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Tuesday, 16 October 1973
Page: 2198

Mr FAIRBAIRN (Farrer) - The statement by the Minister for Minerals and Energy {Mr Connor) is quite a remarkable document. In fact one could say it is incredible. It consists of threats, vague assertions and abuse. It is not backed up in any way. It reasserts assertions which have already been proved false by the mining industry and all that it will do is make the uncertainties even greater uncertainties and therefore disturb even more industry which has contributed well to the Australian nation and which would continue to do so if only the Minister would get off its back, provide stable Government policy and try to encourage these people to search more. He has rushed in at short notice. No one knows what for. My theory is that this was some material he had ready, thinking we would move a motion of no confidence in him, and when we did not he said: 'Oh, well, I will give it to the Parliament anyway.' One of the incredible things about this statement is that here we have 2 parties which are absolutely poles apart in their thinking. At the present moment the Minister knows very well that legal advice has been given that the pipelines legislation under which he is proposing to operate is invalid. He has received information from Sir William Pettingel to this effect, and yet he goes ahead when he knows quite well that he cannot go ahead until such time as the case against the Pipelines Authority Act comes to the High Court.

Mr Connor - We will go right ahead.

Mr FAIRBAIRN - The Minister has great legal knowledge. I understand that he had a long practice in law and no doubt he would know what the situation is. But if the Act is held to be invalid then of course it must be tried out. As I say, these 2 parties are poles apart. The Opposition believes in private enterprise under proper supervision. This is, of course, the system under which virtually every democracy in the world has undertaken the search for oil and has produced it once it has been discovered. We believe in private enterprise under proper supervision in which the Government has a major responsibility to set the conditions and to receive a great percentage of the return. Do not let us forget that more than 50 per cent of the profits returned from this goes to government. We believe a fair share should go to government. What happens at present is a company tax of 47} per cent on any profits goes to government. Government also gains from royalties which are set according to world standards, from a withholding tax of 15 per cent, from payroll tax and from a tax on dividends when they are distributed. The Government gets a great take, but we believe that it is private enterprise basically which should undertake this work and not socialism or nationalism.

The Opposition believes also in co-operation with the States. It is interesting to note that the Minister never at any stage mentioned whether he would co-operate with or seek advice from his State colleagues. Yet a lot of the work that has to be done in respect of this project must be done by the States and of course, must be done under the Petroleum (Submerged Lands) Act in which the State Minister is the designated authority. But the Australian Labor Party believes in nationalisation. It believes in taking over at the wellhead or perhaps even before, if it starts to go into the search for oil itself. Where are the cost-benefit analyses for this? The Opposition would have liked to have had time to study this most illuminating document. We would have liked to have had time to go into it deeply but we know quite well that the debate, if adjourned, would never be brought on again and therefore we have to debate it straight away. On the other hand the Minister has had plenty of time to prepare his statement

Mr Anthony - He did it over the dinner hour.

Mr FAIRBAIRN - Yes, and we are given just a few short minutes in which to prepare our reply. Let me refer to some of the points involved.

Mr Hunt - The Minister wrote it at afternoon tea time.

Mr FAIRBAIRN - Yes, it looks like it. First, the Minister says that the pipeline authority must secure control of and retain reserves of petroleum adequate to meet the long-term needs of the Australian people. But the Government can do this now. What is new in this petroleum authority doing what the Government can do now? Not one barrel of oil, no gas or anything can leave Australia without the authority of the Minister. That situation applies now. So what is so different in this new system that the Minister seeks to implement? The Minister referred to the Woodside-Burmah consortium as still holding exploration permits and said that they are very large. The extraordinary thing is that he says it is not doing enough and yet he is preventing it from doing any more. Whenever the company has tried to get farmouts and by this arrangement to get more drilling done so as to see that that area is covered, he refuses the permit. We know quite well that Mount Isa Mines and other bodies like that have applied for these farm.outs and the Minister sits there smugly, smirking, and refuses to give them anything and says that it must be handed back to the Australian Government. What happens if it is handed back to the Australian Government? The Australian Government cannot do anything with it so it has to hand it out to another company.

Mr Connor - We will get the money.

Mr FAIRBAIRN - The Government gets the money now and gets a very large percentage - well over 50 per cent of profits. If, of course, what the Minister intends is that everyone in Australia should cease to look for oil except the Government - this is the way that he is heading because no one would want to go on under the conditions he is setting - he has to realise that the Government must provide vast sums. The Minister said that Woodside-Burmah is unable to fully explore the area and it should surrender the area to the national Government but, as I have already pointed out, it is not the national Government that will allocate this area because this position is covered by legislation passed by this Parliament and by every other Parliament in Australia - the Petroleum (Submerged Lands) Act. That is a joint arrangement between Commonwealth and State. So it is not the national Government which makes this allocation.

Mr Connor - It will not stand the test of law in the High Court and you well know it.

