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Wednesday, 16 April 1980
Page: 1486


Senator YOUNG (South Australia) - This afternoon the Senate is debating a matter of public importance brought on by the Australian Labor Party, which states:

The implications of the Government's fuel pricing policies for country areas.

Let me hasten to say that there are implications. Let me hasten further to say that those implications are for the long-term benefit and security of people who live in rural areas, and by that I mean residents as well as rural producers. The Government has done a lot for the man on the land. Let us look at what has happened with regard to freight equalisation, which has been mentioned today by many speakers. The Government reintroduced- I emphasise the word 'reintroduced'- a freight equalisation scheme whereby freight on petrol, kerosene and diesel fuel was subsidised by the Government. In April this year the Government went further and amended the scheme so that people in country areas will pay no more than 2c a gallon, or 0.44c a litre, more than any city user- all because of the Government's freight subsidy. I emphasise that this Government reintroduced freight equalisation. It was not done during the time the Labor Party was in Government. I will not accept Senator Chipp 's statement that it was done between 1972 and 1975. It was during that period that the Labor Party saw fit to get rid of what was a freight equalisation or subsidy scheme which helped rural consumers. This Government has seen fit to reintroduce that scheme. The Government has been aware for a long time of its responsibilities to the total community, which includes country residents. When it comes to fuel, I will go further. Fuel is a very big factor in the overall costs, convenience and needs of rural dwellers generally. The Government has also introduced for farmers an excise of 5c a gallon on diesel fuel used on their properties. It now intends to legislate to allow ethanol, which can be used as an additive for fuels, to be duty free as a transport fuel. One can see very clearly that the Government has recognised the needs of rural dwellers.

I refer to import parity pricing, which is a policy the Government introduced, not for the short-term reasons of which we have heard criticisms in this chamber today but to give longterm security to this country. That is basically what import parity is all about. It would be very easy for the Government to sit back and accept low petrol, diesel and kerosene prices, but a government has a responsibility not only to the immediate needs of a community but also to its long-term security, and that is what import parity is all about. Higher prices for petrol result directly from the high prices of crude oil. Over two years ago I reminded this Senate that the days of cheap petrol and crude oil were over, for the simple reason that the Organisation of Petroleum Exporting Countries had seen fit from 1973 onwards to escalate prices. We in this country had a limit on our reserves of crude oil and the reserves would deplete very rapidly. I said that we had no alternative but to fill that gap with imported crude oil at overseas prices and that unless we did something about this we would rapidly deplete our resources and become far more dependent on overseas supplies.

The Government was faced with two alternatives. As I have just said, the first was to leave prices as they were, which in turn would encourage wastage because petrol was far too cheap, particularly in comparison with the price of petrol in other countries. The second alternative was that, because of its cheapness and the wastage of our petrol, and many other factors with which I will deal in a moment, our reserves would soon run down. In 1 976 people forecast that, whilst we had 70 per cent self-sufficency, unless this country did something about conservation and better untilisation of its energy resources, our crude oil supplies would run down and by 1985 our reserves could be down to somewhere around 35 per cent. That was a rather gloomy forecast, but the figures were being put around by many people.

Today we have heard the Labor Party being critical and playing politics. That is fair enough, but the Labor Party is looking at all of these aspects in the very short term, and I emphasise that. It has given no consideration whatsoever to the longer term needs of this country, including the needs of the man on the land, who in many ways has a greater need than anyone in the city. There are alternative forms of transport for many city dwellers, but those alternatives do not apply to people who live in the country. Of course, if our supplies ran down we would become more dependent upon overseas supplies of crude oil, which dependence naturally would bring with it higher prices for crude oil. More than that, it would bring insecurity of supply, which today has reached a crisis situation in many countries.

Dealing with the situation in the Middle East today, the amount of crude oil Iran will supply has fluctuated considerably. I refer to Iraq and some of the countries within the OPEC group in the Middle East region, some of which are deliberately holding back supplies of crude oil at the present time. I refer to Japan and the problems she has had to face as a country entirely dependent on the importation of crude oil. Whilst commercial prices quoted were about $30 per barrel, Japan has been blackmailed into a situation where it has had to pay as high as $45 a barrel in spot prices. If it did not pay this price for crude oil its normal commercial supply was placed at risk. To demonstrate the uncertainty and the fragmentation of the OPEC group, it could not reach uniformity with regard to setting a standard price for its crude oil earlier this year. The whole pattern may change with regard to who takes the lead in the OPEC group. Whilst it comes predominantly from the Middle East at the present time, with the vast finds of crude oil off-shore in Venezuela and Mexico, the whole leadership situation within the OPEC group could change.

