Australia’s Productivity Commission calls for federal review of ethanol subsidies as food prices increase

In Australia, the Productivity Commission has asked the federal government to review ethanol subsidies in light of the potential impact on food prices. The federal government has spent $31.9 million on annual subsidies, and research by the Commonwealth Parliamentary Library found that diverting crops to ethanol production would increase the trade deficit.

In 2006, the Rudd government when in opposition demanded that the government lock in the tax-free status of ethanol in order to assure the emerging industry’s survival.

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