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Tuesday, 11 May 1920

Mr GREGORY (Dampier) .- I am afraid the honorable member for Darling (Mr. Blakeley) has misunderstood my interjection. I am very much opposed to the Bill, and I think it should be referred to a Committee. I am not at all satisfied about the wisdom of establishing a refinery in Australia just now. But if the Government are going to be put to the expense of £250,000 in connexion with this arrangement, we should see to it that the best brains available are on the directorate of the company; and I would like to know that the experience and knowledge of the Anglo-Persian Company controlled the project. The development of petroleum deposits in Australia is of the greatest importance, and, therefore, the Government should do all that is possible to encourage prospecting. We have not done very much hitherto. By an announcement recently in the Commonwealth Gazette the Government intimated their intention of paying a reward of £10,000 to the discoverer of a valuable oil deposit in Australia. But I put it that any person who discovers oil in commercial quantities will not stand in need of Government assistance. This assistance, if it is to be of any real value, should be given in the prospecting stages. So far as possible, we should avoid creating any monopoly in oil, and therefore we should give every inducement to prospecting parties. During the last fifteen years a considerable amount of work in this direction has been done in Western Australia, so far without success; but it is surprising what faith a great number of people have in these ventures. Large sums of money have been expended in boring operations, and in one case a bore has been put down to 1,700 feet. Those interested in these projects firmly believe that oil will be struck somewhere between Albany and the Leeuwin, as bitumen is found all along the coa3t between these two points, and bitumen, as honorable members know, indicates the presence of oil. The State Government have given a good deal of assistance to prospecting parties, but so far the Commonwealth Government have not.

I doubt if one honorable member thoroughly understands what the Bill means. I believe it gives a big monopoly to the Anglo-Persian Company. This is not right. We want oil badly. . Nothing could be of greater importance for the development of our resources. INdo not want to reflect upon anybody, but recently an application for the right to prospect in the Northern Territory did not appear to receive sympathetic consideration, a rental of £13 per block being demanded. In Western Australia, when I was a State Minister, no rental was charged to any person who desired to prospect for oil. A small registration fee was sufficient for a large reservation which the Minister had power to cancel, but this power was not exercised if he were satisfied that the people were prospecting in a bond fide manner. When I was in Western Australia during the last election campaign some gentlemen who are interested in the oil project, brought under my notice a report by Dr. Basedow, who certainly thinks the prospects are most promising. I had no personal interest in the Northern Territory application to which I have referred. The people who approached me assured me that they could get plenty of money from friends in the Old Country, and all they wanted was the right to prospect over a given area, but all sorts of difficulties were put in the way. I tell the Government plainly that' it is no use offering a reward of £10,000 for the discovery of oil, because the discoverer will not need the reward. He should, however, be free from all interference other than insistence that he should legitimately prospect, though I am afraid there will be a great deal of wretched restrictions, such as we have experienced hitherto in connexion with mining mat- ters. We Avant an open market for oil in Australia, always, of course, provided that the interests of the Commonwealth, from a defence point of view, are safeguarded.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - There is no open market for oil to-day.

Mr GREGORY - It is a pity. I thought from what I had heard about the Anglo-Persian Company that there had been an open market. So far as America is concerned, there has been control for some time, but prior to the war a combine reduced the price to the consumers, as we were able to get kerosene for about ls. per gallon. I do not know what effect it had upon producers, though I believe many were crushed out of existence. I believe in the open market, and I believe in encouraging the prospector. Very few honorable members understand the difficulties and troubles of prospectors, who go out on their mission with little or nothing to guide them. It might take years to discover oil, but when it is found the successful prospectors should get the full reward for their enterprise. Paragraph 11 of the agreement states -

The price payable by the Refinery Company to the Commonwealth and to the oil company respectively for indigenous oil and for crude mineral oil shall from time to time be fixed by agreement between the Commonwealth and the oil company, and shall be based upon the contents of the oil.

I object to this proposal. It is all very well to talk about starting new industries. Any development along these lines should not be at the expense of' the man who makes the discovery. When the Bill is in Committee, honorable members should make it quite clear that the price to be paid for the oil shall be world's parity. We demand world's parity for our other primary producers, and we should also have world's parity for our oil.

Sir Robert Best - The Anglo-Persian Company will see that the price is fixed at world's parity.

Mr GREGORY - No, it will not. Is there anything in the Bill that would lead one to believe that any special effort will be made to develop the oil-fields in Papua or in any of the other Pacific Possessions?

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - Oil boring is proceeding at present.

Mr GREGORY - By the Government?

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - By the same company.

Mr GREGORY - There is nothing to that effect in this proposal. .

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - There is another agreement.

