Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 16 May 1973
Page: 2184


Mr FAIRBAIRN (Farrer) - On Thursday, 10th May, the Minister for Minerals and Energy (Mr Connor) introduced a Bill for an Act to establish a pipeline authority.

The Bill seeks to establish an authority for the transmission of petroleum, natural gas and other hydrocarbons by an interstate ring main pipeline system. The Minister for Minerals and Energy claims that this is necessary in order to ensure continuity of supplies and uniformity of price. He claims that the Authority should have trading rights to buy and sell hydrocarbons.

We of the Opposition are not opposed to the establishment of an authority to plan interstate pipelines but I move an amendment to the motion for the second reading in these terms:

That all words after 'That' be omitted with a view to inserting the following words in place thereof: this House is of opinion that the Bill should be withdrawn and redrafted so that the National Pipeline Authority provides for Australia a public utility for the transportation at a fair price of petroleum on behalf of producers, distributors and users but so that the Authority may not be used as an instrument of nationalisation of the petroleum industry thereby inhibiting the search for and development of petroleum by private enterprise'.

Australia is on the threshold of exciting developments in the field of natural gas. We still do not know our reserves of natural gas and probably will not for a long time to come but vast discoveries have been made, particularly in the Gidgealpa, North- West Shelf and Cooper basins. There are also hopes of establishing substantial reserves at Palm Valley in the Amadeus Basin. Natural gas will change the energy pattern in Australia. It is cheap. When it is supplied to Sydney we can expect to see a drop in the housewife's bill of from 20 per cent to 35 per cent while the cost of gas to industries can be expected to drop by about 30 per cent and perhaps even to double that figure.

Not only is natural gas cheap but also it has the great advantage of providing a fuel which requires no expensive anti-pollution control equipment. It can provide a substitute for the heavy oils which we have had to import from overseas because they have not yet been discovered in Australia. Already Brisbane, Melbourne, Adelaide and Perth are connected to natural gas. When Sydney and the industrial areas of Newcastle and Wollongong are connected we can expect to see a steadily increasing percentage of our energy requirements met by natural gas. This will be an advantage to the country as it will help to reduce our costs, make us more competitive, increase employment and reduce pollution and the despoliation of our natural flora.

Arrangements to connect Sydney to the Gidgealpa-Moomba natural gas field were well under way. The pipeline company had obtained permits from the Governments of New South Wales, Queensland and South Australia. Contracts have been signed with the producers as well as with the Japanese and Australian pipe manufacturers and shippers. The pipeline was due to be completed by December 1974 and reticulation to consumers was due to begin by April 1975. Everything appeared to be going forward smoothly. Suddenly the whole industry was thrown into utter confusion. The Federal Government announced that it intended to build and operate not only the GidgealpaSydney pipeline but also a network of pipelines throughout the Commonwealth. Let me say this about Labor's proposals: I would have no disagreement - and I stress this - with the Commonwealth's setting up of a Federal Pipeline Authority to plan, in conjunction with the States, a natural gas pipeline. Such an authority could help to avoid some of the problems that have arisen and errors that have been made overseas. I am sure honourable members will realise that in the United States of America there have been great problems associated with pipelines. There is no doubt that there has been enormous waste there because a producer and a purchaser have negotiated with one another and have just built a pipeline to connect the field to the area where the gas would be used. If one looks at the maps held by the Federal Power Commission in Washington one can see that the whole of the United States is criss-crossed by pipelines often going over one another and under one another. There is no doubt that there was little planning and this has led to excessive costs.

I do not think anyone would say that there is any reason why we should not have an authority, but we must realise that such an authority must plan in conjunction with the States. At present all the pipelines operating are intrastate pipelines and the authorities that handle the gas are intrastate authorities. I make this point because a number of the pipelines now operating are intrastate and the Commonwealth has no power over the operation of these pipelines. Because most of the distribution authorities are under the control of State governments, close liaison must be maintained with the States in planning interstate pipelines. A limited amount of time is available for this debate on what the Leader of the House (Mr Daly) said was a matter of great national importance. I agree that it is a matter of great national importance. It is a tragedy that debate on a matter of such great national importance should be gagged and so little time made available to many of my colleagues who are extremely anxious to speak on this subject. It is one of the most important of all matters concerning the future development of this nation that will come before this Parliament for a long time.

I stress that Opposition members are not opposed to the establishment of an authority to plan in conjunction wilh the States. We hope that this authority will be really efficient. One of the first things I hope it will do is negotiate contracts rather than use day labour. Day labour has been used in the past and this has increased the cost. In a capital intensive industry, such as pipeline transportation of natural gas, the capital cost is extremely vital in determining the cost at which oil or gas can be transported.

