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Thursday, 1 December 1960

Mr OSBORNE (Evans) (Minister for Air) . - I move-

That the bill be now read a second time.

Honorable members will recall that until last year it had been Government policy for many years, and particularly since the early 1950's, to encourage the production in Australia of sulphuric acid from indigenous sulphur-bearing materials. The main material used has been iron pyrites.

In 1958-59 total sulphuric acid production was almost 1,000,000 tons, and 35 per cent, of this was derived from pyrites. As part of this policy, the Government has since 1954 paid to acid producers using iron pyrites a bounty to compensate them for the additional cost involved in using these materials as compared with imported brimstone. Since 1957 bounty has also been payable on acid produced from lead sinter gas.

In 1958 the Tariff Board submitted a further report, recommending increased rates of bounty in line with this policy of encouragement. However, there had been, by then, a considerable improvement in the supply position overseas for brimstone. After examining the position, the Government decided in May, 1959, that in view of the extra costs involved in using pyrites and other Australian materials, economic reasons no longer justified continuation of the past policy. In making this decision, the Government recognized that it had obligations to those producers of acid and sulphur-bearing materials who had cooperated or planned to co-operate in the previous policy. Because of this change in policy the recommendations to the board's 1958 report were not adopted. Instead, the board was asked to recommend a bounty which, while not conflicting with the Government's decision to abandon the encouragement policy, would have regard to its obligation to the producers mentioned above. The board delivered its report on 20th June, 1960. As the act then current was due to expire on 30th June, I960, and the short time available was not sufficient for a thorough study to be made of the board's report, the bounty was extended for six months to 31st December, 1960.

The board has recommended, in effect, an extension of the bounty for a further period of five years; separate rates of bounty for sulphuric acid made from iron pyrites and for iron pyrites itself; and that no bounty rate be prescribed at present for acid produced from lead sinter gas.

It proposed alternative bounty rates of £3 or £5 4s. a ton of 100 per cent, sulphuric acid, either of which could be adopted by the Government in the light of what it considered to be its obligations to the producers concerned. The lower rate measured the average disability of producers, the higher rate the disability of the highest-cost producer. Similarly, it proposed alternative rates of bounty on iron pyrites, with the same criteria to be applied.

A copy of the Tariff Board's report of 20th June, 1960, has already been tabled.

The bill now before the House is designed to give effect to the board's proposals for sulphuric acid, and a complementary bill to be presented immediately after this will implement the board's proposals on iron pyrites bounty. The rate of bounty which will be prescribed in the regulations is that based on the average disability of producers. I point out that even when it was the Government's policy to encourage the production of sulphuric acid from indigenous materials, the bounty was based on average disability, not the disability of the highest-cost producer.

Under the terms of the present act bounty is payable on sulphuric acid made from iron pyrites and lead sinter gas. There is one producer of acid from lead sinter gas, and the board has reported that he is now under no cost disability through the use of that material compared with brimstone. Accordingly, the board has recommended, and the Government has accepted the recommendation, that no bounty be payable on acid made from lead sinter gas.

The bill contains provisions to restrict the bounty to those producers to whom the Government recognizes an obligation. Accordingly, the only recipients will be those producers who have been producing sulphuric acid from iron pyrites before the introduction of this bill. Producers who before this date have incurred substantial commitments to commence production will be allowed a period of six months in which to apply to the Minister for consideration as possible bounty claimants in the future. No alteration has been made to the rate of profit limitation which, at 12i per cent., is the rate which has applied on sulphuric acid since the bounty was introduced in 1954.

I commend the bill to honorable members.

Debate (on motion by Mr. Pollard) adjourned.

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