Claims that ethanol in petrol helps farmers is a hoax of the worst kind

Entities with market or political power can pass on at least some of these losses to others but many entities cannot shift the burden elsewhere. Those who ultimately carry the pain of higher costs and lower benefits will be poorer sections of the community and those involved in businesses competing in world markets, such as mining, farming, tourism and manufacturing.

Overall, the community suffers substantial losses because protection/subsidy deals draw resources into activities in which we cannot compete efficiently and handicap our more efficient and dynamic industries. Consequently, income and growth are lower than they could be. The Queensland economy will be particularly adversely affected because it is more heavily dependent on farming, mining and tourism activity than most other state economies.

Politicians and the ethanol lobby have promoted E10 as good for the environment. However, there is division among scientists on this matter.

Scientists agree that E10 results in lower emissions of carbon monoxide, hydrocarbons and some carcinogens, such as benzene, but causes increased emissions of other carcinogens, such as aldehydes, and greater emissions of oxides of nitrogen. There is disagreement as to whether carbon dioxide emissions rise or fall.

Some scientists have expressed concerns about E10 increasing the potential for leaking of underground fuel tanks and contamination of ground water. Also, criticisms have been directed at the environmental effects and sustainability of many current farming practices producing sugar cane and grain crops, and environmental effects of processing activities supporting ethanol production.

To the extent that there are environmental gains from using E10 instead of petrol, the costs must be taken into account. Politicians and the ethanol lobby have not told us just how large the costs are.

Queensland's environment minister has referred approvingly to a study undertaken for CSR, which indicates E10 cuts emissions of the "greenhouse" gas, carbon dioxide by 4 per cent. If figures in that report are combined with the of cost of the subsidy and increased fuel consumption, the cost of avoiding emission of a tonne of carbon dioxide by using E10 ranges from about $382 to $1120. However, work by the Australian Greenhouse Office, the Australian Bureau of Agricultural and Resource Economics and United States' experts indicates that Australia could attain its greenhouse gas reduction commitments in other, more economic ways for a maximum of $50 per tonne.

The justifications offered by Commonwealth and Queensland government ministers for hand-outs to the ethanol industry cannot withstand close scrutiny. There is no doubt that protecting this industry is appallingly bad policy.