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Thursday, 10 September 1942


Mr PATERSON - We can increase further our war effort only by the transfer of human energy from non-essential industries to essential industries. This can most easily be brought about by diverting the maximum amount of surplus spending power to the war effort. Money diverted in this way becomes effective, whilst credit expansion is useless for the purpose so long as other supplies of money are in circulation and are being used for other things. We cannot get the concentration of labour and war effort in such circumstances. In peace-time I believe that it is right to keep the tax exemption levels high, because that tends to make the whole community more uniformly prosperous; but in war-time we cannot do that and at the same time attain a full war effort. Yet that is being attempted in the budget, despite (its high-sounding phrases about austerity and sacrifice. If the problem presented by this huge aggregation of surplus spending power is not courageously tackled, no price-fixing system, or rationing method, can save the Australian people from the evils of inflation. In dealing with surplus spending power in the hands of those on the lower and middle incomes. I prefer to see it taken by the Treasurer as a postwar credit than as a straight-out tax. In this connexion I compliment the Leader of the Opposition (Mr. Fadden) on his excellent speech this afternoon. We do that with our soldiers to the amount of 14s. a week. We make them lend to us compulsorily 2s. a day, whether the soldier be a private or a noncommissioned officer. Higher ranks lend more. Why not apply the same principle to civilians1? Why is the system, good for the soldier, but not for the civilian? If it be a good thing to compel a soldier to leave a portion of his modest pay in the Treasury till after the war, with advantage to our present-day war finance and benefit to the soldier later when the war is over, what is wrong, with a system of post-war credit for the benefit of war funds now, for the avoidance of inflation now, and for the ultimate advantage of our civilian population when the war ends? I cannot see why what is good for the soldier in this connexion can possibly be bad for the civilian. The Minister for Social Services (Mr. Holloway) said this afternoon that he hoped to see after the war a tremendous number of the working people in this country as 'bondholders because of their investments in war savings certificates and Commonwealth loans. We all wish to see that, but how many more there would be with a post-war credit system in operation! It is true that a proposal for post-war credit was rejected by this Parliament in 1941, but that is no good reason why the proposal should be similarly treated in 1942 when inflationary tendencies are being revealed in the rising costs of living and of production. In all earnestness and sincerity I urge the Treasurer not to close his mind to this proposal to establish a system of post-war credits along the lines of the system in operation in England and elsewhere. I am aware that numbers of people in comparatively humble circumstances have contributed well to war savings certificates and war loans, but others have not done so, and will not do so although they have money to spare. Many young .people of both sexes are earning big wages to-day, but unfortunately some of them have no thought for the morrow. The time may come when they would thank the Treasurer if he compulsorily made them bondholders by bringing in a system which would give to them post-war credits. The money would Gome in useful when this country has to pass through the transition period between war-time activities and peace activities. Do what we will in preparation for that time of transition, we shall then be confronted with a tremendous task. That task will be rendered easier if as many as possible of the citizens of this country have substantial post-war credits to help them. Until this is done a dangerous volume of unrestrained spending on non-essentials will continue, with inflationary effects. I realize that there are some people with special commitments who would suffer hardship if a system of post-war credits were imposed upon them, but I believe that reasonable provision could be made for exemptions in deserving cases. I cannot believe that the Treasurer and his colleagues do not know the danger that the Government is running in connexion with this matter. Unfortunately the Government is not yet willing to treat the symptoms with good wholesome medicine, because of the fear that the medicine might prove to be unpalatable. There is more timidity than austerity in this budget.

Speaking of the Australian Food Council, the Minister for Supply and

Development (Mr. Beasley) said that that body had done good work in ensuring that we shall have adequate supplies of good food of different kinds. As one who has been on the land for years, I believe that an extra pair of hands on many farms would be more effective in ensuring a continuance of production than would result from half a dozen men sitting round a conference table. I fear that unless something more effective than has yet been attempted in order to relieve the situation on many farms is done, the position will become worse owing to the depletion of labour and that we shall find ourselves unable to supply to Great Britain half of the dairy produce that that country requires from us. I frequently receive letters saying that dairy herds are being reduced in numbers owing to the incapacity of the limited number of persons left on the farms to milk the cows. Old people on dairy farms are trying to do the work of young people.. In many of our butter factories the position is indeed acute. Managers of some factories do not know how they will be able to process all the milk and cream that is offering. We should not waste good food. The production of essential food should be given a number one priority in any country's war-time programme. There have been some extraordinary decisions in connexion with applications for exemptions of men from military service in-order that they might work on farms.


