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Tuesday, 31 October 1967

Sir JOHN CRAMER (Bennelong) - The honourable member for Melbourne Ports (Mr Crean) has said very little in the last half hour other than to reiterate or perhaps emphasise what has been previously said by speakers on the other side of the House. It is strange, though, that he rather than the Leader of the Opposition (Mr Whitlam) or the honourable member for Cunningham (Mr Connor), who led for the Opposition, should move the amendment which we now have before us. The Opposition must have had some new thoughts over the weekend. It is just one of those extremely foolish amendments that should not be put into effect. It proposes the appointment of a committee. The assumption is apparently that a select committee of this House could bring in a better report than could any of the State governments or the Commonwealth Government with all its expert organisations such as the Bureau of Mineral Resources. This is just so stupid that it is difficult to see why the Opposition would want to move an amendment of that kind. The honourable member spoke of foreign capital and the need to know the people who control the companies which have permits. This can be found out by anyone. This information is published from year to year and would not be difficult to find.

Mr Connor - Ninety per cent of the capital is foreign.

Sir JOHN CRAMER - There is a lot of foreign capital and there is a lot of Australian capital, too. The second half of the Opposition's amendment deals with the question of pipelines. Those pipelines which come from the source of offshore petroleum to the shores of a State are dealt with in this Bill. However, pipelines in general are not the function of this Parliament at all but are a question for the State governments.

Mr Buchanan - Opposition speakers do not know what they are talking about.

Sir JOHN CRAMER - That is true. One can only imagine that they have moved the amendment because there is a Senate election soon and they want to argue about foreign capital. If we did not have foreign capital this country would not be as far advanced as it is at the present time. We have to realise that we are in the process of building a great new nation. It is only a few years since those who were qualified to judge estimated that because of the lack of water in Australia, only the coastal fringe could be developed and therefore we could not have a greater population than about 20 million to 25 million.

Mr Bryant - Who said that?

Sir JOHN CRAMER - This has been said over and over again. A dramatic change has taken place, particularly in the last 18 years since this Government has been in power. Now it is possible that this country will have a population of 100 million or even 200 million. This is all because of the opportunity that has been given for development. One only has to think of the enormous progress that has been made. I read somewhere today, and it has been stated before by the Minister for National Development (Mr Fairbairn), that by 1972 mining exports from this country may exceed $ 1,000m. This will make minerals our greatest exports, far exceeding wool or any other commodity. Just imagine the discoveries and the development that have occurred since this Government has been in power. This Government has given encouragement to people to go out and discover the country's natural resources. Uranium, iron ore, bauxite, lead, zinc, silver, gold, nickel and a host of other resources have all been discovered since this Government has been in power.

Mr McIVOR (GELLIBRAND, VICTORIA) - They have all been given away.

Sir JOHN CRAMER - What nonsense. Oil refining plants have been built throughout this country and' aluminium production has been increased. With the great development of water resources and the greater development in power, it looks as though the production of these natural resources will far exceed any other type of production in this country. This is all because this Government has been a stable government and is trusted by the rest of the world. It has given encouragement to private enterprise and has laid the foundations for private enterprise. Oil and natural gas resources have recently been discovered, but if the Government had approached the matter in the way that the Labor Party suggests in this amendment we would not have had these discoveries because the Labor Party's policy would not have given encouragement to private enterprise. The search for oil in Australia has been sponsored largely by this Government. A great deal of taxpayers' money has been spent in encouraging the search for oil. The search for oil and natural gas involves the expenditure of large amounts of risk capital. This capital is not available in a country with fewer than 12 million people. We must have recourse to companies with adequate financial resources to undertake this search.

