PRESS OFFICE TRANSCRIPT WEDNESDAY, 27 JUNE 1979
PRESS CONFERENCE: ON ENERGY POLICY ( TELEVISION SYDNEY)
4 TREASURY PLACE, MELBOURNE
Prime Minister-
The Government has been amongst the first to move to import
parity pricing for oil as a major component of its energy
policy. Tihe statement that I auy malking today with thie iitc
Kevin Newman, is now filling out that policy in a very forth* riJg* t
manner indeed because quite plainly we need measures that will
promote conservation. We need measures that will promote
conversion from fuel oils to natural gas so that we can rely
more heavily on sources of energy which are more readily
available to Australia. We need measures that will continue
to encourage exploration and development. We need to encourage
more research and we need to make quite certain that we can take
every possible measure to avoid the dangers of rationing in
the future. Now, we can't guarantee that, but we can guarantee that
the measures we are in fact introducing will involve a very
fully pledged energy policy.
For example, after the completion of current con-tracts for
Conmmonwealth cars, not just for -the Government, but for
Commonwealth instrumentalities, it will be our purpose only to
buy vehicles fitted for gas use initially in Sydney, Canberra
and Melbourne where the outlets are available and as outlets
become available in other capital cities we will be moving to
buy cars that are gas fired in those areas also.
We will be doing this and the purpose of it will be to make
sure that the major motor companies have gas fired cars on
their production lines and then people purchasers won't have~
to have a conversion job done later. A number of tax measures
are being announced. We are taking sales tax off, as from
tomorrow, off the conversion kits for gas fired cars. We are
taking sales tax, where it applies, off other than oil home
heating appliances. Measures of this kind are, again,
designed to move away from oil and towards other sources of
energy. The statement that is being issued is a very full one, a very
detailed one, and I would commend it, so that people can see the
real depth of the Government's measures.
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Question Mr. Fraser, the fuel economy goals. How will these actually
be brought in and how will they be enforced?
Prime Minister-
They are voluntary goals, goals which have'been worked out
with the industry, which the industry is happy to work to.
Question W~ ill people have to buy certain types of cars in -the future?
Prime Minister
No well, I hope not. I hope people will be able to have
their own free choice, but these are goals that have been set
by the industry. Quite obviously by those dates all cars won't
be meeting those standards. They are the objectives for new
cars. Question
WThat about the lead level of the .65 grams. Are you putting
petrol consumption before health at the moment?
Prime Minister-
For a very long while there was a much higher lead content in
petrol and it is worth noting that the octane rating, the lead
content, and the move to stage three of emission control if
we took the right decisions for fuel economy on all these measur-es
you would increase fuel economy by upwards of 10 percent. That's
a very substantial increase indeed. If you are concerned, or i1
people are concerned about emission quality in major cities
Sydney perhaps in particular then if there can be much greaterconversion
to gas fired cars in Sydney that's going to do a great
deal for air quality control. That would need to be put in the
other side of the ledger against a slight increase in lead content
and against a maintenance of the present emission standards as
opposed to going the further step.
The decisions that have so far been taken by the N. S. W. and
the South Australian Government to move to stage three of the
emission controls are going to involve a very heavy price for all
Australian motorists and a very heavy price in terms of additional
fuel usage. The three measures which affect the quality of
petrol and octane ratings and emission control which I suggested
in this paper, are capable of saving upwards of 10 percent of
Australia's use of motor spirits. Now, in the kind of world w.. e
are living in, where L-uel is so important for Australia, that's
a very large saving iirdeed. / 3
-3
Question What about the question of parity for oil prices, overseas
prices. Why if we are only importing 30 percent should we pay
these higher prices?
Prime Minister
We need to have fuel priced at world parity to encourage
exploration and development. When the price of Bass Strait oil
-is pegged at the oir-$ 2.33, oil search was killed d-avelo -t
was Killod off and ur-d'-: r those circumnstances we w., ere going t-o
become more and more dependent on imported oil anyway for which
you would certainly have to pay the world parity price. It's
better to pay the world parity price to encourage exploration
and development and make yourself less dependent on imported
fuels. That policy is already having a sub-stantial result
because reserves have been substantially increased as a result
of development since the change of pricing policies were announced.
