Senator JOYCE—I refer you to page 12 of the additional estimates. What will the cut to the ethanol production subsidy entail? $10.8 million is being cut from the production subsidy. I will combine with that the $5 million cut to the ethanol distribution program.

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Ms Taylor—Essentially those represent savings in those two programs. Essentially we have done forecasts as to the annual yearly expenditure, and these are savings in the program.

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Senator JOYCE—Do you think we have been effective in getting ethanol into the market? Do you think the uptake of the program is working well? Are cars now using more biorenewable fuels and helping to reduce our carbon footprint?

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Ms Taylor—Over the last 12 months there has been quite a substantial increase in ethanol usage and program. I can give you some numbers in relation to the volumes. For the 2007 calendar year the program funded 110, 304, 231 litres of ethanol. That was up from 60 million litres the year before.

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Senator JOYCE—So, that was 110 million litres?

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Ms Taylor—Yes, 110.3 million litres. That is essentially about an 80 per cent increase over that calendar year.

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Senator JOYCE—Is that uptake by independents? Where did that uptake happen?

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Ms Taylor—I do not have those details.

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Senator JOYCE—Can you take that on notice?

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Ms Taylor—I am not sure that I can find that information.

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Senator JOYCE—Tell me if you cannot. I will understand. Would it not be counterintuitive to the move towards trying to reduce the price of fuel to put an alternative product onto the market, and also reducing our carbon footprint by using a renewable resource as opposed to a fossil fuel? Should we not be increasing our investment in ethanol rather than reducing it? That is probably a question to the minister.

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Senator Carr—This is essentially a budget measure and I think the officers are better placed to deal with the details of the reasons that underpin that. I cannot assist you in terms of the process that went into making up the budget measure itself.

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Mr Hartwell—The savings that you refer to are projected underspends for both of those programs. The original estimates have been revised on the basis of the grant applications, and these savings are projected for the remainder of the fiscal year. That is based on what has been coming forward.

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Senator JOYCE—If they are predicted budget underspends—I imagine you would like to claim credit for that—why did you not include them into your efficiency dividend and what is in the efficiency dividend, the $141,000? Can you quantify that purely beyond it just being two per cent of your overall figure?

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Dr Boxall—The efficiency dividend is applied to the departmental, which is the cost of running the department. These savings are savings against an administered item, because it is a program administered by the department. In the way that the budget operates they are separate issues. The efficiency dividend is the two per cent efficiency dividend on the running costs or departmental expenses. These are savings against programs that the department administers on behalf of the government where the demand for these subsidies has been less than originally anticipated.

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Senator JOYCE—The demand for the subsidies is less. Has the question been asked why the demand for the subsidies is less? I know the answer. The capacity for people to actually get ethanol to the market is obfuscated by reason of the major oil companies refusal to buy the product. Therefore, they are not taking up your subsidies because they have no-one to sell the ethanol to.

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Mr Ryan—There are probably two points to make. On the first point, whether we could have used these savings to offset our efficiency requirements, we would like to, but under department of finance arrangements these are seen as fortuitous savings. Because it is an entitlement program people will get paid either up or down depending on what happens. In terms of what has happened in our estimation, lots of factors come in when estimating for an entitlement program. There are changes happening in the marketplace all the time.

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Senator JOYCE—I will be more direct. If we had a mandate on ethanol would it not be more likely that we would not have to worry about those savings because the uptake of the production subsidy savings and the ethanol distribution program would have been a lot more fulfilled by reason of the fact that people who were going into ethanol production would have had someone to sell their product to rather than the current oligopoly arrangement where the oil companies are basically trying to obfuscate the process? I take onboard what you say about the 110,000 litres. But that is still below their own targets.

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CHAIR—I think most of that is a policy question.

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Senator JOYCE—With respect to the efficiency dividend, can you quantify in your department where you envisage finding that 141,000?

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Dr Boxall—Not yet. As you probably know, our department is a new department. We are just being established. The total funding for our department will be the subject of deliberations in the budget. We do not know what our total funding will be. Once we find that out, we will then work out how to manage our department’s new budget.

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Senator JOYCE—Correct me if I am wrong, but they are going to set up a department, give you the funding and then after they give it to you they will ask for 2 per cent of it back?

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Dr Boxall—They set up the department and funding is transferred from the former Department of Industry, Tourism and Resources. We had three divisions transfer over and we received funding for those three divisions. We have received funding from some smaller machinery of government changes from the former Department of Education, Science and Technology. But there is a issue about the overall funding of the department which will be considered in the budget context. We, like everybody else, will be subject to the two per cent efficiency dividend.

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Senator JOYCE—How do you determine a two per cent efficiency dividend when you do not actually have a base to jump it from?

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Dr Boxall—That is the two per cent based on the monies that we have been given thus far.

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Senator JOYCE—So, there is no previous year to determine an efficiency from? ‘We give you this money and we expect you to spend 98 per cent of it?’

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Dr Boxall—It is basically an efficiency dividend that is based on the money primarily that we receive from the former Department of Industry, Tourism and Resources.

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Senator JOYCE—When do you think you will be able to start determining where your efficiencies will lie? How can you explain to us where those efficiencies lie when we do not know where you are actually inefficient because you did not actually exist, so to speak?

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Dr Boxall—The department didn’t exist but the three divisions existed in the previous Department of Industry, Tourism and Resources. What the government has decided is that there shoul