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Wednesday, 27 September 1972
Page: 1209


Senator MURPHY (New South WalesLeader of the Opposition) - I move:

That the Senate, at its rising, adjourn until tomorrow at 9.55 a.m.

This is the procedural way in which the Senate is enabled to discuss now a matter of urgency. The matter or urgency to which I refer is as follows:

The failure of the Government to take action to protect Australian employment and industry in the supply of the Moomba-Sydney pipeline.

The Australian industrial community, including not only those who arc the industrialists but also those who are working in the industry and who are dependent on it for their livelihood, has been concerned by the events which have been revealed in the last week or so relating to the construction of what may be described as the initial part of the reticulation of natural gas for Australia which is to be carried out not with pipelines manufactured from Australian steel by Australian industry but with Japanese steel imported by the Australian Gas Light Co. at a cost of about S54m. This, naturally, has caused great concern in industry, to the unions and to the workers who could be affected by the loss of employment in the steel and pipelines industries. This situation has given rise to considerable controversy.

Broken Hill Pty Co. Ltd, which is the main supplier of steel in Australia, Tubemakers of Australia Ltd, which is a company in which BHP has shares, and another company - Steel Mains Pty Ltd - which is in the pipeline industry, have been giving out somewhat publicly, but apparently more privately, versions which are different from that given by the Australian Gas Light Co. on what are supposedly the facts of the matter. It is said by BHP and by Tubemakers that, in effect, they have not had fair treatment in the supply of these materials, that they could have supplied at least part of the pipeline and the steel, that men will lose their employment because of the failure to allow them proper treatment in the tender, and that they could have complied with at least a great deal of the contract if they had duly been given the specifications and the proper opportunity to comply. As I read one report, it is said by a spokesman for BHP that workers in the Australian pipe industry could lose their jobs as a result of the $54m gas pipeline contract given to Japanese manufacturers. That statement was by a Mr John Avieson, who said that industry needed the order to keep going. He said also that no pipe contracts were coming in in Australia and that if they did not get this one they would not get any.


Senator Wright - To which employees is the honourable senator referring.


Senator MURPHY - Employees in the steel and associated industries. At this stage I am merely putting some of the contentions which have been raised in the matter. I do not want it to be assumed that I am vouching for the accuracy of these contentions; I am merely saying that matters such as these are being raised. On the side of the Australian Gas Light Co. it is being said, as I understand it, that it is nobody else's business, that it is their own business what they do with the contract. The company maintains that everybody was given a fair chance to tender for the contract and that Australian industry - for the moment do not let us worry about which division of it is involved - is not able to meet the times or the specifications. It says also that Australian industry is not able to give the warranties which would be required, that the safety of the material ought to be subject to an unlimited warranty on the part of those supplying the pipelines but that such a warranty could not be obtained in Australia where there are some limitations on warranty. I understand that the Australian companies are prepared to warrant their products to the extent of $250,000 or $500,000 but no more. On the other hand, the Australian Gas Light Co. is suggesting that the Japanese company is prepared to meet the price and specifications and to give an unlimited warranty.

Workers in the industry are certainly concerned about what has been happening, and with good reason. The National Secretary of the Federated Ironworkers Association of Australia has indicated his union's extreme concern at the proposal to construct the pipeline with imported materials because the union is heavily involved in the steel and associated industries. Mr Short, the National Secretary, said that his union had hundreds of unemployed members in the Newcastle, Wollongong and Melbourne areas and some of those unem ployed could be absorbed if the pipes were built in Australia, or even if half of them were built in Australia. He said that the National Council of the Association had contacted the Broken Hill Pty Co. Ltd and Tubemakers of Australia Ltd to ascertain whether BHP could produce the special steel, and it has said that it could, and whether Tubemakers of Australia could produce the pipelines, and it had said that it could make 45 per cent of the pipes required in time to meet the plans of the Australian Gas Light Co. and, given more time, it could produce all the pipes.