We need to discover oil in large quantities. We have not yet done this. Thank God the prospects are good, but we need to make further discoveries. The Opposition's suggestion, if adopted, would prevent us from getting the oil we need. Western Australia, the State in which oil was first discovered, is well on the way to production. Queensland is in much the same position. Large discoveries of offshore oil and gas have now been made in Victoria. No discoveries have yet been made in New South Wales, but who knows where oil and gas will be discovered next if companies engaged in searching are adequately encouraged. Who knows what reserves of oil and gas we have in this country? I venture to suggest that no honourable member knows. We must encourage people to search for oil and gas.

Australia is a fast growing country. We must treat development of this country on a national basis. In this regard I agree with the opinions expressed by the honourable member for Melbourne Ports. Let us indeed have a national outlook. We must look beyond State boundaries, because great things are happening. We must use our manpower and our natural resources in the proper order of priority so that we may build a great nation. This is an important consideration at a time when we are making discoveries of oil and gas. Every State has its own priorities of development, but I am sure that they will look beyond State boundaries and adopt a national out- look. In my opinion this legislation is a triumph for the unity of the States and the Commonwealth because two of the six States which signed the agreement with the Commonwealth are governed by Labor governments. To obtain agreement of all six States and the Commonwealth for the good of the nation as a whole is an extraordinary accomplishment in all the circumstances.

Under this legislation each State retains its sovereign rights. The Commonwealth has not given away any of its legal rights. Had we not entered into this agreement, as sure as we sit here tonight the discovery of oil off the coast of Victoria would have led to serious litigation between Victoria and the Commonwealth or between Victoria and other States. This is something which we set out to avoid. In his second reading speech the Minister for National Development (Mr Fairbairn) referred to this matter and to what is happening in other countries. We know that in the United States $800m is involved in litigation. There is litigation also in Canada. Once litigation commences no-one can foretell the results. The agreement between the Commonwealth and the States avoids any possibility of litigation as between a State and the Commonwealth or as between the States. This is the great feature of the agreement. I repeat: This agreement is a trumph for its organisers. The success of the agreement depends, naturally, on the commonsense of the people who administer these matters. One weak link could destroy the agreement.

Everybody must know that Australia's development is dependent primarily upon energy, that is, power and fuel. You cannot start to develop a great nation until you have sufficient energy. In addition, you must have ample supplies of water. Given these two essentials the sky is the limit. In any country as sparsely populated as is Australia decentralisation cannot begin until there are ample supplies of energy and water. We cannot support a large population unless we build up our manufacturing industries, because we do not have great centres of population dependent entirely upon primary production. Primary production is an essential base to our development, but it does not support a large population. So our manufacturing industries must be developed. To do this we must adopt a national attitude towards the production of energy. Energy must be made available to the great centres of population. It must be made available in other areas to encourage decentralisation. These are the things to which the agreement pays regard.

It is estimated that in the next 15 years the demand for oil as a source of energy will double in the free world. Some of the statistics relating to the demand for oil are illuminating and here I have in mind the remarks of the honourable member for Mackellar (Mr Wentworth) when speaking in this debate last Thursday. Petroleum today provides the United States with 75% of all its energy needs and it provides the rest of the free world with 55% of its total energy needs. In the next 15 years the free world must produce 300 billion barrels of oil to meet estimated demand. This is double the quantity of oil used since it was first seriously marketed in 1859. These are striking figures. I do not think sufficient regard is paid to the need for oil in the future when suggestions are made that would hamper the search for oil in Australia. Three hundred billion barrels is equivalent to the free world's present known resources of oil. So there is no over-abundance of oil in the free world. As a matter of fact, we will be in a sorry plight if we do not discover further sources of oil. It is alleged that in some places the production of oil is being curtailed. This is so, but if we are to develop Australia we must discover oil in this country. The figures that I have given are authentic. They are taken from a booklet produced by the Mobil Oil Co.

Mr J R Fraser - What did the Shell company say in the matter?

