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Thursday, 18 September 1941


The PRESIDENT - Is the motion supported ?

Four honorable senators having risen in support of the motion,


Senator ASHLEY - I wish to draw the attention of honorable senators to the delay occasioned by the Government in. granting permission to the company in which Mr. Craig is interested to establish an oil refinery in New South Wales. The original application was made some three years ago. Honorable senators will recognize that if the establishment of the refinery was highly desirable in a time of peace, it is doubly necessary to establish it under war-time conditions. I am not concerned about the financial circumstances of the company. That is a matter for the Government itself, because the Capital Issues Advisory Board and other authorities can investigate it. I am, however, concerned about the necessity for the establishment of this industry for the production of petrol and bitumen from crude oil. The company renewed its application some months ago, but the request has been bandied about from cabinet meeting to cabinet meeting. During the last Parliamentary sittings this matter was raised by Senator Keane, and we were then informed that the Cabinet was dealing with it. It was admitted by the then Minister for Supply and Development (Senator McBride), on behalf of the Government, that some delay had occurred, and that an injustice had been done to the company. Apparently the Government has not yet arrived at any decision in this matter, for I was informed yesterday, in reply to a question, that the matter was still before cabinet. I understand that some difficulty arose with the Capital Issues Advisory Board in relation to deferred shares in the company, but I understand that that matter has now been adjusted to the satisfaction of the Government. If that be so, I cannot understand the reason for not giving to the company permission to go ahead.

The establishment of an oil refinery in Australia by this company would be of enormous assistance to both primary and secondary industries, particularly in view of the fact that petrol rationing is in operation. I do not say that some form of petrol rationing was not necessary, but I do not agree with the ruleofthumb methods which have .been adopted. Almost daily I receive complaints - and I have no doubt other honorable senators do also - of interference with industry and essential services because of inadequate petrol supplies. I have brought a number of cases of hardship before the Minister concerned, and am glad to know that many of them have been rectified. One case was that of a carrier who was carting silica, which is an essential ingredient in the production of steel. This man's supply of petrol had been so reduced that he would have been compelled to relinquish his contract had not his ration been increased. Only this week I received a complaint from a man who was carting pit timber for use in mining operations, and I was able to have his claim adjusted. These, however, are only a few of the many complaints that I have received. Petrol rationing has caused great inconvenience to men on the land situated 20 or 30 miles from a town. In some instances they do not get sufficient petrol to ena'ble them to obtain necessary supplies. To-day, as the result of the war, a number of small companies are establishing their own petrol-producing plants. Last week I visited one such plant at Mittagong, involving the use of high temperature carbonization, which has been started by Peters American Delicacy Company Limited. In various parts of New South Wales and other companies are operating, but almost every conceivable obstacle has been placed in their way. I do not blame the Commonwealth Government for all the difficul ties that have been encountered for the State Government must accept its share of responsibility for what has taken place. Surely people who are pioneering the production of fuel oil in Australia should be helped rather than hindered. The Mittagong company to which I have referred pays a royalty of 1s. 9d. a ton of shale to the owners of the land on which it is operating, and a similar royalty to the lessee of the land. It also pays 4d. a gallon to the owner of the process which it is using, and, in addition, it has to pay 4d. a gallon excise to the Commonwealth Government. That tax should he abolished. That shale being used at Mittagong is of somewhat inferior quality, and will produce only about 40 gallons of oil to the ton. In this country there are enormous deposits of shale, and the people who are prepared to pioneer the production of oil from shale should be given every encouragement, as, should their efforts prove successful, the petrol obtained would be of great value to both primary and secondary industries, to say nothing of its value in the event of Australia being blockaded by an enemy. The importance of the establishment of a central refinery in New South "Wales can scarcely he overestimated. I mention New South Wales because in that State and in Tasmania are the largest shale deposits in Australia. The absence of a 'central refinery makes it necessary for every company engaged in the production of petrol from shale to establish its own distillery at a cost probably as great, or even greater, than that of the plant required for the treatment of crude oil. The pioneers of this industry deserve better treatment than has so farbeen given to them.

Since the commencement of the war the price of bitumen has increased from about £7 a ton to approximately £15 a ton.


Senator Gibson - There is practically no importation of bitumen.


Senator ASHLEY - That is so. Evidence tendered before the Tariff Board showed that bitumen could be produced in Australia and sold at about £6 10s. a ton, less than half the present price.


Senator McLeay - Is the honorable senator prepared to guarantee sales at that price?


Senator ASHLEY - I have quoted from the report of the Tariff Board, an instrumentality that is recognizedby the Government.


Senator McLeay - The Tariff Board did not report that bitumen could be produced in Australia at £6 10s. a ton.


Senator ASHLEY - That price was given in evidence before the Board.


Senator McLeay - Who said that bitumen could be produced in Australia at £6 10s. a ton.


Senator ASHLEY - The Minister will have his opportunity later to refer to this matter. A representative of the Department of MainRoads, New South Wales, in giving evidence before the Tariff Board said: -

1.   Under normal conditions the department would welcome the establishment of an industry for refining bitumen in Australia, provided no increase in cost resulted therefrom and provided also that regular supplies and deliveries of the resulting product of a quality suitable for road purposes could be assured.

2.   In the present emergency the department regards the establishment in Australia of an industry of the nature in question as a matter calling for careful consideration from the point of view of national war-time policy.

