AGY-4901 | Royal Commission of Inquiry into the Gas Industry

Full description

A Royal Commission of Inquiry into the Gas Industry was established by Letters Patent on 21 June 1948. Three Commissioners were appointed: Joesph Lamaro, District Court Judge, and Chairman of Quarter Sessions for New South Wales as Chairman: Albert Edward Barton, (Companies Representative); the Honourable Robert Arthur King, Member of the Legislative Council of New South Wales (Employees Representative). (1)

The original terms of reference of the Commission were to investigate :
(1) The administration, technical and industrial practices and methods of the Australian Gas Light Company and the North Shore Gas Company Limited
(2) Discontent in the gas industry
(3) Recruitment of employees
(4) Health and Safety of employees
(5) Research work
(6) Results of improved technological methods and
(7) Whether any amendment of legislation is desirable concerning (a) control over companies (b) notices to minister of impending stoppage of work, or reduction of supply
(8) Reason for sudden cessation of gas supply by Australian Gas Light Company on Saturday, 25th May 1948
(9) Reason for cessation of supply or reduction of pressure by Australian Gas Light Company on Friday, 21st May, and Saturday, 22nd May, 1948
(10) Whether any allowance is being made in consumers accounts by reason of gas failures, 13th to 24th May 1948, inclusive
(11) Generally, as to conduct of operations of companies. (2)

Duration of Commission under the Original Terms of Reference
Prior to the commencement of the Commission, the two gas companies named in the terms of reference, and the unions were advised of the start date, and terms of reference of the Commission. The Commission held it first hearing on 16 July 1948. (3) The period of the Commission was extended initially on the request of the Commissioners until 21 December 1948, then to 21 February 1949, and finally to 21 April 1949. (4)

The terms of reference of the Commission were also extended on 28 January 1949, and the commissioners submitted a separate report for the extended terms of reference. Under the original terms of reference the Commission conducted 37 hearings, and heard evidence from 49 witnesses. 66 Exhibits were tendered to the Commission. The Commission heard representations from the Australian Gas Light Company, the North Shore Gas Company, the Labour Council of New South Wales, The Federated Gas Employees Union and other interested unions. (5)

In addition, members of the Commission also held conferences when necessary, within the Commission, and between the Commissioners and Counsel. Additional evidence examined by the Commission included inspection of the Booster stations, Showrooms, and the Head Offices of the Australian Gas Light Company, and North Shore Gas Company. (6)

Findings and recommendations under the Original Terms of Reference
(1) The Commission did not recommend that any modification of administrative, technical, or industrial practices of either company was desirable. This was subject to any recommendations made in the extended terms of reference. (7)
(2) The Commission noted that in its inspections of both companies’ sites, and evidence put before it that there appeared to be generally good relationships between employees and the companies. The good relationships were encouraged by the effective use of committees set up to deal with disputes or complaints in regards to wage or salaried staff. Some dissatisfaction existed in some sections of the employees. However, as the Special Tribunal normally determined wages and general conditions it was felt by the Commission that this was the appropriate forum for these matters to be heard. In relation to superannuation the waged staff expressed the need to be part of a superannuation scheme similar to the salaried staff. The Commission agreed and recommended that a Board of Inquiry be established to investigate a suitable scheme of superannuation for the Gas Industry. The Board was to be established under s. 22 of the Gas and Electricity Act 1935 (No, 42, 1935). (8)

(3) The Commission found that there was a general shortage of staff across many industries. However, the gas industry did not experience any special difficulties, except in recruiting staff to work on the gas purifiers, where the work could be unpleasant. (9)

(4) and (5) The Commission dealt with these two terms of reference together. The Commission found in relation to dust hazard that “there is no inherent danger in the gas industry from dust that affects the lungs and that what was claimed as being a risk of benzole poisoning does not exist” (10). In relation to dermatitis produced by dust, heat and sweat, while the Commission found that companies were trying to eliminate adverse conditions they would be assisted in this by a health survey of their employees. This survey was to be conducted by the Industrial Hygiene Division of the Department of Public Health. The Commission also recommended the appointment of a full time medical officer at the Australian Gas Light Company, and a part medical officer at the North Shore Gas Company. (11)

(6) Extensive evidence was supplied to the Commission regarding the research undertaken by the Australian Gas Light Company. The functions of the research division were to: generally conduct the necessary tests to enable the safe manufacture of gas appliances; to participate in the setting of standards for the manufacture of gas appliances; and also to provide advice on the servicing of distinct industrial gas appliances. The North Shore Gas Company was too small scale to conduct research; and generally relied on work carried out by the National Gas Association, and the Australian Gas Light Company. (12)

(7) The Commission found it difficult to specifically answer this question. There had been an improvement in the working conditions, because although the cost of wages, coal and materials had risen, the company was able to restrict the cost of gas. These improvements are probably due to greater efficiency, and also to some extent the research work carried out by the Commission. The Commission found it difficult to determine if revenue had increased or expenditure had decreased due to technological changes. There appeared to be no accretions to reserve funds. (13)

(8) The only evidence submitted in relation to this term of reference was suggested by Mr Haviland, the under secretary to the Department of Works and Local Government (on behalf of the Department). His suggestion was that the Auditor – General be appointed to inspect the Gas companies in addition to existing audit activities. This was not based on the inefficiency of the existing auditors but based on providing additional checks and balances for gas consumers.

However, the Commission did not wish to make any recommendations on the amendment of the Gas and Electricity Act 1935 (No.42, 1935) for the purposes of the above for the following reasons: that the existing auditors had been thorough and efficient: existing audit practices were also thorough, and required auditors to examine and certify annual statements (which were sent to the Minister regularly). The auditors were also required to certify that the company had accurately apportioned its expenditure between capital and revenue; Section 18 of the Gas and Electricity Act 1935 (No.42, 1935) already authorised the minister to appoint the Auditor – General or other auditor to audit the accounts of any gas company.

