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Wednesday, 24 August 1983
Page: 156

Mr BARRY JONES (Minister for Science and Technology)(11.50) —I move:

That the Bill be now read a second time.

The Government has a clear national responsibility to prepare contingency plans against any foreseeable national emergency. The fundamental objectives of a national response to a major fuel shortage should be to minimise the total impact on the community-in terms of maintaining essential services and minimising economic dislocation-and to ensure that available supplies are distributed as equitably as possible. The purpose of this Bill is to equip the Commonwealth Government with the authority needed to prepare for and handle a national liquid fuel supply emergency. This would be done in close co-operation with the governments of the States and the Northern Territory.

In the event of a serious shortfall of fuel supplies it could be expected that fuel prices would tend to rise substantially as purchasers competed for available supplies. This would be exacerbated by panic buying, and consequently normal market operations may break down. Such a situation could cause severe economic dislocation and hardship throughout the community. Government intervention to ensure a fair distribution of available fuel supplies may be required. For example, in a severe shortfall governments may need to implement quantitative allocation methods to achieve a satisfactory balance between supply and demand. Governments will require flexibility in meeting an emergency. It is important to recognise that the most available response would be determined in the light of prevailing conditions. The provisions of this Bill will enable this to occur. Together with existing legislation in the States and the Northern Territory, its enactment will enable the Commonwealth to take action in a fuel supply emergency situation with the effectiveness and authority that the Australian community is entitled to expect. The passage of this Bill will represent a major step forward in the Commonwealth Government's preparations against a national liquid fuel supply emergency.

This Bill is one of the outcomes of a major effort by Commonwealth and State governments to improve their preparedness against a fuel shortage. It has its antecedents in the events of 1979, when the Iranian oil crisis triggered a condition of turmoil in world oil markets that forced an accelerated recognition of the need to prepare measures for dealing with an emergency situation. It was in this climate that member countries of the International Energy Agency became acutely aware of the possibility of having to implement the IEA's emergency oil sharing system and to invoke cut-backs in the consumption of liquid fuel in accordance with their obligations as IEA members. Australia, although a member of IEA, does not have the appropriate legal basis for handling a supply cut.

As a result of the concern of all Australians about the possible impact of uncertain supplies, in September 1979 Commonwealth and State Ministers with responsibility for energy matters agreed to form the National Petroleum Advisory Committee-NPAC-to advise governments on the appropriate arrangements and priorities for the allocation of liquid fuels during any period of supply shortfall. NPAC members are drawn from the agricultural, fishing, manufacturing, mining, shipping and transport industries, the oil industry, the Australian Council of Trade Unions and motorists' organisations as well as the Commonwealth , State and Northern Territory governments. NPAC completed its report ' Management of a National Liquid Fuels Supply Emergency' in October 1981 and after acceptance by Commonwealth, State and Territory governments as a basis for proceeding with emergency planning, the report was tabled in the Parliament on 16 September 1982.

The proposed Bill is in accordance with the NPAC recommendations and is based closely on the powers proposed in the report. Together with current legislation in the States and the Northern Territory, it will enable all governments to work together in preparing for and managing a national liquid fuel emergency. In order to meet, as far as possible, the concern expressed by some States that the proposed Bill may inhibit the operation of their own emergency legislation, the Minister for Resources and Energy (Senator Walsh) has agreed that the Commonwealth, the States and the Northern Territory shall work together to develop alternative Commonwealth and State legislation. To provide a specific timeframe for this exercise the Minister has also agreed to include in the proposed Bill a three-year sunset clause. This will enable discussions to proceed without jeopardising the Commonwealth's ability to act decisively in any emergency situation in the immediate future. I recognise that agreement with the States on alternative legislation cannot be guaranteed within the three-year period. In this event, it would be necessary to extend the Act beyond the currently proposed sunset date.

It is our intention to work in conjunction with the State and Territory governments. The Bill requires that consultations occur between the Commonwealth and State and Territory energy Ministers before declaration by the Governor- General of a national liquid fuel emergency. Consultation is also required before the Commonwealth Minister may make certain determinations or issue certain instructions under this Bill. These include actions under the contingency planning and the emergency control clauses of the Bill. Further, the Bill enables the Commonwealth Minister to delegate powers to the State and Territory Ministers where this is appropriate. The primary mechanism for consultation will be the establishment of a high level committee of Commonwealth , State and Territory officials as the National Fuel Emergency Consultative Committee. This was recommended by NPAC and the Minister has taken steps to establish this committee through an exchange of correspondence with his State and Territory colleagues.

In essence, the Bill provides arrangements for nationally uniform proportionate reductions in the level of supplies of scarce liquid fuels, ensuring that the burden of a shortage is shared equitably as far as possible throughout Australia . This will be achieved by means of a bulk allocation system for bulk consumers and, in extreme conditions, a rationing system for retail purchasers. It is intended that the bulk allocation system will operate with sufficient flexibility to meet special needs-such as seasonal and regional fluctuations in fuel requirements-and will take account of economic efficiency. This will ensure the maximum possible equity and efficiency in the distribution of fuel to consumers.

In addition to making supplies available to all users on a uniform basis, the Bill will also provide extra supplies of fuel to users whose activities are classified as 'essential' or 'high priority'. These will be identified by State and Territory energy Ministers for users in their regions and by the Commonwealth Minister for a limited range of Commonwealth responsibilities, such as defence. To ensure consistency in the identification of essential and high priority users, and in the calculation of their allocation quantities, guidelines will be specified by the Commonwealth Minister. The formulation of these guidelines will be a subject of consultation between the State and Territory energy Ministers, and the guidelines will be presented to the Parliament for approval.

The Bill includes certain provisions for pre-emergency contingency planning, and this will be undertaken in co-operation with the appropriate State and Territory authorities, Ministers, and governments, with inputs from the oil industry and fuel users. Included in the contingency preparations are provisions for the maintenance of minimum stock levels to be held by the oil industry in normal or non-emergency conditions. In order to ensure that fuel is available to supply users during an emergency, the Bill provides powers to direct the movement, production, release or retention of liquid fuels if this becomes necessary. Directions under these powers can only be made after consultation with State and Territory energy Ministers.

In accordance with recent Government legislation in related areas, the Bill contains provisions for the reconsideration and review of certain ministerial decisions. These include the determination of bulk customers, the identification by the Commonwealth of essential or high priority users, and directions on strategic stock levels. This protection of individuals and corporations is encompassed in provisions requiring the Minister to reconsider such decisions, and for their subsequent review by the Administrative Appeals Tribunal. The Bill also provides appropriate protection for the operation of consistent State or Territory laws.

In conclusion, I will return to an earlier theme. The Government has a clear responsibility to prepare contingency plans against a foreseeable national emergency. There can be no argument that in today's uncertain world a major oil supply crisis is a real possibility and it is equally certain that such a crisis would have potentially serious social and economic consequences for us as Australians. This Bill, based on the recommendations of a high-level committee arrived at after two years consideration of expert advice, will provide the Commonwealth with the means of fulfilling its role as a co-operating partner with the States and the Territories to ensure that the impact of such a crisis is minimised. I commend the Bill to honourable members.

Debate (on motion by Dr Harry Edwards) adjourned.