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Wednesday, 18 September 1996
Page: 3562

Senator PANIZZA(10.54 a.m.) —I would like to enter this ethanol debate for a very short period, because it is something that I have had experience with in the past. I have had experience of trying to set up a plant to produce ethanol on farm. In the United States from around 1965 to 1970 there was the big push for ethanol production with the so-called world oil crisis.

However, you have to face realities. Ethanol production was first tried in Australia, somewhat successfully, during World War II because there was no other alternative. Cost was not a consideration because, if fuel was required, it had to be manufactured and it had to be got hold of somehow. It was tried with reasonable success. But we do not know for certain because that cost was not compared with other fuels. At the time gas producers seemed to have been far more efficient in producing for the average smaller vehicle, although gas producers were pretty useless when it came to heavy vehicles.

The next upsurge in the idea of producing ethanol as an alternative fuel came in about 1969 in Australia. It was tried at a time when the world overproduction of wheat was on and when Australia, for a very short time, had wheat quotas. There were a few experimental plants in Australia. But, even with wheat in those days of 1969-70 at around $50 a tonne, it was not viable to produce ethanol and use it successfully even with the rising world prices of oil.

During that time I personally got quotes from the United States to get a plant out in order to erect on the farm and produce ethanol. But when you worked out that, with the average farm production unit the United States supplied at the time, it would take virtually two or three years to manufacture ethanol that you would use in one year; the cost factor was blown out as well as not being able to get enough production. Then, of course, wheat prices took a big jump in 1973-74 and ethanol was put on the backburner again.

We have the case here, as has come out today, where, in order to get last year's budget through, some toing-and-froing went on with the Democrats and a certain amount was inserted into the budget to have a look at the ethanol situation again. Unfortunately, economics has proven that both ethanol and the cost of production of ethanol at the present moment cannot compete with other fuels. Furthermore, as Senator Margetts would know, the Metropolitan Transport Trust in Perth—Metrobus or whatever they call it—has had a couple of diesel buses converted to run on ethanol running around for quite some time. Although the operation has been rather successful, unfortunately, the economics has not. In this day of economic rationalism, which I support, ethanol has not reached the position where it can be economically manufactured. I mean, you can subsidise and you can subsidise, but there has been nothing new over the years. Until we come to a stage where it is somewhere near economically viable, I think it has to be left where it is now, and that is on the backburner.