Mr Gordon—Chair, if I may just add something that may assist. The government has put in place an action plan process under which the oil companies have given commitments to voluntarily take up certain amounts of fuel. Our understanding is that, when that meeting took place between the Prime Minister and the oil companies, there was a choice between doing it voluntarily and the government looking at other mechanisms.

Senator JOYCE—How much ethanol are the oil companies actually using now?

Mr Gordon—Their target for 2006 is 89 million to 124 million litres, until December this year. There is some room possibly for dispute, but we try to follow this up quite clearly and regularly at least twice a month with potential producers. We do not see the evidence at this stage that the oil companies will meet their 2006 target, but we do not know everything that is going on. We do monitor—

Senator MURRAY—Sorry, but when you say 2006, do you mean 2005-06 or the 2006 calendar year?

Mr Gordon—2005-06.

Senator MURRAY—So the financial year?

Mr Gordon—No, it will end in December.

Senator MURRAY—So it is a calendar year?

Mr Gordon—Correct. So we have yet to see that. If the target is not met, it will be a major issue because it will send a signal to the banks and other financial institutions that things have not changed. Now, I am not here to be critical of the oil companies or anybody else involved, except to say that is the situation that we are confronting. And we have more interest in this program being a success than anybody else.

CHAIR—Indeed. But the message that comes through loud and clear, at least to me, both from you and from the witnesses from the biofuels industry that we heard from before lunch, is that the complaint about this bill is that it would nullify the effect of a government policy which everybody seems to be very happy with.

Mr Gordon—Correct.

Mr Hill—Yes.

Senator MURRAY—That is right.

CHAIR—Does anybody have any more questions? Senator Joyce.

Senator JOYCE—The 2012 reduction in the excise is a crucial issue, and I have been trying to track that through but I cannot find that stated anywhere in the bill. Obviously, if you are going to call for an amendment or change to fix that issue, we need to know where it says that. Where is it?

Mr Gordon—I cannot tell you, and that is one of the problems with the bill. Our concern with respect to that is that, if the evidence is vague, it means you can interpret it in many ways.

Senator JOYCE—I am not vague. If I can find out where it is, I will certainly be making moves to change it. I put that categorically on the record.

Mr Gordon—Perhaps our Treasury colleagues will be able to help us there later on this afternoon.

Senator JOYCE—Do you feel that, in the last six years, the oil industry has been dragging the chain in meeting its objectives?

Mr Gordon—To be fair, I think it is too early to judge. We place a lot of importance on them meeting their targets as specified. The oil companies know their business better than anybody else, and, if they set a target and made a commitment to the government and the Prime Minister, you would expect them to be able to meet it. We have concerns about whether the target this year will be met, but nobody will be happier than us if it is met.

Senator JOYCE—Did you say 56 per cent of the trade account deficit is due to the importation of fuel?

Mr Gordon—It is 63 per cent.

Senator JOYCE—Do you feel that the implications of this bill as it stands, and as Senator Brandis has properly pointed out, run contrary to a government policy on what they were trying to achieve on this issue?

CHAIR—Senator Joyce, can I correct you before I am verballed. I did not point that out. I said that that is what I understand these witnesses to be pointing out to us.

Senator JOYCE—Fair enough. You believe the implementation of this bill as it stands would further exacerbate the problem of the trade account deficit?

Mr Gordon—This industry is at a very modest scale at this time but the biofuel industry is one of the fastest growing industries in the world because governments in countries such as the United States, the European Community, China, India, Japan and many others see that there is a vital role for alternative fuels, particularly renewable alternative fuels such as ethanol and biodiesel, to play a role in addressing these issues. President Bush has predicted that the United States has the capacity to replace 50 per cent of its current dependence on crude oil through biofuel development in that country.

Senator JOYCE—You and other witnesses believe that the effect of this bill runs contrary to the intent of previous government policy. Has anybody from any department given you any statement that that is what they intend to do—they intend to change a former government policy on this issue?

Mr Gordon—The clear message that we have got is that there will be no change in policy.

Senator JOYCE—You are basically saying it is a dilemma between the intent of this bill and the intent of what the government wanted to achieve.

Mr Gordon—All I can tell you is that the advice we have received from the Minister for Revenue and Assistant Treasurer, and Treasury, obviously, is that the government is not inclined to change this bill at this time. We hope to convince them otherwise that it is in the national interest to do so.

CHAIR—That is why we are here, Mr Gordon, having this hearing so that the parliament can consider the matter.

Mr Gordon—Thank you, Mr Chairman.

Senator JOYCE—And it is the proper course of the Senate too—and doing a very good job at it. Amongst the people that you represent, Mr Gordon, do you have any idea of the investment they have made in relation to that—the intent of the government policy as it formerly stood?

Mr Gordon—We think it could be in the order of $600 million to $700 million. I cannot be precise because the cost of setting up a biodiesel plant is significantly lower than for an ethanol plant. On average, the yardstick for an ethanol plant to produce one million litres is $1 million investment.

Senator JOYCE—Would that $600 million to $700 million investment made in the Australian economy presently be stalled, reduced or destroyed by the intent of this?

Mr Gordon—I cannot say exactly but it could be one or all of those things. The box set up by the banks and financial institutions that many of our producers have been able to get a tick in in the past has been on the issue of, ‘Can you demonstrate that you can get your fuels into the marketplace?’ If there is uncertainty associated with this bill, if we do not see the take-up of the