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Wednesday, 16 May 1973
Page: 2189


Mr KERIN (Macarthur) - I am a little disappointed that the honourable member for Farrer (Mr Fairbairn) still seeks to justify the past Government's attitude on this matter. It is apparent that he still has not fully grasped the magnitude of this issue. Although the Minister for Minerals and Energy (Mr Connor) in his second reading speech said that this Bill is not a complex one, it is also accurate to say that it is a very important and profound one from the point of view of the national interest. The Government has constantly stated that the resources of Australia should be in the hands of Australians for the benefit of Australians. The National Pipeline Authority is part of a wider policy now being drawn up in terms of a national fuel and energy policy. We believe that there is a need for an annual fuel and energy budget to be drawn up so that we can discern our own available supplies and requirements and identify our own national interest in the light of the wider international fuel and energy supply and demand situation.

I have often thought that one of the big differences between the Government Party and honourable members opposite was in the timing of policy action. The previous Government would move when shoved, when action could no longer be decently avoided and when the issue was largely something that had passed by. But I am staggered by the degree to which laissez-faire policies had gone in respect of oil and gas exploration and development and what was potentially to be given away by way of exports. The amount of public investment in oil and natural gas exploration has been of the order of $419m, nearly half of all moneys spent. Yet no Australian share was sought and in many cases little control was exercised in respect of maintaining provisions of agreements. The potential gross value of discoveries so far made, on a conservative basis, exceeds $14 billion. Again it seems likely that the previous Government would have allowed the export of much of the natural gas component of this without ever having identified the national interest.

The 6,000 miles of proposed pipeline will not be built immediately. It does not really matter whether private funds or public funds are used for the construction of the pipeline. The money will be found. It is simply a question of efficiency. Australia currently produces between 60 and 70 per cent of its oil requirements. Without further discoveries it will be producing only 40 per cent in 5 years time and by 1980 less than a quarter. There is a strong case for further exploration, but there is little sense in pouring public funds into exploration when discoveries are simply to be exported. Of course, oil exports are banned but given enough reserves of gas and given declining international reserves, it may well pay to convert natural gas into petroleum in a very short space of time. Developing a national fuel and energy policy will be mainly about doing our sums and finding out what the facts are so that we can act rationally. If we have only 45 trillion cubic feet of natural gas it is necessary to work out just what our requirements are. Estimates vary widely. On present usage we have plenty, but these are only early days in terms of our usage. If we extrapolate Melbourne usage to the national scene and look at the consumption patterns of other countries, it can be calculated that we have only 11 years supply. It is near certain that usage of gas will rise by more than 45 per cent by 1980. The greatest benefits of a national grid will be that charges will be uniform, that decentralisation into centres will be facilitated sooner and that a cheaper fuel resource will underpin Australian industry, perhaps will prevent rises in the costs of some of our basic industrial products such as cement, glass and steel products, and also will provide raw material for some chemical industries.

The natural gas industry is commonly divided into 3 functional divisions - production, transmission and distribution. The Government wishes to be marginally involved in production and totally involved in transmission, but to have little interest in distribution. All other countries effect some form of regulation of the industry in the way in which the Government proposes. In the United States of America the Federal Power Commission has jurisdiction over the interstate transportation of natural gas and over the sale of natural gas in interstate commerce for resale. Although various areas of authority are still poorly defined in the United States, there is the rational desire for Federal control and evaluation of national interest in that country.

The Japanese and United States energy crisis has been canvassed widely. It has been estimated that United States imports of oil and natural gas will be worth of the order of $30 billion in 1985. Japan's consumption of oil will double from 300 million tons in 1975 to 600 million tons 10 years later. Japan and the United States are combining to develop Siberian oil and gas in their own long term interest and, one assumes, that of the Union of Soviet Socialist Republics. It is clear that Australia and Canada will be heavily involved in the requirements of the United States and Japan. There is a case to say that Australia and Canada cannot be too unwilling or indecisive about supplying natural energy resources because their very lucrative markets may be lost to more agreeable energy resource suppliers, to new energy technology or to energy rationing programs and these markets may be hard to redeem. But there is no urgency. The price of these commodities must increase. All this reinforces my belief that the Commonwealth must be involved, that we must develop policies, that we must identify our own interests and that we must do our sums.

The international scheme of arrangements with respect to the oil industry, which is the biggest industry, must be more fully understood. Some writers are now suggesting that the United States may not face an energy crisis for 15 years and that there may not be a major foreign policy problem for the United States if that country follows less inept policies. For example, Adelman, writing in 'Foreign Policy No. 9 1972-73', builds up a case to the effect that the interest of the State Department in stability has maintained a monopoly price for oil some 10 to 20 times higher than the long run incremental cost of producing oil. If the United States and the other major consuming countries achieve a rationalisation of international oil trade, perhaps we will have another set of facts to deal with.

Our own foreign policy must be subservient to domestic policy, but first we must have a domestic policy. This matter needs our earnest consideration. A continuance of a laissez-faire policy, which our opponents proclaim, would leave us like babes in the wood. What the previous Government did not do to look after its own natural resources would make the hair of any self-respecting Australian stand on end. The mistakes made in the coal industry would have continued to be made in the natural gas industry. Dr Joseph Barnea. director of the United Nations resources department, recently stated that what the United States faces now is 'not a crisis of resources, but a lack of planned development'. Instead of placing too many eggs in the still problematical nuclear energy basket, Barnea urges recourse to a variety of long term alternatives, from refineries for low sulphur coal to research into solar and geo-thermal energy. He says:

The lesson to be learned from the United States' problems is that every nation must pursue a carefully planned program for energy development. Failing that, the crisis will be all too real for every country.

Now other countries are waking up to the magnitude of this problem. Thankfully we have a Minister who is aware of and determined to identify Australia's interests. I support the Bill.







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