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Tuesday, 11 May 1920

Dr EARLE PAGE (COWPER, NEW SOUTH WALES) .- I desire to preface my remarks upon this measure by a reference to the matter of waste iu the distillation of crude oil. I have before me the work of a recognised authority, whose conclusion is that the refiner turns every content of petroleum to commercial account - except the smell. With respect to the loss which takes place, it is not really a loss at all in actual residuum. The residuum is used right up to the last. There may be in actual distillation a loss in volume or weight, but when it is considered that crude oil is worth about 4s. a barrel, and that refined petrol is worth in Australia to-day nearly 4s. per gallon, it will be realized that we could afford to lose a certain amount of volume in freighting the crude oil to Australia, and still not be at a loss by the fact of a refinery having been established here. Every oil distilled has a residuum, and each usually has its own specific value. For instance, Mexican oil would have a particular constituent in its residue, while Trinidad oil would have another, of a different value. The point is, however, that there is really nothing wasted.

I am entirely in accord with the view expressed by the Leader of the Opposition, the honorable member for Yarra (Mr. Tudor), with respect to the necessityfor appointing a Select Committee before Australia is committed to any agreement. Although I disagree with the remarks of the honorable member, to the effect that it is immaterial whether a foreign or a British company refines the product in Australia, yet I agree that there are many other points upon which Parliament should satisfy itself. The Anglo-Persian Oil Company stands in rather a different category from most other oil concerns, so far as concerns the establishment of a refinery in Australia. The company was formed in the first place, I 'think, on the basis of two-thirds of the capital being put in by the British Government to begin with, so that the half-share represented by the company's activity in Australia would have one-sixth private capital, while the remaining five-sixths would be either Australian or Imperial Government capital.

Mr J H Catts - Out of £17,500,000, there is only £5,000,000 of British Government capital in the concern; that is to say, less than one-third.

Dr EARLE PAGE (COWPER, NEW SOUTH WALES) - In 1918, of a capital of £5,000,000, over £2,000,000 had been furnished by the British Government.

Mr J BT Catts - I have quoted from the figures furnished by the Prime Minister himself, when introducing the Bill.

Dr EARLE PAGE (COWPER, NEW SOUTH WALES) - I understood the right honorable gentleman to say that there was about two-thirds British Government capital in the original company. From the inception of the Anglo-Persian Company it has' displayed elevated Imperial ideals, in that it has sought to make the Empire self-supporting as regards its oil supplies. In its original prospectus the policy was set out as follows : -

Jo get an all-British company, with the Government as a controlling influence free from taint of any kind to deal with development of all fields outside British Isles. It might absorb all existing combinations, and at the same time undertake the examination and exploitation, as far as concessions are obtainable, of all' the known oil territories of the world, particularly directing its attention to British colonics and dependencies and those countries whose friendship can be relied on.

It recognised that the preponderance of the Empire's oil requirements were drawn from alien sources. I might add that it is one of the very few companies which has had the distinction of being mentioned in despatches, by reason of the manner in which it stood by the British Navy throughout the war. In 1918 the company approached the Commonwealth, and, in the proposition, which it placed before the Government, it answered most of the objections which have been raised to-day regarding its attitude upon finance. It proffered three alternatives: First, the company offered to enter into an agreement exactly similar to that which the Prime Minister is now placing before Parliament for approval. That is to say, the Commonwealth Government and the company were each to find half the capital.

It also offered to allow the Government to finance the whole undertaking of refining; or, as a third alternative, that the company itself should finance the project. I am of opinion that the basis on which the Government have presented the agreement - that is, sharing half and half - is easily the most favorable from the view-point of the Australian public.

Mr GREGORY (DAMPIER, WESTERN AUSTRALIA) - Would not the better policy be to try to find the oil first?

Dr EARLE PAGE (COWPER, NEW SOUTH WALES) - It is essential that there should be a refinery established in Australia before, oil is found; otherwise, there might possibly be enormous wastage. One of the reasons why I am glad that this company came to the assistance of the Commonwealth Government is that it has been proved beyond question that, although the United States of America possesses the great bulk of the world's oil refineries and wells, and has turned out the greatest number of engineers, the American engineer, by very reason of the fact that oil is abundant in that continent, is not a good man to send out to prospect new country. It has been proved that the British geological surveyors and oil prospectors have been very much more successful in finding oil in regions which have not hitherto shown indications. I am glad that there is to be an opportunity for the Anglo-Persian Company to place its surveyors, prospectors, and trained engineers at the disposal of the Commonwealth Government in order to try to locate that big oil field which, I am satisfied from my own experience of Papuan residents, actually exists in New Guinea.