Mr GREGORY - I cannot deal with that. If it is the intention of the Government to grant a monopoly to the Anglo-Persian Oil Company, I am going to oppose it as strongly as I can.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - It is not intended to give the company a monopoly. It is merely our boring agent.

Mr GREGORY - Will the Minister for the Navy say what area, if any, is to be handed over to the company?

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - The company is conducting boring operations there at present.'

Mr GREGORY - For the Commonwealth?

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - Yes', and for the British Government.

Mr GREGORY - I believe in giving concessions over limited areas for prospecting purposes, but the Anglo-Persian Oil Company should not be granted a monopoly. The representatives of this concern understand their work, and I believe they will make a legitimate effort to discover oil; but at the same time I object to an endeavour being made to create a private or governmental monopoly, because during the last four or five years we have seen, with regret, the results of so-called Government enterprise. I oan not in a position to say that money has been wasted, or that there have been unnecessary delays, because a layman does not know the amount of effort that has been employed. I have, however, read reports in connexion with works of this character, and from recent information I received from Papua, it would appear that, up to the present, very little deep boring has been carried out there. If private companies had been in control, and had had a similar amount of money at their disposal, I believe bores would have been sunk to a depth of at least 1,000 or 2,000 feet, and that by now we would have known definitely whether oil could be produced in payable quantities. I am not in favour "of Governments undertaking prospecting work, as I have seen too much of it in Western Australia, where, in most cases, the results have been most unsatisfactory. Exploratory work of this nature should be carried out by individuals, assisted by the Government - Federal or State- as under such circumstances prospectors are always anxious to obtain something for themselves. So long as enterprises of this character are under Government control, they will be doomed to failure.

The next point I wish to raise in objection to the Bill is in' regard to the restrictions to be placed on other refineries and producers. There are other refineries in Australia at present refining large quantities of fuel oil for use in industries that are likely to be extensively developed. Such industries need to be protected, and I am not. sure whether the creation of a monopoly of this nature will not be detrimental to the interests of such undertakings. Even if they are not likely to be prejudicially affected by this measure, it would be wise to refer the Bill to a 'Select Committee to enable honorable members to be in possession of the fullest possible particulars. Certain private information has been given to me, and it appears that there is a slight danger of the measure seriously interfering with the operations of certain industries already established. In view of all the circumstances and the necessity of having the fullest information, I hope the Government will agree to refer the Bill to a Committee of inquiry. The honorable member for Cowper (Dr. Earle Page) seems to be in favour of the measure, but I can see very grave dangers to the interests of the primary producers. Paragraph 14 of the schedule reads -

In order to insure the full success and development of the oil-refining industry in Australia the Commonwealth will so long as the prices charged by the Refinery Company for products of refining arc considered by the Commonwealth fair and reasonable -

(a)   exercise or cause to be exercised such statutory and administrative powers as it deems advisable to prevent dumping and unfair competition by importers of refined oil from other countries.

I have seen a good deal of what has happened when Ministers have been allowed to exercise statutory and administrative powers, particularly in connexion with metals, during the war period, and I am strongly opposed to such practices.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - It should be quit* clear to the honorable member that a private company would not come here unless it was protected from the Standard Oil Company. No company could live here unless it had some protection.

Mr GREGORY - If the Minister for the Navy considers that some protection is necessary, why should it not be embodied in a separate measure placing the power in the hands of Parliament instead of Ministers? I" think the paragraph I have quoted is quite clear.

Sir Robert Best - I think the honorable member is wrong.

Mr GREGORY - The paragraph reads -

The Commonwealth will . . . exorcise, or cause to be exercised (a) such statutory and administrative powers as it deems advisable to prevent dumping and unfair competition by importers of refined oil from other countries.

Sir Robert Best - It says " such statutory and administrative powers."

Mr GREGORY - That . is so; such " administrative powers as it deems advisable." In connexion with the metal industry, an outside organization - the Australian Metal Exchange - with, no statutory powers, even by regulations, has absolutely refused to grant a permit for the export of certain articles from this country. When we hear of such occurrences it naturally makes one suspicious - I do not use the term offensively - concerning measures of this sort. The Government may be acting in what they consider the best interests of Australia, but I strongly object to statutory powers being placed in Ministers' hands. If the Government are to prevent dumping they will naturally interfere with competition by other companies. I can easily understand the attitude of the honorable member for Kooyong (Sir Robert Best), who believes in Protection even to the extent of erecting a stone wall round the country to prevent anything coming in.

Sir Robert Best - The honorable member has never heard me advocate prohibition.

