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Thursday, 8 September 1983
Page: 544

Mr ANTHONY (Leader of the National Party of Australia)(10.29) —The Liquid Fuel Emergency Bill 1983, introduced in this House on 24 August, is a valuable step forward in planning for possible fuel supply shortages in this country. The Opposition has several reservations not so much about the legislation but about the Commonwealth's commitment in some key areas. But like the members of the Australian Minerals and Energy Council, we believe this legislation is better than no legislation at all. I mention the Opposition's reservations and I will return to them shortly. What I want to mention first is the background to this legislation and to stress the vital need for this country and its people not to fall into the trap of complacency about oil supplies.

Record levels of petroleum exploration in Australia last year and the fall in the official price of the Organisation of Petroleum Exporting Countries in the face of oversupply and economic downturn have, I fear, lulled many people into a false sense of security. The fact is that there is still the potential for massive disruption to our oil imports and that in the long term the price of oil will continue to rise at least at around world inflation levels. It is also a fact that in Australia we still need to go on finding oil, lots of it, pretty rapidly. The potential for disruption is clear, and the continuing conflict between Iran and Iraq, not to mention the troubles in Lebanon and the failure to resolve the deep and bitter differences between the Arab states and Israel, underlines the fact that the problems will not go away. The Middle East is, and it appears that it will be, the main oil supply source of the world. Closer to home there will always be the possibility of massive industrial disruption in the oil industry.

On the second point, the World Bank has recently forecast that the price of oil will increase by 20 per cent in real terms, that is after inflation, above the 1981 peak by the mid-1990s. It believes that OPEC will continue to be the main supplier to consuming countries. On the third point, it must be remembered that after a record year in 1982 the Australian oil exploration industry has moved sharply backwards. The Australian Petroleum Exploration Association reported in July that in the second quarter of 1983 exploration drilling and development drilling were down by 29 per cent and 35 per cent respectively from the levels at the same time last year. Disturbingly, seismic activity, the vital precursor to drilling, was down by 81 per cent over the same period.

Overall, exploration drilling activity over the full year is expected to fall back to about 1981 levels. But if we are to maintain present levels of production and just stay still on the self-sufficiency treadmill, the petroleum exploration industry has to find another 800 million barrels of oil in the 1980s and connect these fields to production by 1990. Australian oil fields in production early in 1983 have the capacity to produce 480,000 barrels of crude oil a day. They do not produce this amount. The daily average is about 380,000 barrels, and that is largely because of industrial action. The hard fact is that production from known fields is expected to peak at 455,000 barrels a day in 1985 and decline to 228,000 barrels a day by 1990. The demand is now about 650, 000 barrels a day and by 1990 is expected to reach 710,000 barrels a day. This leaves an immense gap.

It is not generally realised that our export earnings from our massive resources of coal have, in recent years, barely equalled the cost of importing our oil. If we are forced to import more and more oil, yet cannot produce or find markets for sufficient exports, we will be faced with severe and lasting balance of payments problems. In the face of statistics such as these there can be no room for complacency in this country about our supplies of oil, or the price that we will have to pay for them.

The measures proposed in this Bill are aimed at dealing with a national fuel supply emergency. But, more importantly, we need to do our best to ensure that an emergency does not arise. That is the best solution, instead of acting on the Bill that we have before us. We cannot stop an outbreak of war in the Middle East that would halt or severely restrict our imports of oil. We may not be able to prevent an outbreak of massive industrial disruption on the waterfront or in the oil industry in this country, but we can have policies which ensure the maximum possible level of oil exploration in Australia and the maximum development of existing oil fields and we can have policies to develop alternative sources of fuel. These policies are now in operation. They were brought in by the Liberal-National Party Government. The key to them is import parity pricing of Australian oil.

Dr Theophanous —Nonsense. You did nothing about it for 20 years. What are you talking about now?

Mr ANTHONY —Import parity pricing has been vital to our self-sufficiency. Import parity pricing means--

Dr Theophanous —You did nothing about it.

Mr SPEAKER —Order! The honourable member for Burke will remain silent.

Mr ANTHONY —I do not mind; he can speak. He is going to speak later; we will hear some really remarkable comments.

Mr SPEAKER —I do mind. I would like to maintain order in the House. I call the Leader of the National Party.

