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Wednesday, 10 May 1972
Page: 1533


Senator KEEFFE (Queensland) - I want to make brief mention of some of the points raised by Senator Negus. I think that the statements made in the early part of the debate by my colleague, Senator Cant, adequately describe my own feelings. A whole host of matters contained in the report of the Senate Select Committee on Off-Shore Petroleum Resources will not be covered because of the limited time available for the debate this evening. It is a most unsatisfactory state of affairs that a debate of this magnitude has to be confined to the length of time allocated for discussion. In addition to that, it seems to me to be a major political tragedy that we have to bring on this matter for debate on the motion for the first reading of the Excise Tariff Bill because the Government has neglected to create the circumstances in which a proper full-dress debate could take place. I believe that a spirit of Federalism was paramount at some stage in the early formulation of policy in relation to one of the most important pieces of legislation, with all its weaknesses and failings, that we have seen in this country in the last decade.

In a moment I propose to traverse some of the early history of the Senate Select Committee on Off-shore Petroleum Resources and the early history of legislation concerning the continental shelf. For a number of years the 6 State governments and the Commonwealth Government carried on negotiations in an endeavour to bring down Federal legislation to cover all the loopholes in relation to this matter, but they have failed miserably to do so. We find today that there are many instances of the oil companies in particular receiving preferential treatment.

Senator Canttraversed in an academic manner many sections of the legislation and quoted a number of them in detail. It probably would take six or seven speakers adequately to cover the whole of the Report. It seems significant that this Government has made a habit over the last 20 years of setting up standing committees, select committees and various other types of committees to investigate particular matters. It is equally significant that after many hundreds of thousands of dollars are spent on such investigations, involving thousands of man-hours, the resulting reports invariably gather dust in some of the archives of this Parliament. I believe that not only this Report but also some of those presented before and since relate to matters of great political importance which ought to have been ventilated at the earliest possible opportunity.

I digress for a moment to point out that only a few weeks ago there was presented in this Senate a report from the Standing Committee on Social Environment. It dealt with a very important subject - what happens to petitions after they are presented in this House. The Leader of the Government in the Senate (Senator Sir Kenneth Anderson) promised at that time to bring that matter on for early debate. We now have reached the cramming stage that we reach at the end of every session when the Government says that it has important Bills to deal with, that there is not time to discuss such a matter and that it will come on for discussion next session. But we probably will never get round to doing that.

Let us examine the early history of this legislation and the personnel of the Senate Select Committee on Off-shore Petroleum Resources. I want to quote from page 1 of this report where this information is set out in detail. I regret that I have to quote this in this manner but it is obvious that this matter is not going to get the airing that it should get. The report states:

The Bills for these Acts-

The major one and the subsidiary ones as well - were introduced in the House of Representatives on 18th October 1967.

That is quite a number of years ago.

They passed that House and were transmitted to the Senate on 3rd November. On 6th November 1967, the Leader of the Opposition in the Senate, Senator Murphy, moved an amendment to the motion for the Second Reading of the Principal Bill, the Petroleum (Submerged Lands) Bill 1967. If the Amendment had been carried the motion would have read:

That the Bill be referred to a Select Committee of the Senate and that the Committee be empowered to consider also the 6 associated Bills relating to off-shore petroleum.'

Let us dwell there for a moment. Had the Parliament seen fit at that time to set up a select committee with a restricted time in which to report, much more effort would have been put into it by the Government. It is quite possible that the weaknesses that have been pointed out by my colleague Senator Cant would have been detected early and perhaps even have been corrected in some instances. This did not happen, as revealed in the Report which goes on to state:

This Amendment was negatived on 7th November, after the then Leader of the Government in the Senate, Senator Henty-

It is years since he sat in this chamber - had indicated that the Government would support a compromise solution proposed by Senator Wright that, after the passing of the legislation, a

Select Committee of the Senate be set up to inquire into and report upon Off-shore Petroleum Resources in Australia. The legislation passed all stages in the Senate on 7 November, whereupon Senator Wright moved his foreshadowed motion for the appointment of a Select Committee.

On 8 November 1967, Senator Wright's motion was amended, on the motion of Senator Murphy, to include provision for the Committee to inquire into: whether the legislation makes adequate provision for Australian ownership and/or control or Australian participation in the ownership and/or control of Australia's off-shore resources of oil and natural gas.'

The motion, as amended, was then passed as was a subsequent motion for the appointment of members of the Committee.

The last paragraph in the dissenting report included in this publication and which was drafted by my colleagues and me, refers specifically to Australian ownership and control, but 1 will say more about that in a moment. The personnel of the Committee changed considerably over the intervening period of time. Senator Wright presided at the preliminary meetings of the Committee but was then moved up into the ministry. He was followed by Senator Cotton who also was moved up into the ministry.


Senator Cotton - Not immediately.I chaired the Committee for about 18 months.


