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Thursday, 21 August 1980
Page: 609


Mr KEVIN CAIRNS (Lilley) - Election times are often occasions when frauds are attempted to be perpetrated. They are also occasions when those frauds deserve to be exposed. The proposal for an Australian hydrocarbon corporation is a fraud, and it needs to be exposed. The alternative energy policy for this country has as its centre and linchpin a proposal for an Australian hydrocarbon corporation. It is proposed that it be developed using four overseas models - the corporations in Great Britain, Norway and Canada, and the AGIP in Italy. I wish to read two quotations from the last Federal Conference of the Australian Labor Party to indicate the Labor Party's attitude. I am delighted that the honourable member for Cunningham (Mr West) is present because page 333 of the transcript of 1 8 July 1979 records the Deputy Leader of the Opposition (Mr Lionel Bowen) as saying:

I have just come back from Norway and I know Stewart West was there and not one of us would disagree with Statoil, not one of us-

The honourable member was referring to the Norwegian hydrocarbon corporation. The honourable member for Blaxland (Mr Keating), for whom I have very great respect, said this at the Conference:

This Corporation-

That is, the proposed Australian hydrocarbon corporation - is similar to the British National Oil Corporation, the Norwegian Statoil Corporation, Petro-Canada or AGIP in Italy.

To substantiate those promises, or threats, the Leader of the Opposition (Mr Hayden) has said over and over again that the first plank in the Labor Party's oil policy is the setting up of the Australian hydrocarbon corporation as a principal explorer for oil in Australia and the off-shore areas. Unfortunately this is a fraud, and it deserves to be exposed.

Each of the models which has been cited disputes the very aim that the Labor Party says the corporation is to accomplish. Let me give an example. There is one vital difference between the British National Oil Corporation and the proposed Australian hydrocarbon corporation. The British set up their Corporation in 1975, but they had already discovered and proven the North Sea province. They already had in place about 20,000 million barrels of oil. Australia has 2,000 million barrels of oil. When the Norwegians set up the Norwegian Statoil Corporation they knew that the North Sea was a bonanza for them. They now have 50 to 100 years supply of oil, and are producing several times the amount of oil that is being produced in Australia. They are cutting back production according to their economic requirements and not according to the oil that is available. The Norwegians set up the Statoil Corporation only after oil had been discovered and proven. The Canadians did the same thing. They set up their corporation in the middle 1 970s. They have produced oil for themselves and, in the first oil crisis, for the world. The oil province was proven. The Canadians have 10 barrels in place for every one in Australia. One point has to be understood: State oil corporations are not discoverers of oil provinces.


Mr Jacobi - Who says so?


Mr KEVIN CAIRNS - I ask the honourable member to listen to the data. Of the 50,000 billion to 60,000 billion barrels of oil in place in those countries, the corporations have been responsible for finding less than 2 per cent. I say to the House and to the country that if a state oil corporation using these models is to be set up, at least we should use some of the sense shown by them and not be foolish. It is similar to a boxer going into a ring and saying: 'I do not know what my opponent is like. I will throw all my tough punches in the first round and then take it easy'. That shows the stupidity of the proposition for a state oil corporation for Australia, which is one of the world's great oil-deficient countries. Less than 2 per cent of oil has been discovered by those means.

The Opposition should think again. It should think about the timing of its proposal. The models it has chosen disprove the proposition it has brought forward. Even if the Labor Party is against private enterprise- this is the .other stupidity - why manifest that opposition before private enterprise discovers the oil? The Norwegians, the Canadians and the British have not done so. They have far more intelligence. I wish to refer to something Mr Harold Norvik, the Under Secretary for Minerals and Energy in Norway, said about spending public money on oil exploration. He said to me:

We do not take risks with public money. Private money is best for risks.

In other words, there is nothing riskier than oil exploration. The Norwegians give us the example. I quote again the words used by the Deputy Leader of the Opposition with the honourable member for Cunningham at his side: 'We find nothing wrong with Statoil'. But there is another aspect which needs to be explored. It is a fair question to ask: If you are going to set up a corporation, how much will it cost? How much of taxpayers' money will be involved? How much are you going to spend? On the three examples given- I leave out the Italian example because Labor has much more to answer for in copying that example than the three I have cited - and on conservative estimates, taking into account exchange rates and rates of inflation, to set up such a corporation this country would have to put aside between 800 million and 1,400 million to 1,500 million 1980 Australian dollars. That is quite true. In 1975, the British allocated £600m sterling but not all of that money has been used. They got away with it easily in one sense because the Burmah Oil Co. effectively went into liquidation. It was saved by the Bank of England and after being saved, it was offered to the British National Oil Corporation. Even so, the British still had to spend - the money was not to be repaid - the equivalent of 800 million to 900 million 1980 Australian dollars. The Norwegians are another example. The Norwegians make it quite clear that their corporation was not set up to search for or to discover oil.


