Thursday, 28 August 2014
Australian Renewable Energy Agency (Repeal) Bill 2014; Second Reading
I am opposed to this bill and opposed to its passage through the parliament. The purpose of the Australian Renewable Energy Agency (Repeal) Bill is to repeal the Australian Renewable Energy Agency Act and the great work of this organisation—again, a classic example of the difference between this Abbott government and the Labor Party when it comes to protecting our environment; encouraging investment in renewable energy in our economy and, ultimately; ensuring that we hand on a cleaner, safer environment to our children.
The Australian Renewable Energy Agency was established in 2012 by the previous Labor government. The ARENA is an independent agency designed to improve the competitiveness of renewable energy technologies in Australia and to increase the supply of renewable energy to Australia's electricity markets. This bill to repeal that organisation and the philosophy behind it is well and truly rooted in the 1970s. It demonstrates the attitude of this government when it comes to encouraging the uptake of renewable energy in our economy. ARENA works to reduce the cost of renewable energy technology development and increase its use in Australia.
Through ARENA, financial assistance, largely through grants, has been provided to nearly 200 renewable energy developments, including the construction of renewable energy projects, the research and development of various technologies and the development and deployment of renewable energy, along with activities to capture and share knowledge gained through all of these projects to advance the sector towards commerciality. Seventy per cent of ARENA funding has gone to projects in rural and regional Australia, and those projects have created jobs for the future in these areas and encouraged investment in renewable energy in important localities and sectors of our economy. The Abbott government's axing of this very important body and its work puts many of those projects in jeopardy. On 1 July this year ARENA celebrated its second anniversary. In existence for two short years, ARENA has succeeded in shifting Australia's energy landscape. In his second reading speech introducing this draconian bill, the Minister for the Environment acknowledged the considerable success of ARENA, but, rather than seek to continue the program that this bill repeals, the government has decided instead to thrust its head in the sand and hope for the best.
Australians know and understand that climate change is real. They understand that climate change is occurring. They understand the vulnerability of Australia when it comes to climate change and our incidence of and our propensity to be affected by extreme weather events. They know that climate change is occurring, and, importantly, they know that as a nation we need to take action to combat climate change. If we are going to meet the IPCC recommendations, if we are going to meet the international obligations for which we have signed up as an economy to reduce emissions in Australia, then we need to be taking coherent and effective action to transition our economy into a clean energy future, to provide incentives for the development and the research of clean energy technologies, to provide the incentives for businesses to provide seed funding and to invest in renewable technology projects, and of course to provide the wherewithal and the expertise to manufacture those clean technologies into the future. That is what will drive future economic growth.
Many other economies in the world now see this. In our region many economies see this, including one of our closest neighbours, New Zealand, and, increasingly, our most important trading partner, China. China now has emissions trading schemes working in five—soon six—provinces. And during this five-year plan period of the Chinese government, we will have at the end of it a nationally operating emissions trading scheme. And we would have been looking, I might add, to link that trading scheme to neighbours and trading partners within our region, including Australia. But what has Australia done? We have gone in the opposite direction. We have taken a backward step when it comes to combating climate change, and this bill is a further example of that.
A recent Newspoll published in The Australian on 20 August this year showed that a staggering 98 per cent of Australians support renewable energy in our nation. A few days before that Newspoll was published, research was released that showed that energy companies stood to gain $10 billion in profits if the government winds back the renewable energy target—$10 billion for those dirty, polluting industries, predominantly coal fired power, if the government winds back the renewable energy target. And this research sheds an illuminating light on why the Prime Minister is so determined to either freeze or scrap the renewable energy target.
Australia was taking action on climate change. We had developed a price on carbon. That had been recommended by no fewer than 37 parliamentary inquiries in Australia. And when it came to the issue of how we tackle climate change in this country, since 1992 there have been no less than 37 parliamentary inquiries—and every single one of them recommended that a market-based mechanism was the cleanest and most effective way to reduce emissions within our economy, to provide a market-based approach, to allow businesses, households and individuals to make their own decisions about how they change their behaviour and reduce emissions within our economy. But despite this, despite all of these parliamentary inquiries, the coalition has failed to heed this message. Instead, it has chosen to take an axe to some of our most important institutions charged with the task of leading the nation into a clean energy future. The Australian Conservation Foundation's campaigner Tony Mohr said in the Sydney Morning Herald:
[These cuts] will starve research and development of clean energy in Australia, moving us to the back of the global race for clean tech.
This, in addition to the axing of the Clean Energy Finance Corporation, paints a vivid picture of this coalition's indifference to the global challenge of climate change.