Amendments to the Gas and Electricity Act 1935 (No. 42, 1935), and Gas and Electricity (Amendment) Act 1936 (No.35, 1936) were also covered in the extended terms of reference. (14)

(10) The reason for stoppage of supply of gas by Australian Gas Light Company on the 13 th May 1948 was a strike by an important section of the employees of the Company.

(11) The stoppage of supply and reduction in pressure of gas on Friday 21 st May, and Saturday 22 nd May 1948 was caused by the Strike referred to in terms of reference Number.10. The company had tried to make the supply of gas available as soon possible after the strike.

(12) The Australian Gas Light Company did admit that for a short period gas supplied was of a lower quality. However, they considered that “even if it was desirable to make an adjustment in consumer’s account, it would be incapable of equitable allocation.” (15)

No evidence was tendered, or recommendations made under terms of reference Numbers 9 and 13.

Duration of the Commission under Extended Terms of References
Prior to the commencement of the Commission under the extended terms of reference the two gas companies named in the terms of reference, and the unions were again advised of the start date, and extended terms of reference of the Commission. The Commission held its first hearing on 8 March 1949, and conducted 15 hearings. The Commission heard evidence from 8 witnesses. 52 exhibits were tendered to the Commission. In addition, the members of the Commission conducted conferences. The Commission heard representations from the Australian Gas Light Company, the North Shore Gas Company, The Federated Gas Employees Union and other interested unions. (16)

The extended terms of reference of the Commission were to investigate:
(1) Whether any amendments of legislation is needed concerning the Special Purposes Account
(2) Amounts appropriated to and paid out of Special Purposes Account annually
(3) Granting of discounts to industrial customers
(4) Standard rate of dividend
(5) Relative costs of producing gas by gas – making oil and coal.
(6) Production of water gas
(7) Advertising. (17)

Findings and Recommendations under the Extended Terms of Reference
(1) and (2) The Commission dealt with these two terms of reference together. Section 7 of the Gas and Electricity Act 1935 (No.42, 1935) authorised the establishment of a Special Purposes Account by the Gas Companies. The Special Purposes Account was only to be used for expenses incurred by reason of accidents, industrial disputes and other circumstances, expenditure on accidents, industrial disputes; expenses incurred in the removal of plants or works. The maximum amount in the Special Purposes Account at any one time was not to exceed one – twentieth of the share, share premium, and loan capital of the company.

The Commission concluded that the maximum allowed under the Act may be too high, and could be reduced to one – fortieth of the share, share premium and loan capital of each company. Both companies already had substantial amounts in their Special Purposes Accounts. The commission also recommended that "a Board of Inquiry appointed under Section 12 should be given power by and addendum to Section 12 (2) (a) (ii) (a) to disallow any expenditure which it considers to be improperly charged to the Special Purposes Account”. (18)

(3) The Commission concluded in relation to the Australian Gas Light Company “ Whilst, as already indicated, there is no evidence that the total discounts allowed by the Company (apart from those already referred to in regard to price-fixing regulations) are in excess of what is necessary to maintain the Company’s business, we feel that, in view of the wide variation which has developed since 1937 in the relative cost of making and distributing gas, some reconsideration of the respective rates of discount allowed to the different classes of consumers has become desirable. This would be a highly specialised and complicated process, and we recommend that it should in the near future receive the attention of an expert Board of Inquiry appointed under Section 16 of the Gas and Electricity Act, 1935-1936. We further recommend that Section 16 of the Gas and Electricity Act, 1935 –1936 be amended so as to enable the Minister of his own motion to set up a Board of Inquiry to consider the matter referred to in that Section, including the question of differential rate for gas supplied. The Section at present provides for such a Board to be set up by the Minister only at the request of a Gas Company.” (19)

(4) The Commission was not of the opinion that the “ Standard rate of dividend allowed by the Act is unduly high, having regard to the circumstances, including in interest rates generally”. (20)

(5) Neither company produce gas purely by gas making oil, they used the oil in conjunction with coke for the purposes of making carburetted water gas, as dealt with in terms of reference Number 6.

(6) Only the Australian Gas Light Company produced water gas to supplement gas produced by coal. The relative cost for producing coal, and carburetted water gas indicates that carburetted water gas is cheaper to produce by either manual or automatic plant. Although the calorific value of water gas was lower than coal gas, it appears that when coal and water gas were mixed, the resulting product did comply with the Standards in the Gas and Electricity Act 1935 (No.42, 1935). (21)

(7) The Commission was of the opinion that the amount expended by both companies on advertising of their products, considering the expansion of the market for gas appliances. (22)

The Commission ended with the publishing of the final report on 10 June 1949.

Endnotes
(1) Report of the Royal Commission of Inquiry into the Gas Industry pp. 5 – 6 in NSW Parliamentary Papers 1948-1949-1950, Vol.3, pp.919- 920.
(2) Ibid p.8.
(3) Loc.cit.
(4) Ibid., p.7.
(5) Loc.cit.
(6) Loc.cit.
(7) Ibid., p.9.
(8) Ibid., pp.9-10.
(9) Ibid., p.10.
(10) Loc.cit.
(11) Ibid., pp.10-11.
(12) Ibid., pp.11-12.
(13) Ibid., p.12.
(14) Loc.cit.
(15) Ibid., p.13.
(16) Ibid., p.17.
(17) Loc.cit.
(18) Ibid., pp.17-19.
(19) Ibid., pp.19-20.
(20) Ibid., p.20.
(21) Ibid., p.24.
(22) Ibid., p.25.