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Tuesday, 15 April 1980
Page: 1434


Senator CHIPP - I preface my question to the Minister for National Development and Energy by commenting that the Minister will remember conceding to me, in answer to a question, that oil companies were selling petrol in their own outlets at some cents below the price set by the Prices Justification Tribunal. I believe that he also conceded that this practice at least put in doubt the accuracy of the price set by the Prices Justification Tribunal. Because this means that oil companies could be making super profits of several million dollars a month, why did the Minister send telexes to oil companies reminding them to apply to the Prices Justification Tribunal for price rises? How does this fit in with the fight against inflation? To be consistent, will this Minister therefore send telexes to trade union leaders inviting them to apply to the Conciliation and Arbitration Commission for wage rises when inflation increases as a result?


Senator CARRICK -I recall Senator Chipp 's previous question, and my reply that the Government, with some draft legislation, was testing the community's views with regard to franchises for independent operators and was looking at the whole question of the relationship -


Senator Chipp - That has been going on for 1 8 months.


Senator CARRICK -No, the draft legislation has been in circulation, subject to correction, for less than two months. I imagine it is in that order of time. It is true that some oil companies are discounting, probably to a degree that independent operators could not do because they would not be buying the oil wholesale at that price. Having said that I have to say that I did not send a telex inviting the oil companies to approach the Prices Justification Tribunal. I have the full telex here if any honourable senator wishes to see it. I said:

I understand that your company may wish to approach the PJT to have compensatory adjustments made to the prices of other petroleum products which you produce. I expect such adjustments will be marginal and, in those circumstances, your company may wish to approach the PJT at a convenient time in the future when other cost claims might be made.

In other words we had discussed with the companies what we were doing. We had told them that any price rise would be marginal. What my telex said was that any price rise would be so marginal that we suggested that they not approach the PJT now but wait until they have a future reason for approaching the PJT. That is what, in plain words, was said. Some of the oil companies said: 'No, we intend to approach the PJT now '. In other words, the reverse of what the media has taken this to mean was done. The Government realised that they had the right to approach the PJT. We suggested that the companies not approach it now but wait until a future opportunity arises. I am bound to say that this matter has been grossly misunderstood. The fact of the matter is, as honourable senators are aware, that there is a report. I would be very happy to have the clear situation exposed to the Senate. I understand from the media that yesterday the PJT- in response. I think, to an approach by BP Australia Ltd- said that the maximum increase would be 0. 1 8 cents for a litre of petrol.

The fact of the matter is that when the PJT made its decision in January it most heavily overloaded the price of liquefied petroleum gas, thereby virtually subsidising other products. Past figures show that when the price of LPG was $1 1 0 a tonne the price of indigenous oil was $ 1 08 a tonne. When LPG was $147 a tonne indigenous oil was $147 a tonne. However, in January when the PJT virtually doubled the price of LPG to $252 a tonne, it was some 28 per cent higher than the price of indigenous crude which was $196 a tonne. It is now by Government arrangement at $205 a tonne which is a much closer approximation to the figure of $196. This is a very sensible and appropriate arrangement. The Government did not approach the PJT in the terms suggested by Senator Chipp.


Senator CHIPP - I wish to ask the Minister for National Development and Energy a supplementary question. Does the telex to which he referred constitute the substance of his conversations with the oil companies? Will he incorporate the telex in Hansard)


Senator CARRICK - I am perfectly happy to incorporate the telex in Hansard. On the same day as the Press statement was made I advised a variety of institutions in Australia about what the Government's policy would be. The telex contains basically nothing other than that information. I will be happy to incorporate the telex itself. The Government regards liquefied petroleum gas as a premium fuel.


Senator Chipp - Mr President,I raise a point of order. With the greatest respect to the Minister, my supplementary question simply asked whether the Minister would incorporate the telex- I thank him for being prepared to do that- and whether the telex represents the substance of the total conversations he has had with the oil companies on the matter of the price of petrol. The question had nothing to do with LPG.


The PRESIDENT - There is no point of order. Senator Carrick, will you seek leave to incorporate the document to which you have referred?


Senator CARRICK -I thought I did.


The PRESIDENT - No, you did not.


Senator CARRICK - I seek leave to incorporate the document in Hansard.

Leave granted.

The document read as follows-

DEPARTMENT OF MINERALS AND ENERGY

Message No. Telex No.

Received am/pm 19 Time Sent am/pm Return to: Mr D. Ives At Room 406

OUTWARDS TELEPRINTER/TELEGRAM

File Ref

CLASSIFICATION: RESTRICTED TO:

FROM: J. L. CARRICK, Minister, Department of National Development and Energy

TO: Mr P. Ross, Amoco Australia-AA2068 1 AMOCAUS

Mr A.E. Harris, Ampol Petroleum Ltd;AA21252 AMPOLCO

Mr A.W. Gorrie. BP Australia Ltd;AA30166 AUSTBP

Mr J.A. Landels, Caltex Oil Australia Pty Ltd- AA20502 CALTEX

Mr J.F. Kirk, Esso Australia Ltd;AA20549 ESSO

Mr J.B. Leslie, Mobil Oil Australia Ltd-AA30307 MOBOIL

Mr L.T. Froggatt, Shell Group, Melbourne ;AA30973 SHELL

LPG

As you know from recent discussions with departmental officers, the Government has been considering proposals in relation to the pricing of LPG. I appreciate your company's contribution to those discussions which have helped to provide the Government with valuable information determining a pricing policy for LPG which I shall be announcing today.

The principal elements of that policy in relation to refinery produced LPG are that:

(i)   the maximum justified wholesale price for LPG exrefinery gate, at all refineries, for both propane and butane (other than for petrochemical or nontraditional usage), shall be established at a level not exceeding the price at which naturally occurring LPG (other than as a feedstock in the petrochemical industry or in non-traditional industrial uses) will be sold in the domestic market from Long Island Point, that is $205 per tonne.

(ii)   future adjustments in the maximum justified wholesale price for both propane and butane, established in accordance with (i) above, will be made in accordance with the percentage increase in the price of indigenous crude oil from the Gippsland fields as announced from time to time by the Minister for National Development and Energy; and

(iii)   the maximum justified wholesale price for both propane and butane established in accordance with (i) and (ii) above shall not exceed the price received by Esso and BHP for the sale by those companies of exported naturally occurring propane.

In the context of the pricing policy expressed above, the Government is requesting you to adjust the price of exrefinery LPG with effect from tomorrow, 9 April 1980, to $205 per tonne ex-refinery gate. A similar request is being made to the producers of naturally occurring LPG in respect ofthe Long Island Point price.

I understand that your company may wish to approach the PJT to have compensatory adjustments made to the prices of other petroleum products which you produce. I expect such adjustments will be marginal and, in those circumstances, your company may wish to approach the PJT at a convenient time in the future when other cost claims might be made.

An appropriate directive to the PJT will be made by the Minister for Business and Consumer Affairs, stating the pricing policy the Government is adopting.

I will be issuing a full policy statement on LPG pricing and related matters later today.

Authorised by D. J. Ives Date 8.4.80


Senator Georges - Will the Minister also table it so that we can have access to it straight away?


Senator CARRICK - I would be very happy to table it. In fact, I will get copies made of it if that is desired. Over the course of the past three or four weeks considerable discussions have taken place with the whole of the oil industry, including the producers at Cooper Basin and Bass Strait and the refiners, regarding LPG. This telex contains the final resolution. I am bound to say that the companies had been informed of our proposals and had the opportunity to comment on them prior to my sending the telex. But it is indeed a frank statement of the discussions and the dialogue with the companies.







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