On Sunday 1 May 2016, Radio National broadcast a story on its Background Briefing programme that explored the link between donations from the Manildra Group and the recent passing of the Biofuels Amendment Bill by the Baird Government.
The story shone a light on the size and extent of donations made by the State’s monopoly ethanol producer (i.e. Manildra) while also questioning the State Government’s motivation for relabelling E10 as ’94 RON’ fuel – an action that has significant potential to confuse motorists who have no desire to purchase ethanol blended petrol.
A webcast of the programme can be found at: https://acapmag.com.au/2016/05/background-briefing-ethanol-fuel/
On Monday 2 May 2016, the NSW Minister for Better Regulation and Innovation, the Hon. Victor Dominello MP, convened a stakeholder meeting to discuss the implementation of the new biofuels laws.
During the course of the meeting the Minister tabled a draft biofuels regulation that proposed that all fuel retailers reconfigure their sites to ensure that the number of E10 nozzles was matched with the number of 91 RON nozzles – or retailers would be fined for not applying their ‘best endeavours’ to market E10.
Suffice to say the proposal did not go down well, particularly given that this proposal had been originally tabled on 11 February 2016 and then reissued in the same form 3 months later – without any genuine consultation with industry.
Needless to say that all industry stakeholders, with the exception of Manildra who have curiously not been involved in any of the stakeholder consultations, were incensed by the unwanted constraint of service station operators’ ability to configure their fuel delivery infrastructure to accommodate the nature of fuel demand in their local markets – to say nothing of the increased cost which has been estimated to be as high as $100k per site for those that are already selling E10.
Wednesday 4 May 2016 saw Minister Dominello issue a formal correction in the Lower House of the NSW Parliament, as a result of having used inflated employment figures to justify the new biofuels laws. It turns out, the Minister made statements about the employment benefits of continuing with the biofuels mandate using figures that were 10 times – yes that is 10 times – higher than was actually the fact.
In making the correction in the NSW Parliament, the Minister indicated that he actually relied on an ‘independent report’ which, as it happens, was prepared by the biofuels industry itself (see https://acapmag.com.au/2016/05/manildra-gave-inflated-jobs-figures-to-minister-before-ethanol-bill/).
The magnitude of the error raises a very real question!
Why was this figure blindly accepted by the NSW Government when the substantial downside risks to industry and NSW Motorists had gone largely ignored – costs previously estimated at up to $900k per service station site by ACAPMA and an estimated increase in the cost of fuel to motorists in the order of 8cpl (https://acapmag.com.au/2015/11/time-to-come-clean-on-biofuels-in-nsw/).
The Minister’s admission of this error, given its magnitude, demonstrates economic recklessness in the Baird Government’s frenzied desire to rush through new biofuels legislation without properly considering the cost to industry and the wider community.
The action is even more curious when considered in light of the Government produced report by the Independent Pricing and Regulatory Tribunal – IPART.
The IPART report concluded that “most options to increase ethanol uptake would increase the cost of an already expensive policy, with little economic gain for the NSW community” and stated that “small service station owners would bear the cost of increasing ethanol uptake and they would ultimately pass these additional costs on to consumers through higher prices” (see https://acapmag.com.au/2015/12/ethanol-fuel-plan-will-only-lift-use-by-1-2-percentage-points-over-10-years/).
The day finished with Upper House Government MP, Dr Peter Phelps, continuing to strongly voice his opposition to the new biofuels laws that are being advanced by his own Government.
In a speech delivered in the NSW Upper House on Wednesday night, Dr Phelps stated that:
“Once again tonight we will have a look at the ethanol problem in New South Wales. This problem was exacerbated yesterday when Minister Dominello spoke in the lower House to correct some figures he had given to the Parliament. Previously he had stated that the industry supported 3,000 direct jobs and 20,000 indirect jobs.”
Dr Phelps continued, “But of course this was wrong, and the real figures are substantially different. In fact, as the Minister pointed out yesterday when he corrected his earlier comments, the true number is 218 direct jobs and 2,668 indirect jobs. So those initial figures were only wrong by a factor of 10 times the actual figures.”
One might say to oneself, “Well, that is a simple mistake. Anyone could make that mistake.” Except for the fact that the Minister got these figures from Manildra in the first place. Did he bother to check them? No, he did not.”
A full transcript of Dr Phelps speech, which is significant given that he is strongly speaking out against his government’s own policies, can be found at: https://www.parliament.nsw.gov.au/Hansard/Pages/HansardResult.aspx#/docid/HANSARD-1820781676-67859.
Thursday 5 March 2016 saw the NSW Greens provide notice of its intent to introduce a Bill proposing full repeal of the NSW Biofuels Act.
That is right! The NSW Greens, having determined that biofuels delivers little/no environmental benefit, initiated a parliamentary process that targets the abolition of the NSW Biofuels laws.
As this story goes to air, it is understood that the NSW Greens are preparing to submit an application to the NSW Independent Commission Against Corruption (ICAC) seeking investigation of a series of irregularities with respect to the Baird Government’s most recent Biofuels push.
And so the week ends – perhaps an end that could not have come fast enough for the Baird Government.
But for the rest of us, a faint glimmer of hope that perhaps reason will prevail on this issue.
Perhaps the NSW Government will actually demonstrate respect for the 5600 people employed in NSW fuel retail businesses and their customers (i.e. NSW motorists), by actually taking the time to put this whole initiative on hold until the economic costs and benefits of the proposed changed to biofuels laws can be properly assessed.