Mr Lazzarini - Only recently the honorable gentleman wanted every one in the country to be conscripted.


Mr PATERSON - Every person in the community should be doing the job for which he is most suited. Many persons would be of greater service to Australia by doing the jobs for which they have been trained than by becoming spare parts in the military machine. I should like to see as many men trained as possible, but we cannot feed the Arm\' and in addition the men of Allied countries and the civilian population, and send food overseas, unless our farms arc kept reasonably well supplied with labour. I shall cite one illustration of the extraordinary decisions that are given in connexion with applications for the release of men from the Army to help on farms. It relates to a farmer who had met with a serious accident in which a leg was dislocated at the hip socket. He will be practically a cripple for some time, but he has a chance to get well if he can rest the leg. There is no opportunity for him to rest because of lack of labour to assist him on his dairy farm. He therefore sought the release of a young man whom he had formerly employed. The man-power authorities very strongly supported his request for the young man's release for six months, but the application was rejected by the military authorities. I could understand the rejection of the request on the ground of military necessity, because obviously the commanding officer must have the last word in these matters; but I was told that although it was freely admitted that his retention in the Army would cause hardship, that hardship would be suffered, not by the trainee but by his employer; and because no hardship was suffered by the trainee he could not be released. That is carrying matters to an absurdity. I could have understood a decision which started that, on account of the urgent war situation, the man was needed where he was, but the reason given was most absurd. The price factor has also a lot to do with the retention of labour on farms. As the prices for butter do not enable dairy-farmers to compete with the wages offered to men in other employment it is extraordinarily difficult for them to retain labour on their farms. I believe that if overtime rates had to be paid for Saturday afternoon and Sunday work on dairy farms on the same basis as in secondary industries, it might be impossible to sell butter retail at less than 2s. 6d. per lb. This is a matter which will have to be looked into. I hope that the report by the committee which was recently set up to advise the Government in these matters will soon be in our hands, and I trust that its recommendations will be wise ones.

Another factor which is reducing production on dairy farms is the shortage of superphosphate. In many districts where the farms are small it is possible to maintain the herds only by frequent applications of superphosphate to the soil. We all realize that there is a real difficulty in this connexion because the sources from which we previously obtained phosphate rock are not now available, and inferior rock has to be shipped tremendous distances. ' We are getting less phosphate rock than formerly and moreover, it is of inferior quality. Therefore, I hope that everything possible will be done by the Government to ascertain to what extent deposits of phosphate rock exist in this country, and whether they are worth developing. We know that we have some deposits of low-grade phosphatic rock. These are not comparable in quality with those of Nauru and Ocean Island or even of those of the place from which we are now getting the rock, 'but we may be driven to use them. I hope, therefore, that the Government is doing everything possible to survey such resources as we possess.

I wish .to say a few words concerning the superphosphate bounty which is being paid by the Government. On account of the extremely high price of phosphatic rock to-day, owing to the cost of transport to Australia and of difficulty of obtaining supplies, it is inevitable that a much smaller tonnage of superphosphate will be used this year by farmers. Consequently a bounty at the existing rate would involve the Government in much less expenditure than was incurred under the old conditions. I 'therefore suggest to the Treasurer that it would be of great assistance to- the farmers if the Government would continue to pay the same aggregate amount in bounty as it is paying at present. This would mean a larger bounty per ton, but I believe that the expenditure would be well justified.