The additional revenue significantly goes to the community in
the form of tax, but sufficient goes to the companies to encourage
them and to malke sure that exploration is continued. Without thrat,
of course, our supplies would dry up and then we would be totally
dependent on imports.
There is one other point I ought to make. World parity price,
the price we use, is the lowest official world price. Now there
are many spot prices which I think go up to double the price
that is used for world parity pricing. It is also worth noting
that the Australian motorist pays much less for fuel, even though
it is more than he is used to, than in most European countries
and I think perhaps almost as many countries apart from
North America. That's partly because those countries have to
import their fuel and partly also because the Government taxes
on the fuel are greater than in Australia.
000---/ continued
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Prime minister
The statement that was issued today is a result of a great
amount of work by the Minister for National Development, his
Department and by other Government Departments over a consideQa* a-le
period. I think you know that the Minister had been developing
a green paper which would have been a discussion paper for
energy policy. But that now is really bypassed as a result ofE
the policy decisions that have been made on a firm basis by
the Government and as a result of the statement that has been
issued.
We are all well aware of the importance o" the energy proble:-ts,
the shortage of fuel oil flowing out of the Iranian difficulties
and the inability of other producers,' or unwillingness of oth~ er
producers, to increase supplies as a result. In Australia we hav'e
had, especially in the northern part of the country, shortages
of Avgas. In some areas shortages of fuel oil and we have seen
in NSW how a serious industrial dispute in one major refinery
can cause enormous disruption to private people and to industry
throughout the whole State.
Against this total background it is clear that the Government
that Australia needs to take a number of measures that will
over time, reduce our dependence upon fuel oils and increase
the use of other fuels of which Australia has an abundant
domestic supply.
We have very large reserves of natural gas. We are 70 percent
self-sufficient in oil and we've got major reserves of coal
in many parts of the continent. Therefore it is up to Australia
to use the reserves, the fuel, the energy, that we have in a
sensible'way and in an economical way. The overall petroleLun
position looks like being manageable in the third quarter of
1979 but there is uncertainty for the last quarter. That makes
the measures that are being introduced all the more important.
Under existing policy, a number of measures were introduced to
encourage oil search, to encourage development and to encourage
the North West Shelf which is one of the largest development
projects ever to be undertaken in Australia. In addition to
that, of course, we have moved to import parity pricing which
is a central and integral part of an energy policy. I believe
that any country Without import parity pricing can't claim to have.
an energy policy at all. Because without out there won't be
a rational use of energy resources between different forms of
energy. Despite that, I think it is worth noting that in Australia we
pay much less for petrol than in Japan, where it is nearly
Australian cents a litre; the United Kingdom, over 45 cents;
West Germany, over 40 cents; France nearly 50 cents; in Italy,
over 50 Australian cents per litre. It's true in the United
States and in Canada the price is lower than in Australia, but
they don't have world parity pricing for their energy source,
for fuel oil. I think there is a wide-held view that they
ought to.
Prime Minister-( continued)
If a major country such as the United States has a lower than
realistic price, that means they do use more -than their
fair share of a finite world resource. An important part of
the world problem won't be overcome until there is world
parity pricing in the United States. Our policies have already
increased reserves by 600 or* 700 million barrels as a result
of pricing policies and oil search has been revitalised where
it had been killed under earlier policies.
kcjainst this total background, 1 have~ a number of new ifllt~ ea: 1? zs
to announce.
Import parity pricing, of course, remains, but there can be more
flexible -timing as a result of pricing changes which will take
into account the pricing changes by OPEC countries themselves.
We will be encouraging companies to go out and undertake spot
purchases of fuel as it's necessary to maintain supplies in
Australia and the Prices Justification Tribunal will asked to
allow the necessary recovery of genuine increased costs that
could come as a result of that. We'll be asking New South Wales
and the South Australian Governments to do exactly the same thina.
We've already announced in relation to AVGAS and fuel oil that
if additional supplies can be contained then obviously the compa'. les
would have -to be recouped for the cost of those fueld. We're going
to suggest that emission standards stay as they are, as Mr Nixon
has been arguing with the States for some time and if stage 3 of
the emission controls are postponed that will prevent a further loss
of up to 5% of motor spirit. That's a significant additional loss.
