Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Friday, 21 May 1926

Senator NEEDHAM (Western Australia) . - I am pleased that at this early stage of the resumed session I find myself at least for once in agreement with the Government, so far as this bill is concerned. We have before us a measure to provide another £100,000 for the Commonwealth Oil Refineries Limited, half of this amount to be supplied by the Commonwealth Government and half by the Anglo-Persian Oil Company, the partner of the Commonwealth in the company. There is just one phase of the agreement between the Commonwealth and the Anglo-Persian Oil Company I do not like. It is true, as the Minister, Senator Pearce, pointed out yesterday, that of the £500,000 capital originally invested in the refinery company, the Commonwealth has provided £250,001, and the Anglo-Persian Oil Company £249,999, giving to the Commonwealth the controlling vote so far us shareholders are concerned. But that commanding position is counteracted by the fact that on the directorate of the company the Commonwealth is represented by only three directors as against four representing the Anglo-Persian Oil Company. I do not wish any remarks of mine to be construed as reflecting in any way on the management of the Commonwealth Oil Refineries Limited, but I think that the Commonwealth should have not only a commanding share of the capital, but also a controlling position on the directorate. It is contended that a meeting of shareholders could at once be convened if it were discovered that the interests of the Commonwealth were not being conserved, and that our position could be safeguarded in that way, but one never knows; something may occur, and it may be too late to remedy it by the time a meeting of shareholders is convened. . I have always contended that whenever the Commonwealth enters into a partnership with some other body, it should have a controlling hand, not only as regards the amount of capital provided, hut also in the actual direction of the affairs of the concern in which it is interested.

Senator Thompson - We should then get inefficient management.

Senator NEEDHAM - So far as the Commonwealth Oil Refineries Limited is concerned, there is perhaps justification for entrusting to the Anglo-Persian Oil Company the actual direction of operations, because of its expert knowledge of the work; but I hope later on the Government will bring about an alteration in order to see that the interests of the Commonwealth are properly safeguarded. In 1920, the Labour party opposed the original bill, providing for the formation of this partnership, on the very ground that the Commonwealth was not sufficiently represented on the directorate of the. refinery company. The bill of1920 was brought down to ratify an agreement between the Commonwealth and the Anglo-Persian Oil Company to establish the Commonwealth Oil Refineries Limited, with a capital of £500,000. In 1924 that capital was increased by another £250,000, each partner, of course, providing one-half. The refinery company commenced operations about March, 1924, and, according to the Prime Minister (Mr. Bruce) lost £53,000 in fourteen months. There is some provision in this bill to meet that deficiency. We are now asked to increase the capital by a further £100,000. I have no objection to the amount asked for. As a matter offact, 1 should bc prepared to support a bill providing for a greater amount. I have visited the company's refinery at Laverton, and I realize the splendid work that it is doing for Australia. Although it is working three shifts - its fullest capacity - it cannot fully meet the demand for its product. There was at first a certain amount of prejudice against the product of the refinery, but when ifc waa found that the refinery's competitors were charging 2d. a gallon more, consumers generally began to use it, and speedily recognized its value. While I support the bill, I do not want it to be taken for granted that the directors of the refinery company can get financial assistance from the Commonwealth any time they ask for it. Seeing that they have now been operating for about two years, and that the concern is running well, they ought to be able to avoid future losses. One recognizes, of course, the necessity at the present moment for wiping out the loss already incurred, but, with the advantage already secured, the directors of the concern should not find it necessary to approach Parliament again for further assistance to recoup them for their losses. If the operations of the refinery were extended to every capital city in Australia, it would effect a vast saving in the cost of distribution. Of course, it would take much more than £100,000 to enable that to be done, but the money would be well spent in establishing branches of the refinery in all the capital cities. Undoubtedly the refinery company has been the means of stabilizing the price of petrol in Australia. It has imposed a very big check on the operations of the competing firms - the British Imperial Oil Company aud the Vacuum Oil Company - and if it had not been in existence, the price of petrol would have been higher than it is today. In my opening remarks I said that, for once, I was in agreement with the Government. That is because I find the Government is adopting the policy of honorable senators of the Labour party, who advocate the nationalization of all industries such as this. The refining of oil is a semi-nationalized industry, established by a Government which recently went to the country and told electors that it was opposed to interference with private enterprise. To-day that Government is partner in a concern which, in the production of oil, is certainly hitting private enterprise heavily.

Senator DRAKE-BROCKMAN (WESTERN AUSTRALIA) -brockman. - The Government also told the electors that it was against the exploitation of the people of Australia by any one, and this bill is fully in accord with its policy in that respect.

Senator NEEDHAM - The Government is following the Labour ideals, because it now realizes that there are private concerns in Australia exploiting the people. In moving the second reading of this bill in another place, the Prime Minister said -

We cannot allow this country to bc exploited in regard to one of its most vital commodities.

He was speaking the truth; but if the Government had sufficient courage it would extend this industry, and thus make oil and petrol cheaper than they are today. It would not need to be afraid of the competition of private concerns, because it would be in command of the field.

Senator Payne - Even at the present price the refinery company is operating at a loss.

Senator NEEDHAM - The loss is very small, in face of the big competition it has encountered. The Prime Minister and other members of the Ministry have made much of the fact that the establishment of the Commonwealth Oil Refineries Limited has been of great benefit to Australia, and has assisted to keep down the price of petrol. The Government recently disposed of the Commonwealth Woollen Mills at Geelong. It contended that they were interfering with private enterprise, and therefore it virtually gave them away. Now. however, by this bill, the Government itself is interfering with private enterprise, and is taking legislative action because it recognizes that certain private companies should not be permitted to exploit the public. The work being done at the refineries at Laverton demonstrates the adaptability of the Australian, workmen. On a recent visit to Laverton, I heard the manager of the refineries speak, in terms of the highest praise, of the efficiency of the work being done there by Australians, despite the fact that the distillation of oil is a new industry in this country. The workmen were said to be performing their duties with remarkable efficiency. I entirely approve of the Ministry's decision that competitors of the Commonwealth Oil Refineries Limited shall not be permitted to exploit the public- This is an age of motor transport, and there should be no monopoly of the supply of petrol and oil. I read an article contributed to a recent issue of the Melbourne Herald by Mr. Cohen, exMinister of Public Works in Victoria, dealing with the traffic problem of Melbourne. He referred to the growth of motor traffic, and pointed out that, while in 1904 motor vehicles in Melbourne and suburbs numbered 6,000 or 7,000, the number had now increased to about 99,000.He remarked that there was now one motor car to every sixteen and a half inhabitants. If flow oil is ever discovered in Australia,' this country will be placed on a much improved footing in regard to motor transport. But, in any case, there are rich deposits of oil shale inNew South Wales and Tasmania that could be utilized for industrial and other purposes. The principal comment I wish to make in regard to the bill is that the. Government should consider the necessity to alter the directorate of the Commonwealth Oil Refineries Limited so that the Commonwealth will be in control so far as the personnel of the board is concerned, as well as hold a majority of the share capital.

Suggest corrections