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Monday, 15 September 2003
Page: 20077


Mrs DE-ANNE KELLY (6:59 PM) —I rise to speak on the Fuel Quality Standards Amendment Bill 2003. This bill is a result of the government's commitment, made in April of this year, to ensure that fuels are properly labelled and offences under the act are properly enforced. It follows on from the Fuel Quality Standards Act 2000, which established a national regulatory regime for fuel quality, backed up by comprehensive monitoring and an enforcement regime that is among the best in the world.

The bill establishes a comprehensive and transparent system of labelling. It will be used in the first instance to establish the parameters that will apply at the point of sale of ethanol-blended fuels. This will be an important element in restoring public confidence in ethanol—confidence that has been seriously damaged by the actions of the oil companies and motoring organisations, such as the Australian Automobile Association. In this they have been aided and abetted by the Australian Labor Party and some sections of the media. I will return to the matter of ethanol later in my address.

The amendments contained in this bill will enable the responsible minister to set a fuel quality information standard whenever this is in the public interest. This can be used, for example, to label biodiesel blends when these become available. The bill also introduces strict liability for key offences under the act. This is to ensure that convictions can be obtained. It will not be possible, as it was under the previous act, for a defendant to simply claim that they were not aware of the requirements of the act. Ignorance will no longer be a defence. This bill confirms the government's commitment to uniform enforceable national fuel standards that will enable consumers to be confident about the fuel they are buying. It is a sensible measure that both sides of the House should support.

I would now like to return to the issue of ethanol. I had the opportunity recently to see the ethanol industry in the United States. Ethanol has a very different place in the minds of the American motoring public and its supporters there from the place it unfortunately has here in Australia. I visited the Minnesota Department of Agriculture and received a great deal of their material, including a brochure entitled Questions and answers about ethanol, which they distribute freely to motorists in the great state of Minnesota—and I was very pleased to drive there, despite the fact that you have to drive on the wrong side of the road. In Minnesota all motorists use a 10 per cent ethanol blend. That is all you can buy—a 10 per cent ethanol blend; there is no plain gasoline available in Minnesota. It is the same in many other states, but Minnesota takes the lead.

The Minnesotans are so keen on ethanol that they are now producing E85, which is an ethanol blend of 85 per cent ethanol and 15 per cent gasoline. They are so proud of this that a leaflet I have here with me says:

Never buy gasoline again! E85. Renewable—American-Made ... Less-Polluting.

It lists the 86 service stations in Minnesota that sell E85. They also have a list of all the vehicles that can run on E85, known as flexible fuel vehicles. Under Ford, for instance, Explorers, Tauruses, sedans and wagons, Ranger pick-ups and Taurus sedans are all listed as being able to drive on E85. Under Daimler Chrysler, it lists Dodge Rams, Chrysler Sebring sedans, Dodge Stratus sedans, Dodge Caravan cargo vans, Caravans, Voyagers and Town and Country vehicles—all Daimler Chrysler. General Motors have Tahoes, Ukons, Ukon XLs and some of their Sierras and Silverados, Chevvies, Sonomas and Suburbans. Isuzu has a range of Hombres, Mazda has the Mazda B3000 and Mercedes has the C320 series. Mercury also has selected vehicles that drive on E85. So in Minnesota not only are they all happy to drive on E10 but they are now starting to drive on E85—no worries about ethanol over there. In the brochure Questions and answers about ethanol, one of the questions asked is:

Will the use of ethanol void my car's warranty?

This is a very topical issue, with the scare campaigns that the Australian Automobile Association has been running. The answer reads:

Certainly not! When the use of ethanol began in 1979, most automobile manufacturers did not even address alcohol fuels. As soon as each manufacturer tested their vehicles, they approved the use of a 10% ethanol blend. Today, all manufacturers approve the use of ethanol, and some even recommend ethanol use for environmental reasons.

A further question is:

Why do some mechanics say not to use ethanol?

The answer is:

A mechanic who says not to use ethanol does not have correct information.

It then goes into that information, which I will not share with the House tonight. Another question asks whether ethanol use reduces exhaust emissions. The answer reads:

Ethanol contains oxygen, so it contributes to a cleaner, more efficient burn of the gasoline with less CO and other toxic chemicals in the exhaust emissions. Ethanol is a simple chemical which, when burned, does not produce all the complex pollutants and aromatics formed by the many different chemicals contained in gasoline.

