Michael Pascoe writes:

CSR is a reliable, well-managed, diversified blue chip industrial company that has been travelling very nicely indeed this decade. So well, in fact, that copping a $5 million gift from the Federal Government looks like one of the more blatant examples of silly corporate welfare.

And what’s funny about this particular largesse is that it’s part of Canberra’s attempt to curry favour with sugar cane farmers when sugar is looking its happiest in decades.

Federal Industry Minister (and National Party member) Ian Macfarlane announced the gift in Brisbane yesterday, using the occasion to talk up the idea of 10% ethanol in petrol.

In a joint venture with Queensland University, CSR is doing some very interesting and quite promising research into genetically modifying sugar cane to sharply increase the sugar yield. If the search for this GM grail succeeds, it would revolutionise the economics of sugar production, initially crashing the sugar price, but also potentially making cane primarily a fuel rather than sugar crop.

There’s a lot of blue sky involved, but CSR will continue with the research with or without extra handouts from the taxpayer.

Still, it would be silly to think the granting of such money is about research outcomes – it’s all about the politics of being seen to do something for sugar seats.

You can’t blame CSR for taking $5 million when it’s offered, even when the company is perhaps the one major player in sugar and local ethanol who does not want ethanol content mandated for use in petrol. CEO Alec Brennan believes in free markets working best and that fiddling with them tends to have undesirable and unintended consequences.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey