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Wednesday, 5 March 1980
Page: 589

Senator WALSH (Western Australia) -The Opposition supports the Pipeline Construction (Young to Wagga Wagga) Bill 1979 to extend the natural gas pipeline from Young through Cootamundra to Wagga Wagga. Since a 12-inch pipe has finally been decided upon, it opens up the possibility that this extension of the pipeline could ultimately be connected to the Victorian grid and thereby could at least partly establish an eastern or south-eastern Australian natural gas grid. This was, of course, one of the policies which was vigorously expounded by the late Rex Connor during his period as Minister for Minerals and Energy and which, I might say, was vehemently and vitriolically opposed by the present Government which was then in opposition. The present Government portrayed Connor's proposal for a national gas grid as some sort of socialistic monolith, some sort of socialistic juggernaut which would threaten the survival of our free democratic society. That was patent, palpable nonsense at the time it was first expounded by the Liberal Party of Australia and the Country Party of Australia and has now tacitly been repudiated by those parties as they are partially implementing the policy that Connor espoused.

Although the inland centres of Cootamundra and Wagga Wagga will be connected, it is important to note that a number of other provincial cities in the same region of New South Wales will not be connected to the New South Wales natural gas grid, at least at this stage. Such important centres as Bathurst, Lithgow, Cowra, Wellington and Parkes, all but one of which 1 note are in the Federal electorate of Calare, will not be included in this proposal. The Government is extremely concerned for political reasons if not for the right reasons, that the towns I have mentionedBathurst, Lithgow, Cowra, Wellington and Parkes- among many others must continue to be supplied, at least for the present, with much more expensive liquefied petroleum gas. The Government is repudiating the rationale for its own proclaimed energy policy by fudging the price of natural gas. It has already done it once. It is contemplating doing it again. Even if it again fudges the price of liquefied petroleum gas, thereby repudiating its market price philosophy which it claims to be the central theme of its whole energy policy, the important centres I have mentioned will still be paying substantially higher prices for liquefied petroleum gas than they would pay for natural gas were they also connected to the grid.

Senator Sibraa - They are aware of it.

Senator WALSH - They are very much aware of it, particularly as so many of these provincial cities happen to be in federal electorates in New South Wales upon which the National Country Party and the Liberal Party have very tenuous holds. We of the Labor Party do not accept that the subsidisation of liquefied petroleum gas for politically opportunistic reasons is an adequate answer to the long term domestic energy needs ofthe cities. We believe that the natural gas pipeline should be further extended. I refer to what the honourable member for Blaxland (Mr Keating) said in the House of Representatives when this Bill was being debated in that House last year. He stated: in respect of Wagga Wagga, Orange, Bathurst and Lithgow, on behalf of the Federal Opposition, in 1977 I promised that a Labor government would build pipelines to Orange, Bathurst and Lithgow. I reiterate that promise; we would build the lines. The present Government has been in office for four years but it has failed to build the lines. If the lines had been built, the gas to these towns would have been priced in the terms of the contract which AGL entered into with the Moomba producers in respect of essentially the Sydney market. In other words, cheap gas would now be available to Orange, Lithgow and Bathurst. It is not. Instead, the people in these towns have very dear LPG thanks to the Prime Minister, the Treasurer (Mr Howard) and the Minister for National Development who believe in high energy prices.

That statement by the honourable member is now more appropriate than it was at the time it was originally made. Even with the subsidy which the Government has introduced for opportunistic reasons, the subsidised prices of liquefied petroleum gas are higher than the market price was at the time the honourable member made that statement.

It is interesting to note the contortions through which Government Ministers have been putting themselves in the last few months over their proclaimed adherence to market pricing for energy. The basic dilemma which the Government faces in the pricing of liquefied petroleum gas for both domestic consumption and automotive use is that it has decided that LPG prices will be locked into world parity for crude oil. This will operate directly with LPG and indirectly with crude oil since the two move almost in a onetoone ratio. At the present time they have locked themselves into a crude oil price of about $30 per barrel as against a price of just over $3 per barrel in equivalent terms for those towns which are fortunate enough to be connected to natural gas, plus some allowance for distribution costs. Therefore, there is a very wide discrepancy between the cost for domestic users who are connected to natural gas pipelines and those who are dependent upon liquefied petroleum gas. It is a huge discrepancy of between $3 a barrel and $30 a barrel. It has been partially adjusted by the recently announced subsidy but it will not be removed to a great extent either by that subsidy or by any other arrangement which the Government may at present be contemplating. Senator Carrick announced the $80 a tonne subsidy, which incidentally is not yet operative, on 24 January. It is worth noting the intellectual contortions revealed in his statement. He said:

LPG is a valuable national resource which has the potential to make a significant contribution to Australia's liquid fuel requirements and our national development. It is a premium fuel, of particular value as a motor transport fuel and has an input to the petrochemical industry.

In the final paragraph of the same statement he said:

It is essential therefore, that we avoid inappropriate patterns of usage . . .

He said that in a Press statement in which he was announcing the subsidisation of an inappropriate pattern of usage, to wit the wasteful use of a premium liquid fuel for domestic heating. Domestic energy requirements can be met by lower grade sources such as natural gas or electricity. Senator Carrick actually had the audacity to announce in a statement that the Government would encourage, subsidise and provide incentives for the wasteful consumption of liquefied natural gas. He said:

It is essential, therefore, that we avoid inappropriate patterns of usage which if maintained in the mid-1980 's, would pre-empt a substantial part of annual output for less efficient uses, for which LPG is basically less appropriate than other fuels of much greater availability.

I have no doubt that when Senator Carrick replies to the second reading debate on this Bill he will attempt, in his customary fashion, to misrepresent what I have said. He will claim that the Labor Party is advocating dearer fuel prices for these and other inland towns. If he says that- if he runs true to form he will- it will be a complete misrepresentation of the Labor Party's position. What we are advocating and what the honourable member for Blaxland undertook to do in 1 977, an undertaking he repeated at the end of last year, is that the natural gas pipelines should be extended to these towns instead of subsidising liquefied petroleum gas for what Senator Carrick himself has admitted is an inappropriate pattern of usage.

I refer to the use of liquefied petroleum gas as an automotive fuel. Last year Senator Carrick 's predecessor, the Prime Minister (Mr Malcolm Fraser), the Deputy Prime Minister (Mr Anthony) and possibly Senator Carrick himself- I do not recall for certain- were urging motorists, particularly fleet owners, to convert motor vehicles from petrol to liquefied natural gas on the grounds- this was a justifiable policy- that Australia is a substantial net exporter of liquefied petroleum gas whereas it is a substantial importer of crude oil. Liquefied petroleum gas has other technical advantages as an automotive fuel over petrol powered vehicles. At that time the price differential between motor spirit- petrol- and liquefied petroleum gas was in the vicinity of 1 7c a litre. There was a very substantial incentive in terms of price for motorists, particularly fleet owners, to convert to liquefied petroleum gas. Already, because the Government has fudged its import parity pricing for crude oil that differential has been substantially reduced. It currently stands at about 14.6c a litre. That is a reduction of 2.4 cents a litre in the price differential between the two products and, therefore, a reduction in the market incentive which is available for users of LPG as an automotive fuel to convert their vehicles.

That price differential will continue to shrink. It will do so because under existing Government policy LPG is locked into world parity prices for crude oil. Because the Government has fudged and partially repudiated its own so-called import parity pricing for crude oil, the price of petrol, however, is not currently locked into the changes in world parity prices. At present oil imported into Australia averages around $30 a barrel for oil of an equivalent quality to domestic crude. But for the domestically produced crude which goes into Australian refineries the Government applies a price of $24.63 a barrel.

Already there is this substantial differential in crude oil prices which is reflected in the differential between petrol and natural gas prices. For the time being petrol is largely locked into a price of just under $25 a barrel plus some minor adjustment that might be made because of rising costs of the imported component. Natural gas is fully locked into world parity prices for crude oil. Australian petrol is related to world, crude oil prices only to a factor of about 25 or 30 per cent. Liquefied petroleum gas prices are entirely locked into world parity for petroleum products. As world prices for petrol products continue to rise, as they almost certainly will on 1 July and beyond, that gap between true world parity and the Government's fudged version of world parity for the purpose of pricing domestic oil will continue to grow. In an inverse manner the differential between the price of liquefied petroleum gas and petrol for automotive use will continue to shrink.

Senator Carrickstill has the audacity to claim that the Government's policy for the pricing of domestically produced crude oil to Australian refineries is import parity. He has the audacity to say that at a time when import parity is in the vicinity of $30 a barrel and Australian domestic crude is priced to local refiners at below $25 a barrel. He refuses to stand up for what was supposed to have been Government policy, that is, a biannual adjustment of the domestic price for crude oil in accordance with movements in world parity. He says that the Government's policy is flexible. I agree with that. It is flexible to this extent: There will be no adjustment of domestic crude oil prices before the next Federal election. The Government has, for opportunistic reasons, dropped its commitment to world parity pricing for crude oil, which it claimed was the prerequisite for any rational or successful energy policy, because it is scared to put up the price of petrol again either now or on 1 July. There will be no increases this side of the Federal election in the price of Australian produced crude oil. What will happen after the election, if the Government should happen to be returned, is of course another matter. We will then see a return to full import parity pricing, to true import parity pricing, which applied until the beginning of this year and a further massive increase in the tax rip-off, but for politically opportunistic reasons we will not see it this side of the election.