I wish to refer to two essential war-time commodities which I should like to see produced in greater quantities in Australia. I refer to aluminium and oil. ,

To-day we are fabricating aluminium ingots which we import. The material is being manufactured into aircraft parts and other essential war-time requirements. So far, however, we have made no aluminium from our own basic ore, which is known as bauxite. The Prime Minister, in an admirable speech last night, referred to our shipping difficulties and to the necessity to avoid long haulages in ships of even essential com modities, and to discontinue altogether the haulage of unnecessary items. Bauxite is present in substantial quantities in Gippsland. It has been used for many years for the production of sulphate of alumina, required in paper-making and for the clarification of water supplies. The bauxite, however, is equally suitable for the manufacture of aluminium. Some doubts have been expressed as to the quantities available, but these have been completely dispelled by the recent discovery of enormous quantities of even higher grade bauxite than that formerly known to exist in Gippsland. I understand that there iconsidered to be a minimum of 1,000,000 tons available. Probably the deposits contain several million tons. According to the Commonwealth Controller of Mineral Production the quality of this bauxite is the finest in the world. The new deposits are right alongside a a bitumen highway and only a mile and a quarter from a railway line, and so are most accessible. They contain from 55 to 60 per cent, of alumina with about 30 per cent, of moisture. The moisture can be easily removed, and when it is removed a very high percentage of alumina is left. The bauxite contains very little silica or iron. It is very desirable that there should be a low percentage of silica for it combines with the alumina with wasteful results. I am told that the bauxite in the deposit0 in Arkansas, United States of America, is regarded as A grade if it contains not less than 55 per cent, of alumina, and as B grade if it contains between 50 and 55 per cent, of alumina. The A grade bauxite must contain not more than 7 per cent, of silica and the B grade not more than from 7 to 15 per cent. These percentages apply to the ore after it has been washed. Our percentages in Gippsland are slightly better than those before the ore has been washed or before anything has been done to it. The worst bauxite that we have discovered in these recent finds is equal to the B grade Arkansas bauxite, but the larger part of it is somewhat better than the average A grade Arkansas material. I hope that something will be done in a big way in the near future to convert these deposits into aluminium. Attempts have been m.ade in the past to question the quality of Australian bauxite. It was said that it was not quite suitable for the production of aluminium. I believe that such statements were made by people who desired .Australia to remain dependent upon the imported ingots. Such disparagement of Australian bauxite cannot be continued since the recent discoveries in Gippsland, for both quality and quantity are now definitely known to be available there.

There Ls a most extraordinary " tieup " of the aluminium industry. Aluminium interests in the United States of America, Canada, Great Britain and Switzerland have been combined in a kind of international carte!. As honorable members are well aware, I am a simple, guileless and quite unsuspicious individual; yet I cannot help feeling that certain aluminium interests in other countries are not anxious that Australia should be equipped to produce this valuable metal from its own bauxite deposits. I believe that the Minister for Supply and Development (Mr. Beasley) is doing his best to ensure the development of this industry, but I sometimes wonder whether the advice he is getting comes from entirely disinterested sources. The honorable gentleman told me a day or two ago, in answer to a question, that much difficulty was being experienced in obtaining equipment from overseas to work our bauxite deposits, so that we may produce our own aluminium. I wonder whether an attempt is being made to prevent the necessary equipment coming to Australia except on conditions determined by the international combine.

I believe profoundly in private enterprise, but things are done at times by powerful combines which tend to discredit it. I wish to see our bauxite deposits developed, right to the aluminium stage, by an Australian company entirely free from overseas domination. I hope that the Government will bo able to take steps to achieve this desirable end speedily. Even when we. need less aluminium than we need to-day, we shall still need a great deal. Light metals are coming into increasing use. I look forward to the day when we shall bc able to produce all of our own aluminium. I hope that, at least, we shall be able to manufacture up to the alumina stage where the ore is available in Gippsland, for coal and water supplies are at present there in abundance. I understand that for the later processing a huge volume of electric power is required. That also should be available in Gippsland, because the principal Victorian source of electric power is not far distant from these deposits. If the volume of power available there is inadequate, owing to the present heavy overloading for other purposes, there should be no need for us to wait for the development of hydro-electric supplies .because I have learned that in the United States of America aluminium is successfully processed by means of gas-fired diesel electric generators and gas-fired boilers. I hope that we shall be able to develop our resources in this direction without delay. Unfortunately this war may last for several more years. It would be a splendid thing for Australia if during that period we could develop our bauxite deposits to the stage that would make us independent of supplies of aluminium from overseas.