The Anglo-Persian Company should exist largely as au oil-refining concern rather than as an oil-producing company. There should be included in this agreement provision for the protection of the rights of Australians, or, indeed, of any one who might secure the requisite licence to prospect for oil throughout Australia and its territories. The necessity for some such action as that now proposed being taken before oil is discovered is shown by the fact that in America oil discoveries have often been in the nature of gusher wells. The oil has been struck and has poured out in millions of barrels per day. The result would be that, if there is no trained organization available to immediately control the construction of adequate containers and the proper handling of the commodity in bulk, enormous quantities are "wasted. The same consideration applies in respect" of possible Australian discoveries. If, for example, oil were struck in Papua tomorrow, it would probably be a matter of six months before we could begin to save one-fourth of it. If the AngloPersian Company, or any other company - and I hold no brief for. the Anglo-Persian except that it is a British concern - were in a position to promptly control and direct matters, the oil which, might be tapped would be very considerably preserved. I would like to see the proposed agreement modified so that oil could be refined in Australia within the very near future, if the necessity arose, and in order that there might be a trained staff available till the time. It may surprise some honorable members to know that of the total supplies received for refining by the American Standard Oil Company, only 15 per cent, is drawn from its own wells. That is to say, 85 per cent, is derived from other sources. The custom in America, as I hope it will be in Australia, is that the refiner is compelled - in America, by competition, and will be here, I trust, by Government regulation - to offer to the producer the guaranteed market rate for his product. If provision to that end is made in the agreement now before Parliament it will meet with most of the objections raised by the honorable member for Kooyong (Sir Robert Best), to the effect that the refinery, when it is established in Australia, might never handle any Australian oil. If oil should be discovered in Australia the refinery will be required to take the oil at very definite rates which can be fixed and adjusted upon the world's parity. After all, the oil producer is a primary producer in the best sense of the term, and should be protected as such. The alterations which I regard as necessary in the agreement in order to make it acceptable bear first upon the question of establishing the refinery in Melbourne. If Papua should become the main source from which our crude oil supplies are to be derived, it will be only fair that the most suitable point - that is to say, one which is near to the source, and which can be adequately safeguarded in time of war - should be chosen. Other things being equal, I suggest that Bowen, on the north coast of Queensland, should be the site for the refinery. We understand that iron deposits in that neighbourhood are now about to he exploited by the Queensland Government, and that there are also big deposits of coal in the vicinity.

Mr JAMES PAGE (MARANOA, QUEENSLAND) - Bowen would not be a bad place.

Dr EARLE PAGE (COWPER, NEW SOUTH WALES) - I am not advocating any particular site. The matter should be carefully considered by a Select Committee. The question of the location of the refinery is one of the reasons why a Committee should be appointed. There may be in the electorate of the honorable member for Dampier ' (Mr. Gregory) on the western coast, spots which would be more suitable for the establishment of an oil refinery than there are on the eastern coast. These are all matters which should be determined by a Select Committee only after very careful examination and consideration of transport, and handling of both crude and refined products.' In the second place, there should be provided in this Bill, without any element of dubiety, absolute freedom for everybody to prospect for, and develop, oil in any part of Australia or of the islands. In the third place, there should be some assurance that the company, if protected in the way proposed, will purchase crude oil from any producer in Australia at current rates.

Mr Gregory - Is not the best market the open market?


Mr Gregory - Will there not be an open market under the agreement?

Dr EARLE PAGE (COWPER, NEW SOUTH WALES) - When I speak of current rates, I mean world's parity rates, after deducting freight and other charges for getting the oil away. That is the condition that holds in all other parts of the world, and no part of Australia wants preferential treatment over any other country. All we ask is a fair field and no favour, for every man who puts his money into the business. Boring and sinking for oil are matters for the small capitalist. It may cost anything from £1,000 to £10,000, or £15,000, whereas refining is a matter of £500,000 or £1,000,000 sunk in machinery and plant. There is every reason why the small capitalist and producer should be safeguarded in any agreement with a big company such as this is. Further, some definition of "current rates:" is required. That is the term which the Prime Minister used in his speech on the Bill, and some definition of it should be put into the agreement, so that there may never be any element of doubt as to what was actually intended. In the last place, I think the Crown should always retain the royalty. I fail to see how there can be any question of profiteering in an agreement of this nature, in which the Crown has such a large amount at stake, and such a large element of control.

Mr Mathews - It ha6 no control of the management.

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