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Tuesday, 8 November 1910

Senator PEARCE (Western AustraliaMinister of Defence) . - I move -

That this Bill be now read a second time.

I thought that copies of the Bill would have been distributed to honorable senators, but I find that that has not been done. I have sent to the other Chamber for copies ; and before I have concluded my remarks in moving the second reading of the Bill, they will be ' available. As I have said already, if any honorable senator objects to continue the debate on the second reading, we shall be prepared to agree to an adjournment of it. The Bill makes provision for a total expenditure of £50,000 for the encouragement of the production of kerosene the product of shale and refined paraffin wax. The expenditure is to be spread over a period of three years, one-fifth in the first twelve months, and two-fifths in each subsequent twelve months. Four-fifths of the total bounty is to be payable on kerosene, and one-fifth on paraffin wax.

Senator Vardon - Is the kerosene to be up to any particular standard?

Senator PEARCE - Yes; a standard is laid down in the Bill, and it is the standard adopted by the Customs authorities under their regulations. As a fuel, I suppose that oil ranks only second to coal ; and its use in shipping and in connexion with machinery of all kinds, is very rapidly increasing. Fuel oil is found in a raw and natural state in very few places in the world, and the effect is to lead to its concentration in the hands of a very few owners. I suppose that the Standard Oil Monopoly is the greatest in the world. It is therefore important that we in Australia, having, as we are assured, great deposits of shale, should take early action to have " these deposits developed so that we may be Independent of outside supplies of oil for fuel. One aspect of the matter in which we are particularly concerned is that many of the vessels we are ordering for our Fleet will require oil for fuel. We have been as sured that the oil we require can be successfully produced from the shale of which we have enormous quantities in Australia. It would be a calamity if, in time of war, or even in time of peace, we were dependent on outside supplies for the oil required for our ships. I might mention, further, that in connexion with the dairying industry, and many other industries, oil-engines are coming into more frequent use; and this is another reason why we should do all that is possible to develop our shale deposits.

Senator Millen - Motor car people also use oil.

Senator PEARCE - Yes, but not the particular kind of oil to which this Bill relates. At the present time Australia is a very big consumer of these products. I have here a statement showing our import and export of certain oils in bulk, and of paraffin wax, during the years 1905- 1909. Of benzine, benzoline, and gasolene we imported in 1909 1,626,483 gallons, valued ot £73,593. During the same year our importation of mineral oil, consisting of pentane, petrol, turpentine, substitutes, and all petroleum spirit under .790 gravity, was 116,673 gallons, valued at .£5,794. Of lubricating mineral oil, during the same period, we imported 2,611,845 gallons, valued at £123,321. Of residual and solar oils we imported 410*972 gallons and 30,603 gallons respectively. The residual oil was valued at £6,607, and the solar at £664. During the same year, of kerosene and other refined petroleum oils, we imported 19,924,622 gallons, valued at £630,302. Our imports of paraffin wax during the same period totalled 6,110,137 lbs., valued at £74,410. I do not propose to read the figures relating to our export of these articles, because they are not very large, and, therefore, do not affect the question materially. The statistics which I have read show that, in the matter of kerosene and paraffin wax, Australia is d very large consumer indeed. I hold in my hand a return which sets out the average prices of these articles based upon the imports of 1908-9. During 1908, the price of lubricating mineral oil was i2.o7d. per gallon; in 1909 it was 11.33d. per gallon. The price of residual oil was 3-78d. per gallon in 1908, and 3-85d. per gallon in 1909. In 1908 the price of kerosene was 6.77d. per gallon, and in 1909 it was 7-59d. per gallon. The price of paraffin wax in 1908 was 3-42d. per lb., and in 1909 2.92d. per lb. The reason why the Government have decided to grant a bounty, instead of imposing a duty upon kerosene, is that that article differs materially from many of the other items which are embraced in our Tariff. Not only do we not produce anythinglike sufficient kerosene to supply the local market, but that article also comes into competition with other illuminants, such as gas and electricity, upon which no duty is levied. Gas is the product of coal, and we all know that Australia possesses coal in abundance. As a matter of fact, we export coal. It will thus be seen that to impose a duty upon kerosene, which has to come into competition with gas, would be to penalize practically the whole of the community who use oil. Further, the industry would not derive such an immediate benefit from the imposition of a duty as it will from the payment of a bounty. By offering it a bounty, we shall be able to give the industry a certain amount of encouragement direct, without penalizing the persons who use it.