I come now to the subject of oil production. A situation has arisen in relation to the Lakes Entrance oilfield which seems to me to be prejudicial to our prospects of producing oil as successfully and as speedily as might otherwise be practicable. For the information of honorable members I shall briefly review the history of the development of these oil resources in Gippsland. Early attempts were made to secure oil at Lakes Entrance and it was proved that oil existed there in considerable quantities. A. substantial sum of money was expended by various small companies in conducting more or less experimental operations, with the object of producing oil but difficulties were encountered owing to the fact that the deposit was of a low-pressure character. Up to a few years ago about £150.000 had been spent in attempts to develop these fields. Then, a small company, known as the Austral Oil Drilling Syndicate, took over

p.   number of leases from other companies that had spent a good deal of money in unprofitable operations. This small syndicate inspired with courage and determination, drilled several bores to a depth of from 1,200 feet to 1,300 feet and proved the existence of considerable quantities of .heavy oil suitable for fuel, diesel and lubricating purposes. The oil also contains about 15 per cent, of bitumen which the Victoria Country Roads Board was prepared to purchase in almost unlimited quantities. Nearly four years ago (be then Commonwealth Oil Adviser, Dr. "Wade, made a report to the Govern ment on the results achieved up to that time and stated that probably the best procedure to adopt would be to apply artificial pressure to this field. It was suggested that by pumping great pressure down a given bore, the oil would be forced up into other adjacent bores. It was stated, however, that a fairly large area would need to be brought under one control in order to make this procedure practicable. It would be unsatisfactory, for example, to apply pressure to a bore belonging to one company if the result would be to force the oil into the bores of other companies. It was recommended that arrangements be made by neighbouring leaseholders to combine1 in one company, and a promise was given that if this procedure were adopted, some government assistance would be forthcoming for the proposed application of artificial pressure. Considerable, expense was incurred by the Austral Oil Drilling Syndicate in making arrangements with other leaseholders as advised by the Government. When that stage was reached, the Commonwealth geological advisers apparently changed their minds concerning the quantity of oil available and the prospects of obtaining payable supplies by the pressure method;. Meanwhile, great progress bad been made in the application of a new method to lowpressure fields in other! countries and particularly in the United States of America, where many low-pressure fields had been brought into profitable production. The problem had been solved by the sinking of a shaft into the oil-bearing strata and excavating a kind of working chamber at the bottom of the shaft from which bores were drilled horizontally around the bottom of the working chamber. It was demonstrated that bores drilled horizontally, somewhat like spokes going out from the nave of a wheel, would have thu effect of tapping the oil-bearing strata along their whole length, whereas one bore drilled vertically to a depth of say 1,300 feet might tap an oil-bearing stratum for only about 25 or 30 feet. When information came to hand of what was being done in the United States of America in this direction, the Austral Oil Syndicate suggested that an expert, should bo brought to Australia from America or from Canada to advise the Commonwealth Government on the probable value of the process in relation to our oilfields. The then Minister for the Interior, (Senator Foll), agreed to this proposal and Messrs. Ran ney and Fairbank visited Australia. They examined the field, and also the abundant and carefully prepared data placed at their disposal by this small syndicate, and came to the conclusion that there was a field from which oil could be successfully obtained by the system of shaft sinking and horizontal drilling. Accordingly, they recommended that this form of exploitation be practised, and expressed the opinion that many millions of barrels of oil would be obtained in that way. The Commonwealth Government and the Victorian Government decided to assist the syndicate by granting it. a loan of £50,000, the company to pay the amount back out of subsequent profits. However, before the company could raise necessary capital the Government announced its intention to limit profits to 4 per cent. Of course, the company, and the Government too, realized how hopeless it was to attempt to raise capital for a proposition of this kind under those conditions. Therefore, the Commonwealth Government decided to finance drilling operations, the estimated cost of which was £150,000, of which three-quarters was to be found by the 'Commonwealth Government, and onoquarter by the Victorian Government. The syndicate had already expended £40,000 on the field, as has been verified by the Government's own investigators. It is admitted that the syndicate raised £44,000, and expended £40,000. One would have thought that, when the Government proposed to expend £150,000, it would have been only fair to take into consideration the £40,000 already expended by the company, to place it alongside the amount of £150,000 to be provided by the Commonwealth and the VictorianGovernments, and to agree that the syndicate should share with the two governments in the distribution of profits at least in proportion to the amount of capital which it had devoted to the enterprise.