We'll be moving from 98% to 97% octane for super petrol for oil
companies and one major company will go to a standard of 92% and
that should result in the savings of 2% of motor spirit and we'll
also be suggesting that the States should move to a different
lead content for petrol which could save up to 3% 0 of motor spin:.-
Now these three measures taken all together could save up to ] 0%
on motor spirit that would othbrwise be used and against that
background that we have that's a very considerable saving.
It ought to be noted that the measures will be undertaken will
encourage a much greater use of natural gas and that of course
improves pollution, or lessens pollution problems in major cities.,
if the emission controls stay as they are instead of moving to
stage 3 that there's a concern that that might worsen the pollution
in major cities then a greater use of natural gas would have the
opposite effect.
There are some changes in policy on export controls, blanket
approvals will be suspended and there'll be guidelines to protect
Australian interests. We'll be getting more data from companies
in relation to what they're doing in relation to storage facilities
and we'll be reviewing the adequacy of storage around Australia.
There'll be voluntary new fuel economy targets for major
manufacturers. They are announced in the statement and over a time
that would result in considerable savings. Targets have been
worked out in co-operation with the companies and have their support. / 6
-6
Prime Minister ( continued)
Government Departments and Agencies will be undertaking conserva-ion
programmes and we'll be studying the scope for that and the Sta--es
will be asked to do the same. There will be a publicity campcaign
for conservation measures and the states will be asked to
participate in that and there'll be a national conservation
conference in October this year and again to highten the broadbased
understanding of the need for conservation.
We'll be seeking to encourage the substitution of other fuels
for fuel oil and natural gas pipeline will be extended to Wagga.
Bicallv, it only needs a 6" iplne for the naeds of '-. agqi b
i t will be built on a 12" basis, late~ r to be connecta with Au:
Thus, linking up the Bass Strait and the Cooper Basin gas fields.
Then there will be one national grid, Sydney, Melbourne and
Adelaide. The automotive use tax of 2.125% per litre will be taken off
natural gas. The Sales Tax on conversion kits will also be taken. i
off. That was a 15% Sales Tax as from tomorrow morning.
We've made a decision already to convert 100 Commonwealth cars.
A decision has been made to convert 450 more in the major
Commonwealth fleet but after the exploration of existing contracts
which run up, through I think, until about Junie of next year. Al
new Commonwealth cars will be LPG fired for the Sydney, Melbourne
and Canberra areas and as gas outlets become available in other
cities, policy will be extended to other cities. There will nee--:
to be I suppose, some petrol cars for those who have to go out Lito
the countryside where gas may not be available.
The States will be asked to do the same thing with their fleets.
There are upwards of 40,000 cars and light commercial vehicles
in Commonwealth fleet and in Commonwealth instrumentalities so cnie
can see that this move, even if the States don't follow our
example, and I can see no reason why they shouldn't, will create
a considerable market-for gas-fired cars. it's our objective to
see that -the companies establish factory production runs of gasfired
cars and that again will encourage private useage so that
conversion will not be necessary.
We'll be undertaking what measures we can to encourage the wider
distribution of natural gas.
on home energy useage, any sales tax on non-oil domestic heaters
and sales tax on all solar appliances will be taken off. We'll be
encouraging further research and development and we'll be spending
greater sums in the 79-80 Budget on energy research and
development. That will rise'from about $ 7m overall this year to
$ 14m next year through the Coal Research Trust Account and other
energy research and development. That again, I think, is an
important element. ./ 7
7-
We'll be asking for closer liaison with the States on a number o:'
matters. The Transport Advisory Council has investigations underway
at the moment on Urban Transport systems, which are again
designed to save fuel.
Obviously, there are contingency measures that we have and which
are needed in an emergency situation as of the kind that was
evident in New South Wales over recent times. but it's our hope that
the emergency measures will not be necessary and that the broadbased
measures of conservation of conversion which will be
encouraged as a result of these policy changes will put Australia
in a sounder position as any-other country in relation to its
enErfy neecls.
Question:
Mr Fraser you've said that the supply of petrol, the regular,
unlimited supply of petrol can't be guaranteed after the final
quarter of this year. Does that mean that after that we could
perhaps expect to hear restrictions, such as rationing?
