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Government's Oil Search Policy



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The present oil crisis emphasises the need for oil explora­

tion in Australia to be increased. Action should be taken

immediately to stop the reduction in the number of explora­

tion wells being drilled. Then we should aim to restore

exploration to the level of recent years.

Tax concessions and subsidies for oil search provided by

Liberal and Country Party Governments have saved Australia

from great economic difficulties. Without that policy we

would be now facing the possibility of drastic cutbacks in

industry and domestic use of power. Prices would be much

higher for the consumer whether for commercial or personal

use.

The Labor Government's oil policy and taxation actions have

failed. The result has been a halving of search activity.

The number of wells to reach total depth has fallen from 13^

in 1972 to 73 in 1973. The total footage drilled has fallen

from almost one million feet to just over a half million feet.

The Prime Minister and Mr Connor ignore this alarming trend

when they talk about the problem. They pretend that a

Petroleum and Minerals Authority is going to be a magical

cure for all our future energy problems and especially for

petroleum products. There is no magical cure. Search and

discovery of deposits is the only cure. Using the taxpayer's

money to fund a government search authority does not reduce

the risk. To rely on taxpayers' money alone will be a

massively expensive business.

Oil search needs venture capital. The cost of discovery is

very high and makes the capital expenditure very risky. Yet

if it is not done the oil will be just left to lie under the

ground.

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The oil exploration company needs confidence that if it

receives an exploration permit and finds oil the company

will be able to get production rights for their discoveries.

The Labor Government has caused the reduction in oil search

by these actions.

. By terminating the subsidy (repayment is required if

successful),

. By terminating the tax deductions for share subscriptions

(discouraging the private investor).

. By banning farm-ins.

. By imposing a one-third Reserve Bank deposit freeze on

overseas funds.

. By terminating the tax exemption for petroleum dividends

up to the amount of capital expenditure.

. By deciding to acquire the North-West shelf gas at the

well head.

. By creating a general air of apprehension and uncertainty

by a tax on the industry and in particular on overseas

companies.

Any government must develop a policy to achieve national

energy self-sufficiency and the Liberal Party would ensure

that incentives would be given to the petroleum and minerals

industry to undertake a continuing and planned programme of

exploration. We would

- encourage private enterprise as the driving force of

development. It v/ould be regulated so that the nation

receives a fair share of the rewards of the development

and sale of our resources. We would assess the nation's

requirements and the extent of our resources to ensure

that reserves are retained in Australia for foreseeable

future requirements.

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establish close co-operation between the State and Federal

Governments in mining exploration and development, recognising

that in the field of mineral production the States have

expertise and control.

Re-establish close relations and co-operation between

government and industry.

ensure that we obtain as high a price for export as possible

and that the maximum possible amount of processing

economically justified which is carried out in Australia.

not use taxpayers· money on government exploration which

involves high risks, high costs and large capital outlays

and requires skills and expertise which government

bureaucrats do not possess.

give priority to joint ventures. Our aim would be to

maximise Australian control in such ventures. We believe

that increased Australian ownership does not necessarily

mean increased control, and that it is control in such

ventures which is important. We are not opposed to foreign

capital particularly where Australians are unwilling or

unable to fully participate. Where overseas-dominated

investment occurs Australians should have a majority share

in the management of the project. Adequate encouragement

will be provided to encourage investment in mining by

Australian investors through the tax system.

ensure that adequate sources "of power and energy are

available to meet the needs of the growing nation. ¥e

would map and assess the extent of these resources.

regulate the establishment of natural gas and oil pipelines

in Australia as the basis of a national power grid if found

to be justified after careful cost benefit analysis of

investment.

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The Liberal-Country Party government foresaw the need for

exploration and adopted successful policies aimed at achieving

Australian self-sufficiency in energy requirements. That

has been an achievement of great national importance.

Australia has progressed from a country totally dependent

on imported petroleum products in 1960 to 70 per cent self­

sufficiency today. The Labor government is taking advantage

of that situation in the present crisis. But by its short

sighted approach it is failing to build upon the foundation

it inherited.

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