Mr Holt - That would have been the minimum of justice.


Mr PATERSON - The enterprise could not have come to a successful conclusion but for the pioneering work of the syndicate. Now, when it is exploited, it may return a yield of many hundreds of thousands, or even millions, of pounds. The Government has taken control of the syndicate's leases, and its equity in the enterprise has been fixed in arbitrary fashion by the Commonwealth and VictorianGovernments at £25,000, so that it may be regarded as having a seventh share in the total capital of £175,000. If the syndicate had lost faith in its enterprise, and wanted to sell out to the Government, then the Government might have been justified, in the circumstances, in driving the hardest bargain it could. But, the syndicate had not lost faith; it wanted to share the risks of the enterprise. If it failed, the syndicate was prepared to lose its money, but if the enterprise proved successful, the syndicate which had pioneered the work, felt that it ought to share with the 'Government in the ensuing profits.


Mr James - How many gallons is it estimated that this field can produce?


Mr PATERSON - Already 150,000 gallons have been brought up in the course of experimental work, and it is expected that many millions of barrels can be recovered.


Mr Morgan - Perhaps the Government thought that the £40,000 had been unwisely expended by the syndicate.


Mr PATERSON - Noattempt was made to assess the equity of the syndicate in a fair manner. [Extension of time granted.] The Commonwealth, moreover, proposes to have the right at any time to acquire the whole of the syndicate's rights and interest for £25,000. I suppose that, if the project turns out to be successful, the Government will acquire for £25,000 the whole of the syndicate's interests, whereas if it be unsuccessful, then the Government may leave the syndicate to lose its £25,000. Such a proposition reminds me of the old saying, " Heads I win, tails you lose ". Under the control of the syndicate's manager great progress has been made. A large power-house has been constructed, roads have been made, a big electric power unit has been installed, men's changing-rooms have been erected, and a beginning has been made with the sinking of a shaft. In addition, huge derricks have been erected. Everything that was done under the direction of this man met with the approval of the Commonwealth's advisers, yet because he was not prepared, in view of the very unsatisfactory proposal made to his syndicate, to sign on as an employee of the Commonwealth, he has been passed out, and a new manager has been appointed in his place. This new manager is reputed to be an excellent mining man, but he has no knowledge of oil, so far as I know. The syndicate sought, reasonably I think, to have a minority voice in the conduct of the enterprise. It asked that if a. committee or board of control were appointed to represent the Commonwealth and the State Government, it should also be represented. This was refused, yet this is the syndicate which brought the enterprise to the stage-


Mr Rosevear -Where it could not carry on any longer.


Mr PATERSON - No, that is not true. The present Government, by announcing its proposal regarding the limitation of profits, destroyed any chance which the syndicate might have had of raising the capital it required.


Mr Lazzarini - The syndicate was finished. If the Government had not assisted, it could not have carried on.


Mr PATERSON - I do not believe that for a moment. This enterprise is being controlled by Mr. Newman, Commonwealth Director of Mineral Supplies - a man with much experience of mining, but no knowledge of oil - Mr. A. C. Smith, of the Department of Supply and Development, and Mr. George Brown, of the Victorian Mines Department. They are all very capable men, but none of them knows anything about oil. Neither, for that matter, does' the engineer in charge, whereas the previous manager and engineer had learned a great deal about oil. There is a grave risk that, without the active help of the syndicate - and it is practically precluded from giving this help in an effective form - the success of the enterprise may be prejudiced. I am not blaming the Minister, who has acted according to the advice given to him, but I believe that he has been advised unwisely. I urge the Government to reconsider the proposed agreement with thesyndicate and to deal more justly with it, so that the great value of the syndicated knowledge and experience may be availed of.







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