THE owner of the Manildra Group Dick Honan has dismissed a report that has questioned the effectiveness of the ethanol industry as “garbage” and has warned if the federal government withdrew its support the Bomaderry plant would have to close.
The Bureau of Resources and Energy Economics (BREE) report raised concerns about the ethanol industry that receives $108 million a year from the federal government’s Ethanol Product Grant Program.
With predictions of likely cuts to come in the May budget, the report has prompted speculation the subsidy may be scrapped, meaning the ethanol industry could be the next to feel the Abbott government’s hard line on requests for assistance.
The EPG was introduced by the Howard government in 2002 but the BREE report questions the effectiveness of the scheme, saying the subsidies were producing minimal economic or environmental benefit and might even be responsible for higher costs to motorists.
Manildra’s Bomaderry plant, the biggest manufacturer of ethanol in Australia, receives the lion’s share of the subsidies.
“I’ve seen the report and it is garbage,” Mr Honan said.
“It’s a pity a tree had to be cut down to make the newsprint.”
Mr Honan has warned in the media that the Bomaderry plant would be closed if the federal government withdrew its assistance for the industry.
“It wouldn’t be viable for the renewable fuel industry in Australia if the subsidy was withdrawn,” he said.
“That was bipartisan and we don’t see any change to that.
“We’ve certainly had no communications that that will change.”
Mr Honan said Manildra’s Bomaderry plant had 300 employees, while there are also extra staff at three other locations in Gunnedah, Manildra and Narrandera, who supply raw materials for the company’s operations.
As well as producing ethanol at its Bomaderry complex, Manildra also produces a host of other products such as starch, gluten, glucose syrup and brewers’ syrup.
There has been more than $600 million in capital investment on the site in the last two decades, more than $300 million of that in the past six years.
Producing 300 million litres of ethanol a year, Manildra is the largest producer of the fuel in Australia.
The company uses wheat starch to make around 70 per cent of total Australian production.
United Petroleum’s plant in Dalby, Queensland uses red sorghum to make 80 million litres of ethanol and Wilmar Bioethanol uses molasses from sugar at Sarina, Qld to make 60 million litres.
The BREE report estimates that Australia’s three ethanol producers employ a combined workforce of 200, costing taxpayers between $545,000 and $680,000 per job.
In 2012-13, petrol sales in Australia totalled 18.7 billion litres, a decrease of 4.8 per cent from consumption levels in 2011-12.
Ethanol-blended petrol (EBP) accounted for 13.8 per cent of total petrol sales in 2012-13.
“Why should it be altered when there are 58 countries in the world with national mandates?
“The ethanol industry received 38 cents a litre excise exemption but we discount to the oil companies 47 cents, so we give back more than what we receive, how could we be taking a subsidy?”
Mr Honan said suggestions the subsidies for ethanol production may be cut were nothing more than “speculation”.
“We’ve had no correspondence from the government,” he said.
“Legislation was passed in 2011, bipartisan legislation, to extend the excise exemption on ethanol and biodiesel to 2021.