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Alert On Risks Of Ethanol Subsidies
By Mr Ethanol | April 7, 2008
The Australian:
The Productivity Commission wants the Rudd Government tourgently review the multi-million-dollar assistance for the ethanol industry amid growing warnings the program is pushing up the price of feed grain.
The commission’s latest trade and assistance review estimates the commonwealth will spend $31.9 million on the ethanol production subsidy scheme this financial year and demands a review of the program as a matter of priority.
It warns that ethanol assistance is increasing feed grain prices, echoing a research paper by the Commonwealth Parliamentary Library that found diverting feedstock to mandated ethanol production would increase the trade deficit.
Domestically produced ethanol enjoys an excise advantage under the ethanol production grants scheme, a subsidy that offsets the 38.143c a litre excise on ethanol.
In 2006, the then Opposition spokesman for resources, Martin Ferguson, sought “a review of the taxation regime on ethanol to ensure its tax-free status remains in place long enough to guarantee its success in Australia’s fuel market”.
The Howard government set an objective in 2001 that ethanol and other biofuels would contribute at least 350 million litres to the total fuel supply by 2010.
Assistance for the development of ethanol and other alternative fuels has been driven by environmental, health and regional development concerns, along with a desire to reduce reliance on fossil fuels.
Topics: Agriculture, Ethanol Prices, Industry, Market |
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