Labor believe in taking real action on climate change. Importantly, we also believe in ensuring that our economy should transition to a clean energy future. If we misjudge our policy approach to tackling climate change, then we will all pay. But, alarmingly, those that will pay the most and those that will suffer the most, if we do not get the policy right on tackling climate change, will, unfortunately, be our children. They will bear the unbridled economic and social brunt of a mistake on climate change policy. But that is exactly what we are doing with climate change in this country at the moment. This bill is a classic example of that mistake that we are making. We are moving away from promoting research and development and the commercialisation of renewable energy projects. And that will be paid for by our children. That is why this bill must be opposed.
Australia is a nation of extreme weather events—of droughts and flooding rains, as it has been famously put. Failure to tackle climate warning and warming will see a greater incidence of extreme weather events that we will all pay for. Now, that is not my view. That is not the view of people who are uninformed in this area. That is the view of scientists. That is the view of climate change experts. What are we to do—ignore that advice? The great irony is that this is exactly what is occurring in this bill.
The coalition has developed a policy of direct action. It is a system of subsidies for companies paid for by us, through our taxes, to hope that companies will install cleaner technology that will, hopefully, reduce their emissions. So this is the great irony of this government's policy on clean energy: here we have the Liberal Party, the bastion of free-market economics—of the value of markets determining efficient outcomes within our economy—arguing for Soviet-style direct subsidies to combat climate change. And here you have the Labor Party arguing that we should have a market-based mechanism to allow companies and individuals and households to make their own decisions within the market about how they will reduce their emissions and change their behaviour.
All economists in our economy who are worth their salt will understand and know that that is the most efficient and effective way to change behaviour. The price allocates capital in market-based economies. And that is what was occurring under the Labor government, particularly in respect of the development and the commercialisation of renewable energy projects. In closing ARENA, we will see the promotion of renewables be reduced. We will see subsidies being offered to polluting companies in the hope that they will install new technology to reduce their emissions.
The other great irony is that the government claims there is a budget emergency. They claim that there is a need to take drastic action to clean up the budget and to get into a better financial position. But what we are seeing with their climate change policy is the complete opposite, because they are removing about $11 billion of revenue each year that is raised through the carbon price. It is raised by that market-based levy on big polluting companies—so that $11 billion in revenue has gone. And what do they put in its place? They put in its place $1.56 billion worth of expenditure each year, so, in net figures, the budget ends up about $12½ billion worse off. Our environment ends up being more dirty as we are not reducing emissions within our economy, and, importantly, the financial and economic incentive to invest and to make the transition to a clean energy future is also removed within our economy. It is a backward step in any objective analysis of this policy.
This policy of direct action will be paid for by all of us through our taxes, but we will not get the investment in clean energy technology and we will not get the market-based incentive to make a transition to a clean energy future. Although we pay the costs of the scheme through our taxes, only those who receive the subsidy will benefit. That is the great downfall of this, and that is being recognised—traditionally, I might say, by the Liberal Party in promoting market-based approaches but also by economists in respect of this. This is an unfair and inefficient system. More importantly, it will not work. It will ensure that our children have to clean up our policy failure at a greater cost.
Of course, we all know the Prime Minister's feelings on climate change. They were made clear a long time ago. 'Absolute crap'—they were the words that the Prime Minister used to describe the science around the greatest challenge of our generation. The direct action policy is proof of that attitude. The Abbott government is now determined to hurt Australians with this unfair budget, and also to hurt future generations of Australians by saddling them with the cost of taking action on climate change—by passing on to the next generation of Australians that cost, which will increase into the future if we do not take action now, of taking action to tackle climate change.
The Abbott government's Renewable Energy Target Review has only ever been about politics. It does not do anything to promote a clean energy future in our economy. Not only is this review the wrong way to go but it has also sparked a war within their cabinet and put billions of dollars worth of investment in clean energy technology and jobs at risk. Under Labor's renewable energy policies, wind power generation has tripled. The number of jobs in the renewable energy sector has tripled. The number of households with rooftop solar panels has increased from 7,400 to almost 1.2 million. Labor's renewable energy policies have been a success story but they are now under attack from this government. The abolition of the Australian Renewable Energy Agency is a classic example of that. That is why this policy must be opposed and this bill must be opposed.
I rise to speak to the Australian Renewable Energy Agency (Repeal) Bill 2014. The Australian economy is built around energy in terms of both access to efficient and affordable electricity for homes and businesses alike, as well as energy exports. We all want affordable and sustainable energy to continue to power industry and to consolidate our position in the international energy market. We also want to ensure that we put downward pressure on electricity bills for consumers.
