Corporate Sector Welfare



About this Item
SubjectsIndustries Assistance; Business; Energy
SpeakersWest The Hon Ian
BusinessAdjournment
Commentary Manilora Group


    CORPORATE SECTOR WELFARE
Page: 3167


    The Hon. IAN WEST [4.08 p.m.]: I will elaborate on brief comments I made on Tuesday about corporate welfare, which is a vital part of our mixed economy's sustenance and growth. But there must be awareness about the public money used in the private sector and what benefits it returns to the community at large. As I outlined recently, one concern is that a double standard is applied between welfare for the private corporate sector and compensation or subsidies for individuals in need. The Federal Government is quick to apply its principle of mutual obligation to the unemployed person on the dole, yet when it comes to handing over money or concessions to corporations, little accountability is expected in return. We have to ask whether it is really enough to include projected economic stimulation as part of the mutual obligation on corporations.

    Considerations must include the social capital, those services and measures that can benefit the whole of the community as opposed to only that particular corporation. The environment is an area in which all sectors of our mixed economy, especially the private sector, must take much more responsibility. Making surpluses and profits while degrading the environment is, fortunately, no longer acceptable even though it occurs on many occasions. Sustainability is obviously an environmental principle as well as an economic imperative that needs much encouragement. It is fair to expect that if a business is trying to make a profit with the help of community resources, whether economic, environmental or otherwise, then that business should demonstrate what it is doing to return something for the common good or social capital of the society.

    Unfortunately, there are many cases of corporations receiving taxpayer assistance and not demonstrating their contribution to society's wealth. One case that has arisen recently, which relates to ill-placed corporate welfare and environmental issues, is the Federal Government's subsidy of Manildra Energy Australia Pty Ltd. Manildra, as we know, is the company that happens to donate substantially to the Liberal Party. We are told the dividend seems to be a $17 million subsidy from the Federal Government, which is a substantial return by any measure. Manildra produces ethanol-blended fuel that is designed for use in motor vehicles. The irony of this case is that the use of ethanol in fuel is designed to benefit the environment by substituting petroleum fuel that burns less cleanly. The downside of the plan is that ethanol has been found to significantly degrade motor vehicle components because they have not been designed to burn ethanol.

    The other problem with this scheme is the question of corporate welfare accountability. There was no regulation of the levels of ethanol in fuel. The Howard Government was forced to impose a 10 per cent cap on the amount of ethanol in vehicle fuel, effective from 1 July this year. This $17 million windfall for Manildra was the result of the Federal Liberal Government being fiercely lobbied by ethanol producers to impose a 38 cents a litre subsidy for ethanol production. This was a huge direct benefit to ethanol producers and takes the form of a tariff. It is spectacular hypocrisy for the Prime Minister to be parading around the world, extolling the virtues of free trade, while meanwhile he arbitrarily slaps a huge tariff on ethanol which benefits Manildra as a producer of 90 per cent of Australia's ethanol and, indirectly, the wheat growers who supply the basis for ethanol.

    But the case of corporate welfare for Howard's mates at Manildra does not stop there. The latest Federal budget provided for extension of the subsidy from its original 12 months all the way to 30 June 2008. This is estimated to cost taxpayers $195 million. That money could just as easily be used to support the Medicare system, for higher education, or for supporting families in need of assistance, who are equally vital to the economy. My Federal colleague Senator Kerry O'Brien elicited from the Federal Government details showing that a grant of $885,000 was given to Manildra to research how to make wheat protein-based foods taste better. Manildra was paid $1 million of public money to help to develop a commercial-scale fuel ethanol plant using wheat starch.

    Subsidies being paid to companies for the development of technology that will assist the nation is clearly a principle that the Labor Party supports, but what has to be considered is the responsibility that Manildra has to return the favour granted by Australian taxpayers in ensuring that its monopoly continues. Provisions should be written into grants and subsidies received by beneficiaries of corporate welfare. [Time expired.]