Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

I thank Senator Allison for that question. On 22 December 2005, the government released its Biofuels Action Plan, under which the major oil companies, major retailers and independents undertook to develop Australia’s biofuels industry. That plan shows that the industry expects to exceed the government’s biofuels production target of at least 350 megalitres by 2010. In 2006 there have been a number of announcements and new contracts have been signed, which shows that the industry is well on track to achieve our target.

BP will produce 110 megalitres of biodiesel per annum by 2007, using new technology which, I am advised, is a world first—from the biological and renewable feedstock animal tallow. The BP renewable diesel is a biofuel, just like ordinary biodiesel and ethanol. The government will make the necessary legislative changes so that it receives the same effective tax treatment as normal biodiesel. BP will also supply 80 megalitres of ethanol in Western Australia from 2008.

Australian Renewable Fuels has opened a 45-megalitre biodiesel plant in South Australia. Indeed, I was the presiding minister and officially opened that plant, and I had pleasure in so doing. I understand that Australian Renewable Fuels also plans to roll out a total of five biodiesel plants by 2007. The extent of investments to date, as I have outlined, does represent a major step in the development of Australia’s biofuels industry and does signal to consumers, producers and the financial sector a strong degree of commitment to the industry’s future.

I think that the Biofuels Action Plan is on track. We are supporting this industry and we do want to see it develop as an alternative fuel source. It is never going to be the answer to Australia’s transport fuels, but it has a proper place in the mix, it is receiving government support, and the industry is now behind it.

I was asked about the issue of mandating. No, it is not government policy to mandate the consumption of ethanol in the fuel mix. We are doing what we think is appropriate to provide the industry with the opportunity to market its products. It is the industry’s job to convince ordinary Australians that they should purchase this product. It is not for the government to mandate that Australians must put this particular product in their cars. The government does not share that view at all; we do not think that is the right path to go down, but we do want to set in place arrangements which ensure that this industry has the opportunity to find a place in the fuels mix in Australia, and we think we are doing what is appropriate with the resources available to the government. But, at the end of the day, it is for the industry to persuade consumers that they should consume this product.