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Wednesday, 26 October 1949

Mr WARD (East Sydnev) (Minister for Transport and Minister for External Territories) . - by leave - I move -

That the bill be now read a second time.

The purpose of this bill is to authorize the execution by the Government of an agreement with the Government of New Zealand in relation to certain rights which have been jointly acquired by the Australian and New Zealand Governments to the phosphate deposits on Christmas Island in the Indian Ocean, and for other purposes connected with the control and working of those deposits. The bill represents the successful culmination of negotiations undertaken by the Government with the object of ensuring continuity of supplies of high grade phosphate to meet the needs of the agricultural industry of the Commonwealth. Previous negotiations, which had been conducted as far back as 1926, and renewed from time to time in subsequent years, to- secure the Christmas Island deposits had net been successful. As the result of the latest negotiations, the Australian and New Zealand Governments have jointly acquired, under an agreement made on the 31st December, 1948, the whole of the interests and assets of the Christmas Island Phosphate Company Limited at Christmas Island. This is a private company which is incorporated in England.

Christmas Island is located about 1,400 miles north-west from Fremantle. It is an administrative dependency of the Colony of Singapore. It contains deposits of high grade phosphate estimated at from 25,000,000 to 30,000,000 tons. These deposits had been worked for more than 50 years by the Christmas Island Phosphate Company Limited under a 99 years lease of the whole of the island which was granted to the company from the 1st January, 1891.

Pre-war output of phosphate .by the company was approximately 150,000 tons a year, most of which was sold to Japan. Since the war, supplies of this phosphate have been obtained for Australian andNew Zealand requirements to supplement the supplies available from Nauru and Ocean Islands. The present phosphate requirements of Australia and New Zealand are approximately 1,250,000 tons a year. This is expected to increase to approximately 1,500,000 tons a year by 1951-52. Nauru, with a total deposit of 75,000,000 tons, and Ocean Island, with a total deposit of 12,000,000 tons, can supply approximately 1,300,000 tons a year. The Christmas Island deposits should supply the balance of the requirements.

Under the agreement which has been concluded with the Christmas Island Phosphate Company Limited, the two governments have jointly purchased the whole of the rights of the company in the undertaking at Christmas Island as at the 31st December, 1948, including the unexpired portion of the company's leasts which, at that date, had still 41 years to run. An amount of £2,750,000 sterling was paid by the two governments as joint purchasers in consideration for the sale. This price was subject to adjustments in respect of capital expenditure incurred by ;the company after the 30th June, 1948, :and also in respect of certain stock -adjustments which were to be subsequently determined. These adjustments which have since been effected with the. company, involved a further sum of £142,695 sterling, bringing the total purchase price up to £2,892,695 sterling.

Since the conclusion of the sale, consultations have taken place between the Australian and New Zealand Governments on the method of providing for the future conduct of the undertaking at Christmas Island and a form of agreement which is acceptable to both Governments has been arrived at. This proposed agreement is set out in the schedule of the bill.

Under this agreement it is provided that the purchase price and any additional moneys required for the working of the undertaking will be provided by the two governments in equal shares. It is estimated that Australia's contribution under this arrangement will be £1,500,000 sterling. A separate commission is to be established to manage and control the undertaking on behalf of the two governments. This commission will consist of three commissioners, of whom one is to be appointed by the Australian Government, -one by the New Zealand Government and one by the two governments jointly. The British Phosphate Commissioners representing the Governments of the United Kingdom, Australia and New Zealand attend to the supply of phosphate for Australia and New Zealand and work the deposits on Nauru and Ocean Islands; but as the United Kingdom Government is not joined in the agreement for the purchase of the Christmas Island deposits it will be necessary to establish a separate commission to control this Christmas Island undertaking. However,, in view of the close connexion between the working of the Christmas Island phosphate deposits and the activities of the British Phosphate Commissioners in regard to Nauru-Ocean deposits, it is proposed to utilize the service of the British Phosphate Commissioners as managing agents of the Christmas Island undertaking and thereby avoid unnecessary duplication of existing facilities and services. In anticipation of the agreement to give effect to this agreement, the British Phosphate Commissioners assumed control as managing agents of the undertaking at Christmas Island as from the 1st January, 1949.

Phosphate from Christmas Island will be disposed of in Australia and New Zealand, in conjunction with phosphate supplied by the British Phosphate Commissioners from Nauru and Ocean Islands, under arrangements that will ensure, as far as practicable, the lowest possible average cost. In practice, the Christmas Island phosphate will he delivered to the nearer fertilizer works in Australia, principally in Western Australia, thus releasing a corresponding tonnage of phosphate from Nauru and Ocean Islands for delivery to New Zealand. The supply of ground phosphate from Christmas Island to Malaya previously arranged' by the Christmas Island company will continue in accordance with the obligation taken over from the company, but the agreement provides that phosphate is not otherwise to be supplied to countries outside Australia and New Zealand except with the unanimous approval of the commissioners.

In common with the British Phosphate Commissioners, the activities of the Christmas Island Phosphate Commission will be conducted' on a. non-profit basis, but any surplus funds which may be accumulated as a result of the activities of the commission are to be shared equally between the -two governments. Although under the terms of the agreement the management and control of the undertaking is to be vested in the commissioners, it will be noted from Article 9 of the agreement that the commission will be subject to any general directions of policy that may be jointly given by the two governments.

The addition of these Christmas Island deposits to the present holdings at Nauru and Ocean Islands, pursuant to the provisions of this bill, will ensure continuity of supplies of high-grade phosphate for Australian and New Zealand needs for many years to come. Honorable members will appreciate the importance of this in relation to Australia's agricultural industry. The New Zealand Government has already enacted appropriate legislation in relation to this matter.

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