Senator Millen - What quantity of kerosene are we producing to-day?

Senator PEARCE -I shall give honorable senators that information presently. It may be asked why we propose to grant a bounty upon the refined product, and not upon the crude oil. The reason is that we desire to encourage the production of the largest quantity of oil, and the employment of the greatest amount of labour possible. If we granted a bounty upon the production of crude oil, we should have no guarantee that that oil would not be exported, and the finished product made up . elsewhere'. Again, we may be asked why we propose to pay a bounty on paraffin wax, and not upon other oil products. We have picked out of the schedule to the Tariff which I have read the two main articles of con sumption. Many of the oils mentioned in that schedule already bear a substantial duty. Moreover, in some of those residual oils our production more nearly approximates to our requirements than it does in the matter of kerosene and paraffin wax. If Parliament should decide that other oils need more encouragement, we shall be in a position to grant it to them when we revise the Tariff. The present Australian production of kerosene is about 300.000 gallons per annum. When we recollect that last year out imports under this heading totalled more than 19,000,000 gallons, and were valued at£630,000, it will be seen that our production represents only a small percentage of our requirements. The present Australian production of refined paraffin wax is 300 tons. This is produced from about 450 tons of crude wax. We are informed that within about twelve months the Commonwealth Oil Corporation expects to produce over 1,000 tons of refined wax per annum, and the Murrurundi Company anticipates having an output of 400 tons per annum. There are three places in Australia in which shale has been proved to exist, and in which companies have been organized and capital subscribed for the purpose of working the shale deposits. They are Newnes and Murrurundi, in New South Wales, and Tasmania. All these companies have excellent prospects of success, and of placing these industries on a sound footing. There te another feature in connexion with them which is well worthy of note. I recollect that when the Bounty Bill was under consideration in this Chamber many honorable senators objected to bounties being granted to certain industries in which wretched wages were paid and miserable conditions existed. But, in regard to this industry, I think I may safely say that the very highest wages are being paid. I confidently appeal to Senator de Largie, who has had considerable experience of it, to say whether my statement is not correct.

Senator E J RUSSELL (VICTORIA) - Paragraph c of sub-clause 2 of clause 6 provides that the Minister "may" withhold the whole or any part of the bounty payable. Why is its payment made optional?

Senator PEARCE - So that the Minister may withhold the bounty if he finds that the rates of wages or the conditions of employment which obtain in the industry are not up to the standard.

Senator Vardon - The word " may " in the provision is equal to " shall." It is pretty well mandatory.

Senator PEARCE - The object is to enable the Minister to enforce a penalty. The firm claiming the bounty may overstep the limits with regard to labour conditions to such an extent as to justify a penalty of say, £20, and the Minister, under such circumstances, would withhold the bounty to that extent. I think that the wages at present paid in the industry are good. We provide in the part of' the Bill dealing with that matter, as we have provided in Bounty Acts previously passed, that certain wages and labour conditions shall be observed.

Senator Millen - Are the conditions provided for under this Bill similar to those which have been provided for in previous Bounty Bills?