Mr FAIRBAIRN - The Minister has done nothing to bring that on and does not intend to because if the present Bill is passed it will not affect petroleum legislation. Here we have the extraordinary situation where he is preventing people from searching for oil and at the same time saying that they are not doing enough. He goes on to say that under section 39 of the Pipeline Authority Act we have broken new constitutional ground. My word, they certainly have. The Australian Gas Light Company intends to challenge this Pipeline Authority Act but the Minister said tonight that the Government intended to proceed with the building of the pipeline. He said that litigation could seriously delay construction of the pipeline and that the Government is going to press ahead irrespective of whether we have the legal authority or not. He said with that great knowledge of his that the High Court will find in favour of the Australian Government. He then went on to say:

For these reasons, it is vital that full acquisition of natural gas and associated liquids be made by the Australian Government.

This is blatant nationalisation or socialism, call it what you like. He continued:

We plan a major refinery at Dampier.

Is this to be built by the Government? How does the Minister know that he has the authority to do it? He said nothing about getting in touch with Tonkin and the State Government who are in charge of Dampier. Is he intending just to acquire and, if so, under what section will he acquire land for this I take it, Commonwealth-owned refinery at Dampier? He went on to say:

There are wholly-owned Australian firms who have the necessary technology and ability to establish such a refinery.

I hope they have and that under private enterprise they will do so. However, the Minister's colleague in South Australia, Mr Dunstan, says that no Australian consortium has the expertise, technology and marketing knowledge to build the $300m petro-chemical complex at Redcliffs.

Here we find a State Premier disagreeing with what the Minister for Minerals and Energy says. The Premier says that these companies have not the expertise and it is unlikely that they would be able to get in their bids in time. The Minister says that there are plenty of Australian companies which could do it.

Mr Connor - And will.

Mr FAIRBAIRN - He mentions again in his statement this failure by the Woodside-Burmah consortium to disclose discoveries. It is an extraordinary thing how Woodside-Burmah Oil N.L. seems to get the bucket all the dme. Woodside-Burmah is only one of a number of companies in the consortium. There is the Shell Co. of Australia Ltd, BP Australia Ltd, and California Asiatic Oil Co. Yet everything is thrown at Woodside-Burmah which has Australian management and Australian equity. I thought we had disposed of this matter a long time ago. Mr Donaldson said to Mr May, the State Minister for Mines, in the presence of the Minister for Minerals and Energy: 'Is there anything you want that you have not got?' Mr May said: 'No, I have received everything I have asked for'. Now the Minister throws up this old shibboleth again. For goodness sake if there is anything he wants from these companies he should be man enough to tell them and they will provide it. But he should not sit here sniping and trying to undermine their confidence as he has already succeeded in doing. He said: 'We have experienced the greatest difficulty in obtaining this information'. What utter rot and the Minister knows it is. He proceeds then to talk about allegedly huge costs. It is interesting that the Minister tabled a document yesterday in the House which completely confirmed the figures which I brought forward. He said that I believed in fairy tales, yet the documents he tabled showed that to bring one well into production, including the pipeline and a production platform -

Mr Connor - A major well - North Rankin.

Mr FAIRBAIRN - Of course. I said 'one well'. I listened to the Minister in silence and I hope he will listen to me in silence. I gave the figures for the development of 5 wells. The Minister said that it will cost $2 10m for one well. I said that it would cost $ 1,000m for 5 wells. I think that, if anything, I was perhaps a little under the estimate. That cost is only to bring the production on shore. One then must have the liquefied natural gas plant at a cost of $250m. Ten tankers will be required. The Minister says that we can hire those tankers. Of course we can do that if we are prepared to pay the cost of hiring them. The charge for those tankers would be another $ 1,000m. There would be the further cost of the pipeline to Perth, if necessary. There is no doubt whatsoever that approximately $2,500m will be required to develop these 5 fields which have been discovered. Is the Minister suggesting that the Government is to do all this?

Mr Connor - Fantasy.

Mr FAIRBAIRN - Well, I have asked the Minister before to show where it is fantasy and he cannot do so because he knows quite well that it is-

Mr Connor - They will come here with their own cryogenic tankers. You know that. Do not mislead the House.

Mr FAIRBAIRN - As I have said already, if they come here we will pay the cost of transporting this fuel.

Mr SPEAKER - Order! The Minister will cease interjecting.

Mr FAIRBAIRN - The Minister repeats another one of these complete inaccuracies - it has already been shown up - about the proven and probable recoverable reserves of the Gidgealpa basin not fully meeting the commitment under the contract between the Australian Gaslight Co. and the Gidgealpa organisation. Again, this is utter rot. We know perfectly well that the well known Texas firm of Degolyer and MacNaughton, probably the most outstanding people in the world in this field, has given a certificate to the Australian Gaslight Co. that there are in the Cooper Basin dedicated to Sydney, Wollongong and Newcastle sufficient gas reserves for 30 years. Yet, the Minister says that there are reserves for 10 years to 12 years only. We know that, after that certificate was given by this most reliable company, further discoveries have been made, particularly by the Western Mining Company in the south-west corner of Queensland. So, more gas has been discovered since that time when there were dedicated reserves for 30 years to Sydney. The Minister goes on to say:

Without export controls this company planned within this period of 21 years to rip out and rape the natural gas.

