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Wednesday, 16 May 1973
Page: 2191


Mr GORTON (Higgins) - Like my colleague the honourable member for Farrer (Mr Fairbairn), the previous speaker from this side of the House, I have no objection whatsoever to the purposes for which this Pipeline Authority is to be established. As I see it, the Authority is to ensure that there ire interconnections throughout Australia for discovered gas and petroleum supplies generally and to ensure that the fuel so discovered is taken to consuming points, whether those consuming points be in existing cities or whether they be in areas for which cities are planned for the future. The Authority is to ensure that hydrocarbons discovered in Western Australia or in the Northern Territory, for instance, have a means of transportation to markets in eastern areas of Australia. The Authority will make the best use of the natural resources of Australia and ensure that they are available to all parts of this nation, no matter in which subdivision of the nation they may be discovered. It is hard for me to see how anyone can argue against that concept. It is hard to see how anyone -:an claim that this action is not demanded by the public interest. For myself I would be happy to see it take place with or without consultation with the States and certainly with or without agreement by the States.

I suppose there can be some legitimate discussion on how the aims which I have set out can best be brought about. The first part of that discussion, I imagine, would be as to whether the corporation that carries this out should be a public or private corporation. Those who argue in favour of a private corporation argue that the capital required would not be a drain on public finances, that private enterprise is more efficient than public enterprise and is able to do the job more cheaply. I am afraid that for myself these arguments do not carry conviction. I have never been able to accept the view that public investment should take place only in areas where it was clear that it would be unprofitable and that there would be a loss. In my view private enterprise naturally, because of its proper requirements, would tend to construct only those segments of a pipeline where there was a profit to be made. Private enterprise, I suggest, would not construct those segments of a pipeline which would need to be constructed if it were clear that no profit would be made from them.

Furthermore, this operation is, of necessity, a truly monopoly operation. It is a truly monopoly operation in the sense that it is not even subject to competition from overseas or subject to competition from a similar kind of transportation. There is no real indication that in circumstances of complete protection and monopoly this operation would be carried out better by a private consortium than it would by public funds. This operation is and must be a monopoly operation. It would be absurd to suggest a duplication or a partial duplication of this pipeline in the way in which, for example, there is a duplication of airline services to provide competition, a duplication of shipping lines to provide competition or a duplication of the Commonwealth trading bank with private trading banks in order to provide competition. In this sense it would be absurd to suggest the construction of a parallel pipeline. I bear in mind also that if some private company does want to construct a pipeline to convey its own product to some other point there is, as I understand it, nothing in this Bill which prevents that company from constructing a pipeline and moving its own goods. If there were something of that nature in this Bill I would be violently opposed to it. But, as I see it, there is nothing of that kind in the Bill.

I would much prefer, as I have said, to see a public monopoly than a private monopoly because I would prefer a situation where the accounts of the Authority were open to scrutiny in this Parliament, as I trust they will be and as I trust each significant transaction it makes will be open to scrutiny in this Parliament. I would prefer to see a situation where there is not an opportunity for oil companies, perhaps as a consortium, or for some oil companies perhaps as a consortium, to manipulate their profit to decide whether it was made in the transportation or in some other area. I want to avoid the danger where some oil companies as a consortium might use the power they had over transportation unfairly to treat their competitors in the oil field who did not own shares in that pipeline authority which would transport the product. So, as well as agreeing with the purpose of the pipeline I agree with it being operated by a public corporation and particularly since, as I have pointed out, there is no suggestion of anybody being compelled to use this authority by law.

Having said this I believe that there are real dangers in the Bill as it stands. These are not so much dangers which are written into the Bill as dangers which exist as a result of the Bill and which ought to be provided against by altering the Bill. Let me suggest what I think some of these dangers are. Firstly I point out that there is no mention of how the price which is to be charged for transportation is to be arrived at. There is not even - and there should be - a provision that the price charged should be the same to all producers including the Authority if it buys some petroleum products and transports them itself. It is essential that this corporation should not differentiate in charges but that the charge should be the same to all producers. This is not provided for in the Bill. There must be no question of a variation of prices to give one producer an advantage over another for the same purpose.