The coalition government also sees the benefit of promoting the potential of Australia's energy services and locally developed technologies to the rest of the world. That is why this government is committed to around 200 taxpayer funded projects worth $1 billion, matched by a further $1.8 billion in private funds, making the total projects worth over $2.8 billion nation wide, which are managed through the Australian Renewable Energy Agency Fund.
I want to make it very clear that the coalition government is focused on getting real and measurable outcomes from the existing renewable energy projects and returning the uncommitted funding back to the budget. There is no magic pudding to endlessly fund projects, but the Labor government spent as if there were no tomorrow and every morning the magic pudding just replenished the spend.
The Australian Renewable Energy Agency, ARENA, is a statutory authority which commenced operations on 1 July 2012 and has the objectives of improving the competitiveness of renewable energy technologies and increasing the supply of renewable energy in Australia. The purpose of the bill we are debating here today is to transfer the responsibilities of ARENA to the Department of Industry by the repealing of the Australian Renewable Energy Agency Act 2011. The bill also provides for the transfer of all of ARENA's existing contracts and commitments to the Commonwealth for the Department of Industry to manage.
This bill, when enacted, will help achieve further budget savings of $1.3 billion by returning most of the uncommitted funding to the budget. This measure is required because of the financial mess that was inherited from a reckless and incompetent Labor government, which has always had the ability to spend more than it earns or could afford. The government will be ensuring that each and every project is well managed, that it meets its contracted milestones and that it is contributing to the advancement of an industry that has seen considerable government and collaborative industry funded investment over recent years. This government believes in providing the policy framework where Australian businesses can grow and can compete in an increasingly competitive global marketplace without just relying on government handouts. The focus over the life of these projects will be to make sure that the investments that are already made help progress the renewable energy industry as a whole.
I want to re-emphasise: the coalition government supports and is committed to the renewable energy sector through the existing $1 billion in taxpayers’ money invested in around 200 renewable energy projects across Australia and, I say again, leveraged up to $2.8 billion with collaborative funding from the private sector. The government is keen to see these projects deliver outcomes over the coming years. We recognise the clean energy sector, which, by its own count employs 24,000 people and has generated some $20 billion in investment is an important part of Australia’s energy solution. That is why we believe renewable energy should be part of a diverse energy mix.
Given Australian taxpayers are making a substantial investment in renewable projects, we believe it is sensible and prudent to monitor those investments and use the knowledge gained in ways that can strengthen the renewable energy industry. In particular, we are focused on ensuring that the knowledge that is gained can be applied in a practical way to deploy renewable energy in commercial projects to the benefit of all Australians.
We expect the knowledge gained from each of the 200 projects, from every taxpayer dollar spent, to help advance the renewable energy industry and benefit our nation. We believe that by using this knowledge we will start to develop energy solutions that are specific to Australian conditions and that can be deployed commercially to the benefit of all Australians.
When I began visiting the ARENA projects in my role as the Parliamentary Secretary to the Minister for Industry I went in with an open mind, willing to learn more about renewable energy projects, the number of people being employed and what taxpayers were receiving in return for these significant investments. I was absolutely fascinated by some of the research being undertaken.
Earlier this week I joined with ARENA CEO, Ivor Frischknecht, at the University of New South Wales to announce $21.5 million in federal government funding for 12 new solar research and development projects. These projects have a total value in excess of $70 million. There were 110 applications and, in a very competitive process that saw applications vetted and ranked against one another, 12 were selected. These projects are the best of the best.
The ANU will receive $9.183 million in funding for five projects: researching material qualities; the efficiency of silicon solar cells; high temperature solar thermal energy storage; and developing PV modules for the unique Australian environment. The CSIRO in Newcastle will receive $4.6 million in funding for three projects: to develop high efficiency solar Allam cycle: to develop low-cost small heliostats for use in remote installations; and to work on a virtual power station.
The University of New South Wales will receive $6.95 million in funding for three projects: to develop ultimate performance commercial silicon solar cells; to develop high efficiency silicon/perovskite tandem cells and modules; to study advanced recombination-based loss analysis methods for silicon wafer and silicon solar cells. The UTS will receive $750,000 for a project to develop lithium-sulfur batteries for large-scale commercial electrical storage. The total value of these 12 projects is $70.5 million and it is a great example of the government working with researchers and industry to deliver real and measurable outcomes to the solar industry.
I visited many of the ARENA projects and the first one was in Wallsend. In May, I visited the Carnegie Wave Energy project south of Perth, where Tim Sawyer, the project development officer, demonstrated that this $33.4 million-project is well advanced. ARENA provided $13.1 million towards the development of the Australian-invented and owned CETO wave energy technology that converts ocean swell into zero-emissions renewable power and desalinated freshwater. This project is the commercial demonstration phase that comprises the design, construction, deployment and operational performance evaluation of a pilot-scale, grid-connected, two-megawatt-installed-capacity wave energy demonstration project at Garden Island. The facility will consist of three submerged CETO 5 units in an array, subsea pipelines to shore, hydraulic conditioning equipment and an onshore power generation facility.