The Opposition is opposed to a number of proposals in the Bill. One of these is paragraph (c) of sub-clause (1) of clause 13 which will enable the pipeline authority to buy and sell in Australia or elsewhere. This means that if it wants to it can buy oil overseas. It can sell oil through pumps. It can buy natural gas at the lowest well head price that it can squeeze because it will be the only authority that can purchase gas and therefore it can bankrupt a company if it so desires by offering the product at too low a price. It can then sell to the highest bidder. This, we feel, would be an extremely bad thing. It would undermine confidence in the search for and discovery and marketing of natural gas and petroleum in Australia. We think it is an extremely bad thing. We see the Authority in the same light perhaps as the railways, although I hope it may be more efficiently run than the railways. But, of course, the railways do not buy something that they transport and sell at the other end. They transport other people's goods at a fair and reasonable cost. This is why we have moved the amendment providing that transportation should be at a fair and reasonable cost to the producer and to the consumer.

Of course, one only has to look at what has happened in particular in the United States to realise what can happen if one tries to squeeze the cost of petroleum products. This has happened particularly in the case of natural gas in the United States where the Federal Power Commission set an extremely low price. Initially this appeared to be to the advantage of industry and the public, but what has happened is that because of this people have not invested money in the search for and discovery of oil. The final result was that the supplies of natural gas in the United States have been running down and down. At the present moment many of these products are rationed or there is a very small supply of them. It is just the common law of nature that if we try to squeeze a producer he will not look for additional supplies; he will take his money somewhere else. This certainly has been shown to be the case in the United States. At the present moment we in Australia appear to have good fields of natural gas and adequate fields in many areas for some time to come. But this is not an excuse for a nationalised industry, which can be the only buyer, to try to squeeze the price to such an extent that private enterprise is no longer interested in the search for oil, because it is quite vital for us to see that the search for oil' and natural gas is continued. As far as crude oil is concerned, the search needs to be stepped up.

The Minister has given a long list of proposed pipelines connecting Gidgealpa with Sydney, Wagga, Albury and Melbourne. Gidgealpa will then be connected to Palm Valley and Dampier. A pipeline will link Palm Valley and the Kalgoorlie mineral province to Perth. In addition spur lines will be built between Sydney and Brisbane with extensions - I put these next words in inverted commas because no one really knows what is meant by the expression - 'to coastal Queensland cities'. I looked at a map and tried to work out what could be the cost of this sort of proposal which is before the Parliament. It seemed to me that the plan calls for up to about 6,000 miles of pipeline and, depending on the size of the pipeline and how much inflation rockets under the present Government, that it could cost anything between S 1,000m and $ 1,200m, and possibly more. No assessment of costs or foreseeable markets and requirements has been carried out, except in relation to the Gidgealpa to Sydney route for which the East Australian Pipeline Corporation has already let contracts for about $53m and the final cost of this is expected to be around about $180m. The Minister says that he and the Western Australian Government have agreed to a feasibility study on the Palm Valley-Kalgoorlie-Perth Jink but, quite frankly, I do not know why this should be done. As I say, there has been no assessment of the final cost and yet we are asked to accept an Authority which could spend vast sums of the Treasurer's money. I am glad to see that the Treasurer (Mr Crean) is here because I am sure this could well give him a nightmare.

Perth is already receiving natural gas which comes to it from the Dongara field. We are asked for an expenditure of an additional $240m, and the only thing that this will do is to give Perth backup supplies in the case of interruption by natural calamities. To me this would appear to be quite an excessive cost for that backup. Another reason given for the interconnected grid system is the exhaustion of supply. Both of these reasons would need to be assessed extremely carefully before vast sums of taxpayers' monies were committed. Supply usually can be maintained for some weeks after interruption of the source of supply by a variety of means such as keeping the old gas making equipment in working order, storage of one sort or another, or temporary use of liquefied petroleum gas or other gas which can be used for a short time. This is usually more than sufficient to enable supply to be recommenced. In any case, the capital cities have been connected to a gas supply for some time and, to the best of my knowledge, there has been no interruption to the service or problem of any sort; yet we are asked to expend these vast sums of money on a backup source of supply.