What an incredible statement. The Minister apparently believes that although he has these export controls now, he is incapable of administering them so as to prevent what he calls ripping and raping. He knows, as I have said again and again, that not one barrel of oil can be exported from Australia without the authority of the responsible Minister. Yet, he says that they will be ripping and raping it. What utter nonsense! He states further:

We will continue the pipeline to Palm Valley to provide a back-up for the short fall of supplies at Gidgealpa.

We know that these are not shortfalls at all. Why does the Minister not show us any feasibility study as to what the costs and benefits will be, when it will be necessary to produce this and what size the pipeline will be. (Extension off time granted.) I thank the House. I will not detain it very much longer. It is interesting to go through some of the points made in this statement because it is the most incredible statement I have ever seen in my 24 years in this House. The Minister also stated:

My recent conference with Burmah Oil Co. (UK) Limited was to ensure that it confined itself to exploration and did not prejudice itself by financial commitments associated with export.

In other words, the Minister says to the company: 'You go ahead and find it for us and we will take it from you as soon as you find it.' That is nationalisation. What is the Government to pay for this resource when there will be one bidder only. We have heard the Minister say already that the price' for Bass Strait oil was too high and that the price somewhere else was too high. We know quite well that he will be the only bidder. He will be the only person who can take this resource. Therefore, he will pay any price which he chooses to set. The company has to accept that and like it.

Dr Jenkins - Do you find the Bass Strait situation satisfactory?

Mr Reynolds - These are Australia's assets that you are selling out.


Mr FAIRBAIRN - The Minister says that he will work in the closest collaboration with his colleagues, the Minister for Secondary Industry (Mr Enderby) and the Minister for Overseas Trade (Dr J. F. Cairns). Again, as I say, he mentions nothing about the State Ministers. A great deal of the back-up work has to be undertaken by the States. A great deal of the expertise and knowledge of the technology in this field resides with the State departments, and the licences and permits are allotted by the appropriate State Ministers.

Honourable members know that the action of allocating licences and permits must be undertaken by the designated authority who is the Minister for Mines in the relevant State, in collaboration with the Federal Minister. Yet the Minister for Minerals and Energy says nothing about this. He then goes on to say that the Australian average in off-shore drilling has been good. The figure relating to off-shore wells, of course, has been good; we have been fortunate. But the figure relating to exploration for oil and gas in Australia has been that one well in 40 has been a commercial proposition. If we take an average cost of $2m per well and we attain the Australian average this means that for every $80m expended we get one commercial well. Of course, we know that private enterprise is more skilled in this than public enterprise is likely to be and that, therefore, public enterprise would not achieve this figure; the expenditure of S80m might not result in one commercial well. We believe that if governments have that amount of the taxpayers money to spend they should spend the money not on this risk exploration but on housing, schools, roads and hospitals - the sorts of things which governments have to provide - and leave private enterprise, under suitable conditions, to search for oil and gas.

Finally the Minister for Minerals and Energy states:

Almost every major industrial nation faces the stringent shortage of oil supply. Australia will have an abundance, and a dominant economic position In the future industrial world. ls the Minister going to adopt a dog in the manger attitude? Is he going to say: 'We are the haves and we are not going to let the have nots have anything at all'? Is he going to set up a cartel as he tried to do and as his Prime Minister (Mr Whitlam) tried to float when he was overseas in Mexico, though he did not get very far with it?. Is he going to seek to restrict supplies? We in the Liberal Party believe, of course, that we must know what our reserves are and that we must have adequate reserves for the foreseeable future. However, once those reserves are provided for, we believe we have a duty to sell overseas over and above our requirements which, of course, also brings us enormous benefits by the gains which come to our exchange as a result of this.

I conclude by saying that the Liberal Party believes that co-operation between private enterprise and government is the only way to ensure the orderly and progressive development of Australia's natural resources and energy. Since coming into office the Labor Government has actively attacked the petroleum and mineral exploration industry in Australia. This attack on free enterprise has been carried out under a plan which has been systematically devised for the purpose of eliminating individual Australian companies. For example, firstly the principal incentive for risk capital, namely the right to deduct capital contributions for tax purposes, was removed. Then, of course, there was the 25 per cent freeze on anyone bringing funds in from overseas. We are not against overseas funds. We believe that there should be adequate Australian equity and management. But if, over and above that, further capital is required we believe there is no reason why it should not come in under suitable terms and conditions. Petroleum and mineral exploration companies now realise that they are the first on the list for nationalisation by the Labor Government. So when we come back to office again, which I hope will be very shortly, we will re-establish the close relationship and co-operation between governments and industry which is paramount in our policy and we will ensure that taxpayers money will not be used on exploration which involves high costs and a major amount of funds.

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