We are faced with a very insecure supply situation from within the OPEC group. There is a need for this country to make sure that, whilst we may pay more for our petrol in the immediate future, we can guarantee security of supply for this country in the long term. So the Government has moved to import parity. This has meant that petrol prices have increased because we base the price of our crude oil upon Saudi Arabian light crude, which sits somewhere around $24 per barrel as against the overall OPEC price of somewhere around $30 a barrel. So we do not put our oil at the highest price, but we use Saudi Arabian light as a guide for further increases and to keep realistic petrol prices in this country.

One could compare the prices of petrol throughout the world with the price in Australia. If people were to look closely at those prices they would find that in France, for example, petrol is 75c a litre, in Italy 73c, and in Japan 62c to 66c, and without any doubt it will go higher. In the United Kingdom petrol is 60c and in Australia today it is about 33c, to quote the Melbourne price.I could go on quoting prices, but allI want to do is show clearly that at the present time our price stands at about half overseas petrol prices. What we are doing is getting a guarantee and a consolidation of supply for the future of this country. Import parity has also increased the use of substitute fuels. Senator Douglas McClelland referred today to the use of natural gas in Sydney. The use of this gas has been estimated to have saved some 2 million barrels of furnace oil in Sydney last year. This is the sort of thing that import parity pricing is doing to encourage people to move to alternative sources of energy.

We can look to the other things which have happened. Our crude oil reserves have increased. That gives us greater security and more lead time to find alternative fuels. Our crude oil reserves have increased by more than three years at the present time because of the price of crude oil. What was previously regarded as uneconomic has now become economic because of the price of crude oil. We find that exploration in the

Cooper Basin in South Australia has led to light crude oil being found. There has been a strike in Queensland this week and so it goes on. There has been a stepping up in the exploration taking place in this country- activity that had nearly come to a stop during the Labor Party's period in office. Again, I wish to refer to the 1972-75 period and the effects after that of the Labor Government's term in office. In 1972 some 101 wells were being drilled to explore for oil in Australia. By 1975 that figure was down to 23 exploration wells. For another two years after that the figure stayed at 21 wells. That reduction came about because incentive was killed in this country by the policies of the previous government. Today it has been forecast that in 1980 some 6 1 exploration wells will be drilled in this country. That is the sort of activity we want because the oil companies know that if they find oil, with any luck-even if it is a small find- at today's prices it could be an economic well. Encouragement has been given to the oil companies to drill for oil.

Import parity pricing has also encouraged greater use of electricity as against crude oil which is a saving for Australia. It has also increased the research into coal liquefaction. We find that increased exploration for and research into shale oil is occurring. These things would not have happened if crude oil prices had not been as high as they are today. This research would not have been undertaken unless companies could see that it would be economic to carry out such research. The research needs to start at this time because of the great lead time involved. There is a great lead time not only in relation to the research that is conducted but also in relation to the establishment of a commercially viable operation.

In the Rundle shale oil deposit alone, we have a reserve equivalent to some 2,000 million barrels of oil. That is the sort of thing we are looking for in this country. We should not be concerned because we are paying more for our petrol or our distillate today. It is unfortunate that we have to pay more but this has been thrust upon us. We need to pay more for these products today in order to encourage research on alternative sources of energy and on exploration so that this country can develop its reserves. (Quorum formed).


The PRESIDENT - We will now proceed to the presentation of papers.


Senator Peter Baume - Mr President-


Senator McLaren - Mr President,I draw your attention to the business sheet which indicates that two hours are allowed for this debate. Has that period of two hours expired?


The PRESIDENT - We have four minutes to go in this debate.


Senator McLaren -Mr President,I would like to take up the four minutes of the Senate by speaking-


Senator Peter Baume - Mr President,you have not given the call to Senator McLaren.


Senator McLaren - I was on my feet.


Senator Peter Baume - We were both on our feet, Senator. It is up to the President to decide who gets the call.


Senator McLaren - The call comes to this side of the House now.


Senator Young - Mr President,I suggest to you with great respect that I was on my feet but when you spoke, out of respect for the Chair, I sat down.


The PRESIDENT - I was under the impression that Senator Young's time had expired and therefore I called on the business of the day. The two hours allotted for the debate has not yet expired.


Senator McLaren - You have already told me, Mr President, that four minutes of the time allowed for this debate still remains. I wish to contribute to the debate.


Senator Peter Baume - I rise to take a point of order. Will you indicate, Mr President, who obtained the call because two honourable senators rose at once. Could you indicate who obtained the call?


The PRESIDENT - I did not notice that you were on your feet, Senator Baume. I now call Senator McLaren.







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