Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Monday, 11 August 2003
Page: 13094


Senator O'Brien asked the Minister representing the Minister for Industry, Tourism and Resources, upon notice, on 18 March 2003:

With reference to the production subsidy of 38.143 cents per litre for ethanol use in petrol announced on 12 September 2002:

(1) What companies or industry organisations were consulted prior to the introduction of the production subsidy.

(2) When and in what form did that consultation take place.

(3) On what date or dates were ethanol producers and/or industry organisations informed of the decision to introduce the production subsidy.

(4) How were ethanol producers and/or industry organisations informed.

(5) What is the total amount expended on the subsidy, by month, in the 2002-03 financial year to date.

(6) What costs have been borne by the department in administering the scheme in the 2002-03 financial year to date.

(7) What are the department's projected costs associated with scheme administration, by year, for each of the following financial years: (a) 2002-03; and (b) 2003-04.

(8) Is the total appropriation of $33 184 000 for the subsidy for the financial years 2002-03 and 2003-04 based on forecast ethanol production in the period 17 September 2002 to 17 September 2003; if so: (a) what department, agency, company or industry organisation provided the ethanol production data from which the forecast was derived; and (b) which department or agency provided the forecast; if not, what is the basis of the appropriation.

(9) Have companies other than Manildra Energy Australia Pty Ltd and CSR Distilleries Operations Pty Ltd received production subsidies in the 2002-03 financial year; if so, what are the names of the companies.

(10) Is the Minister aware that his department advised the Economics Legislation Committee during its estimates hearings on 12 February 2003 that Manildra Energy Australia Pty Ltd was in receipt of 90 per cent of expended subsidies under this scheme.

(11) Is Manildra Energy Australia Pty Ltd still in receipt of 90 per cent of expended subsidies under this scheme.

(12) For each company that has received a subsidy: (a) on what date did the company first apply for the subsidy; (b) when did the department enter into a contract with the company to provide the subsidy; (c) what total subsidy has been paid; (d) what volume of subsidised ethanol has been produced; (e) what feedstock has been used to produce the subsidised ethanol, expressed in volume and percentage terms; (f) what are the terms of the subsidy payments; (g) how does the department audit subsidy production; (h) where are the ethanol production facilities located; and (i) has the subsidy resulted in increased production and/or the construction of new or expanded ethanol plants; if so, can this increased production or productive capacity be quantified.

(13) Can the Minister confirm evidence given by the Department of Treasury to the Economics Legislation Committee during its supplementary estimates hearings on 21 November 2002 that the subsidy was introduced without any analysis of whether it would create an expansion in the Australian production of fuel ethanol; if so, why was no analysis undertaken before the government introduced a $33 million production subsidy; if not, what analysis has been undertaken, including the projected expansion of fuel ethanol production, incorporating production volume and value, number of new or expanded production plants, and number of full-time-equivalent jobs generated.

(14) What performance benchmarks have been established to measure the effectiveness of the subsidy in maintaining the use of bio-fuels in transport.

(15) What baseline data was used to establish these benchmarks.

(16) What was the source of this baseline data.

(17) What program has the department established to assess the effectiveness of the subsidy.

(18) What analysis has been done of the scheme's effectiveness.

(19) What consideration, if any, has been given to an extension of the ethanol production subsidy.

(20) If consideration has been given to an extension of the subsidy: (a) what form has the consideration taken; and (b) what companies and industry organisations have been consulted.

(21) Has the department received any representations from companies and/or industry organisations arguing the proposed 12-month life of the production subsidy restricts its capacity to promote the increased production of fuel ethanol; if so, what companies and/or industry organisations have made those representations.


Senator Minchin (Minister for Finance and Administration) —The Acting Minister for Industry, Tourism and Resources has provided the following answer to the honourable senator's question:

(1) No companies or industry organisations were consulted by my Department prior to the production subsidy being announced by the Prime Minister.

(2) Not applicable.

(3) On 18th September 2002, companies were informed of the proposed introduction of a twelve month subsidy for fuel ethanol.