In June, I visited the team from Renergi at the Fuels and Energy Technology Institute at Curtin University in Western Australia. The research project, headed by Professor Chun-Zhu Li, had received $3.6 million towards the project cost of $6.7 million. The aim is to develop new technology and increase technical expertise to grow and convert farm-grown Mallee crops into advanced biofuels that can meet future transport fuel demands, whilst at the same time reducing carbon emissions. The Mallee spinoff has additional economic benefits of reducing dryland salinity in agricultural areas and this could potentially reduce approximately $300-$400 million of crop losses per year in Western Australia.
Renergi’s commercial gasifier will also produce biochar as a by-product, which may have applications for carbon sequestration or agricultural fertiliser. ARENA has offered a further $5.2 million to Renergi under the Emerging Renewables Program to scale up its gasification technology to a commercial application capable of delivering five megawatts. Again, this project is still in its early stages but I do look forward to the results.
New and innovative technology is always fascinating to conceptualise and intriguing to understand. But let me also be very clear that research and development in renewable energy lies not solely with ARENA as an agency. In May I visited the Edith Cowan University, where I met with Professor Kamal Alameh, Director of the Centre for MicroPhotonic Systems at the Electron Science Research Institute—ESRI.
I have always wondered why large-scale buildings with glass curtain walls could not be better designed to collect solar power. Obviously, the glass cannot be covered with photovoltaic cells as there would be no vision or light through the glass. But ESRI, who previously received the WA Inventor of the Year Early Stage Category award for high-speed, chip-to-chip optical interconnects, has developed Tropiglass.
Tropiglass is a glass panelling arrangement which allows the harvesting of solar energy through the window panes by deflecting the light energy source to the internal frame, which in turn houses the solar cells to collect the energy. It is this sort of thinking that is well beyond 'outside the square' thinking that will deliver to Australia and the environment in spades. We have organically grown and also attracted some of the best and brightest researchers to Australia.
The previous government’s record in generating sensible environmental policy disastrous. Let me run through the litany of disasters the former Labor government dreamed up: pink batts, Green Loans, Green Start and 'cash for clunkers'. 'Cash for clunkers'—that summarises the entire ALP approach to the environment. This is not to mention the citizen's assembly that was, in fact, the climate policy they had before the carbon tax and which was the policy they took to the 2010 election.
We can remember the Green Loans. Green Loans were another signature policy. It ended up with an average cost of $100,000 per $1,000 loan. It may sound extraordinary, but the average price per loan distributed was around $100,000. They spent $100 million and they issued just over 1,000 loans. Therefore, the program cost, on average, $100,000 each for the loans, which were just over $1,000 each. Great economics!
Then we go from Green Loans to cash for clunkers. This, of course, was their signature program. It was going to be a giant. It was going to transform the automotive sector—except that it never happened. The cash for clunkers program in the end did not just collapse; it actually crashed.
The repeal of the carbon tax has been a huge win for the Australian public and for businesses. We believe the passage of this legislation will be another step in the right direction, by continuing to invest in renewable energy projects in a financially sustainable way. The repeal of the ARENA bill will be another step in the right direction.
In conclusion, it is important we continue to reflect on what it will take to secure Australia’s energy future. Energy is fundamental to our economic prosperity and the government is keen to ensure we get our economic fundamentals right. All the energy sources available to Australia should come into the equation in considering how best to secure our energy future.
Traditional energy sources continue to meet the bulk of our needs, but the importance of renewable energy in the mix is growing. The government’s open-for-business policy is to enable all businesses to stand on their own feet and flourish with fewer taxes and more streamlined, but improved, regulation. The government believes well-functioning markets are the key to delivering the best outcomes for energy producers and consumers alike. Competitive energy markets are essential to attracting investment in our energy sector in a form best suited to the needs of businesses and households.
As has been seen in the retail energy markets, effective competition promotes customer choice. Effective competition means customers can choose from multiple energy contracts and energy retailers to find an offer that best meets their needs at a price they are willing to pay. Retailers are incentivised to innovate and differentiate their offers from those of their competitors to better meet the needs of their customers. The government’s focus is to create the optimum policy settings that will support the efficient operation of the energy markets, and that includes a blended renewable energy market.
I commend the Bill to the House.
