STATE TO BE RESELLER OF PETROL

Chronicle (Levin), 12 October 1946, Page 6

STATE TO BE RESELLER OF PETROL

—Press Association

& Opposilion Raise Objections , in Parliament

By Telegraph-

WELLINGTON, Oct. 11. Details of the agreement ahout to he concluded between the Government and the Anglo-Iranian Oil Company on terms under which a suhsidiary company will be set up to import petroleum products into the Dominion and to distrihute them on the New Zealand market, were given in the House of Representatives this afternoon hy Mr. Nash when moving the second reading of the Finance Biil which empowers the estahlishment of the new company and assures it of licences to sell its products. Mr. Nash said the •Anglo-Iranian Oil Company would have the right to appoint the ehairman of directors of the subsidiary eoncern whilo the sliareholders and the New Zealand Government would each have the right to appoint another three direetors. The Government will hold 51 per cent. of the shares in the company. Mr. Nash said the Jicensing provisions of the Industrial Efficiency Act would not apply to the company to be formcd in New Zealand, to prevent it engaging competitively in the New Zealand market. Mr. E. B. Corbett (Egmont): That is called loading the dioe. Mr. Nash: Tliey are merely given the right to compete. Mr. W. fc>. Goosman (Waikato) said other interests were regulated wliile the new company would bo given a Icgislative advantage. Mr. Nash said the new company was given equal right vvith eomjmting interests. Mr. W. Sullivan (Bay of Plenty) : For how long ? Mr. Nash said thc Anglo-Iranian Oil Company was a fairlv oid concern, the directors of wliicli must bc British subjects. The company liad ten directors appointed by the sharolioiders and two by the British Government. Tliese latter two had 110 shares but tliey had the right to negative any decisiou of the board. The other directors, howevor, had the right to appcal to the British Government agaiust the decisious of the two Government directors. In other words, the two Government directors had the right of veto against any board deeision which tliey cousidered contrary to British interests, but the other directors could appeal to tlic British Government against the cxerciso of that veto. The appointment of the British representatives followed an agreement in 1914 between the company and the British Government. The major rcason for tliis agreement was to eusure fuli oil supplies for the British Navy but it also provided for increased capital to be subscribed by the British Government. The company now had a capital of £35,000,000 and the issued capital was £32,843,752. The British Government held £11,250,000 in ordiu ary shares and £1000 of iirst prefereuce sharos. The company obtained new concessions in 1933 and today had relineries in lran and Iraq, Wales and Scotlaiid. It also had shares in other oii companies. Mr. Goosman: About thirtv otlicrs. Mr. Nash said the Anglo-Iranian company was also interested in the Commonwealth Oil Iteiinery Ltd. in Australia, which had a capital of £50,000 and in which the Australian Government owned oue more share than did private shareholders. The objeets of the company in Australia, were different from those of the company to be formed in New Zealand. The Australian concern was formed to ereet and opcrate a relinery and aimed to process 200,000 tons yearly. The Commonwealth Government had the right to buv out the company and legislate in its favour.

The Capital Required. Mr. Nash said that the company to be formed in New Zealand was estimated to require capital of £2,500,000 of which the New Zealand Government would owu 51 per cent. The issue of capital was estiinated to require £1,200,000 and any subsequent increases in capital would be in the proportion ot 51 per cent. to 49 per cent. There would be seven directors all of wliom must be British subjects. The ehairman of directors would be appointed by the Anglo-Iranian Company. Three would be appointed by the New Zeaiand Gov ernment and three by the shareholders. O.nJy British subjects were to be shareholders. Under the proposed agreement iio shares could be sold without prior oh'yr to the original shareholders and shares could be held only by the Government or by British subjects. Any decisions reUiting to military interests or external affairs of New Zealand or to any long term contract which might endanger New Zealand 's oil supplies, or to the sale of the company, must be referred to the New Zealand Government for its acquiescence. Under the agreement with the AngloIranian Company it agreed to supply all the petroleum products required by the New Zealaiid company at a price to enable the latter to compete in the New Zealand market. This price must not exceed current export prices in the Gulf of Mexico plus freight to New Zealand and insurance. "Shows Its Hand." Mr. W. S. Goosman (Waikato) said this wijts where a socialist government showed its hand. The particular clause concerning the formation of the subsidiary company was against the promises of the principal Ministers. The Minister of Finance in 1945 said the Government 's policy was that where public enterprise could do a better job it would do it but where private enterprise could operate more successfully the Government would be glad to help. The Minister of Public Works had said the Government was not out tp destroy private Enterprise but those were empty idle words. He did, however, trust the Meinber for Christchurch East who had said she did not care a hang about private enterprise, whether she killed it or not. She at least was straightforward. It was obvious that the Government had gone back on its promises and therefore the people could place no trust in the Government which took unto itself the right to judge whether jfri-

