consumer goods from overseas. The world recession of the 1970s, from which Australia suffered a very bad delayed reaction in 1982-83, was largely due to the fact that nations around the world had to spend more and more of their export earnings on oil and had less and less to buy other countries' goods. That is something that we must, above everything else, try to stop for the future in a country like Australia, which has an enormous capital debt now which is eating into our economic vitals, which has a balance of trade as bad as we have got and which has a dollar which has been judged and found wanting in the world so that it has tumbled 40 per cent.

The heart of the thing is this: No government has the right to govern unless, in the first place in a country which is energy rich, it has discovered and made good the sources for a continuous supply of automotive, thermal and electricity generating power. It is outrageous that this should be falling away. No government should be able to claim to be government unless it has put up increased exploration at a time when our known resources are falling away; and it cannot claim any kind of authority unless it is conserving, which this Government is not, and converting, which this Government is not.

The tragedy is that we have a bandaid Bill before us. I thoroughly approve the Bill. In fact, I was a part architect of it years ago. I am perfectly happy about the Bill, but it is a bandaid because the serious accident has happened. Nothing that the Government is doing is stopping the serious accident. Everything it is doing is aggravating Australia's debt, balance of trade and high costs, and the Government stands very seriously condemned on that.