Mr GREGORY - Perhaps not; but the honorable member will probably support the Government in placing an embargo on the importation, into this country of certain articles of which he knows that Australian manufacturers cannot produce sufficient to meet our requirements. I desire honorable members who represent primary producers to realize that in the future oil fuel is to be largely used for traction purposes in connexion with the development of farming areas, and we can easily realize what the result will be if this power is placed in the hands of the Government. Sub-paragraph c of paragraph 14 reads -

The Commonwealth will . . .

(e)   cause to be introduced into the Parliament of the Commonwealth and supported as a Government measure a Bill providing for the imposition of Customs duties on crude mineral oil whenever in its opinion such action is necessary or advisable to prevent unfair competition with the products of crude oil refined in Australia by the Refinery Company.

All the primary producers are to have is an oil refinery somewhere in Australia. The measure provides for the imposition of Customs duties on crude mineral oil to prevent unfair competition with the products of the Anglo-Persian Company. I do not think that is a fair proposition.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - We have that power at present.

Mr GREGORY - But this is a special pledge, and when these powers are exercised it will mean dearer oil.

Mr Corser - How can it?

Mr GREGORY - We have oil companies here now.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - Very small concerns. 1

Mr GREGORY - Can the Minister for the Navy explain how we are to derive any benefit from the establishment of an oil refinery in Australia? There has been a good deal "of kite-flying, and promises have been made to those who could discover oil in payable quantities. I am anxious to do all I can to promote the search for oil, but when it is discovered it will be time enough to start a refinery.

Mr Corser - That will take two years.

Mr GREGORY - We have been twenty years searching for oil, without success, and the proposition now is to penalize the people because it will take two years to erect a refinery. I think that is hardly fair.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - Who said that we were going to penalize the people? We are going to cheapen the price, I hope.

Mr GREGORY - I do not think that this proposition will be the means of reducing tie price. The Anglo-Persian Oil Company is a big concern, and has, I believe, done some fairly good work.

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - The Anglo-Persian Oil Company supplied the British Navy with oil during the war period at less than one-half the price we had to pay.

Mr GREGORY - But I am referring more particularly to the benefits, if any, likely to accrue to the consumers in Australia. The AngloPersian Oil Company offers to put £250,000 into the new concern that is to be formed under conditions that seem very fair. To my mind, it is reasonable that the company should have control of the directorate, because brains and ability are essential to the success of the enterprise, and for these it is safer to look to experts than to Government nominees, who not only might have no practical knowledge, but also, as sometimes has occurred, might be appointed because of pressure exerted on their behalf. The company has been carrying on operations in different countries; it has a staff specially trained for its work, and understands all the ramifications of the oil industry. Its people, therefore, should control the refinery. But it is also right and safe to provide that the Government shall have a controlling influence by possessing the majority of the shares, so that no alteration may be made in the articles of association. The company is not to contribute to the expenses incurred in prospecting for oil. It may be provided under another- agreement that it is to find experts for that work, but I decline to consider that matter, because the only thing that we have before us is the agreement contained in the schedule to the Bill. On the other hand, the company obtains the profits on the crude oil, and the profits on the shipping freights. As has been pointed out, special tank steamers must be used for the conveyance of the oil, and as they will be unable to take back loading, that will be taken into consideration in fixing the freights. I believe that the company will act fairly towards the Government, but they will undoubtedly get a good profit on the shipping business. Furthermore, they risk nothing from loss of cargo in transit, because the oil is to be purchased f.o.b., and the insurance charges therefore will be met by the concern that it is proposed to form. I have been informed that in the refining of the crude oil there will be a reduction of bulk amounting to 32,000 tons in every 200,000 tons, which means that we shall have to pay freight on a larger quantity of oil than will go into' consumption. That, however, is a matter into which I do not propose to enter, the question that really concerns us being what shall we have to pay for the oil. Will oil cost more than it costs now ?

Sir JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) (Minister for the Navy) - It would not be worth while to enter, into the agreement under other circumstances.

Mr GREGORY - The matter is one that should be thoroughly inquired into, and practical men should be called to give evidence on a number of points. The subject is too technical to be dealt with by the members of this House, who have no special knowledge regarding it. All the information available should be obtained before Parliament commits the country to an agreement which may put upon it a very heavy obligation. "Undoubtedly we need oil for the development of our industries. The motor car has become an essential in the back country, and oil engines and tractors are being more and more used there. To reduce working costs, machinery must be employed wherever possible, and oil is now one of the principal sources of motive power. In my opinion, the Government should have done more than has been done in the past to encourage the production of fuel oils in this country, though that sort of thing takes time, and sometimes it is well to go slowly. I hope that, in the interests of the country, the Government will allow the Bill to be referred to a Select Committee for investigation, so that members may be satisfied that, in sanctioning the agreement, they will be doing the best thing for the Commonwealth.

Sitting suspended from 6.29 to 8 p.m.

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