The really alarming aspect of the Government's energy policy, as administered and expounded by Senator Carrick, is not that it has been fudged almost beyond recognition. It is not the opportunism or prevarication which we have seen Senator Carrick display during Question Time over the past three weeks. The really alarming feature of it is Senator Carrick 's failure to grasp the fundamentals of the policy he administers. I cite an instance of that. This is almost unbelievable. The first time that he said it I thought it was a slip of the tongue, but he repeated it yesterday in Question Time when he said:

It is perfectly clear therefore that the pricing at export parity would give a higher price to petroleum products than would import parity.

The first time that Senator Carrick said that we could have excused it as a mistake, but he has now repeated it and he must be locked into it. This is a convincing demonstration of the fact that he does not even know what import and export parity mean. For the benefit of Senator Carrick and anyone else in the Liberal Party who might be equally unenlightened- I find it hard to believe that that should be so but perhaps it is possible- I will explain what import and export parity mean.

Senator Peter Baume - You will preach to us again.

Senator Wriedt - Obviously you do not understand.

Senator WALSH - Obviously Senator Carrick does not understand. I do not know whether Senator Baume does. Import parity is by definition world parity plus freight. Export parity is world parity minus freight. Given those facts of definition that are accepted by everyone else in the community except perhaps Senator Carrick, who might have some highly original, indeed some completely unique, interpretation or definition of what those terms mean, it is clearly impossible that export parity could be higher than import parity because export parity has the freight component doubled and deducted from import parity. It is almost unbelievable that a Minister who was chosen as a replacement for another Minister who was clearly incompetent and who one would expect to have a better grasp of the subject could be so abysmally ignorant of a fundamental principle of the policy he is administering. I repeat Senator Carrick 's words:

It is perfectly clear therefore that the pricing at export parity would give a higher price to petroleum products than would import parity.

That is not the only example of ignorance he is demonstrating. He has repeated several times in the Senate during the last few weeks that Australia has the third cheapest petrol in the world. That statement also is incorrect. If he,had qualified it more carefully and said that Australia has the third cheapest petrol of the countries which are net importers of crude oil he would, I think, have been correct. Australia would be third behind the United States of America and Canada. There are many countries in the world- at least seven in the Middle East- which are net exporters of crude oil, massive exporters in many cases, and which have petrol prices substantially lower than Australia. Perhaps Senator Carrick is reflecting some essentially AngloSaxon view of the world which he imbibed in childhood and in which the only countries in the world he counts are Anglo-Saxon countries. If he believes that the only countries in the world that should be counted are Anglo-Saxon ones, I think his statement that we have the third cheapest petrol is true. If however we do what most more enlightened people do these days and count all countries, not just those with which we have some genetic and cultural affinity, his statement is wildly inaccurate.

Yesterday in Question Time, Senator Carrick vehemently denied the accuracy of a report in yesterday's Age. When questioned further on that matter today, following another report in this morning's Age, he substantially amended his earlier answer. But, as usual, he did not admit it. I do not have the written text of what he said today, but even from memory it is quite clear that his statement today changed in at least two important respects what he had said on the previous day. Yesterday he said:

The fact of the matter is that Bass Strait production in February was significantly reduced as a result of the shortage of available coastal shipping to carry the indigenous oil to interstate refineries.

Today he admitted that while that may have been a factor there were other factors involved and that, because of necessary production maintenance or the inspection of production equipment, production at the well head had been reduced substantially in February, irrespective of what the position may have been regarding coastal shipping. Further he said yesterday:

However, the producers were able to maintain output at about 70 per cent of capacity and concurrently to complete by 27 February routine maintenance scheduled for March.

In his statement today Senator Carrick admitted that routine maintenance scheduled for March had in fact not been completed and that a substantial portion, if not the great majority of it, would be completed in March. So in those two instances at least, even without the benefit of the text of the statement he made, we are able to point to two instances where he was clearly wrong the day before, but as usual he would not admit it. But the final crunch, I suppose, was when he admitted in Question Time today that the average production during March would be in the vicinity of 320,000 barrels, which is just over 80 per cent of normal Bass Strait production.

