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Whatsapp New quotas essentially mean that 60 per cent of fuel sales in NSW petrol stations must contain ethanol.

Ethanol producer Manildra's political donations are under new scrutiny as details emerge about the dissatisfaction in Liberal ranks with NSW's ethanol in fuel laws. Mark Davis reports.

Former NSW Upper House whip Peter Phelps has revealed he confronted premier Mike Baird over his concerns about ethanol in fuel laws before his dramatic resignation.

There's certainly an argument ... that you have to do something to help Manildra because if Manildra doesn't get help the plant will close down, we'll lose 300 jobs and we'll lose the seat of Kiama.

Phelps quit as whip in late March when the NSW parliament passed the Biofuels Amendment Bill, which changed the way ethanol was marketed and imposed quotas on service stations.

By law, the ethanol blends must now be called 94, instead of E10 or 91 with ethanol. The quotas essentially mean that 60 per cent of fuel sales must contain ethanol, or stations will face huge fines.

Speaking for the first time in detail about the reasons for his resignation, Phelps told Background Briefing it was 'literally the worst piece of legislation NSW has introduced'.

'It was so bad that I was able to get a number of my colleagues to agree with me—so much so that we actually took a delegation to the premier to see him about it,' he says.

Phelps says they approached Baird the day before the bill was introduced in the Upper House.

'We had a meeting with the premier, which explained our concerns, and he was seemed to be receptive to those concerns. Then the following day the bill was introduced in to our house and we had to make a decision as whether to, to vote on it or not.

'I thought we'd persuaded him. I thought we'd had an agreement that it would be held off and some proper empirical [research] would be done and it wouldn't come back until it had gone through the party room again. But at that stage it was decided to race it through in the last week.'

Baird has told Background Briefing he does not comment on discussions with colleagues. Through a spokesperson, he said: 'On biofuels reform, the government is continuing to consult with the industry to ensure the burden does not fall disproportionately on small to medium operators.'

Do you know more about this story? Contact Background Briefing.

Greens member Jeremy Buckingham says he recalls a 'visceral' mood in the Upper House when the legislation was passed, with the Liberal Party 'almost split to asunder'.

'There were people who excused themselves from the vote, there were people who spoke in support of him, but then voted with their government, but no one was defending the government,' Buckingham says.

'I was in the parliament saying that this process was corrupt. None of them were calling me to order, none of them were saying that I was out of order ... usually they'd howl me down and throw me out but instead they hung their heads in shame because I believe they knew it was true.'

Greens slam process as 'democracy for sale'

The ethanol in fuel legislation is a bonanza for Manildra, the near monopoly provider of ethanol in NSW—a company who, as Buckingham told NSW parliament, is also one of the biggest donors to political parties in Australia.

'Since 2010 the Manildra Group has donated $536,000 to federal Labor, $505,000 to federal Liberals, $683,000 to the Nationals, $123,000 to New South Wales Labor, $77,000 to New South Wales Liberals and $76,000 to New South Wales Nationals,' Buckingham said.

'This is democracy for sale.'

The minister for better regulation, Victor Dominello, says the laws help consumers by putting an alternative fuel into service stations and making it viable.

He doesn't deny the money that has been paid to parties in NSW by Manildra, but he strongly claims it has had no bearing on the legislation.

'NSW has the strongest laws in the country regarding disclosure laws,' he says.

'As long as it's transparent, as long as voters know they can make an informed decision, if it's transparent our listeners can make a judgement.'

Manildra's head of corporate affairs, Kirsty Bevan, says all the company's public donations are on the public record.

'It's all declared on who we meet with and when we meet with them,' she says.

'We make no secret and no excuses for meeting on behalf of our 2,000 employees in regional areas on topics that are relevant to regional communities.'

Five meetings with the minister in six months

Phelps says Manildra certainly had no problem organising meetings with senior politicians when the legislation was being drawn up inside government ranks.

'This is Manildra's modus operandi—they just bombard the minister with complaints and phone calls, bombard them continually with complaints and phone calls,' he says.

'Up to the decision to take this new path, in terms of ethanol, Manildra had five meetings with the minister in a six-month period, which is quite remarkable.'

Asked whether the 'substantial' donations to the major parties had bought access, or legislation, Phelps replies: 'I would suggest that it bought the original legislation. For this new legislation, as I said, they haven't put in anywhere near enough money.

'Manildra's main plant does happen to be in Kiama, which also happens to be a marginal Liberal seat. There's certainly an argument, which was around the corridors, that you have to do something to help Manildra because if Manildra doesn't get help the plant will close down, we'll lose 300 jobs and we'll lose the seat of Kiama.'

Hear Mark Davis's full investigation into the ethanol in fuel laws on Background Briefing at 8:05am on Sunday.

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