This week the Queensland Parliamentary Utilities, Science and Innovation Committee (USIC) handed down their report on the Liquid Fuel Supply (Ethanol and Other Biofuels Mandate) Amendment Bill 2015 and it looks bad for fuel retailers and their customers. The release of this report marks the final step before the draft legislation is considered by the Queensland Parliament for approval in December 2015.

In a report which is highly supportive of the Australian Biofuels Industry the USIC has recommended that the proposed biofuels mandate legislation be passed by the Queensland Government, creating serious issues for many small to medium fuel retailers who will be required to make significant infrastructure investments in order to comply with the legislation.

The Committee’s recommendation of the legislation comes despite there still being great uncertainty about how the mandate will actually work, with many of the issues around retail compliance and retail business exemptions still to be sorted out.

“It is largely inconceivable that any government, faced with conflicting messages about adverse industry costs and impacts, could so recklessly push through legislation without taking due account of likely adverse impacts on our industry and the potential adverse flow on impacts to fuel consumers”, said ACAPMA CEO Mark McKenzie.

Under normal circumstances, the government would undertake a regulatory impact statement that seeks to assess both the costs and benefits of proposed legislation on all affected parties, with a view to determining whether there is a net benefit to the community at large – and the level of adverse impact on specific stakeholders.

“In this case, however, the Palaszczuk Government’s rush to secure the support of The Katter Party in a parliament that is finely balanced means that due process is apparently being ignored”, said Mark.

The result is that while the USIC has recommended that the legislation be approved for a commencement on 1 January 2016, the Committee also noted that much of the detail around how the scheme will operate is yet to be resolved.

Specifically, the Committee made the following recommendations about the need to address the following issues prior to setting a date for commencement of the mandate:

  • Analysis of the fuel sales data to determine an appropriate volumetric threshold level
  • Development of the sustainability criteria and compliance model in consultation with stakeholders
  • Development of the compliance and enforcement regime in consultation with stakeholders
  • Development of the exemptions framework in consultation with stakeholders
  • Development and implementation of an extensive public education and awareness program in consultation with stakeholders
  • Assessing the reasonable time required for upgrades to service station infrastructure.
  • Development of a timeframe for consideration of exemption applications
  • Establishment of a consultation process to be utilised in the development of regulation and amendments of the mandate

“When you look at all the work that still needs to be done with respect to the operation of the mandate, it is simply inconceivable that the Queensland Government is seeking to pass this bill in less than 4 weeks with a view to commencement of reporting requirements from 1 January 2016 – and commencement of the mandate 6 months later”, said Mark

Perhaps the most concerning recommendation within the report, however, relates to the suggestion that the Minister should provide ‘advice’ to fuel wholesalers that any price differential between Ethanol Blended Products (EBP) and regular unleaded petrol needs to be passed on in full – or the wholesaler may be made liable to comply with the mandate (the current draft legislation excludes wholesaler compliance for ethanol blended petrol product).

“For a recommendation to be made whereby an independent business is being instructed on how to set their prices is potentially detrimental to the notion of having an open competitive fuel wholesaling market”, said Mark.

“This is a difficult situation in that our industry appear to be the big losers in an apparent bidding war for the support of the Katter Party by both the Palaszczuk Government and the Springborg LNP opposition”, said Mark

“Given the work that is still to do, ACAPMA will continue to engage with Government and other stakeholders on the issues yet to be resolved – with a major focus on the creation of an exemptions regime that genuinely protects Queensland businesses and the people they employ”, said Mark.

To download a copy of ACAPMA’s submission’s to the USIC on the proposed ethanol mandate click here and here.

For more information on this matter, click here or contact the Secretariat on 1300 160 270.