(4) Companies were informed via an emailed letter from my Department.

(5) The total amount expended per month since September 2002 has been:

September 2002

$961,586

October 2002

$2,156,707

November 2002

$2,336,247

December 2002

$2,826,872

January 2003

$2,378,406

February 2003

$2,224,476

March 2003

$2,491,633

April 2003

$2,237,190

May 2003

$1,680,085

June 2003

$2,409,978

TOTAL

$21,703,180.00

(6) Administrative costs of $92,879.09 have been incurred by the Department of Industry, Tourism and Resources in the financial year 2002-03.

(7) The Department had allocated $128,000 for 2002-03 and has allocated $14,000 for 2003-04 in funds for administering the scheme.

(8) Yes.

(a) Department of Industry, Tourism and Resources

(b) Department of Industry, Tourism and Resources.

(9) No.

(10) The Minister is aware of advice provided by officials during estimates hearings on 12 February 2003.

(11) The Minister is aware of advice provided by officials during estimates hearings on 12 February 2003.

(12) (a) Manildra Energy Australia Pty Ltd 14 October 2002

CSR Distilleries Operations Pty Ltd 8 November 2002

(b) Manildra Energy Australia Pty Ltd 17 October 2002

CSR Distilleries Operations Pty Ltd 7 November 2002

(c) Manildra Energy Australia Pty Ltd $20,857,998 to 30 June 2003

CSR Distilleries Operations Pty Ltd $845,182 to 30 June 2003

(d) Manildra Energy Australia Pty Ltd 54,673,200 litres to 30 June 2003

CSR Distilleries Operations Pty Ltd 2,215,825 litres to 30 June 2003

(e) The fuel ethanol is derived from biomass feedstock. No information is available concerning volume and percentage terms.

(f) For each company, the subsidy is paid for the production of ethanol in Australia from biomass feedstock to be blended into or used as transport fuel in Australia. The initial 12 month subsidy applies from 18 September 2002 to 17 September 2003. Recipients must provide satisfactory evidence that the ethanol for which funding is being claimed has been entered into home consumption under section 58 or 61C of the Excise Act 1901 between 18 September 2002 and 17 September 2003.

(g) The Commonwealth or its auditor may at reasonable times and on reasonable notice enter the recipient's premises and inspect the records kept by the recipient to review the recipient's compliance with the contract.

(h) Manildra Energy Australia Pty Ltd - Bomaderry, New South Wales

CSR Distilleries Operations Pty Ltd - Yarraville, Victoria and Sarina, Queensland

(i) There have been no significant increases in the production of ethanol since the commencement of the subsidy. However, the subsidy has only been in operation nine months. No additional ethanol production capacity has been brought to the government's attention.

(13) I am unable to confirm exactly what analysis was undertaken by the Department of Treasury. This is a matter for the Treasurer.

(14) No specific performance benchmarks have been established.

(15) Not applicable.

(16) Not applicable.

(17) The department closely monitors production volumes and subsidy payments to ensure that there is no unexplained change in production from month to month.

(18) The scheme has only been in operation for nine months. Its effectiveness will be analysed as part of the Government's consideration of longer term biofuels policy.

(19) It was announced in the 2003-04 Budget that the Government will continue to provide domestic production grants for fuel ethanol from 18 September 2003 on the same basis as the existing production subsidy. Domestic ethanol will remain effectively untaxed for five years to 30 June 2008. The grants will be reduced in five equal annual instalments from 1 July 2008 to 1 July 2012. This will result in ethanol receiving the same effective excise treatment as biodiesel, LPG and natural gas when used in internal combustion engines.

(20) The Government decided to extend the domestic production grants through its normal Cabinet consideration processes. Ministers received advice on the matter from the Energy Task Force and relevant Government agencies. The Energy Task Force drew upon a number of sources in preparing its advice including submissions made to the Fuel Taxation Inquiry in 2001. Stakeholders met by the Task Force included the Australian Biofuels Association, CSR Distilleries and the Manildra Group.

(21) No.