That concern of the Federated Ironworkers Association is shared by other organisations involved. The Amalgamated Engineering Union, which is now part of Amalgamated Metal Workers Union, earlier made approaches to the companies involved in the matter, including the Australian Gas Light Co., and apparently reached understandings that its position would not be prejudiced. In fact, it has said that it was told that Tubemakers of Australia would be providing as much of the pipes supply as was within its capacity and the remainder would be imported from Japan.

This matter raises some very important considerations for Australia, because it is apparent that we are starting on what will be an important part of the development of our fuel resources and fuel supplies. Natural gas is predicted to supply, in various ways, from 10 per cent up to perhaps 30 or 40 per cent of our fuel needs by the end of the century. The outcome of these predictions will depend on events; but there is little doubt, from the experience in other countries - in particular the. United States, where there is a developing shortage of natural gas, and Japan - that there will be a worldwide demand for natural gas and that, for a number of reasons, Australia will want to develop its utilisation of natural gas. Almost certainly it will embark upon reticulation of natural gas. There will be pipelines joining the major cities with the natural gas supply areas. Those who are expert in this matter predict that we might have at least 10,000 to 12,000 miles of pipeline. So, this 760 to 800 miles of pipeline is the beginning.

At this beginning we are faced with the clear indication of an entire absence of national policy enunciated by the LiberalCountry Party Goverment. That is the basic reason for the difficulty with which those who are interested and the nation are now faced. There is no national policy. There ought to be a national policy. Why ought there to be a national policy? Because all those who have looked at the matter consider that there ought to be. The Senate appointed the Select Committee on Off-shore Petroleum Resources. The report from paragraph 8.54 to the end of the chapter deals in some detail with the viewpoint of those in the industry. My reading of the report is that all of those concerned with this development said that there had to be a national policy, that the Government had to be involved in the question of the transportation of natural gas and that it could not be left to develop as have our railways. We had confusion in the development of our railways and we would have confusion in this industry if each private industry were left to determine what should be done in its particular own interests.

I would like to refer to some of the evidence that is contained in the report of the Senate Select Committee on Off-Shore Petroleum Resources. At paragraph 8.55 Mr Hume, the general manager of the Brisbane Gas Co., said: . . that Australia is leaving herself in a somewhat unique position at this stage in not having a federal authority whereby transmission and distribution can be controlled. Whether you look at the United Kingdom where the gas industry is nationalised, or whether you look at the United States of America or Canada where the industry is under private enterprise, in all cases you will find a Federal or central authority of reference and decision which we in Australia seem to be lacking at this stage. 1 hope that the position does not prove to be as it was in the case of the railways of Australia - we wait for X years hence before we try to untangle the mess that has created by different gauges and so on. 1 believe that does not apply only to natural gas in which my own company is primarily interested. I would support the view that Federal fuel policy is a most desirable thing from Australia's point of view. If we are to be faced with the problems of interstate transmissions, then undoubtedly, in my mind, chaos will arise eventually. The present situation possibly is simple enough to bc handled by interstate argument and discussion but finally a crisis will occur and I think we should be preparing ourselves to have machinery legislation available to serve it.

Mr Humewent on to expand that point. Mr Pettingell, the General Manager of the

Australian Gas Light Co., submitted a letter to the Committee. In that letter also there are indications of the necessity to avoid bedlam. Mr Pettingell stated:

If the seperate States impose diverging principles of control, the development of interstate transmission lines would be greatly inhibited - that has in mind America and Canada where there was bedlam.

Later in his letter he stated:

Uniform regulations should govern the construction and operation of interstate pipelines throughout the whole length . . : .

He dealt with this question in various ways. He went on to state:

A simple and practical approach' by the Commonwealth Government to legislation enabling the construction and operation of interstate pipelines could possibly set the pattern for appropriate State legislation dealing with intra-State pipelines and associated matters such as conservation.

The Committee stated:

The evidence would suggest that regulatory and advisory responsibilities of an authority in the field of interstate Trade could include: (1.) To authorise the construction, ownership, operation and location of interstate oil and gas pipelines;

(2)   To make orders with respect to all matters relating to traffic, tariffs and prices; and (3.) To study, review and from time to time report to the Parliament on such policies and measures as it considers necessary or advisable in the public interest for the control of transportation of oil and gas.