Mr Deputy Speaker Lindsay, I know you have quite a scientific interest, and that is a debate we have not yet had in Australia—the health benefits of using alcohol-blended fuels. Further brochures put out in Minnesota are Breathe easy: small engines run great on ethanol, and Breathe easy: snowmobiles run great on ethanol. And so it goes on.

They do not have any problem with ethanol over there. In fact, the Minnesota Department of Agriculture told me they had set up a hotline for complaints about ethanol. Certainly, for the first few years, they received quite a number of complaints. They would thoroughly check them—they would send out a team to take a sample of the fuel in the vehicle to assess the vehicle. They found that not one complaint related to ethanol, which was pretty much what we found in the complaints about engine damage recently in Sydney. It transpired, when we addressed the Sydney Morning Herald's articles, that the contamination had been from kerosene. That was not mentioned in the articles. In Minnesota they found over time, as ethanol became accepted, that there was no substance to the complaints. They properly investigated them, found they had no substance and reassured motorists. That complaints hotline is still there, but it is rarely used.

I would like to deal again with Minnesota. They sold the idea to the farmers in Minnesota on the basis that ethanol and the Minnesota model would be of assistance to farmers and the wider community. They said farmers could wait for the next government-induced subsidy or they could take charge of their own destiny. In Minnesota, they sure did. The great bulk of ethanol distilleries in Minnesota are farmer owned. They are what they call new generation cooperatives, whereby some of the townsfolk have shares in the distillery as well. Minnesota produces in excess of 300 million gallons of ethanol. As I said, there are 14 plants, of which 12 are new generation cooperatives, with three more under construction.

What did it do for the state of Minnesota? Driving around, there is no doubt of the prosperity in those little towns. You drive through and there are restaurants up the main street and everything is beautifully painted and brand spanking new. There are lots of late model vehicles and people have an air of prosperity and confidence. Why wouldn't they? In building those distilleries there was $555 million in direct investment creating jobs. It adds every year to the annual state GDP, from $29 million in 1990 to $588 million a year now. It directly creates 2,562 jobs, and indirect jobs flow on from there. So why wouldn't Minnesota look like a prosperous, busy, bustling little state?

They do get support. They get financial support from the government—$36 million a year from their state government. What a pity our state government in Queensland was not likewise inclined to create jobs and opportunities in Queensland. That support is being reduced now, as ethanol has become accepted and popular, and it will be reduced to $20 million this year. But the most important factor in Minnesota's case was the state mandate of a 10 per cent ethanol blend. I believe that in time the government will move to that—when we can reassure the public, again, that they can have confidence in blended fuels and, of course, that ethanol can be produced with no subsidy. I think we can move to that in this country. We cannot live in a 20th century fossil fuel age. Unfortunately, the opposition—the Australian Labor Party—love fossilised ideas and fossil fuels, but we in the coalition are prepared to move forward into a carbohydrate fuel age, which has many benefits. It provides a benefit for motorists, a benefit for the environment and a benefit in terms of jobs and opportunities.

In Minnesota the impact on the farmers has been substantial, and there is a flow-on to their communities. First of all, it has stabilised corn prices. As we know, many commodity prices are very unstable; they fluctuate greatly with world prices. But over there when the corn prices are low, because they supply their corn to the distillery and the feedstock is at a low price they get a good dividend from their ethanol sales. When corn prices are high, naturally there is less to make from the dividend from ethanol but, of course, you have got a high corn price, which is something of a solace, I have to say. Mind you, the farmers there told me that they were not often worried by high corn prices—that was not a significant problem for them, if I could term it that way.

Minnesota saw the future 15 years ago. They set oxygenate standards through legislation and they set fuel standards—which, of course, are contained in this very sensible piece of legislation. They mandated, and now they are reaping the benefits of that. The Minnesota model provides a great model for us. But in speaking to them over there I was amazed at the fact that they faced the same obstructions in those early days that we are facing here. They had the scare campaigns about engine damage and dealt with that with a hotline. Likewise, we in Australia will have to deal with that scare campaign. They had opposition from the oil companies; they had arguments about whether in fact the fuel was greenhouse gas efficient. But they focused on getting a coalition of support and actively pursuing scientific research.