Prime Minister:
I would hope not. But I point out that in some areas AVGAS is
already rationed and there have been some shortages of fuel oil.
Now, we're doing what we can to overcome those particular problem-s.
We don't see real relief in the AVGAS situation for some time. it's
been much more noticeable in Queensland and Northern Australia
because those markets were supplied through imports and those
imports have been largely cut off from Iran. Victoria and southern
states have been supplied by a local refinery but we can't
guarantee there won't be more severe situation and these measures
are designed to put us into the best possible position to look
after ourselves but you will have seen reports of rationing in
other countries, the rationing shortages in the United States. lie
want to avoid that here. It won't be possible to avoid it if wie
have repitition of the kind of industrial problems that we had
at Kurnell-Refinery.
Question: What sort of petrol prices are we talking about ] 2 months from now?
Prime Minister:
I'm not going to speculate about that I think you'll have to get
inside the mind of the OPEC countries to know what the price
changes might be.
Question: The days of Australia staying below the world prices, are over.
Prime Mini'Eter:
Well, we're well below the prices of countries that I mentioned.
You've got here the price of a number of countries between 40c and
per litre at this time. * That's partly because of world
parity pricing but partly also because they have much higher
Government taxes on their oil than we do. OUr prices are not at / 8
8-
Prime Minister ( continued)
that level. North America does have lower prices than Australia.
They have announced a decision to go to world parity priciLng but
I think it's being implemented very slowly and very gently.
That of course, involves the United States using more fuel oils
than they otherwise would and thus depletesa finite world resource
more quickly than she otherwise would. I believe that it is
quite inevitable that the United States will also have to go to
world parity pricing if they are to have a fully developed energy
policy. Qu--S tion:
Do you see that fuel useage in the United States is irresponsible?
Prime Minister:
Well now, you're trying to suggest a word, I'm not going to use that
word. Let me only say that I think the sooner all major countries
have a policy of world parity pricing, the better it will be for the
world's oil supplies. Most of course do. The view I've just
expressed is not only by Australia it would be held by European
countries it would be held by Japan. The main thrust of the
policies that have been announced today are designed to make sure
that Australia does everything Australia can to put herself in a
reasonable position in the future.
Question:
What raises the question of the lead levels. Now it's rnot being
red ' uced further than .65 grams. Are you putting fuel consumption
before health levels at the moment?
Prime Minister:
No, I think that's not a reasonable way of looking at it. For a
very, very long while lead levels were higher than those that no*;
prevail. In a number of States, the lead levels have dropped below
the .65. What is suggested here is -that they were at the
there could be not inconsiderable saving on the amount of fuel that's
used. I think it's worth noting that while the savings from a
particular measure might appear to be relatively at 1% or the
three measures, the emission control staying where they are,
changing the octane ratings and moving the lead levels slightly,
those three measures alone could save up to 10% of the motor
spirit that would otherwise be used in Australia. Now against the
background of a world shortage of fuel of an Australian shortage
of petrol, that saving of up to 10% is a very significant saving
indeed. Again, as I know there are those who are concerned with
pollution standards in some of the major cities, especially in
Sydney then the measures that we've announced-to promote and
encourage conversion to gas-fired cars should do much to hel?
pollution. If State Governments could encourage that, if State
Governments will follow our lead and convert their own Government
fleets and the fleets of their instrumentalities, the pollution
levels in major cities, such as Sydney would obviously be
improved as a result of that. That needs to be put into the
counterbalance against holding the emission standards where they
are and a slight change in the lead levels. 9
9-
Question: Sir, you suggest export controls will have to be modified and th-at
allocations shares implemented by companies follow sensible anci
shared practices and to protect Australia's interests. Does t-his
suggest that the oil companies have been acting in a way that does
not protect Australian interests?
Prime Minister:
No, it doesn't. But quite obviously in this kind of situation we
n21to know what 5; happening in the oil trade. ohat's -; oiru
o-2 Australia just as much as we need to know what's coining into
Australia and that's the reason for those particular changes.
Question: Mr Prime Minister, could you estimate the total energy saving -!, or
Australia of the new policy?