Sir JOHN CRAMER - The figures which are shown are not disputed. It is only a big world-wide organisation of the type that is now operating in Australia that can organise the discovery and production of oil in the way that we need. Only companies of that type have the know-how, which they have gained in other parts of the world, to find oil and gas. The attitude of the Australian Labor Party to this Bill is thoroughly stupid. Honourable members opposite begin by seeking to prevent the passage of the Bill which will enable the production of oil even before the oil is discovered. We will not lose anything if oil is produced in Australia. We still have six States with complete and absolute sovereign powers. We still have a Commonwealth government with a Constitution capable of controlling affairs within its boundaries. If we produce oil in this country it will not be lost to us merely because the discovery was initiated by foreign capital. It will be produced in Australia and will be to our benefit. But people who bring capital into Australia must be treated fairly and be encouraged.

What is wrong with encouraging people to bring capital into Australia, especially when they have the know-how which is not available to us otherwise? There is no other way in which we can get oil in the quantities that we should be aiming to get. To find oil we may have to do many things. I: may be necessary to go beyond the continental shelf. It may be necessary to find means of searching in the greater ocean depths. Technicians are now trying to find some way of doing this. Who knows what will be found in the greater oceans depths? While we are so enthusiastic about this we must not lose sight of the fact that the time might well come when the mining and retorting of oil from shale in Australia will be carried out in great quantities. This situation must come about. We must bear in mind also that New South Wales is the major State in Australia and is the one where no oil has been discovered. It is by far the greatest potential user of natural gas for industry. I understand that the New South Wales Government is very satisfied with this legislation, despite the fact that it has no oil and gas of its own. We would not be adhering to the spirit of the agreement if industry in New South Wales did not receive the same treatment in relation to gas and oil as industry in other States.

As I went through the Bill in the first place I was somewhat worried about two aspects of it. My first worry was on the grant of production licences as distinct from permit licences. The grant of these licences is in the hands of the designated authority of the State, but there is consultation between the State and the Commonwealth. However, the State has first call upon the production for its own purposes. Nothing is stated as to the fixation of prices or at what price the product will be made available to the various States and this may lead to some trouble. Unfortunately statements made by the Premier of Victoria in the past have worried some of us, but now that Victoria is a signatory to the agreement I am sure that it will conform to the spirit of the agreement. I have enough confidence in Mr Bolte to know that he will do that.

I come next to the question of oil pipelines. The Bill deals with offshore pipelines but does not provide for pipelines through a State. This also is a matter for the designated authority. No special consultation is provided for and this could give a State far reaching powers. This provision also has worried me. The States will have absolute power in connection with any pipeline that passes through their State and in this matter we will have to depend on the provisions of the annex to the agreement which is worth reading. It states:

The Governments the parties to the Agreement to which this Memorandum of Understanding is an Annex have, further to that Agreement, had more general discussions concerning trade between the States, and between the States and the Territories forming part of the Commonwealth, in petroleum the subject of the legislation of the Commonwealth and the States referred to in the Agreement. The Governments arc agreed that they will encourage and will not seek to restrict any such trade and with that in view they will confer from time to time as any of' them request. They declare their common intention not to discriminate against any such trade.

Those terms are quite broad and I am sure express what we would want to see. Although provocative statements have been made in the past now that the agreements have been signed by the six State Premiers I feel sure that all States will play the game and that we will be able to carry on in our work.

The honourable member for Mackellar expressed worry the other night on the size of the exploration areas, a matter which has been mentioned also by the honourable member for Melbourne Ports, lt must be remembered that the exploration for petroleum resources is a risky business in which big money is involved. The important thing is to have the capital and the know-how to produce oil. I have no worry about the size of exploration areas. Perhaps the honourable member should be reminded of clause 21 of the Bill which states that a permit shall not exceed 400 blocks, that is, roughly 10,000 square miles. The States have already issued permits in many cases and some which have been issued are for an area exceeding 50,000 square miles and in one case a permit was for an area of 140,000 square miles. However, a great number of the permits issued are for only 10,000 square miles. Of 57 titles in existence, up to this point no less than 43 of the permits have been for areas of less than 10,000 square miles. So they have not been issued in the way that has been suggested. Permits for very small areas have been issued in many instances.