That was a remarkable speech from the member for Paterson. He was speaking the renewable energy projects which have sprung up in recent years and was talking about the merits and values of those projects. He made many worthwhile and important points. But the remarkable thing is that the very projects he was extolling have been made possible either by the renewable energy target, which this government is determined to cripple, or by the Australian Renewable Energy Agency, which this Australian Renewable Energy Agency (Repeal) Bill 2014 proposes to abolish! The member seemed oblivious to the fact that his government is determined to kill off the very projects that he was talking up.
The Labor government established the Australian Renewable Energy Agency, known as ARENA, in 2012 as an independent agency designed to improve the competitiveness of renewable energy technologies in Australia and to increase the supply of renewable energy to Australia's electricity market. ARENA works to reduce the cost of renewable energy technology development and to increase its use in Australia. ARENA provides financial assistance for the research, development, demonstration and commercialisation of renewable energy and related technologies; develops skills in the renewable energy industry; and promotes renewable energy projects and innovation, both nationally and internationally.
ARENA currently supports more than 190 renewable energy projects, drawing more than $1½ billion in private sector investment. There are currently a further 190 renewable energy projects in the pipeline which have the potential to draw more than $5 billion in private sector funding. Seventy per cent of ARENA funding has gone to projects in rural and regional Australia, creating jobs for the future in these areas. The Liberal government's proposal to axe ARENA puts these projects in jeopardy. This bill risks the investment arrangements already in place for existing projects, and puts a complete freeze on future investment arrangements.
The Liberal Party is quick to cry foul and make hysterical claims about sovereign risk if a Labor government takes any action which impacts on any company's bottom line, but the way in which it subjects the renewable energy industry to constant policy changes and rough handling, beggars belief. These are real industries, providing a real service in a carbon constrained world. They are the industries of the future.
Experience from renewable energy markets overseas has shown that stable, long-term policy support provides the renewable energy industry with the required incentives to expand the renewable energy market. A clear commitment from the federal government on the policy framework surrounding renewable energy in Australia, such as the renewable energy target, provides the long-term certainty needed to encourage the growth of Australia's renewable energy industry.
The number of countries with renewable energy targets more than doubled between 2005 and 2012, with at least 118 countries—over half of the world's countries—now having renewable energy targets in place. Of these, 109 countries have policies to support renewables in the power sector. Currently, 19 of the G20 member countries have some sort of renewable energy support policy, and all of Australia's top 10 trading partners have policies to promote renewable energy. So we are not out there, on this matter, on a limb or on a frolic of our own; this is what countries right around the world are doing.
A central reason for this is the potential for renewable energy to create jobs. World wide, an estimated five million people work directly or indirectly in renewable energy industries. Global investment, in 2010, reached US$243 billion—an increase of 30 per cent from 2009. So, countries right around the world are recognising the benefits of renewable energy as a central element to remaining economically competitive.
Recent research indicates that France, Japan, the United Kingdom, South Korea and Germany are currently best prepared to be competitive in the global low-carbon economy. These countries, by moving first in adopting policies that support renewable energy and low-carbon technologies, will experience superior rates of learning, better cost reduction, and are currently best prepared to be competitive. Meanwhile, Australia is the only country in the G20 which has become less prepared for the low-carbon economy since 1995, and faces some of the biggest challenges in remaining competitive in a low-carbon future—ranked 16 in the G20 behind Argentina, South Africa, Saudi Arabia and Russia.
If Australia continues with a lack of commitment to policies that support renewable energy then the cost of shifting to a low-carbon economy will be higher, and we will risk losing our international competitiveness. Of overriding importance is the need for policy stability and certainty so investors commit funds that will grow the industry and Australia can catch up in the global race to transition to a low-carbon economy.
Labor's renewable energy policies have been a success story, yet they are all now under attack from the Liberal government. In addition to the bill before the House to abolish the Australian Renewable Energy Agency, the government had legislation before the parliament to abolish the Clean Energy Finance Corporation. We have been reading in the papers in recent weeks that the Prime Minister wants his Renewable Energy Target Review Panel to recommend scrapping the RET all together.
It is a mystery as to why the Liberal government wants to put an end to such successful policies that deliver savings to Australian households, create Australian jobs, drive investment in Australian industries, and are good for Australia's environment. During our time in government, wind power tripled, jobs in the renewable energy industry tripled to more than 24,000, and Australian households with solar panels on their roofs skyrocketed from around 7,000 to over one million. Some of the wind and solar farms in Australia are the biggest in the Southern Hemisphere. Investment in these projects was being driven by the renewable energy target, and when Labor was in government Australia ranked in the top four most attractive places in the world to invest in renewable energy projects. Since the election of the Liberal government, and since the scare campaign against renewable energy, Australia has fallen to ninth on the global index.
