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Tuesday, 20 October 1931

Mr NAIRN (Perth) .- This item has an important relation to the operations of the oil refining companies in Australia. The duty on petrol imported from abroad is 7d. a gallon, and the excise on petrol produced in Australia from imported crude petroleum is 4d. a gallon, leaving a margin of protection in favour of the Australian product of 3d. a gallon. The two companies engaged in refining operations in Australia are the Commonwealth Oil Refineries Limited and the Shell Oil Company. The Vacuum Oil Company lately made a proposal to the Government that if it would make certain alterations in the regulations, the company would spend about £800,000 in plant in Australia; but, according to the Tariff Board, if the company carried out its proposals, the loss to the revenue of the Commonwealth would be about £700,000 a year. I hope that the Government is not prepared to accede to the proposals.

Mr Forde - The margin of protection necessary is being investigated by the officers of whom I have spoken.

Mr NAIRN - But the matter seems to have been investigated already by the Tariff Board, which estimates that the present margin of 3d. a gallon is unnecessarily high. The board made a definite recommendation that the excise should be increased from 4d. to 5-id. a gallon, decreasing the margin of preference in favour of the Australian article from 3d. to lid. per gallon.

Mr Forde - The Government has maintained, except for a brief period of three months, the differential rate that has always operated. The department was not satisfied with the Tariff Board's report, and a careful investigation into refining costs is being made by officers of the department.

Mr NAIRN - When the Commonwealth Oil Refineries Limited was established, the margin of preference was only Id. per gallon, and it was increased to 3d. per gallon when the Shell Oil Company commenced operations in Sydney. The Tariff Board has made an exhaustive report, and has given a definite decision. Here, apparently, we have another instance of the Minister, not being satisfied with the board's report, appointing two officers of his department to make a further recommendation.

Mr Forde - Because the Commonwealth Oil Refineries Limited said that if the Board's recommendations were adopted it would cease operations immediately.

Mr NAIRN - That may be so; but I disapprove of the action of the Government in asking some of its officers to furnish another report because the report of the Tariff Board does not suit it. The Minister constitutes some of his officers a court of appeal when a recommendation of the Tariff Board does not suit him. The Tariff Board, on page 12 of its report, stated -

After examining the position, the board is convinced that the sum of Id. per gallon would greatly exceed the cost of labour expended in the production of a gallon of petrol in Australia from imported crude petroleum. The board does not suggest that a margin of Id. per gallon would bring about refining in Australia, but it considers that such margin is u& much as the industry is worth to the Commonwealth from h.ii economic stand-point.

The board feels, however, that the fact that local refineries have, already been established, and that one of them started under a more generous margin of protection than that siu: crested, should be taken into consideration in making a recommendation. (At the time the Commonwealth Oil Refineries Limited commenced operations the protection available was Id. per gallon. When the Shell Company of Australia Limited started, however, the margin was M. per gallon.)

Even considering this fact, however, the board does not consider that the margin should exceed lid. per gallon. On figures ava liable to the board, this sum would exceed the whole amount expended on refining in Australia by an efficient "skimming" plant, and is four times greater than the amount that would be spent in wages. . . .

In all the circumstances, the board is of opinion that the margin between the excise duty on locally-refined petrol and the. duty on imported petrol should not exceed lid. per gallon.

The board considered the question of costs and the value of this industry to Australia from an economic point of view. An examination of its report shows that the witnesses it examined were representative, and that the whole question was carefully considered. In the opinion of the board, the industry is not worth what we are paying for it. On every gallon of petrol produced in this country from crude oil, Australia loses 2d. The board points out, moreover, that that loss of revenue is not compensated for by any advantage to the consumers of petrol. It would be better for Australia if the company were to close down entirely, for then the gain to the revenue would more than compensate for the loss of any benefits. According to the Tariff Board, the wages paid in the industry represent only one-eighth of the present margin of preference. At the existing rate of 3d. a gallon we are losing eight times a3 much as is paid in wages to those engaged in the industry. The right honorable member for North Sydney (Mr. Hughes), who was responsible for forming the Commonwealth Oil Refineries Limited, told us recently that the company had completely failed to accomplish the purpose for which it was established. He made it clear that he would not hesitate to wipe it out of existence, if given the opportunity. As it is not competent for a private member to move for an increase of taxation, I move -

That the figure and letter "4d." (wherever occurring) be omitted.

I do so in order that another figure may be inserted in lieu thereof, and to give the Government an opportunity to show that it is prepared to take cognizance of the recommendations of the Tariff Board.

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