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Thursday, 2 November 1967


Mr BUCHANAN (McMillan) (12:49 PM) . - Mr Chairman, regarding clause 115, 1 really believe that the wording that I forecast in my possible amendment would be a much more satisfactory way of arriving at a conclusion on this matter. But, as I said before in connection with clause 35, what I am really asking is that the officers concerned with the Bill take note of the amendment that I foreshadowed and sometime next year assist the Minister for National Development to bring this matter forward for consideration by all the State Ministers. Perhaps we should now arrange to have an orderly meeting of State Ministers for Mines so that all the odd matters that may crop up from time to time may be discussed. The Agreement may be amended only with the full co-operation of all States. Such a meeting as I have suggested could be held early next year to discuss the particular point I have raised and others that have been referred to.

I do not think I need say more on this matter. It seems to me quite wrong that a company having special proprietary techniques - having its own tools of trade; something that it has acquired at great trouble to itself and which it wishes to keep secret from anybody else - should be asked to disclose information on work it has been doing when it would be quite happy to give the normal information to the parties concerned.

In this untidy manner in which we are concluding the debate on the Bill I would like to refer to clause 58, to which I had forecast an amendment that a new subclause (5.) be added reading:

Any direction given under this section shall be based on sound technical and economic practices.

The wording of that proposed amendment is the same as that of the amendment I proposed to clause 35. Clause 58 empowers the designated authority to issue directions regarding the recovery of petroleum. If petroleum is not being recovered, the designated authority may require a licensee to recover it. If the petroleum is being recovered, the designated authority may direct the company concerned to increase or reduce the rate of recovery. Somewhere along the line there seems to have been a little misunderstanding about the matter of recovery or proration. In many parts of the world it has been found necessary to adjust the rate at which oil found in large quantities is put on the market. There is a lot of difference between this proration and the meaning of clause 58 as far as recovery is concerned. The dictatorial powers that have been given to the designated authority in clauses 35 and 58 mean that he has absolute right to interfere with the management of an oil company. He has the right to direct the company as to how it shall run its business. I do not think this was ever intended by the legislation. I do not think it was ever intended that at some future date the designated authority might be so silly as to give a direction completely at variance with the normal practice which a company was in the habit of following to ensure that it got the maximum return from the field which it had gone to a lot of trouble to discover. I cannot imagine that, having spent millions of dollars in finding oil, companies would do anything to jeopardise their chances of economic production. Yet they are placed in a position where the designated authority could instruct them so to increase the rate of recovery that they could do irreparable damage to the field.

Will the Minister, when replying to the various questions that have been raised, inform us how a company stands in a case like that? The Bill contains many provisions which provide a penalty if a company does not do certain things. It seems strange that clause 58 gives the designated authority an absolute dictatorial right to interfere with a company's management of its business. What happens if a company does not do what is required of it? Clause 35 makes no provision for a penalty. I would very much like to have the Minister's comment.

At some point along the line there must be some form of appeal, some way in which the oil company and the Government can get together. The designated authority may say: 'This is what you will do,' but the people who are conducting these operations as their means of livelihood may say: 'That is not the practical way to do it,' and they may want to argue. How can they? The designated authority has a dictatorial right. I am asking for some basis of negotiation, some point at which they can bargain and come to an agreement. I suggested earlier that a tribunal should be set up - not on a permanent basis - to which the parties could appeal in difficult cases and get a decision. According to the clause as it stands, if the directions given were such that an oil field was damaged, not only the company but also Australia would suffer an enormous loss.

Various members of the Opposition have said tonight that we seem to be looking after the interests of the oil companies. I assure the Committee that nothing is further from my mind. I am interested only in having these organisations come to Australia, bringing with them their know-how and their finance, and develop what looks like becoming a rather interesting addition to our very many mineral discoveries. However they are nowhere near as large as the honourable member for Cunningham has been trying to make out. Do honourable members realise that in Bass Strait - and everyone is talking about the bonanza that Esso-BHP have struck there - 5 out of 13 holes drilled have been dry? A company does not make money digging dry holes at $2m a hole. The more dry holes we drill, the fewer organisations will come to Australia. We must make conditions as attractive as we can. My only concern is to get legislation which will make Australia an attractive market for the people in the world who understand the business of getting oil, not people like honourable members opposite.







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