Mr ANTHONY —Thank you, Mr Speaker. Import parity pricing has been vital to our self-sufficiency in oil. Import parity pricing means relating to and adjusting the price of oil to the world market price. Unless the industry and investors can see a clear and predictable policy by the Government on the benefits of an import parity pricing policy, the benefits will not work. Exploration and development of oil and gas fields, or alternative sources of oil, require massive amounts of risk capital. If there is any doubt as to whether investors will receive a return related to the market, they will not invest in Australia, they will go elsewhere around the world. Our policy has achieved record levels of exploration and development activity in the oil industry after a virtual halt at the end of the Whitlam years. It has encouraged conservation of petroleum products and the substitution of other fuels-notably liquefied petroleum gas and natural gas-and it has provided a vital encouragement for the development of new fuels, a process which has regrettably slowed with the fall in the world oil prices, but remains very important to our future.

The concept of import parity pricing was at first difficult for Australians to accept. After all, no one likes paying more for fuel. But when Australians understood that higher fuel prices meant greater fuel supply security in the future it was a bargain that they were prepared to accept. However, this Government is putting all those achievements in danger. Its actions since March have seriously undermined the whole concept of import parity pricing. In doing so the Government has undermined the nation's fuel supply security.

The Australian Labor Party promised, during the election campaign, to cut the price of fuel by 3c a litre. It broke that promise, of course. With great reluctance it agreed to a cut of 1.5c a litre. Then in the Budget it increased the excise on fuel to take away even that modest reduction in the fuel price and indexed these excise charges to the consumer price index, immediately adding another 0.5c a litre to the price with more to come every six months. This was a major change. It was the start of a drift away from market-related prices. But there were other imposts. For example, the change in the petroleum products freight subsidy scheme, expected to cost consumers out in country areas $4.2m, and the introduction of sales tax on oils and lubricants from which the rural industry was previously ex- empted, will mean an increase of about $60 in the price of a drum of lubricant oil. Our fuel user industries will not have the same conditions as their competitors around the world which can relate price increases or decreases to the world market price for oil. But our producers will be continually bludgeoned by increased prices of oil because the Government now has a policy to tax the users of oil as a revenue-raising means.

Dr Theophanous —Mr Deputy Speaker, I take a point of order. This Bill deals with the provision of emergency fuel. It has nothing to do with the taxing of petroleum products and other associated matters. The Leader of the National Party has spoken at length about a variety of matters. I think the point about the relevance of a Bill needs to be taken into account at this time. He needs to get back to the legislation.

Mr DEPUTY SPEAKER (Hon. Les Johnson) —Order! Although there is no point of order , I will be watching the question of relevance.

Mr ANTHONY —What I am saying has great relevance to this Bill. I am talking about oil supply security for this nation. That is the fundamental reason for bringing on this legislation. Anything which undermines that security is relevant to this Bill. One change alone-the decision to increase the excise on diesel fuel, while leaving unchanged the available rebate for distillate used by primary producers-will cost primary producers over $32m in a full year. From now on that figure will get greater and greater as it is indexed. The Government has moved the price of fuel out of any relationship to world oil prices. It has abandoned the basis of the former Liberal-National Party Government's energy policies-fuel supply security-in favour of a naked attempt to milk the consumer of every last cent. Consumers will pay. But this Government's tax grab on fuel will do nothing for oil exploration and development. This is a most vital need. It is the key to our fuel supply security.

As I said earlier, we need to do all we can to ensure that this country does not face an emergency of the type with which the legislation before us has been planned to deal. As I have pointed out, the actions of the Government in its energy policy so far have done nothing to achieve this aim. Nevertheless, the Opposition recognises the need for this legislation. We believe, however, that it is important that Australians understand how far-reaching this legislation is . It provides, in fact, for the establishment of a vast, complicated and intensely bureaucratic system of co-ordinating limited fuel supplies up to and including the establishment of petrol rationing on a wartime scale. It invests the Commonwealth with great powers and utilises aspects of the corporation power arising from the recent Tasmanian dam case. The Opposition recognises that these powers may never be needed but if they have to be used it will accept them. It recognises that powers of this sort are in fact needed to achieve the aim of legislation of this kind. It recognises also that the legislation provides for extensive consultation with the States and for the Parliament to approve the guidelines provided for in the legislation under the emergency scheme that will operate.