Senator PEARCE - Yes, the conditions in this Bill are copied from the Iron Bonus Act. The bounty will be paid on oil manufactured from Australian shale and refined in Australia. We do not intend - and I do not think that Parliament desires - that the bounty shall be paid on crude oil brought into Australia from abroad. As honorable senators are aware, this Parliament has already sanctioned the payment of a bounty for (he production of iron. In order to show the necessity for the bounty now proposed, I intend to quote some figures, with the object of drawing a parallel between the capital invested in the oil industry and the concession to be granted to it, and the treatment extended to the Lithgow Iron Works. The total cost of the iron and steel furnaces at Lithgow is estimated at £250,000. The total cost of the shale works at Newnes, in the Blue Mountains, is estimated at about £1,000,000. About £250,000 more is required to complete the works. The number of employes at the Lithgow Iron Works is 600. The number of employes already engaged in connexion with the Commonwealth Oil Corporation, is over 1,000.

Senator Millen - The whole of the capital mentioned by the Minister has not. I think, been expended on the extraction of oil ?

Senator PEARCE - It has been expended on the erection of works and machinery for the production of oil and byproducts. Of course, a railway has been constructed in connexion with the works.

Senator Millen - A great amount of money has been spent on works for the production of coke ; all of it has not been spent on the production of -oil.

Senator PEARCE - I think that the money has mainly been spent on the' production of oil.

Senator de Largie - Principally.

Senator PEARCE - When the works of the Commonwealth Oil Corporation are in full swing 2,500 employes will be required. It has also to be remembered that the State Government of New South Wales has made concessions to the Lithgow Iron Works to the value of £20,000 per annum. But the State has made no concession to the Commonwealth Oil Corporation. In addition to that, the bounty voted for the benefit of the Lithgow Iron Works is £25,000 per annum, whereas the Commonwealth Oil

Corporation has received no bounty whatever. In other words, taking into account what has been received by way of State concession and bounty from the Commonwealth Government, the Lithgow people have received benefits amounting to £150,000 of public money, whereas the shale people have received nothing at all. The wages paid by the Commonwealth Oil Corporation amount to between £9,000 and £10,000 per fortnight, and the rates average 14s. 6d. per day. When the Tasmanian deposits and the deposits at Murrurundi are being worked, the number of employes will f course, be considerably augmented. I do not propose to go into details relating to the Bill more extensively than I have already done. I think that honorable senators will generally agree that we ought to encourage the oil industry. There are two ways of encouraging it. We can do so either by means of a Customs dury, or by the payment of a bounty. Tt seems to me that the payment of a bounty will remove any possibility of an increase in the price of the article produced to the consumer. The oil manufacturers have to face the competition of one of the great monopolies of the world, in the Standard Oil Company of the United States of America. When we remember the fierceness of the competition, the strength of the competitors, the capital invested, the number of men employed, and the wages conditions, we cannot reasonably expect the company to succeed in Australia, unless w.e do render them some assistance at this stage.

Senator MILLEN(New South Wales) [3.35I. - When the Minister in charge of this Bill first intimated a desire that it should be proceeded with to-day, I thought, not having seen the measure, that it might be desirable that some reasonable interval should be afforded for the consideration of the various clauses in it." But having since looked through the Bill and recognised that it is largely a reproduction ot Bounty Acts which have been previously passed by this Parliament, I am prepared, for my own part, to proceed with it at once. It seems to me that what we have now to consider is, not the details of this measure - which, as I have intimated, have been considered before in similar Bounty Bills - but merely whether it is desirable that the Commonwealth should pay a bounty for the production of the articles covered by it. I am unable to dissociate this Bill from the general policy of the country; a policy which has undoubtedly been expressed, not in one Bill, but in several. That policy is that we should take legislative action to stimulate desirable industries throughout. Australia. I quite agree with the Minister that, that being the policy of the country, the oil industry is one which may reasonably ask for such a measure of legislative assistance as Parliament is prepared to bestow. I missed from the Minister's speech, however, any arguments or any facts to show that a bounty is necessary in this instance. He certainly pointed out the fierceness of the competition which the local manufacturers have to face, but such competition faces all manufacturers to-day, distance having become shortened or annihilated, and the products of manufacturers in other parts of the world having become readily available for sale in our markets.

Senator Findley - No competitor is so strong as the Standard Oil Company, and no competition is so fierce, as that which it is in a position to offer.

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