Also, gas is not normally connected to a source unless at least 20 years reserves have been established. This does not always apply, of course. Normally, additional drilling is done and more reserves can be expected to be established. However, in the case of the Roma field, this was not so. I stress that it is the Roma field and not the Moonie field, to which the Minister referred. The Moonie field, as his officers should know, is an oil field, not a natural gas field. One of the reasons given by the Minister for building a pipeline to Brisbane and to coastal cities in Queensland was that the Moonie field might run out. That has nothing to do with the situation at all. The Roma field is the one which provides Brisbane with natural gas and that field at present has proved reserves of only 10 years. However, the company is continuing its exploration. It has a drilling program which last year discovered reserves equal to all of the gas that it had already used. It also has additional fields which would mean the building of some additional lengths of pipeline and which have not yet been fully tested. Should the company not find any more gas in that area, it obviously would move to one of the, other fields where it has had a successful strike.

So, I stress that new pipelines should be built only after a very careful assessment of the costs and benefits of such a pipeline has been made. In assessing these costs and benefits, due regard should be taken of alternatives, such as supplying the needs of certain areas by liquid petroleum gas or by liquid natural gas. One of the problems I see with a national authority in the hands of some governments could be that the pipeline would twist around in a tortuous way in order to go through the areas represented by certain members who brought a lot of pressure to bear. We want to make certain that this does not happen, that the cheapest line possible is built and that there is no political pressure of any sort, as was mentioned yesterday by the Minister for Labour (Mr Clyde Cameron) who told us that, because strong pressure had been brought to bear by one of his colleagues on the front bench, a certain town was to be included for receipt of benefits which would not otherwise have been included.

My personal view in regard to the proposed authority is that the taxpayers' money should not be used to build pipelines when private enterprise is ready and willing to undertake the work I am sure that federal funds should be conserved for those purposes which do not attract private enterprise. There is an enormous demand on the taxpayer for such things as social services, hospitals, roads, schools and dams. We must tax the people for so many of these things but, certainly in some areas, people are ready, willing and able to provide a pipeline and yet they are being prevented from doing so and this vast sum of money is to be put on the taxpayer's back.

Would pipelines be better run by a government authority, in the way the railways are run, or by a private authority? In the case of a private authority, economic and efficient management is a prerequisite to a person retaining his job and to a company remaining solvent. That of course does not apply when it comes to the running of systems by government authorities. I am not saying that, in certain circumstances, a government authority should not build a pipeline just because it did not happen to' be economic. It could well be that for reasons of decentralisation, development or for other reasons, private enterprise would not be interested in building a pipeline which could not run economically. We would accept that, in those circumstances, the Government could well decide either to subsidise a private operator to build and operate the pipeline or to do the job itself. But where private enterprise is ready, able and willing to spend its money we should enable it to do so, realising all the time, of course, that the authorities of the Federal and State governments would dictate many of the terms by way of permits and licences and ensure that the work was performed in a proper manner.

The Minister mentioned what he called the highly successful precedent of the former Labor Government which created the Snowy Mountains hydro-electric scheme'. I stress again that it is to be hoped that that Labor precedent will not be used, because the Labor Government started off using the New South Wales Department of Public Works on day labour rates. Everyone knows the result of this. After a little oyer 2 years the Department had not even completed building its own accommodation and construction of the Eucumbene Dam was running well behind schedule. Luckily then the Liberal-Country Party Government took over and said that it would use contracts and call for tenders. The Utah company won the tender and in no time it had made up the backlog and finished ahead of schedule. One of the basic things we have to ensure is that such an authority uses the tender system and that it does so effectively.

One of the worst aspects of this Bill is that the Authority is to have the right to buy and sell and transport hydrocarbons. It will be quite different from the railways, which transport other people's goods. As it will be the only authority that can transport natural gas and petroleum, it also . will be the only authority that can buy and sell them and thus will have a complete set of monopoly powers. This is the reason for the Opposition's amendment. As I have mentioned, the Authority could, if necessary, break a company by refusing to pay it an economic price for its natural gas. I have also mentioned that because of this system of low pricing of natural gas - not paying an economic price - the

United States of America is having severe problems with rationing and shortages. Many oil men put this down to the extremely low price which the Federal Power Commission allows people to charge. This could happen here. The Minister claims in the first sentence of his second reading speech that it is the Government's policy to maximise Australian ownership. It would seem that so far in the life of this Government the effect of virtually every one of its actions has been to discourage investment by Australians in Australian mining and oil companies. An Australian company is virtually prevented from borrowing loan money from overseas because of the 25 per cent freeze. The abolition of oil search subsidies and some other incentives will make it harder for the small Australian company to raise sufficient funds to mount a satisfactory drilling program.

One other point I would like to make is that, in line with the Labor policy of jobs for the boys, provision is to be made for a trade union representative to be one of the 5 members of the Authority. He will be appointed not because of his knowledge of the pipeline business or because of his great skill and ability in particular fields of business but to represent the trade unions. This is just another case of jobs for the boys. It is not mentioned in the Bill; if it were, I would move an amendment against it.