Mr Jacobi - What was it set up for?


Mr KEVIN CAIRNS - Just let me continue. They make it quite clear that they will come in once a field is proven to commerciality; once the field is proved to be there; once it is known to contain oil and once the oil is able to be brought up. That is when the Norwegians come in and that has been their policy until this year. This year they gave themselves the best field in the area. It was a certainty. They have Esso to manage the field. But Labor's policy is at the very least out of date. In terms of economics it is foolishness and in terms of Australia's interests, it is a downright fraud.

Canada's policy is quite different. Canada is substantially an oil sufficient country. I give an example. Canada says that even in oil sands alone it has up to nearly one million million barrels of oil - not an American billion; I am talking about a British billion. Even in one little province of

Canada, in Alberta, there is three or four times as much oil as there is in Australia, and that is leaving 60 per cent in the ground in order to be recovered by other means. By what extent of imagination, therefore, do people in Australia say: We are going to use those countries as our models'? On what basis could we use those countries as our models? I ask honourable members to examine the accounts. Even the Canadians, in terms of their subventions by various share issues on which equity does not have to be paid and which do not attract dividends and so on, have subvented from public funds up to $Can 1,000m. A lot of that money was allocated four or five years ago. In terms of inflation rates one is talking about the equivalent of $Can 1,300m in today's money. I ask the Opposition to come square, to come clean and to indicate whether it is going to adopt the oil discovery policies of the models it has cited. It must also adopt the financing policies of the models it has cited. When I say that these are the costs of those corporations, I put aside the proposition that those corporations have obtained big loans from overseas banks, chartered banks and so on, sometimes at concessional interest rates. So when I make the charge - it is quite a specific charge - that we are dealing with $A900m to $ A 1,400m, I am not inflating the values. If anything I am being quite conservative as to the values. I say that the Australian people need to be told what is involved in this business. Election time may be a time for frauds but we intend to make this election time an occasion to expose a fraud.

I turn now to pricing policies. These are fascinating. The pricing policies of these state corporations give the Opposition no solace whatsoever. The pricing policy of the British National Oil Corporation is to take what it can get out of the market. lt is not a price leader. Its prices are dictated by effective world prices - often Nigerian prices - but nonetheless world prices. We know that at the heart of the pricing argument is this proposition that the oil from old wells can be made available more cheaply than the oil from new wells. That is about as sensible a proposition as saying that it would be just as logical to charge cheaper rates for water from an old dam than from a new dam. It is totally stupid. But even the left wing Ministers for energy in the British Labour Government did not accede to that policy. They did not accede to a different price for old oil as opposed to new oil. I am referring here to Anthony Wedgwood Benn. I quote again the general manager of the British National Oil Corporation, Mr Evans, on the pricing policy and the difference between old and new oil. He said:

It's not really a subject of serious debate here.

What do the Norwegians have to say about it? Let us look at what the Minister for Minerals and Energy in Norway, Mr Bjartmar A. Gjerde had to say in Norway in February of this year, remembering that Norway can bring the oil up to the well head for $3 to $10 a barrel and that these are the models which the honourable member for Cunningham has been quoted as supporting. He said:

After the start-up of petroleum production on our Continental Shelf in 1 97 1 , we have maintained our basic principle of pricing gasoline and other petroleum products at world market levels.

Even the Canadians have a pricing policy which is somewhat below Australia's, but they are in a distinct position. Canada regards itself as an oilsufficient nation. Its domestic pricing, it says, is similar to that of Mexico and Venezuela and those of Middle East countries. It has no relationship whatever to Australia. Whilst the United States, which is next door to Canada, has an oil pricing policy which is cheaper, the Canadians cannot run in isolation from it. Furthermore, their oil pricing policy is bedevilled by their provincial state relationship which means that most of an increase in price would go to states. Even so, Canada is considering moves which would result in an escalation of price of 25 per cent a year.

As my time is running out, I simply ask the honourable member for Cunningham to answer three questions. He should tell us, in terms of the oil corporation, three things: What is Labor's discovery policy on the models it has chosen? What is the cost involved in setting up this corporation on the models chosen? What is the pricing policy on the models chosen? On each of those questions the models dispute the very propositions which the Labor Party is putting forward to the Australian people. The Australian people should not be asked to support a fraud. They have the right to ask for the truth. They have the right to ask where this $900m to $ 1,400m is coming from. Above all, I would say that Labor's policy is hung forever on the models it has chosen.


Mr DEPUTY SPEAKER (Mr Millar - I inform the House that we have present in the gallery this afternoon a parliamentary delegation from the People's Assembly of the Arab Republic of Egypt led by Dr Soufi Abou Taleb the Speaker of the Assembly. On behalf of the House I extend a very warm welcome to the members of the delegation.


Honourable members - Hear, hear!







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