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Thursday, 27 November 1986
Page: 2860

Senator Sir JOHN CARRICK(12.25) —During the Estimates committee hearings I asked a series of questions regarding the three main factors in terms ensuring that energy is available to Australia in the decades ahead; that is, conservation, conversion and exploration. The evidence from the committee transcripts, other published documents and industry shows a very disappointing picture. There is little or no evidence that there is any attempt at conservation or conversion in Australia and there is very real evidence that exploration in Australia is falling away badly. My comments are against the background that it is generally accepted that two or three important developments will occur. Bass Strait production of oil will start to decline this year and in five to seven years time that oil will be virtually used up. Bass Strait production has been providing something like 400,000 barrels a day, give or take a few, of the 440,000 barrels a day roughly, that Australia has been producing indigenously. This production has been supplemented by imports of heavier crude. Unless we can find substitutes for Bass Strait oil Australia will be in a dire situation. Today and for the last four years the Government has been facing a growing trade deficit which has bedevilled the whole of our economy. It is incredible that the Government should be running the grave risk, the peril, that we will be enhancing that deficit in the decades ahead through the necessity of buying more and more oil from overseas. On old figures, every 10 per cent drop in our oil self-sufficiency in Australia requires an extra $1 billion in oil imports. Those figures will increase as the years go by. On top of that, it is accepted generally that towards the middle years of the next decade world production of oil will be such that the Organisation of Petroleum Exporting Countries will command 75 per cent of the non-Iron Curtain world supply source of oil.

From the experience of the 1970s we should have learnt the great danger to the free world of a monopoly on oil. I express the gravest personal view that we are utterly wrong in exporting oil from Australia at present. I understand-the Minister for Resources and Energy (Senator Gareth Evans) can confirm these figures-that the amount we have now exported would be roughly equivalent to seven or eight months of Australian consumption. In my judgment that volume of oil left in the ground to be used in five to seven years time could be absolutely vital to our economic situation. It could be vital in that we would not be hostage to the world monopolies and we would not have such pressure upon our balance of trade.

I refer to reports on the way in which other countries are conserving oil. The Department of Resources and Energy projected some years ago that Australia's consumption of oil would increase by a fraction less than one per cent a year. I understand that in fact the figure is something under 2 per cent. Countries such as the United States of America and Japan have shown a great capacity to conserve oil. In comparison, I see no evidence of an attempt to conserve oil in Australia. In my judgment that is one of the most serious dangers to Australia.

When this Government came to office there was a plan very much in force to convert each year some thousands of government vehicles to LPG so that there would be more use of our indigenous LPG, a lesser drain upon oil needed for fractionation for petrol purposes and in the longer term the development of an industry in Australia which could use Australia's LPG and natural gas rather than depend upon the light fractions-the petrols. That program has been run right down and is virtually non-existent. How a government could do that defies imagination.

We have had the clearest of proof that in the taxi industry LPG has proved highly efficient and highly economical. I think the figures were that 90 per cent of Canberra taxis were using LPG, in Melbourne 80 per cent were and in the other major cities the figures were of that order. A natural thing for all commercial vehicles that have high milages would be to have LPG conversion. I see absolutely no sign that the Government believes that there is any sense of urgency or that it has any responsibility in promoting conversion from petrol. I see nothing in the energy saving figures that have been given to us that suggests that we are attempting to conserve.

That does not just apply to oil. It is not just the question of saving a precious, non-renewable resource. Fundamentally we are in the grip of an economic crisis where we are being costed out of world markets because of our high costs. Anything that a government can do to get the costs down is of profound importance. If we can save on energy, we can save fundamentally. The International Energy Agency has repeatedly reported that it would be possible for a country with our kind of living standards to save up to 30 per cent of its consumable energy without lowering living standards. The effect of that on costs would be enormous. We are only toying with energy conservation in terms of electric power consumption. There is some sign that in government buildings something is happening, but there is no intensity or fire in the belly of this Government to do this. Yet the best way to save the huge capital investment in new power stations and, therefore, the huge borrowings overseas that build up our foreign debt, is to use our electricity more conservatively. I see no such drive in the Government wherever I turn.

When I turn to exploration I see the very reverse of this situation. When the Whitlam Government went out of office in 1975 there were 22 oil rigs in Australia, of which only one was working, and only 25 wells were being developed. Over the period of the Fraser Government this was built up to 200 or more and, on the momentum of that buildup, was carried to a peak by this Government, but it is now declining. The Government has deliberately gone out of its way to impede exploration in Australia. It has put penalties upon exploration. The new situation in which, in certain areas, leases are granted by front end bonuses is a disincentive. The industry is issuing a grave warning to the Government; it is saying to the Government that the rate of exploration is far from enough for us to keep up our self-sufficiency.

The Government admits that, on the present predictions from the Bureau of Mineral Resources and on its own predictions, by some five years time, and no more than that, self- sufficiency in Australia will have fallen from something like 78 per cent to the 40 per cent mark-45 or 47 per cent.

Senator Gareth Evans —That is on the assumption of no new discoveries. Be fair.

Senator Sir JOHN CARRICK —With great respect, it is not on the assumption of no new discoveries but on the assumption of no new major discoveries. That is a very significant difference. I suggest that the Minister go back to his facts on this because the question that I have asked BMR and the Department of Resources and Energy repeatedly is: What is the projection for Australian self-sufficiency on the known facts? The know facts are that our self-sufficiency will be somewhere in the order of 40 per cent in five or six years time without any major discoveries.

To get an understanding of this, for the free world to keep up its supply of oil, every 15 years it has to find another oil field of the magnitude of either the North Sea or Alaska. Apart from the development of Mexico's oil fields, there has been no such discovery and, indeed, the North Sea is now predicted to be on a path of decline. For us to stay self-sufficient we have to find major fields. There is no doubt in the world that we could better develop the fields we have now, but the fact is that on this prediction we will have fallen from what amounts to total self- sufficiency in the lighter fractions, say 78 per cent, to some 30 per cent. If that shortfall had to be import replaced, it would cost at least $3 billion a year which this country is quite incapable of financing in the future.

If we have learnt one thing from the world recession of the 1970s it is that the world had to put more and more money out into buying oil and had less and less money for trade. As trade shrank, so recession grew throughout the world. If we have to put more and more money out in terms of buying oil, we will have less and less money for trade and bigger and bigger deficits. I see nothing in the publications of the Department or in the Government's statements which suggests a sense of urgency and that the Government really recognises the impending crisis in terms of energy both in the world and in Australia. I see nothing in the performance that is scheduled that shows that. As I understand it, the exploration people are pointing out that exploration will fall by about half in the future. The Minister can perhaps comment on this projection. I see nothing that the Government is doing to provide further incentives.

It is not just a question of oil and energy. Australia has all the basic mineral resources and a huge potential for energy. Put together, we ought to be one of the great manufacturing countries of this world. We are not because we have no efficiency in the system and we have not given the people a perceived goal. I have to say, sadly, that all the evidence that came out at the Estimates Committee points to the fact that the Government has no perceived urgency in terms of conservation, conversion or exploration.