Prime Minister:
No, I don't think you can undertake that or make that sort o-f
estimate because a great deal will depend upon individual decisisns
by people. How soon can we actually get the companies to have gasfired
cars coming off their production lines? How many private
motorists are going to buy gas-fired cars? H-ow soon can we get more
distribution points. Now Melbourne is pretty well set-up and
Canberra and Sydney I think will be well set-up with distributcr.
points. With other capital cities there are difficulties. e
have to work on all of this and work as expeditiously as we can.
I think that I've learnt the hard way of giving targets and one or
two other things and I'm not going to give a target on this one.
Question: But you do put a 10% figure on motor spirits.
Prime Minis-ter:
No, I said up to 10%, as a result of three specific measures. If
they're implemented as suggested in this paper. But if they are to
be implemented or not is going to depend upon the co-operation of
the States. Octane ratings, that's fine, that'll be undertaken
but the emission controls and lead quantities will depend upon
States.
Question: Prime Minister, the oil companies have cut back on the amount o.-
oil which will be imported into Australia since the uranium crisis.
Firstly, could you give us a figure on the percentage cut-back
which has occurred, there is some dispute about this and secondly
could you explain how these measures, announced today are going to
overcome this problem? / 13
10
Prime Minister:
Well, there is a shortage world-wide of about 2 million barrels
per day.
Each country therefore needs measures that will encourage the use of
other forms of energy.
At the same time, you need measures that are designed to keep up
your own supplies of short fuels and make it go as far as it car'.
So encouragement of exploration, development of new wells wherever
that's possible. But they're medium-term measures and we have to
pu:-ouriselves in as good rositCion as quiickly as we can.
Mir Newan will correct ine iz I'm wrong, but I -think the reduction
in supplies from most of the major oil companies is of the order
of what
Mr Newman:
Average across, yes, it varies with some countries.
Question: How are these measures you've announced today going to overcome
and compensate for that 10% reduction over the short-haul?
Prime Minister:
Look, you can't have a situation in which you wake up tomorrow
morning and you've got a different position, you have to have
policies, those policies have to be given time to apply and that's
quite plain. Now the extent of the difficulties that Australia
might have to face can't yet be predicted with any real degree of
certainty. A good deal is going to depend on measures that are
taken by other countries to restrain their use of oil
also worth noting, I think, that at the present time most oil
tankers, around the world, as I am advised are full, waiting for
the expected OPEC price increases that could be announced later
today, tomorrow and the Minister will be making statements of the
prices following from July 1, as a result of that once those
OPEC decisions are known. As I'm advised there is a good deal o:
oil in tankers waiting for that price rise to cash in on it. No-,
-that's obviously, at the present moment, making the shortage worse
as a result of that speculative holding of oil stocks for a period.
Question: How are you going to guarantee that those oil companies do not c,,, t
back further and increase that 10% of oil which is not coming to
Australia? Is there any measure you
Prime Minister:
we expect oil companies to behave as responsiblc Australian
citizens when they are operating in Australia and we have no
reason to believe that they won't continue to do so. / ii:
11
Question: You've said, Mr Fraser, you said before you lifted the 15% sales
tax of course on conversion costs. Now, other
might need to be applied to incite those who are thinking about
it, to go to conversion. Has there been consideration given to
either subsidising the conversion industry or the actual consumer
to make a conversion?
Prime Minis-ter:
Qulite a large number of people in Melbourne and Canberra, taxis
-2cialiy, hav,: arad been cnetd i'mi advi , sed -that ta: is
get their money back in 6-7 weeks in this city, so the fuel price
difference between petrol and gas is a very substantial incentive
for anyone who does any mileage. It's a very substantial incentive
indeed and I'm glad for your question because I haven't brought
that point out. It's one that probably a lot of motorists are
not yet aware of.
Question: The fact that you're encouraging Australian companies to go into
the spot market is actually an encouragement to the more
extremist elements ( inaudible)
Prime Minister:
Well, if you've got a particular shortage of fuel oil or of AVGAS
and if you've got say a cotton crop that has to be sprayed and can
only be sprayed by an AVGAS fired aeroplane, I'm quite sure
those cotton producers would want to get the gas so that they could
carry out their spraying. There are some uses for which you just
have to have the fuel and quite obviously the Government has got
to do everything it can to make sure those very essential purposes
are maintained. We don't want spot purchases any more than is
essential but I also understand that during the New South Wales
crisis, with Kurnell, Mr Wran was very actively looking around for
fuel from overseas and again I was advised that at one point he
had fuel lined up. Now whether that's actually coming in view of
the settlement or not, I don't know.
