A RIFT has opened between Canberra and NSW, with federal Resources Minister Martin Ferguson telling his state Labor colleagues they should have consulted the Rudd Government before adopting an ethanol mandate.
Mr Ferguson also bluntly disputed a claim by the Rees Government that grain would not be used to make ethanol.
The Australian reported yesterday that the NSW Government was set to approve a $400million expansion plan for ethanol production at the flour-processing facility near Nowra owned by the Manildra Group.
Manildra is the biggest corporate donor to the NSW ALP, giving $461,500 to the party in 2006-07.
When the expanded plant is in operation, Manildra will be the beneficiary of revenue lost to taxpayers nationally of $120 million a year through rebates paid to compensate biofuel producers for the 38.14c-a-litre fuel excise.
A decision by NSW before Christmas to lift the level of ethanol in unleaded petrol from 2per cent to 10 per cent will cost taxpayers in all states almost $200 million a year, but the excise rebate is under review by Mr Ferguson's department.
Critics say the NSW ethanol mandate and a mandate planned by Queensland will force up food prices nationally because large quantities of grain will be diverted to ethanol production, as has been the case in all major ethanol-producing nations. NSW has insisted the mandate will be met from starch waste produced at Nowra.
Mr Ferguson told The Australian that NSW had not consulted adequately with the commonwealth. "NSW is responsible for its own policy decisions but given the substantial financial impost of its biofuels mandate on all Australian taxpayers, greater consultation between the two jurisdictions would have been appropriate," he said.
Mr Ferguson rejected repeated claims by NSW Lands Minister Tony Kelly, the architect of the NSW mandate, that ethanol would be produced solely from starch waste.
Read more on The Australian online.