The RET review, the attempts to axe ARENA and the CEFC, and the Prime Minister's false rhetoric about the impact of the RET on power prices has stalled investment in the renewable energy industry. It is risking jobs and businesses. A recent Newspoll, published in The Australian on Wednesday 20 August, showed that 98 per cent of Australians support renewable energy. And recent research released by the Climate Institute, the Australian Conservation Foundation and the WWF has highlighted that under a scenario where there was a termination of the RET then coal fired power generators would reap an extra $25 billion in profit between 2015 and 2030. I suspect that herein lies the real reason behind the government attacks on the RET. The RET has been such a resounding success that vested interests in the energy sectors are not happy with renewable energy gaining a larger than expected share of the electricity market.
Under the current ownership arrangements, EnergyAustralia is the company that would stand to gain most. Its potential extra profit would be about $1.9 billion if the RET were reduced, and $2.2 billion if it were abolished. If AGL purchased Macquarie Generation it would become by far the biggest beneficiary of reducing the RET, with combined extra profits of $2.7 billion if the RET were reduced. Origin Energy's total extra profit would be about $1.5 billion. Origin Energy owns the power station that would emit the largest amount of additional pollution under a reduced RET.
What the modelling also established was that abolition of the RET would see no reduction to household power prices, and carbon emissions would climb by 15 million tonnes a year on the back of a nine per cent increase in coal-fired power. When I had discussions with Tim Sonnreich from the Clean Energy Council he pointed out, and the council points out, that scrapping or scaling back the renewables target would see electricity prices rise, not fall, due to greater use of gas in the energy sector at a time when gas is soaring in price.
The modelling commissioned by the Climate Institute, the Australian Conservation Foundation and WWF indicated that for a household consuming 6½ megawatt hours of electricity annually, which is the New South Wales average, reducing the renewable energy target would add about $35 to the annual power bill—most of this increase will take place after 2020. An abolition of the renewable energy target would add about $80 a year to the annual power bill. This puts to the sword the claim made by the Prime Minister in July that the RET is significantly driving up power prices, and reveals that the government is more in the thrall of climate change denialism than having a genuine concern for cost–of-living pressures.
The same modelling also indicated that reducing the renewable energy target would cost the federal budget about $680 million in extra funding to meet Australia's target of five per cent emissions reductions by 2020, in addition to the socialised costs amounting from higher levels of pollution, which the model estimated conservatively to be $14 billion. I think it is ironic that this is a government that talks about direct action, the renewable energy target is direct action, yet the government makes spurious arguments to try to justify its abolition.
The review into the RET that was set up by the government was headed by a known climate change denier. Even then, according to reports, it found that the RET did not add significantly to household and commercial power bills and, in fact, it accounts for only three per cent of an average household electricity bill. The government's apparent intention to ignore its own stacked inquiry reflects a predetermined view of climate change by this government. They do not believe in it—full stop. The tragedy of the removal of RET is that it will jeopardise around one per cent of GDP in committed capital investment. It is regrettable that we have got a government that is more concerned with the ideological outcome or the vested interest than it is with a sound and visionary policy, which is what the renewable energy target is. This is real sovereign risk, not that bogus sovereign risk levelled at the mining tax or recently by the trade minister when he was talking about the budget in the Senate. If we have abolition of the RET, this will be done with no lead time, in the teeth of the policy taken to an election.
I also make the point that we have seen the abolition of the carbon price and that underscores the ongoing importance of the renewable energy target. It is now the only game in town, the only national initiative directed at reducing Australia's greenhouse gas emissions—the last hope. Scrapping it at this point is removing Australia's only remaining substantial carbon abatement policy, with all of the negative flow-on effects that that will have for the local and global emissions mitigation effort, as well as exposing Australia to big risks in terms of future international policies. If the government is genuinely concerned about the significant power price increases, which have taken place—I have spoken in the House about this previously—it needs to look at the overinvestment in power distribution networks which accounts for three-quarters of the increases that have occurred.
I note that Miles George, the managing director of the renewable company Infigen Energy, has said either scaling back or terminating the RET 'would be devastating'. He said that the creation of sovereign risk would be significant and that the very issue had been raised by prospective foreign investors, including Canadian pension funds which the Prime Minister sought to woo on one of his overseas trips in June. He said:
Infigen's shareholder base of over 20,000 investors has invested in renewable energy in Australia on the basis of a fixed target of 41,000 gigawatt hours by 2020. This is no different to investors in private or public partnerships acquiring a toll road concession or a port lease. If the government pulls the rug from under institutional investors in renewable energy, we shouldn't expect those investors to come back to buy other infrastructure assets here.