What is said in the report by the Committee and by those witnesses who appeared before the Committee is unquestionably common sense. It would be difficult to find anyone who could say that in the national interest there ought not to be a Federal authority which regulates and controls this field and which determines what ought to be done as we start to develop this great pipeline system.

Are we really to allow this pipeline system to be developed by the decisions of the Australian Gas Light Co. or of some other company - perhaps those from overseas who are interested in the development of these fields? They will do what seems to be appropriate to them and after we get into a mess with all sorts of lines which will go in directions and for purposes which suit particular private interests, somehow the nation will have to come along and sort it out and do what all the experts have said ought to be done right at the beginning.

It is evident - and this has been pointed out by a number of financial writers and by all those who have examined what the Government is doing - that the Government just has no policy at all. There ought to be a policy. This is the basic question with which we are concerned. We are only getting the edge of the problem here. We consider the mess up that is occurring in the present case involving the importation of pipes for the Australian Gas Light Co., we can see the evidence of the absence of any plan. We are only at the beginning of this enormous Australian industry which will transform the fuel aspect of our economy.

Mr RobertSorby, writing in the 'Australian Financial Review', has drawn attention again and again to the fact that the basic question is the entire absence of Federal Government policy and, for that matter, State government policy, in this field. The Federal Labor Party has enunciated its policy. This policy is set out in its platform. 1 would like to refer to the brief statement that is contained in the platform. It is as follows:

Labor will establish a joint Federal-State fuel and energy commission to devise and implement an integrated and co-ordinated national fuel and energy policy. The Commission will:

(a)   Regulate the exploration, development, transportation, marketing and use of oil, natural gas, coal, fissionable materials and generative water and prevent the depletion of fuel and energy resources needed to match Australia's requirements . . .

That statement also goes on to mention that Labor would guard the environment. Labor's policy was spelt out in very much more detail by a committee of the Federal Parliamentary Labor Party. May I say that a number of my colleagues in the other place, particularly Mr Rex Connor, were responsible in large measure for the development and drafting of that policy. The policy was then stated in both Houses at great length. I think that I read to the Senate the policy that had been so developed and drafted in 1967 or 1963. Had that policy been acted upon, there would not have been these difficulties.

The real problem is that companies such as the Australian Gas Light Co., Broken Hill Pty Co. Ltd, Tubemakers of Australia, and for that matter the Japanese company as well as the trade unions, do not know what the Federal Government has in mind.

It is a disgrace that not only is there the injury, one might say, to the Australian companies which have their competing allegations in this issue, but one might say that even the Japanese company would have a legitimate grievance if it said: 'We are not responsible for the lack of policy of the Federal Government. We were asked to tender and we did so. We won the contract. Why should it be interfered with?' That is a legitimate complaint. The difficulty in Australia - and this is where we need Federal Government policy, and we cannot do without it - is that the Government will not say: 'We will establish a pipeline commission. Here is our programme - we will do the best we can to work out how these natural resources can be developed and where the pipelines will go. We are running grids to connect up the whole of Australia. These are the reasonable kind of plans, we have to develop them. We will build, say, 2,000 miles of pipeline over 5 years and so many more thousand miles over another few years and we will adapt our plans in the light of any changes in the circumstances. However, we can be quite sure there will be a minimum of pipeline built over a certain period'. If this were done the Australian companies such as Tubemakers and BHP would know where they were going. They would know with certainty what the Government's plans were and they could put themselves into the position, by acquiring the proper plant and having the appropriate technology and skilled workers, to meet the requirements. If they got themselves into this position by appropriate actions one would say that they would have every expectation that the Government would do the right thing, by the use of appropriate protections and encouragement, to see that the pipeline would be constructed in a way which would use Australian materials wherever that could reasonably be done. This would enhance the interests of Australian industry and employees and there would not be this kind of disruption between ourselves and other trading partners. There would not be complete uncertainty in the industry for companies, trade unions and members of those trade unions.


Senator Wright - Does the honourable senator have anything to say on the matter of constitutional power?