I would like to share some of that research with the House tonight. Mr Deputy Speaker Lindsay, with your scientific background you would be most interested in the net energy value of ethanol, which is one of the very significant issues—that is the energy content of ethanol minus the fossil energy used to produce the ethanol. The latest studies out of Minnesota are done by Shapouri, Duffield and Wang. We will have to duplicate these studies in Australia, naturally enough, and in fact we trust the results will be out in the next few weeks. Those Minnesota studies show that the net energy value now is 21,105 British thermal units positive per gallon. That is a very good result and shows that ethanol is a modern fuel that takes something like low-grade coal and a natural biomass and produces a valuable, renewable, liquid fuel. It is a plus-plus.

In the time left to me I would like to speak about the scare campaign that we have had here. It is quite a disgraceful one. The Deputy Prime Minister has set up an ethanol working group, which is a very good initiative to draw together distillers, oil companies and other stakeholders in what we trust will be an ethanol industry in Australia. There was a leaked document from that group. It asserted that up to 10 million cars in Australia would not be able to use E10. I actually got information from the United States on all of those cars and their manufacturers, and I have in fact written to every car manufacturer and importer in Australia. I have not yet sent the letters; they were only completed this afternoon. Let me give you an example of the anomaly that exists between the quality of vehicle manufactured in Australia and the quality of vehicle manufactured in the US. I have written to the president of the Ford Motor Company in Australia as follows—and I do apologise for his not having received this letter first but, as I said, unfortunately the correspondence could not be completed and sent in time for tonight's address; I will certainly ensure that each of these motor companies receives their correspondence:

Dear Sir

I write to request your assistance to resolve an apparent anomaly regarding the quality of vehicle manufactured for the Australian market compared to those manufactured for the US market, specifically with regard to their ability to operate successfully on E10 or 10 per cent ethanol fuel blends. In the information supplied by your company to the Ethanol Confidence Building Working Group convened by the Deputy Prime Minister, the Hon. John Anderson, it states: Ford: all Falcon petrol vehicles since 1998 will operate satisfactorily on E10. Please contact the Ford call centre for information on other Ford vehicles.

This is at odds with the information that Ford supplied to the American magazine Changes in Gasoline 2, available from Downstream Alternatives in Bremen, Indianapolis. In chapter 5, the auto manufacturers fuel recommendations state that every major auto manufacturer should include the use of 10 per cent ethanol blends under warranty coverage. Page 26, under the Ford Motor Company's details, states:

Your vehicle should operate normally if you use blends that contain no more than 10 per cent ethanol such as gasohol.

In the United States there is no warning to motorists; there is no concern. So my question is: why are Australian motorists being given an inferior vehicle in Australia not only from Ford but from others, when in the United States American motorists have the option of choosing their fuel blend and their vehicle? To be fair to Ford, the Service Station Association of Australia have undertaken a non-technical study of ethanol blended fuels, all at 10 per cent, using a Ford Fairmont sedan which has travelled 94,400 kilometres on E10. The report says:

... only minor panel repair, no mechanical repairs or non-routine maintenance at this time.

Similarly, a Ford XLS ute, an AU11 series, has travelled 161,000 kilometres on E10 and again the report states as follows:

... no mechanical repairs or non-routine maintenance at this time.

I have said to the president of Ford that these results are very impressive, and I commend his company on the results achieved by its vehicles. But the anomaly still remains: why have Ford and other vehicle manufacturers allowed there to be a perception—and it may only be a perception; after all, this is a leaked report, and I have great faith in our Australian vehicle manufacturers and importers—that Australian vehicles are of a lesser standard than American vehicles? I know that the member for Leichhardt would be enthusiastically supporting the ethanol trial in Cairns, which interestingly enough has raised the market share of Caltex. We are delighted to hear that Caltex are doing well out of an ethanol blend. Long may they continue, we trust, to profit from ethanol blends! The National Party believe that motorists in Australia should have choice in their fuel blends, as American motorists do. We would encourage those car manufacturers and importers, which have sound reputations generally, to see that they can promote consumer confidence in E10 by offering vehicles that give this choice.

I encourage the Australian Labor Party to join the 21st century, like the coalition, and to embrace a 21st century fuel and a carbohydrate based fuel industry—certainly starting with E10 blends. It is good for the motorists, who know that they are driving to work using not imported fuels but perhaps the grain, sugar cane or whatever biomass it is from a paddock not far from their town. This is good for the environment—a 10 per cent ethanol blend is said to reduce, following United States studies, greenhouse gas emissions by up to 30 per cent. That is a very positive outcome. So we have a win, win, win. It is not often you get that, but out of an ethanol blended fuel there can be a very positive win for the motorist, a win for the environment and a win for rural and regional jobs and prosperity in regional communities.