Question: Has the Government given any consideration to imposing speed limits
throughout Australia to conserve fuel?
Prime Minister:
No, we haven't considered that point at the moment.
Question: You mentioned shale oi] in your policy but you didn't mention
methanol or ethanol. / 12
12
Prime Minister:
They're mentioned in the tatement. But again I'm glad you
mentioned the question of shale oil because the Rundle deposits
are very large indeed, could involve reserves roughly equivalent
to the oil reserves available to us. Technology is available
in the world for development. We'll be having discussions with
the Queensland Government to see what can be done to expedite
development. Again,. that's not a short-term policy but it's a
development that will be necessary for Australia and will put us
in a much more secure position.
Qi jt ion:
What about ethanol and methanol, are you planning to develop those
too? Mr Newman:
In the statement you will find that there is a precise reference
to both ethanol methanol and coal liquifaction. If the statement
says two things, it will continue in fact increase R D in all
those areas plus we'll up our economic assessments and all the
other things that go with that. All those. The P. M.' s been
emphasising oil shale because of its very great potential.
Question:
Prime Minister one way of overcoming short-term problems is through
Government to Government purchases. Was this considered?
Prime Minister:
It is considered and it's not ruled out. Enquiries are being made
overseas now in relation to just that.
Question: What is the current state of play and can you mention any particular
company. Prime Minister:
No, I can't, I'm sorry.
Question: You're going to Nigeria is that
Prime Minister:
Enquiries are under way now, we don't have the results of those
enquiries. The enquiries were authorised a week or two ago. / 13
13
Question: Prime minister, will you take the lead and convert to a gaspowered
car yourself?
Prime Minister:
Some months ago, I told the Gas and Fuel Corporation in Melbourne
that I'd convert my Melbourne car so long as they could guarantee
that I could fill it up when I'm down in the bush. Well, they said
let's wait a while. I'll do it as soon, I do large mileages out in
the country, as soon as I can make sure I can get out and get back.
Question:
Will you also restrict your speeds,. Prime Minister?
Prime Minister:
Obviously, Will you?
Question:
What about setting an example on down-sizing the car that you do
use?
Prime Minister:
official car? I think if you try and use a briefcase and do some
work in a mini minor you'd find it a little difficult. One of the
problems of chauffer-driven cars is that they do need to be of a
certain size. I am using Australian built cars for the first time
as you probably know. Our own private car is a Commodore, so that's
a smaller car and I think it's a very good world-class car.
Question: Prime Minister you mentioned on page 14 of your statement the
Government has ( inaudible)
programmes national fuel economy, could you tell us how you expect
to achieve this, what have you got in mind.
Prime Minister:
That is a programme being undertaken with the companies. It's been
worked out with these companies, accepted by the companies it is
expected that they should be able to meet for the production of
new cars.
Question: They've made a commitment on that have they?
Prime Minister:
Yes. / 1-4
14
Mr Newman:
The figures that the P. M. has given is based on a national energy
advisory committee report which the P. M. has said that he has
worked out with the industry. They are better than the industry
first announced and there will be again, on a voluntary basis,
annual checks on what's happening.
Question: Prime Minister, you mention that the ninth measure, export contrcls
controlling the product that we modified and blank approvals c
e : Gorts will be suspended. Who is that aimed at?
Prime Minister:
It's not aimed at anyone, it's purpose is to make quite sure that
the Government knows exactly what is happening in trade in this
area. Question: Will it affect the Western Australian Government though, with it's
export of LPG
Prime Minister:
Oh no, no. Look, we're aiming this at fuel oils and fossil fuels
rather than, nothing that we've done affects our commitments to
Western Australian Government in relation to the North West Shelf
and the export of gas from the North West shelf.
Question: Prime Minister are you concerned on another matter that wage
indexation might collapse?
Prime Minister:
Oh, I think you'll need to wait and see what's going to happen
out of the Conference called by Sir John Moore. Mr Viner's
making comments on that matter and I don't want to add to it.
000--