Senator MURPHY - In relation to constitutional power it is clear that the Commonwealth has power over the interstate trade and commerce. It is clear that the Commonwealth has power over the importation of commodities such as steel, and in co-operation with the States it certainly has power in regard to an institution such as the Australian Gas Light Co. which has special privileges and has virtually a monopoly in regard to the supply of gas for industrial and commercial purposes in New South Wales. The Commonwealth has a corporation power and a whole host of other powers, leaving aside such powers as the defence power. When one is dealing with the prospective energy requirements of a nation, of which natural gas will be a important part, I do not think it is useful to divert this argument into what the constitutional powers may be because this is a subject which is fundamental to this nation. Not only is the supply and movement of natural gas fundamental but also the prosperity of the steel industry and industries associated with it and the livelihood of persons who depend on those industries are fundamental.

I suggest that we must understand how important this industry is to Australia and how important the developments are going to be. We are going to have this important industry. We are at this impasse which seems to have stemmed from the deal which was made between Sir Henry Bolte and the late Mr Holt. At the time the deal was characterised as one made for parochial purposes and aimed at disadvantaging New South Wales. The shortages which are going to concern the world may be understood from the prices which United States interests are prepared to pay. There is discussion which suggests that sums of up to $1 per 1,000 cubic feet will be paid for gas brought in cryogenic tankers. The fields which are of importance are not merely the South Australian fields.


Senator Cotton - Cryogenic?


Senator MURPHY - That is the word. A science known as cryogenics has developed.


Senator Cotton - That process is used in cutting up chickens.


Senator MURPHY - And perhaps human beings one day. But at the moment we are speaking about the conveyance of great quantities of natural gas in that convenient form. The Palm Valley field has natural gas far in excess of the South Australian field. The fields off shore from the north west are extremely important. The Palm Valley field is pertinent to this discussion because the construction of the pipeline from Moomba to Sydney brings it within striking distance of the Palm Valley field. What is to be done about this? International interests such as Japanese and United States interests are concerned for their purposes with the exploitation of the Palm Valley field and the off-shore north west fields. Our national interest is concerned. Surely we should have a national approach now and some reasonable planning as to what is to be done. If this pipeline is to be constructed surely there will be a link up with the Palm Valley field? We ought to be making a national plan now in relation to how this interstate transportation of natural gas is to occur. It has been estimated that there . are some 3 trillion cubic feet of natural gas in the Gidgealpa field and some 45. trillion cubic feet in the parts of the north .west shelf which have already been tested. As I understand it that may be only about 10 per cent of the field. This makes it a field of world importance.

It is time the Government faced up to these questions. The great decisions as to what is to happen to this natural gas resource should not be made by the Pacific Lighting Corporation or by Japanese interests. It may be of importance to know in what form payment will be made for the steel. If it comes from Japan is it to be paid for by the export of natural gas to Japan or in some other form? The exploitation of the Palm Valley field is tied up with the transport of the gas. It is said that some $900m may be invested in this by American interests. There are suggestions that some 15 times as much may be recouped by those interests. The particular pipeline with which we are concerned immediately is only a trifle when compared with how these resources are to be dealt with as a whole. Surely the lesson is clear. At this stage we ought to know just what is happening. How does it come about that decisions are being made which adversely affect the steel and pipeline industries? Is it true, as is alleged on one side, that some 300 or 500 men will not gain employment which they otherwise would have gained and the steel and pipeline industries will be severely prejudiced in making plans for their future involvement in the construction of steel or pipelines for future use. Instead of saying - as the Minister for Trade and Industry (Mr Anthony) said yesterday - that this is a matter for commercial firms to sort out between themselves we should say that it is time this was a matter for the nation. We are entitled to know. We ought to be supplied with the information. A national decision should be made on these issues in the context of what is to be done in the development and piping of natural gas in Australia.

Motion (by Senator Wright) proposed:

That the debate be adjourned until 9 p.m. this day.


Senator Murphy - If the debate is being adjourned for some special reason - I do not want to argue - may I suggest that as a matter of convenience resumption be at 8 o'clock instead of 9 o'clock? If there is some special reason perhaps the honourable senator could indicate it?







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