Senator KEEFFE -I admit that you were there considerably longer than Senator Wright. The third chairman of the Committee was Senator Greenwood, who also subsequently went into the ministry. The final chairman of the Committee was Senator Young who during the period in which he served on the Committee, was elevated to the position of Government Whip in the Senate. It would appear on the surface that for Government supporters the Committee was a stepping stone to the ministry although I do not mean to say that they got to the ministry because they were members of it. It is equally significant that 5 members of the Committee who were originally appointed in 1967 stayed on it until its hearings terminated and its report was presented in December 1971. They included the 3 Labor members - my colleagues Senator Cant and Senator O'Byrne and myself - the Leader of the Democratic Labor Party (Senator Gair) and Senator Webster of the Country Party. Changes in the composition of the Committee must of necessity have had some slowing down effect but for mechanical reasons it is not always easy to retain the original members of a committee throughout all its deliberations.

I want to make particular reference to certain sections of the minority or dissenting report. Like my colleague, Senator Cant, I am limited in the time that I can use in this debate. Section 92 of the Australian Constitution states:

.   . trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.

The Commonwealth Government and the State Governments are bound by section 92 - I am referring to one of the notes that we made at the time - and it applies to any legislative or governmental action which operates to restrict the freedom of the individual to engage in interstate trade, commerce or intercourse. The first section of the dissenting report - one of the most important aspects of our report - states this:

We are of the opinion that there is no excuse for not having a national pipeline policy. Such a policy should be implemented without delay and gas pipelines, in particular, should be controlled by the Federal Government, especially as we believe that it is only a matter of time before at least every capital city on the eastern and southern seaboard of Australia will be linked by gat pipelines.

We recommend that a national pipelines policy be implemented immediately, and that legislation be enacted - this may require the co-operation of the States - to regulate the construction and operation of pipelines for the carriage interstate or intra-state of oil and natural gas.

Again I pause for a moment to examine the situation that exists today. There are arguments at the moment as to whether a pipeline shall or shall not be built in an area in Victoria. There are arguments as to the sizes of pipelines. There are loadings going on to the cost of natural gas in Queensland because of the private construction of pipelines. In New South Wales, the mother State of the Commonwealth with the largest capital city, there is no natural gas available yet. There are 2 reasons for this. Had the policy that we recommended been implemented at an early stage it would have ensured the cheap carriage of gas from Victoria to New South Wales. But as the situation stands at the moment, because of the inability of New South Wales and Victoria to reach agreement on pricing natural gas. ultimately it is expected that it will be transported from South Australia to Sydney. We were critical too of the royalties that are paid. One would need to examine the argument put forward in the Report to ascertain the manner in which the royalties have been set. I will just quote 2 or 3 lines from the Report. It states:

Royalty rates provided under the legislation are of concern to us. The legislation provides royalty reviews ever], 21 years - being the term of a production licence.

We believe that that is unrealistic. Perhaps I can tie in a couple of the other points that were mentioned by the previous speaker, Senator Cant. He referred to the weaknesses industrially. In view of the decisions that have been taken, in view of the decisions that have not been taken and in view of the many accidents that occur in this industry, this ought to have been an area of the legislation that was tidied up as soon as possible. We were told continuously during the currency of the consideration of the matter before the Senate Select Committee on Off-shore Petroleum Resources that regulations would be brought down. Today is 10th May 1972 and nobody has yet seen the regulations. Admittedly, there will be weaknesses, but the regulations were supposed to block the gaps. Those who have time to go through the report will see mentioned in detail the reasons why we feel that these loopholes in the legislation ought to have been blocked very early in the piece.

The previous speaker mentioned also the refusal of some States to update the agreement. There is supposed to have been an agreement between the Commonwealth and the 6 States that, whenever discussion took place and unanimity was reached on a change in the legislation, all would cooperate. In theory that sounds very good. In practice it is not working. Probably the biggest failure in this regard is the Commonwealth. I want to make reference to the pricing of crude oil which also occupies a major section of the dissenting report. The dissenting members of the Committee stated:

It is our view that, in the development of any industry, the interest of the consumer should be an important consideration, but we observe that no provisions of the legislation deal specifically with consumer requirements.

That is the first important paragraph dealing with the pricing of crude oil. It is a fact that since oil was found in this country the motorist has paid an ever increasing price for the petrol that he uses in his motor vehicle. We say in paragraph 14:

The policies adopted for the development of an Australia oil and natural gas industry have caused continuing increases in the price which the motoring public is required to pay for petrol. Also, the householder being provided with natural gas is paying more for his fuel than would be payable if, as suggested to the Committee, a pricing formula for natural gas - irrespective of where it is produced - similar to that used by the United States of America Federal Power Commission were adopted in Australia.

In other words, we have in this country a fuel industry that operates on an ad hoc basis or on a day to day basis. This Government is the main authority in Australia and it ought to be the overseeing authority. But it does not know what are the fuel resources of this country. A proper survey has never been made. Hotchpotch, piecemeal surveys have been made, but there has never been a proper survey. If somebody were to ask tomorrow 'What are our coal resources?', nobody in Australia could tell him. If someone asked what our uranium resources were, nobody would know either. Nor do we know how much oil we have. Estimates have been given by the oil companies. But there is no overall supervision by the Commonwealth Government or any of its agencies. I say that with due respect to the small number of people who are trying to do a job as public servants in this area. They cannot carry out the job properly unless the Government is big enough to formulate its own policies to ensure that the job is properly completed. This is the view of the dissenting members in regard to pricing agreements:

Pricing agreements in respect of crude oil produced from indigenous sources have been nothing more than ad hoc arrangements made between Prime Ministers and limited sections of industry.

