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Thursday, 31 March 1966

Mr FREETH (Forrest) (Minister for Shipping and Transport) . - Mr. Deputy Speaker, at the outset I thank the honorable member for Batman (Mr. Benson) for the courtesy of letting me know that he intended to raise this matter tonight. He corrected something about which I chided him yesterday. The question of whether or not there is over tonnage on the Australian coast is quite a difficult one. It is a matter of judgment. I would not expect the honorable member to be prepared to accept the unqualified assurance of one interested party in this case that there is overtonnage without looking at all the circumstances.

Mr Benson - That is fair enough.

Mr FREETH - This, of course, is what the Government is trying to do. The House will be aware that an Australian flag tanker has absolute priority. If there is undertonnam - in other words, if there are insufficient Australian flag tankers to carry the cargoes that are offering - an independent operator can charge what freight rates he likes. Therefore, it is somewhat to the interests of an independent operator to have as little tonnage as possible on the Australian coast. I think that is indisputable.

If there is overtonnage, the first person who will not receive cargoes is the independent operator who is charging higher freight rates. I leave entirely aside the question of whether these rates are excessive or otherwise. If the freight rates are higher, in fact, than the other oil companies are charging for their tankers, then that operator will be first to lose cargoes. These are the simple elementary facts of commercial life. So, the Government has to arrive at a situation where it can gauge the tonnage required so that, first, one operator cannot hold the trade at ransom and, secondly, as far as possible, all ships will be reasonably employed. If the Government does strike a precise figure then nobody can expect that all the tankers will be fully employed aH the time because in that situation there would bc an undertonnage al peak, periods and an overtonnage at other periods.

To illustrate his case the honorable member for Batman cited the issuing of a permit for the ship " British Corporal ". I think it is important that the House should understand precisely the circumstances in which that permit was issued. The supply of petroleum products to Hobart was the reason for the issuing of the permit. Mobil Oil Australia Ltd. had intended to use its licenced ship - its Australian flag ship "Australian Progress " - after that vessel came out of dock. As honorable members will know, oil companies arrange their shipping programmes some time ahead and the " Australian Progress " was due to come out of dock and to go into operation on 12th March. Ironically enough, until today this vessel was still not available because of a strike by iron workers employed by Storey and Keers who were doing the work on the ship. So one Australian flag ship was not available which was expected to be available. The position was that no other Australian flag ships were available at that time as far as could be ascertained, and the " British Corporal ", a foreign flag ship, was given a permit after an inquiry had been made into fuel supplies at Hobart and the urgent need to get fuel there was ascertained.

At Hobart 4,577 tons of premium motor spirit and 2,400 tons of regular grade motor spirit were to be discharged. Stocks were very low and were expected to become exhausted on 31st March. Stocks in other storages around Hobart were down to one or two weeks' supply. Those were the conditions under which this permit was issued. Ironically enough, because the " Australian Progress " had been held up by a strike of iron workers the Seamen's Union of Australia in Melbourne struck to prevent the " British Corporal " from taking supplies to Hobart. In order to resolve the urgent situation which existed in Hobart the British Petroleum Company of Australia Ltd. rerouted its ship " B.P. Endeavour " from its normal scheduled voyage supplying petroleum to Melbourne.

The whole result of all this mixed up operation was that the tanker programme around the Australian coast was thrown out of adjustment and 21 days tanker time has been lost. A serious situation exists in Port Lincoln and Port Pirie. I understand that in one of these places the supply of lighting kerosene is due to become exhausted today and that automotive diesel oil will run out on 10th April unless arrangements can be made to get supplies to these ports. This has something to do with the question of overtonnage because R. W. Miller Holdings Ltd. was advised when the normal shipping programme was arranged that under this programme there was not a cargo available for his ships. A lot of matters enter into this situation. The freight rate R. W. Miller Holdings Ltd. was charging was a matter of dispute between the company and the oil companies, but the plain fact is that as soon as a situation arose that had not been foreseen and one tanker dropped out of the business there would have been a cargo available for the R. W. Miller Holdings Ltd. ship had it still been available.

I repeat that the question of overtonnage is not an easy one to resolve. In addition. 1 understand that on at least two occasions proposals have been made to R. W. Miller by two oil companies at different times to take one of his vessels on a long term charter. The most recent, I understand, was for 12 months charter, but he was not sufficiently interested even to discuss price with the company. So it seems to me that many interpretations can be placed on his version of the question of adequate tonnage on the Australian coast. I say that this is not an easy question to decide offhand. The pattern is changing all the time. New refineries are coming on stream and more Australian produced oil is being made available. But my Department, through the Prime Minister (Mr. Harold Holt), undertook to make as comprehensive a review as possible of our original assessment of tonnage, and this is still in progress.

I ask honorable members: Do they really expect it to be a practical proposition for an operator on the Australian coast to be given an absolute assurance of cargoes without there being some control of freight rates? On performance, this would look as though freight rates could go completely haywire. Does anyone think it reasonable that a company doing its own refining on the Australian coast should be prevented from carrying its own cargoes in its own ships, provided it meets the conditions laid down by the Government? If this is so and if there does happen to be excess tonnage on the coast, to which oil company do we say: "You cannot carry your own products in your own ships? ". Again I say that, while the oil companies have their own tankers that meet the conditions laid down by the Australian Government, there is no easy solution to this problem. At no time has any operator, an oil company or anyone else, been given any guarantee that it can be assured of a cargo. All we have said is that we will do our best to ensure that there is no over tonnage on the Australian coast, and that is what the Government is doing.

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