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Federal Minister for the Environment and Heritage
The Hon Dr David Kemp, MP

ABC - Queensland Country Hour
Thursday, 20 February 2003

Subject: Move to Introduce Mandatory Labelling of Ethanol Petrol Blends

The Federal Government says it will force other states to follow Queensland's lead, and introduce mandatory labelling of ethanol petrol blends. This follows BP Australia's decision to halt sales of its 10% blend in Brisbane, due to negative publicity over damage to car engines in New South Wales, allegedly from petrol ethanol blends of more than 20%.

Yesterday on the Country Hour, Federal Environment Minister David Kemp said the labelling issue was a state responsibility. Now Dr Kemp says consumers have the right to know what they're buying.

Dr Kemp:
Well, what I'm saying now is that we'll legislate as far as we can within the Commonwealth powers, which are limited by the Constitution, and the states will have to support the Commonwealth in that with legislation or regulation that covers retailers that are not corporations.

There are some small independent retailers that don't fall into that category, and so Commonwealth legislation would need to be supported by state legislation or regulation to cover the entire industry. That's obviously very desirable that that happens, and consequently the Commonwealth action will put the states in a position where they will simply have to act.

Couldn't the Federal Government use its excise provisions to make it a financial disincentive for, you know, for any blend, say, above 10%, or whatever you recommended?

Dr Kemp:
Well, we'd be very reluctant to use the tax arrangements for that purpose. This is clearly a matter of consumer protection. The information is clearly now on the public record, which requires action to make sure that consumers are properly informed.

The states have the full power at the moment to take the necessary action - I think that needs to be said - that the…

And Queensland, for example, is doing that?

Dr Kemp:
And Queensland has done that. New South Wales has not done that. Victoria has not done that. And so of course the consumer concerns in those states are different to the situation in Queensland, but undoubtably Queensland consumers are being influenced by the wider debate.

Now, you told us yesterday that you are undertaking a scientific study that's being conducted in WA to try and clear up some of the misconceptions about ethanol. Hasn't there already been so much work done in, for example, the United States and Brazil, who have been using ethanol blends for up to 20 years?

Dr Kemp:
Well, you would think that there had been a lot of scientific work undertaken, and the Federal Government has enquired extensively - both in the motor vehicle industry, with the major petrol retailers, we've enquired in the United States, and so far have not been able to locate any satisfactory scientific basis for some of the statements which are being made.

Well, the other issue that the Government's getting pressure on is to make some mandate on a blending of ethanol. Calls are for it to start at perhaps two per cent and go up to ten per cent. What's the latest on that?

Dr Kemp:
Well, that's another issue again, and of course if we were to mandate ethanol, that would be a decision taken maybe with environmental aspects in mind, if it could be demonstrated that the small blends have environmental benefits, but it would be to assist the ethanol industry as well, and so that's a decision that would need to be considered within that context

That's not the context within which the current debate is being largely undertaken, which is concerned largely with consumer protection issues.

Minister, the reason this argument has cropped up again is because BP has suspended sales of their E10 blend, or a trial of their E10 blend in Brisbane. Now, I understand that they received some money from Government under greenhouse research allowances to conduct that study. Will they keep that money? I believe it was half a million dollars.

Dr Kemp:
Well, the money was for what BP has actually delivered. The money was, as you say, half a million dollars for a trial at six service stations that BP's been undertaking. They undertook to modify these service stations to provide the E10 blend, and they did that.

So they've delivered on what the Government has asked them to do. The Government has also indicated that it was prepared to make further payments to them for very substantial infrastructure modifications, if they were to continue with the marketing of the E10 petrol. Now of course…

That was in fact up to eight million dollars, wasn't it?

Dr Kemp:
That's right. That's right. Of course, none of that money has been paid by the Government yet - or received by BP. Whether that money is paid depends on what BP's future intentions may be.

What BP has said is that it's completing its trial now because consumers have some doubts about these ethanol blends in the absence of proper labelling and information, and that's why we are now discussing the processes which will put proper labelling in place.

Commonwealth action undoubtably would force the states to act, and the Commonwealth is prepared to take that action, because we do believe that consumers have a right to be properly informed.

Federal Environment Minister Dr David Kemp. And a spokesman for BP says the company hasn't ruled out revisiting and expanding its ethanol trial, but it needs Government to act to increase consumer confidence, both through better labelling and addressing the mandatory blending issue.

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