The tax rebate plan would pay gas-to-liquids plant operators a share of their investment, to encourage them to target the domestic market rather than send their natural gas overseas.

“In it is a plan for self-sufficiency, by going to alternative fuels and establishing a regime that encourages them to be developed here,” said Beazley.

“In particular, taking advantage of the massive technological advances in gas-to-liquid conversion and ensuring that we have that industry here.”

Beazley also said Labor would spend an unspecified amount of the $13 billion a year collected in taxes from the mining, oil and gas sectors to build support infrastructure.

“I am committed to putting in place effective incentives for exploration and extraction of this resource starting with a re-examination of the depreciation regime for gas exploration infrastructure,” Beazely said.

The opposition’s alternative fuels plan, to be brought into the next election, comes as Australia’s reliance on imported oil is projected to increase dramatically in the next 15 years.

If the country’s known natural gas reserves were coverted to liquid fuel, Australia would meet its transport needs for the next 50 years, according to Beazley.

A major theme in his speech was the rising price of petrol, which he said could reach $4 a litre by 2015 if Australia continues to rely on imported oil. The best insurance against this is developing homegrown alternatives, he said. He will further argue that Australia must further develop alternative fuels such as LPG and ethanol.

Meanwhile, the Australian car industry has now decided to back E10 ethanol-blended petrol.

Carmakers will tell drivers from next year that petrol blended with 10% ethanol, known as E10, is safe for vehicles and will not affect warranties.

The message will be placed on every petrol-cap flap from January, according to a report in today's Australian newspaper.

The about-face follows meetings between cabinet ministers and the chief executives of Holden, Ford, Toyota and Mitsubishi.