Mr Keating - What did you do?


Mr FAIRBAIRN - In every case that I can recall we appointed the most able person available to the board concerned. We selected the person who we thought had the most knowledge and ability. However, this is done because it is Labor philosophy. But what unionists will the appointee represent? Very few people will be working on the pipeline after it is completed; so why have a trade union representative? The Government does not even say which union this appointee will represent.

There is every possibility that I will not have the opportunity to move amendments because of the guillotine which has been brought down by the Government. We are growing used to the fact that the Government does not want to debate matters or to hear people talking about what it is doing and what it is not doing. It wants to push everything through the House. I shall mention the amendments which I will move provided I am able to do so. I come first to clause 17, sub-clause (2) (a) which states:

A person who enters upon land by virtue of subsection (1)- (a) shall, if it is practicable to do so, before entering upon the land, notify the occupier of the land that he will be so entering upon the land-

I do not see how it could possibly be not practicable to do so. Therefore, the Opposition proposes an amendment which would omit the words 'if it is practicable to do so'. The clause will then read: 'shall, before entering upon the land, notify the occupier of the land- ' I cannot believe that it would not be possible to notify the occupier. On occasions it might take a short time to discover the whereabouts of an occupier who was travelling, but I just cannot believe that it is not practicable to notify the owner of the land.

There is a most appalling provision in clause 18. (1) of the Bill, which states:

The Authority, or any person authorized in writing by the Authority to do so, may, for the purposes of this Act -

(a)   after giving not less than seven days notice in writing to the occupier of land (including land owned or occupied by the Crown in right of a State), enter upon and occupy the land;

Clause 18 continues in sub-sections (b) and (c) to give tremendous power to 'demolish, destroy or remove on or from land so occupied, any plant, machinery, equipment, goods, workshop, shed, building or road'. This clause provides for a great many other things which I will not bore the House by reading.

It seems to me incredible that a person could have his house, for example, demolished in 7 days time and be expected to leave within that time and find another home. Instead of 7 days notice it would be reasonable to substitute 90 days notice. Even this period would not make it easy for the occupier. Even if a person has a hayshed destroyed he has to build another shed for the hay and shift the hay into the shed. The provision of 7 days notice is quite ludicrous. Clause 33 states:

(1)   The Authority is subject to taxation (other than income tax) under the laws of the Commonwealth.

I cannot understand why a private enterprise or State authority should have to pay income tax while the proposed Federal authority should not have to pay income tax. I have very quickly acquired a list of some of the authorities of the Federal Government which do pay income tax. For example, according to Section 23 (d) of the Income Tax Assessment Act the revenue of certain Commonwealth public authorities is exempt from income tax, but this exemption does not extend to some authorities which are public authorities. These include Trans-Australia Airways, Qantas Airways Limited, the Australian Coastal Shipping Commission and many authorities of this type. Many such authorities pay tax. Therefore we believe that the Pipeline Authority should pay tax. Clause 33 of the Bill in sub-clause (2) states:

Subject to sub-section (3), the Authority is not subject to taxation under a law of a State or of a Territory.

Again, what does this mean? Does it mean that the Authority would not be subject to payroll tax, or to motor registration? I should like the Minister to tell the House whether the Authority would have to pay a ton-mile tax, for example, if it is using roads of a State in which a ton-mile tax is applied.

Finally, clause 39 of the Bill states:

Division 4 of Part III of the Petroleum (Submerged Lands) Act 1967-1973 does not apply-- either to this Authority or in relation to a pipeline that the Authority proposes to construct. That in effect means that under the system under which a licence is issued to an authority to build a pipeline from off-shore - it is issued under the joint Commonwealth and State agreement and it is issued by the Designated Authority, who in most cases is the Minister for Mines - the National Pipeline Authority need not get such a pipeline. This to my way of thinking would be a complete abrogation of the agreement which was signed and which was passed through every one of 13 Houses of Parliament when we passed the Petroleum (Submerged Lands) Act 1967-73.I see that my time is up so may I just say once again that while we are not opposed to the establishment of an authority to transport natural gas we believe, in the words of our amendment, that: this House is of the opinion that the Bill should be withdrawn and redrafted so that the National Pipeline Authority provides for Australians a public utility for the transportation at a fair price of petroleum on behalf of producers, distributors and users but so that the Authority may not be used as an instrument of nationalisation of the petroleum industry thereby inhibiting the search for and development of petroleum by private enterprise.







Suggest corrections