When Senator Carrick was asked today whether he would stake his position in the ministry on the accuracy of the answer he gave to Senator Lewis yesterday, Senator Carrick did not exactly tackle the question head on, which is, I must say, not at all unusual for Senator Carrick. I now put to him this question: Will he stake his position in the ministry on the accuracy of this statement: lt is perfectly clear therefore that the pricing at export parity would give a higher price to petroleum products than would import parity.

I invite Senator Carrick to stake his position in the ministry, his credibility, on the accuracy of that statement which he repeated again today, having initially made the assertion last week, an assertion which stands truth, common sense, the English language as it is understood by everyone else but him, on its head. In fact, the more one hears and sees of Senator Carrick in the Senate, the better the Minister for Productivity, Mr Kevin Newman, looks. At the end of last year it would have been incredible to suggest that anyone could have made Mr Kevin Newman look good. Mr Newman, for all his deficiencies, at least told the truth now and again, even though, after conspiring with the Prime Minister (Mr Malcolm Fraser), the Minister for Industry and Commerce (Mr Lynch) and Mr Sinclair, he then contradicted it in Parliament.

Senator Peter Baume - I take a point of order. By what Senator Walsh said about Mr Newman he was implying certain things about Senator Carrick which were not in accordance with the Standing Orders. To be specific, Senator Walsh said that at least Mr Newman told the truth.

Senator WALSH - Now and again.

Senator Peter Baume - 'Now and again'. I find that highly offensive.

The PRESIDENT - That is also a reflection on the integrity of a minister. Senator Walsh, you must not say that.

Senator WALSH -I will withdraw that. Mr Newman told the truth when he went into Parliament- I think this was on about 27 October last year or a little earlier- and said that the declaration of the Great Barrier Reef Marine Park off the coast of Rockhampton was being held up because of problems with the delineation of permits for oil drilling. He told the truth when he said that. But when he came back afterwards, after conspiring with Mr Fraser, Mr Lynch and Mr Sinclair, and contradicted it -

The PRESIDENT - Order ! You do not say conspiring'. In all honesty, this is a matter of using language which is imputing wrong attitudes, and so on. You can phrase your speech in better terms than to cast reflections on honourable senators or members of the other place.

Senator Peter Baume - Would the honourable senator withdraw the statement that Mr Newman had conspired with the Prime Minister?

Senator WALSH - I am quite happy to withdraw the statement that Mr Newman told the truth too, if the honourable senator likes. I am quite easy about it.

The PRESIDENT - You do not qualify your withdrawal, Senator Walsh. You must realise that.

Senator WALSH -Very well. I will withdraw, if it makes Senator Baume happy, if it is offensive to his sensitivities.

The PRESIDENT - You are still qualifying your withdrawal. I warn you not to do that. You withdraw completely, and that is the way that this place will work.

Senator WALSH - 1 withdraw, Mr President. I do remember Mr Sinclair, who is now happily or unhappily no longer in the ministry, standing in the little alcove outside the Senate literally standing over Senator Carrick on that fateful day, almost physically twisting his arm to force him to come into the Senate and read a statement which Senator Carrick knew to be false.

Senator Peter Baume - I take a point of order on two points. Senator Walsh said two things which are quite unacceptable in terms of the Standing Orders. He referred to Senator Carrick being stood over and saying things that he knew to be false.

Senator WALSH -I withdraw. I will take that matter no further.

Senator Carrick - May I take a point of order. Mr President, there must be a limit to the number of times that an honourable senator in this place uses the device of stating things which are outside the Standing Orders and then hiding behind withdrawal to escape the penalty of this chamber. I believe there must be a limit to that. It has certainly been carried to a very alarming degree by Senator Walsh. I do draw your attention to it.

Senator Wriedt - I wish to make a comment with respect to this matter. Initially Senator Walsh may or may not have said something which caused some offence to Senator Baume. But he undertook to withdraw that remark and in fact did withdraw it. But because of some nitpicking interpretation, again by Senator Baume, the matter is prolonged. I repeat, Mr President, that you should certainly rule the objection out of order because it is just a matter of political sensitivity to the truth.

Senator WALSH - I am quite happy to withdraw unconditionally, Mr President. I have just been informed, however, with respect to Senator Carrick 's answer today in which he claimed that the restriction in Bass Strait oil production was due to maintenance and not inspection, that Mr Nigel Wilson of the Melbourne Age has telephoned to say that the oil companies have told Senator Carrick 's Department that the restriction in production is because of inspection and not maintenance. So again I invite Senator Carrick, when he replies, to amend his answer for the second time in the hope that he can get it right on the second attempt- or rather the third time and the second amendment.

The PRESIDENT - Order! The honourable senator's time has expired.

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