Sean Nicholls

The next time you pull into a petrol station in NSW and select the fuel of your choice, consider that you are probably at a location that risks blowing up into a major headache for the Baird government.

Look at the nozzles and you may see one or more labelled E10, or similar, denoting an ethanol blend.

These nozzles are now also being labelled 94 octane – potentially making them more attractive than 91 octane regular unleaded – thanks to a directive by NSW Fair Trading warning petrol station owners they could be fined up to $1 million for failing to do so.

The directive – based on testing by Fair Trading – came before legislation passed by the NSW Parliament in March to ensure that the vast majority of petrol stations are forced to sell an ethanol blend, even if customers do not want it.

The government says it is all about making petrol cheaper and more environmentally friendly.

But the association that represents medium-sized fuel retailers, who will be forced to sell an ethanol blend for the first time, says the opposite will happen.

It warns fuel prices will be forced up by as much as 8¢ per litre thanks to the cost of the extra infrastructure required to sell an ethanol blend.

If they are right, this is a classic hip pocket issue for the NSW government, with the attendant political dangers.

And thanks to a statement in parliament this week by the minister with carriage of the legislation, Victor Dominello, another political threat is emerging: the optics of a highly questionable path to the law change.

When Dominello revealed on Tuesday that he had inadvertently misled parliament about the number of jobs generated by the biofuel industry in Australia – quoting 3000 instead of 281 – it was bad enough.

After all, the state’s MPs had made their decisions about whether or not to vote for the legislation based in part on that false information.

But his further disclosure to Fairfax Media that the wrong figure was in fact given to one of his staff by ethanol producer Manildra was simply breathtaking.

That is because not only is Manildra Australia’s largest ethanol producer, it has a long history as a major political donor to, and fierce lobbyist of, Labor and the Coalition at a state and federal level.

In the lead up to the legislation it had already been revealed that Manildra secured 20 meetings with NSW ministers and donated more than $160,000 to the Coalition in a concerted lobbying effort.

So the jobs revelation cemented the already strong suspicion that Manildra’s uncomfortably close relationship with the NSW government was skewing its policy decisions.

Dominello – who it must be acknowledged volunteered the information about Manildra’s role and describes it as an honest mistake – is angry about how it happened and embarrassed about failing to check the facts.

So he should be. But so also should Mike Baird and the rest of his cabinet.

Baird will be tempted to ride this out as the Labor party has also been on the ethanol teat.

Labor introduced the initial mandate back in 2007 and has also accepted huge sums in political donations. The ALP’s silence on this is equally appalling.

But riding it out is a dangerous strategy for Baird as the perception of undue influence due to lobbying, donations or both is precisely the type of thing  he vowed to stamp out when he became Premier.

After all, his predecessor, Barry O’Farrell, resigned after giving false evidence to the Independent Commission Against Corruption about a $3000 bottle of wine from a political donor and lobbyist, Nick Di Girolamo.

If the government has nothing to hide, there is a way Baird can restore some public confidence in this – release the relevant cabinet documents showing what ministers were told.

Government sources insist the inflated jobs figure was not used in cabinet deliberations on the policy. But the public needs proof the decision was made on good policy grounds, not to keep a major donor happy.

If he fails to do provide those assurances and the move does drive up petrol prices, Baird risks wearing that all the way to the next election.

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