vate enterprise could do the better job. The Government had taken .over the Bank of/New Zealand and Airways and he prophesied that neither would be run as well by the State as by private enterprise. "The Government has been cooking this up lor' some montns," said Mr. Goosman, "but has kept quiet about it in order to get the proposal through on the last day of th'e session. It means another threat to private enterprise if the present Government is- returned to office and is another step toward ultimate socialism.. Any doubts about that will now be dispelled. The Government is going to mop up the big fish Iirst and have an easy time with the small ones. There is one law for the individual who has to apply for a licence and another for the bureaucrats and dictators." „ The Government, he added, would go to the petrol resellers and declare where it wanted to instal petrol stations and would take the right to obtain as many licences as they wanted to put private enterprise out of business. The petrol companies were big concerns and they had done a good job during the war. Hon. F.. .Jones: They did a good job for themseives. Mr. W. M. C. Denham (Invercargill) : Money grabbers. Mr. Goosman said the price of petrol was controlled during tlie war and would anyone say that petrol companies had made big profits?. Mr. Osborne: Yes. Mr. Goosman asked was this a move to reduce the price of petrol and could the Government import petrol at a iesser price than the petrol companies? Apparently the Government intended to Jauncli out on a building prograinme for stores and ollices to carry out their project and if they squeezed out the present pumpholders it meant a large import programme for pumps. Mr. Goosman said it would only be a mattcr of a few years wlien the private companies would have to pack their bags and clear out. Hc said that the British Government 's holdings in the AngloIranian company reprcscntcd 34 poi cent of the capital with 49.6 of voting riglits. 11c asked, if there .wero suflici ent petrol in the sterling area to supply the requirements of that area, would conipctition be allowcd against the Gov ernment? No Government could stand up to compotition unlcss it mado the rules to suit itself. The people should be warncd by the Government 's action and anyone who believed in private enterprise would have to be warned. Mr. G. H. Mackley: The farmers are the next. Hon. A. II. Nordmeycr: Private enter prise has got to be controlled. Mr. W. Sullivan: You '11 get private enterprise next month. Mr. Goosman: And thc people of Oamaru are wise to the. Minister and out hc'll go. Mr. It. M. Algie: Ho'll have a petroJ pump next vear. Mr. Goosman said thc Government Js job was to make thc rules and apply them fairly to all. Minister 'S Assurances The Minister of Supply, Hon. D. G. Sullivan, said that in the Opposition's view "this simple little clause" was the bcgiuning of a red revolution wliich would su'allow up eveSi'jlthiug in the countrv. There was a barrage of i'ntcrjections at this stage during which statements by the Membcr for Waikato were roferred to. Mr. Speaker called ^Iemhers to order and mentioned: '"This is not the Grand Natioual." Mr. K. J. Holyoake: It's the grand nationalisation. Mr. Sullivau said that wliat the

clause proptsed had been done m Britain by the Asquith Government and successive governments had in creased Britain 's holdings until today their share was more than 50 per cent. of the holdings. The dreadful eruption in the mind of the Member for Waikato, and his assumptions that industry great and small would be swallowed, were contrary to the intention of the Government. "How silly it all seems and is," said Mr. Sullivan. "That attitude cannot be defended. It is just another indication of the superheated imagination of the Opposition minds." This Government, he said, was simply following what had been done by the British Government in order to eontrol supplies more ellectively than was the case when the State had no share in the source of supply. It had been assumed that the Bureau of Industry would be eompletelv overruled and that the Government would do as it liked. It was for the Bureau of industry to judge when an adequate distribution had been assured. So far as the granting of Avholesale licences was concorned, it was all a nightmare in the' minds of the Opposition. The Government had not and never had auy intention of doing what the Opposition suggested and the action of the Government was the State joining in with private enterprise which did not put a construction or meaning on the proposal that the Opposition did. It was a good proposition and oue about which no one should feel disturbed. Companies Giving Service Mr. K. ,T. Holyoake said that undej socialism it was ccrtain that all the power would be coneentrated in the hands of the few. It was true that Britain and some Dominions had taken somewhat similar steps to those now being proposed but he could not iind in any of their legislations, the right of the Government to enter into retail business. Mr. Holyoake said that if there were to be a Bureau of Industry tlien the Opposition's view was that State and private enterprise should be on an equal basis, fairly and squarelv. He considered that the Government would be better advised to say straight out that it was going to form a company and was going to demand licences to retail petrol. Could it improve thc qualitv or improve the service that the present petrol companies gave? The companies were giving good service and he could not see sense in duplicating ' that. He asked if the Governmenl • would demand that its pumps be bettei ■ placed thau otkers» Ali potrol reselle'r:

would be disturbed over this proposal and would re.gard it as the thin end of the wcdge. The proposal to enter into thc retail business was dangerous but the Govornmeut wound up thc sorry business of the Onekaka iron project and went blitlicly on to create another enterprise. Protest at Rush Mr. K. J. Holyoake, speaking to the short title when the House wcnt into committee 011 the Bill, said niembers had expcctcd' the Government 's major legislation would be complcted bei'ore today and many had arranged to go home toniglit. Consequently any vote on the Bill would bc farcical but the Opposition took strong exception to the Government 's method of introducing this important measure which ought to have been the subject of a separate Bill. Mr. Polson said he had been told that the JShell Company liad the biggest holding in thc Anglo-Iranian Company. Mr. Nash: That's intriguing. Mr. Polson said fclhell interests aiready had 40 per cent. of thc New Zeaiand petroleum trade and as they had a controiling interest in the Anglo-Iranian Company, it meant the monopoly in New Zealand 's petrol industry would be stronger than ever. Mr. Polson said that under the new set up, Bhell Oil, masqueradihg as a New Zealand eornpanv, with the assistanco of the New Zealand Government, was to be given great advantages in New Zealand 's petrol trade. The Finance Bill was put through all stages and passed. - •