3.   The department views with concern the increases which have taken place in the price of bitumen. In 1935-36 the price was £5 per ton. Immediately prior to the outbreak of war it had risen to about £9 per ton and since then it has steadily increased to £12 10s. per ton.

In giving evidence in favour of tariff assistance another witness stated : -

It is considered that the price of £6 10s. could be maintained in the face of reduced prices for products other than bitumen obtained in the refining process, as increased output would enable prices to be kept down.

In answer to the interjections of the Leader of the Senate I can cite no higher authority than the Tariff Board.


Senator Spicer - The Tariff Board does not state that bitumen can be produced for £6 10s. a ton.


Senator ASHLEY - Evidence was given to the board that it could be produced at that price. There are many interesting features of the Tariff Board's report. One in particular, bears out the contention of honorable senators on this side of the chamber that the Government is dictated to by the major oil companies.


Senator McLeay - The honorable senator does not believe that.


Senator ASHLEY - Honorable senators supporting the Government make no attempt to hide it. The Shell Company of Australia Limited, which is one of the major oil companies and which opposed the granting of tariff assistance to the producers of bitumen, demands cash for petrol supplied to resellers, yet I have been informed that the same company made a loan of £50,000,000 to Germany just prior to the outbreak of war. Is it because the company is afraid the British Empire will lose the war that it demands cash for petrol supplied to resellers? What has been the attitude of the major oil companies in regard to the petrol rationing scheme? What assistance have they given to this nation in its time of peril? ls it not a fact that when they were asked to assist this Government and the nation by building up reserves of petrol they neglected to do so? Is it not also a fact that the intensified restrictions which have been imposed on the use of petrol to-day have become necessary largely as the result of the failure of the major oil companies to build up these reserves! The whole history of the petrol rationing scheme in Australia does not reflect credit on the Government. Is it not true that the major oil companies, which have preyed on the people of this country for many years, demanded guarantees from the Government in respect of any reserves which they might establish? I would have no objection to the granting of guarantees if the major oil companies had played their part in the war effort of the nation, but they have not done so. When the new cartel system was about to be formed, the major oil companies advertised extensively suggesting to their clients the advantage of storing petrol, not with the object of building up reserve stocks of petrol to assist primary producers and the industries of this country, hut in order that, when the cartel was formed, they would be able to produce figures to show that they should get a larger quota than the independent companies. Since the commencement of the war the price of petrol in Sydney has been increased from ls. 9d. to 2s. 6d. a gallon. Of that increase, the major oil companies receive 4d. Since the introduction of the rationing scheme the normal consumption of petrol has fallen from 30,000,000 gallons a month to 12,000,000 gallons a month.


Senator Spicer - The extra 4d. a gallon received by the companies is less than the added cost of petrol to them as the result of the war.


Senator ASHLEY - The honorable senator will be given an opportunity to refute my statements if he can. The major oil companies are making greater profits to-day than they made when users were able to secure their normal requirements of petrol. I shall endeavour to show why the major oil companies are now making larger profits.


Senator McLeay - Would the honorable senator pit his judgment against that of the Prices Commissioner, who knows the facts?


Senator ASHLEY - I shall not be guided by the Prices Commissioner.


Senator McLeay - Will the honorable senator be guided by the facts?


Senator ASHLEY - Yes, and I shall give some of the facts. It is admitted that the consumption of petrol in Australia, to-day is being reduced to 12,000,000 gallons monthly. That is the objective being aimed at by the Government. Various excuses have been advanced from time to time in order to justify the rationing of petrol. First, we were told that petro] must he rationed in order to conserve dollar exchange. Then, the reason given was that insufficient tankers were available to bring our normal requirements of petrol to this country. At that time, however, a fleet of tankers was lying idle at Singapore. The real reason for the introduction of the present scheme of petrol rationing will possibly be revealed when a full inquiry is made into the interests which are now pushing the sale of producer-gas units. Let me analyse the increase of 4d. a gallon now received by the major oil companies. As a tanker holds 3,000,000 gallons of petrol, an increase of 4d. a gallon works out at a total increase of £50,000 on a tanker of petrol. As most of these companies own their own tankers, 1 fail to see how they are faced with any additional charges in respect of transport. I admit, of course, that something must be allowed in respect of increased insurance risks, but, after apportioning £10,000 in respect of that item, which is a very high estimate, the major oil companies a.re receiving an additional £40,000 for every tanker of petrol brought to Australia. Thus, they are better off financially under petrol rationing than when they were supplying our normal petrol requirements. Further, each company does not bring its tankers to its own particular depots. For instance, if a tanker is about to arrive, say, in Fremantle, it unloads its petrol at that port whether it be Texaco, Vacuum or 'Shell petrol. Actually, therefore, one grade of petrol is being handled, and let me say in passing that it is a very poor grade that is now being retailed to the Australian public.


Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - If the honorable senator has not given us any other facts, that, at least, is a fact.


Senator ASHLEY - The overhead costs of the oil companies have been reduced by 50 per cent. They have taken their travellers off the roads, and have ceased advertising. To-day, wo do not see in the press, or hear over the air, advertisements ' of the various oil companies, which, before the introduction of petrol rationing, were to be seen and heard everywhere. In view of this reduction of their overhead costs in relation to their increased profits, it must be admitted that the part that these companies are playing in our war effort, when the nation is in peril, is most discreditable to them.


The PRESIDENT - The honorable senator's time has expired.







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