We also recognise and welcome the fact that the legislation has a sunset clause , although it is a matter of concern to us that the Minister representing the Minister for Resources and Energy, the Minister for Science and Technology (Mr Barry Jones), has already stated that the legislation might have to be extended beyond the three-year sunset date proposed in the Bill. The Opposition views with some concern the wide powers invested in the Minister under this legislation over the oil industry and fuel consumers and also welcomes the provision for appeal against the Minister's decision. We believe, however, that those provisions must be carefully monitored to ensure that they prove adequate in practice and we reserve the right to move amendments in this area in the Senate following the study of the legislation by the Senate Standing Committee on the Scrutiny of Bills.

At the start of my speech, I spoke of our reservations about the Government's attitude to this legislation. To explain those reservations, it is necessary to go over some of the events which led to the introduction of this Bill. I will not go into detail on these because the Minister has already done so in his second reading speech. In brief, however, the legislation is based on the recommendations of the National Petroleum Advisory Committee, a group representing Federal and State Governments, the oil industry, consumers and the Australian Council of Trade Unions and which was established in 1979. NPAC, late in 1981, completed a report on managing a possible fuel emergency. Discussions with the State and Territory governments on implementing that report continued until early this year. They were not successfully concluded until the Commonwealth agreed to the sunset clause and pledged itself to working with the States. So, a common form of legislation could be introduced Federally, in the States and in the Northern Territory when this legislation expires. Concern amongst the State and Territory governments about the need for this measure was widespread with only New South Wales, I understand, standing apart.

The Opposition is concerned to ensure that the Government upholds its commitment to work with the States. That is why we view with concern the fact that the Minister has already indicated that, despite the sunset clause, this legislation could be extended. That is also why we view with concern the fact that the legislation does not provide a statutory basis for the National Fuel Emergency Consultative Committee, or set out the charter and role of that Committee and of the Commonwealth, State and Territory governments. At this stage these elements are not included in the Bill but were strong recommendations of NPAC.

The establishment of the National Fuel Emergency Consultative Committee was a vital part of the NPAC report. NPAC also sets out in detail in its proposed guidelines for fuel emergency management the role of NFECC and the role of various levels of government. I recognise that the Government is already working to fulfil its undertaking to the States and to establish NFECC. But I believe it is important that the Government give a categorical undertaking that it will follow very closely the NPAC guidelines on all these matters. The Commonwealth and the States have clear and separate responsibilities in those areas. This Government has already shown its determination to extend the powers of the Commonwealth in every way at the States' expense. If it begins to move to undermine the States in this important area it will seriously damage the ability of this country to deal with the very emergency that this legislation is designed to counter.

I want to make one other matter very clear. The Opposition believes that this legislation as such is necessary. But we are concerned at the enormous power it gives to government. We are concerned that the bureaucracy needed to administer the measures laid down in this Bill. If they were ever implemented, they could well prove almost impossible to remove. Those who can remember petrol rationing during World War II will remember that rationing continued for four years after the war and was not dispensed with until there was a change of government in 1949. The reason that the Government was reluctant to dispense with rationing was because it had built up a huge bureaucracy which regulated the supply of coupons. Thousands of people were involved in the distribution of coupons and the inspection of petrol rationing. It was reluctant to do away with that bureaucracy. I hate to think that we will see the introduction of petrol rationing on any temporary basis in this country and then find that it becomes an established fact of life. This is one of the great reservations that we have about this Bill. It is being introduced by a Labor government, and if it ever has to be implemented, we know the attitudes of a Labor government wanting to build a bigger bureacracy.

The Opposition has a genuine fear and a concern that there must be a categorical assurance given by the Government that it will use this legislation only as the last resort; that every posssible avenue will be used to avoid bringing in petrol rationing in this country by way of ration tickets as we had previously. We appeal to the consumers in this country to use all devices and restrain their use of fuel in an emergency. If it becomes a crisis of such dimension that after doing all those things the only means of handling it is the introduction of rationing, we accept the legislation. We believe it is vital that essential industries in this country have access to fuel, which is the very basis of their productive capacity. It is with those remarks that I again ask that caution be used in the administration of this legislation. I ask the Government to work in co-operation with the States. I ask the Government to implement in full the recommendations of NPAC, in setting up NFECC and to ensure that all the suggested roles of those organisations are implemented to protect the consumers of this country against the imposition of controls by bureaucrats which could become quite unnecessary. The experience of the past has shown the reluctance of a Labor government to do away with rationing. We do not want to see that ever again.