It must be remembered also that in six years, subject to the permitee carrying out certain work under the licence, half the area must be surrendered, and after each subsequent five years the area is again halved. During that time certain work must be performed in accordance with the conditions of each individual permit. The honourable member for Mackellar referred to the size of areas held by the Australian company, Broken Hill Pty Ltd, and mentioned that by 'some lucky chance' this company had a half interest in 22,000 square miles. I should like to make two points. First, to refer to BHP holding an area by some lucky chance does scant justice to the company. Secondly, according to the figures tabled by the Minister, BHP through its subsidiary Hematite Petroleum Pty Ltd, has interests in more than 62,000 square miles of offshore areas adjacent to Victoria. South Australia and Tasmania. This is a big Australian company.

The honourable member for Mackellar deplored the fact that a greater share of the offshore area was not held by Australian companies. If is well known, and the point was very effectively made in the Ministers second reading speech, that offshore exploration is a highly sophisticated task calling for specialised knowledge and equipment and great technical and financial resources. Let us consider the BHP approach to this problem. In this company we have, as I said earlier, one of Australia's greatest mining companies. Faced with the task of exploring offshore, the company took advice from experts of world renown. It then sought out a partner and it brought Esso in with it. Esso could bring to the operation special skills and resources needed for successful offshore search. The Esso capital from overseas was not brought in blindly.

This was done by our own Australian company because it needed the assistance of a company that knew how to do this work. This should be remembered when efforts are made to belittle the Agreement. Other competent Australian companies have taken a different course. The position is not that no Australian company need apply, as the honourable member for Mackellar said, but rather that Australian companies have sought overseas partners who could bring in the skills and resources needed for this work. So no valid argument can be advanced in relation to the size of the permits that have been granted and will be granted under this legislation. 1 would like to conclude with a few remarks about transmission. A good deal has been said about this aspect. This will call for the utmost honesty and co-operation between the partners to the Agreement. Notwithstanding the Agreement and the legislation that flows from it, we could find ourselves embroiled in a very complicated legal action, and I am sure that none of the States or the Commonwealth wants that. Nothing has been said about means of transmission other than pipelines, but there is no reason to suppose that this is the only means of transmission. Oil is brought to the Australian refineries today in large tankers. Who can say that transportation by train cannot overcome some of our difficulties? I read a statement on this subject only recently in the 'Railways of Australia Network'. It stated:

A train of gas tank wagons running daily between Melbourne and Sydney could keep Sydney supplied with natural gas from the recently discovered Victorian gas fields.

With a market potential 30 to 40 per cent greater than that of any other State, New South Wales offers the largest Australian market for natural gas.

Industries use the largest proportion of the gas, and these industries are concentrated in the coastal strip that includes Port Kembla. Sydney and Newcastle.

This is not an idle statement. It was made as a result of a survey conducted by the Commonwealth Engineering group, which includes technical experts in this field of activity.

The cost of establishing fleets of rail tanks would be about $4. 5m compared with an estimated cost of $50m for a pipeline from Sydney to Melbourne. I do not say that this is the answer. All I say is that the time has not yet arrived when we must make a final decision to use pipelines internally. Much investigation must be done before a determination is made and many considerations must be weighed. Firstly, we must establish whether we have enough gas to warrant establishing a pipeline. We do not know what quantities of oil we have. The main consideration at this time is to continue with the mutual agreement between the States and the Commonwealth. I commend the Government and the Minister on the Agreement and the legislation. This is historic legislation. The spirit envisaged in it is the spirit that we need to develop Australia into a great nation. When we can disregard State boundaries and when the States can adopt a national outlook, then and then only will we build a great nation.

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