It is high time the Liberal government stopped undermining and white-anting renewable energy. Australia has what it takes to be leading the race in developing a renewable energy industry: world-class renewable energy resources, a skilled workforce and a proud history of innovation. We need to exploit this comparative advantage and embrace the huge opportunities that our renewable energy provides; otherwise we risk falling behind. The community is calling for it, business is ready to invest and we and future generations will benefit from this investment.
I rise to speak on the Australian Renewable Energy Agency (Repeal) Bill 2014. Despite the claims of those opposite to the contrary, fiscal reform is needed in Australia and the coalition, as a responsible government, needs to rein in expenditure if we want any hope of putting our economy back on a sustainable path to surplus. The reason those opposite have challenged the government's reform measures is not because those measures are unjust or irresponsible; it is because to do so would mean they would have to finally admit and accept that their cash-splash approach to running the government for six years is what caused every Australian to now be faced with billions in deficit. That is projected to rise to $667 billion if we do not fix the unsustainable spending path those opposite have put us on.
Every member of the public has to balance their personal budget to make ends meet and a responsible government has to do that as well. Unfortunately this concept of economic responsibility was forgotten, year after year, under the former government—despite their ongoing claim that a surplus was just around the corner. I do not know what path those opposite thought they were walking but it certainly was not one to surplus, after delivering $191 billion in deficits in their first five budgets. It is safe to say those opposite have no idea what a surplus looks like except when the coalition delivers one.
The National Commission of Audit, the Secretary of the Treasury and the Governor of the Reserve Bank have all unequivocally stated that the government cannot afford to maintain its current expenditure levels. The commission, in fact, found that if the government did not rein in expenditure, every Australian would feel the weight of continuing deficits for 16 years in a row to 2023-24. Although it may seem harsh to some, entitlements must be pulled back and spending reduced across all government portfolios if we are to have any hope of putting Australia back onto the sustainable path we seek.
To achieve this the community and those opposite need to reassess their view of the government and how taxpayers' money is spent. When an individual, a business or an organisation can afford to support themselves, their expectation should not still be that they deserve an additional handout from the government or from the taxpayer—yet this is exactly what we are seeing. An economically responsible government is not one that caters to this unsustainable expectation; instead it balances its books, while still having safeguards in place to assist those who need it the most, and develops spending measures that will enhance the lives of our future generations through investment, research and innovation, job-building programs and infrastructure advancements. That is something this government will achieve if these budget measures are passed in this place.
The bill before the House today has been surrounded by an air of controversy, with those opposite claiming that if the government closes the Australian Renewable Energy Agency, or ARENA as it is commonly known and referred to, it must mean that the coalition is against renewable energy.
This could not be further from the truth. The government would like to invest more in welfare, education, infrastructure and all manner of other policy initiatives that we are already investing significant funds towards in the budget. The reality, however, is that we simply cannot afford to do this because Australia's current levels of spending are not feasible—not now and certainly not in the long term. This is not just the view of the coalition. It is also the view of the Treasury, leading economists and an independent National Commission of Audit report. The commission's chairman, Tony Shepherd, recently made this clear in an opinion piece in The Australian where he definitively stated that we are living beyond our means. In the article he goes on to state that we have arrived at our present fiscal situation because past governments have expanded the range of, and eligibility for, social services and other benefits and legislated these entitlements, creating unreasonable community expectation. Needless to say, if those opposite had implemented some sort of policy framework that was appropriately costed during the six years they were in government, the coalition would not be faced with these tough decisions today.
As a result, the government has held firm on its spending cuts and introduced the Australian Renewable Energy Agency (Repeal) Bill 2014 for the purpose of closing ARENA by repealing the Australian Renewable Energy Agency Act 2011. This will save the government almost $1.3 billion in uncommitted funding. Like any business model, it is important to see how innovation concepts develop and whether outcomes are being achieved before investing more money in similar initiatives. That is why the government is committed to overseeing the rollout of a billion dollars in ARENA projects that funding has already been committed to. We will ensure greater efficiency in Australia's renewable energy sector is achieved by consolidating the delivery of these projects into the Department of Industry.
A billion dollars is a significant amount of money to commit to renewable energy, so any claims the government is walking away from the developments in this sector are clearly baseless. Although $1 billion is already a lot of money, so is the further $1.8 billion that has been invested by industry—taking the total investment in Australian renewables to $2.8 billion. Despite the idea that has been generated by those opposite and the media that ARENA is the only driver of renewable energy in Australia, this is not the case. As an example I would like to relay a story. When I went on a delegation to Singapore with the former member for Braddon—I see the current member for Braddon sitting in the chamber—and the former member for Reid, both of whom are no longer here, we spoke to a Singaporean development corporation. We questioned them: 'Why don't you invest in renewable energy?' They said: 'We don't invest in anything that is not sustainable.' There is an economic answer for you. There is no reason why renewable energies cannot be picked up by the private sector.