If we look back to the early days of the Bass Strait oilfields - I suppose it could be said that this was the oil find that speeded on the arrangements to have uniform legislation - we notice that the first person to make a concrete decision in this regard was Sir Henry Bolte, the Premier of Victoria. To a very large degree, in his own field he still controls the oil industry in this country. He made an agreement at the time with the then Prime Minister, Mr

Harold Holt. Much criticism has been made of that agreement inside and outside the industry and government. But the Commonwealth Government remains unmoved. In the middle of lengthy discusions the next Prime Minister, Mr John Gorton, announced - I have said this publicly before and I will say it again - a pricing scheme compiled from the top of his head and in consultation with a limited section of industry. So, who decides what prices will be paid for oil, its by-products and natural gas in Australia? I have yet to be convinced that this is not being done by the major oil companies established in this country. I state again the dissenting view:

It is our view that the Committee should have exercised its authority to compel industry leaders to reveal to the Committee details of their cost price structures. All industry representatives who appeared before the Committee contended that they could give no indication of exploration production, transport or other costs.

This was a lot of poppycock. No matter what sort of an industry it is - whether it be a primary industry or a secondary industry - it cannot possibly be run on an economic basis unless there is a price fixing structure. Every one of the witnesses who appeared before the Committee was very coy when we asked what were the transport costs. They were extremely coy when they were asked about their margin of profit. They would say that it was substantial or large, but so was the risk. Of course, the risk is large. We also have to take into consideration the fact that millions of dollars of Australian taxpayers' funds have gone into some of the major oil exploration and producing companies in this country. There is no real accounting for where it goes, except that every so often we are given a new table of so many million dollars that has been passed out to another group of oil companies, sometimes for exploration and other times for developmental purposes. Where a company is firmly established, there is no reason why it cannot stand on its own feet. But this does not seem to be the theory of the Government.

What are the end results of this? We find that at the moment oil exploration is stagnating. So, the so-called policy of the Government in fact has never reached the stage where it has borne fruit at all. It needs a major overhaul. I think that the policies of the Australian Labor Party in this regard, where we state, that there ought to be a central authority along the lines suggested in the minority report, may be the answer. Maybe in this way the explorers would have more faith in the, future. In the final paragraph dealing with the recommendations on the pricing of crude oil we state:

We recommend that a thorough examination be made of the cost price structure of the production of petroleum in Australian off-shore areas.

Today this Parliament faces a major division because we want to make sure that Australia controls the off-shore mineral resources. The Government parties, if not divided down the centre, are showing very deep channels on this issue. Senator Cant referred in some detail to the manner in which permits are issued. A lengthy recommendation is contained in the dissenting report. My time is running out, so I. will cover only 2 or 3 other points which I feel are of importance. I do not propose to deal with the titles and. designated authori-ties because I think those matters were covered adequately by Senator Cant in the time that was available to him. The second last paragraph of the dissenting report states:

The observations and findings of the Committee concerning the adequacy of provisions in relation to Australian ownership and control - item 1 (g) of the Committee's specified terms of reference - as set out in Part Four, Chapter XI, do not cover our views. We believe that the legislation in no way provides for Australian ownership and control.

It has been said that the Designated Authority referred to in the legislation, ought to be able to ensure that there is Australian ownership and control and ought to be in a position to withhold permits if he deems it necessary that there be more Australian capital. The view of the dissenters to the report is set out in these words:

The submission that a Designated Authority can exercise discretionary power in such a way as to ensure Australian equity is little more than wishful thinking. We believe that without legislative backing the alleged discretionary power would not be exercised by any Designated Authority in favour of companies having substantial Australian financial backing.

From time to time we hear the cry that insufficient private capital is available to engage in wholesale exploration or wholesale exploitation of Australian oil and gas resources. I do not admit that that is so, but even granting it to be correct, there is nothing to prevent this country from investing government funds to provide the capital required. But we do not do so. We do not exploit properly the resources available to us. Instead we sit on the sidelines and cry that it cannot be done. On the other hand, in the mining field exploiters are to be seen everywhere - people who find nickel, gold and various other materials. Perhaps I should say that these people think they have found them and they raise millions of dollars overnight. But when they start to dig, the nickel or the gold is not there and the shareholders lose their funds.

In the field of oil exploration certain areas are known to be rich in hydrocarbons. Capital would be available if the Government would take the initiative and conduct the necessary organisation. It is a sad day for Australia when we are forced to debate a report of this magnitude on the first reading of an Excise Tariff Bill. I am sorry that we have had to use this means to debate this report, but had we not done so it is likely that it would not have seen the light of day before the end of this session. It would not have seen the light of day because in the main the Government fears the contents of this report. If it does not fear its contents, it fears the wrath of the major oil monopolies of this country.







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