The second danger I think is this: I believe that there should be clarification of how the price to be charged is arrived at. It should be sufficient to cover operating costs, maintenance costs, replacements costs and in my view to pay income taxation and to pay a limited margin of profit into the Commonwealth Treasury in the sense in which perhaps Trans-Australia Airlines or other authorities are required to pay a profit into the Treasury. But it should not because of its monopolistic position be able to charge whatever the traffic will bear and thereby put up the price of a commodity which it transports to users throughout Australia. This is not provided for in the Bill.

Incidentally, when examining the price which should be charged for the transportation of this commodity in this pipeline I think we might well have reached the stage where we could examine whether a component of that price should be the interest normally chargeable to the capital involved in the construction of such a pipeline. It may well be that there would be some who would consider that the community having taxed itself and provided a large amount of capital for the construction of a pipeline need not necessarily go to the further trouble of taxing itself in order to provide the interest on the money which it has previously taxed to provide itself with funds to build a pipeline. It is possible to consider this point because there is no competition here. It is not a matter of a government enterprise unfairly competing with a private enterprise. It is purely a matter of how most cheaply a commodity which is vital to the interests of Australia can be moved from one part of Australia to another, though we would also need to consider that there would be perhaps some of this commodity which would be exported from Australia, perhaps to the benefit of multi-national companies which we would not particularly wish to help. But nevertheless this whole field, I would suggest, is one to which we could well look when considering the price that should be charged and how it is made up.

Thirdly, I point out that in the Bill there is no obligation placed on the Authority to accept and transport hydrocarbons from whatever source someone wishes to supply them, and there should be such an obligation placed on this Authority. It should not be in a situation in which it can accept business from some fields and some companies and reject business from other fields and other companies without reason - or perhaps for all sorts of reasons including perhaps, wrong reasons. It should be, as a public utility, required to be a common carrier, in the sense in which the railways are a common carrier, and to accept, from whatever source they may come, the goods which it has to transport to the other end. It should be required to act as a common carrier.

It is proposed that the Authority may buy and sell hydrocarbons on its own account. There may be good reason for that; I am not yet fully convinced that there is, but I can see that there could be reasons why this should on occasion be done. I understand that it was not ever intended that it is to be the only buyer and seller and that it is to prevent other people buying and selling; I did hear some suggestion that that was so but I understand that is not so. But if the authority is to buy and sell hydrocorbons on its own account there must be provision to ensure that it cannot charge itself less for transportation than it charges others who have a similar commodity being transported. It would again, I think, be an improper use of a public utility of great value if it were able to buy and sell and, because of that power, charge itself less and put itself in a position of unfair competition with others who wish to have the same goods transported through its pipeline.

In addition, I think the Authority should not be permitted to buy and sell at a profit whether the sale is made at home or abroad. If it is to be properly used, it will be a transportation authority and not a trading authority. It is probably true that it should have the power to buy and sell on its own account but I think that the points which I have raised are absolutely essential if this is to be not only successful but also a fair use of public money for the public benefit.


Mr Clyde Cameron (HINDMARSH, SOUTH AUSTRALIA) - For use and not for profit.


Mr GORTON - Yes, for use and not for significant profit, though I see no reason why a public utility should not make some reasonable profit for the benefit of the people to whom the profit goes. The Authority should not have the power to discriminate between producers. I have indicated a general approval of the concept and the purposes of this Authority. I have raised no objection to its being run as a public authority and a public utility but I have pointed out some real dangers which need to be recognised and guarded against because I would not wish in any circumstances to see this Authority, which is set up to provide a service to the people of Australia and to provide as cheap a fuel as is possible for the people of Australia to get, do something which it could do if these dangers are not guarded against. It could become an instrument of nationalisation, driving private firms and private companies out of business. I do not think the Authority has been set up to do this but I think it could if safeguards were not provided, as I hope they will be by amendments to the Bill.







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