Other measures, including the government's Renewable Energy Target Scheme, have provided both direct and indirect support to renewable energy. This has amounted to tens of billions of dollars in financial assistance to renewable energy projects and targets, a significant investment by anyone's standards. The $2.55 billion Emissions Reduction Fund will also provide an incentive based approach to tackling climate change and reducing energy costs through activities such as revegetation, investing in soil, carbon capturing of gas from landfill and increasing energy efficiency. The government also announced the establishment of the Solar Towns program in the budget to support solar PV and solar hot water in community groups. To date, financial assistance by ARENA, largely through grants, is being provided to nearly 200 renewable energy developments including the construction of renewable energy projects, research and development of various technologies and the development and deployment of renewable energy.
In my electorate of Swan, and as we heard previously from the parliamentary secretary, the Curtin University of Technology has long been recognised as a key driver in research and innovation across a sweep of projects. Many colleagues in this place would have heard me speak about the Curtin University before and I recently had the pleasure of announcing another $2.7 million in Commonwealth government funding to support four potentially groundbreaking science projects at the university. This funding was part of a $150 million commitment by the Commonwealth government to fund 150 new fellowships across the country, and it is administered by the Australian Research Council. Curtin has also received financial assistance from ARENA for two renewable energy projects, one of which was completed in May 2012. Under ARENA's support for advanced biofuels program, the university and its partners received $2.5 million in grant funding to develop new technology and increase technical expertise to equip Australia to grow and convert farm-grown Mallee crops into advanced biofuels and meet transport fuel demands while reducing emissions. As a result of this project, the decision tool that was developed to estimate mallee crop production based on key site characteristics will be made directly available to growers to speed up the development of the mallee based biofuel industry.
Curtin University's company Renergi Pty Ltd also received over $3.6 million from ARENA to take their currently small-scale technology, which converts biomass such as agricultural waste and mallee crops into a gas that can be used to generate electricity, to the next stage by building and operating a larger version of the gasifier. This project is ongoing. I have worked with Curtin University for many years and have witnessed firsthand how their research projects and innovative technologies have the ability to drive various Australian industries in the long term, a goal I am sure each of these projects will achieve.
Two other projects in my home state of Western Australia have also been provided with financial assistance by ARENA, including $13 million towards the Perth Wave Energy Project, which is being developed by Carnegie Wave Energy Ltd, offshore of Garden Island. The parliamentary secretary mentioned this project as well. It reminds me of when John Howard gave a grant of $5 million to that particular company in 2007—and guess what happened when the Labor government came in? They took it away. They say they have a deep interest in renewable energy and they took the $5 million grant away because it was given by the coalition. This project will create the world's first commercial-scale wave energy array that is capable of producing both zero-emission power and directly desalinated water. This clean energy will be purchased by the Australian Department of Defence, as part of a landmark power purchase agreement. Almost $450,000 has also been committed to a feasibility study by Abengoa Solar to construct a 20-megawatt solar thermal power station at Perenjori.
I fully support the work of each of these organisations; however, I understand, as I am sure they do, that the government cannot afford to continue providing this level of assistance with taxpayers' funds—as much as we would like to—when we are faced with the burden of ridding Australia of its current debt levels. To ensure that each of the currently funded projects continues to be well managed, key measures in the bill before the House today will identify how ARENA's assets, liabilities and functions will be transferred to the Department of Industry to avoid any disruptions to current projects or those that will soon be underway. I am sure you, Mr Deputy Speaker Vasta, along with me, have full confidence in the Department of Industry to carry on the work that is currently being done by ARENA. A provision in the bill will also require ARENA to provide the Minister for Industry with an annual report and, if necessary, a subsequent report for the time between financial year 2013-14 and the last day of ARENA's reporting period as an agency. This will ensure the minister has a complete understanding of project outcomes to date so that informed policy decisions can be made in the future.
Under the Labor government, Australian businesses and industry were forced to endure inconsistent leadership and a lack of vision or long-term strategy, which led to projects across an array of portfolios being mismanaged. Unfortunately, ARENA projects did not escape this chasm. Instead of solving problems, the former government's answer was to throw more money at them, close their eyes and hope they went away. We heard the parliamentary secretary earlier mentioning pink batts, school halls and other projects under Labor's auspices. It is because of this mismanagement that the Oceanlinx one-megawatt commercial wave energy demonstrator, based in South Australia, sank in June and remains damaged beyond repair. Nearly $4 million of Australian taxpayers' money sank with it. Another South Australian project was also closed in June, albeit not as dramatically, after grant funding conditions were unable to be met due to a lack of investors for the Petratherm 'hot rocks' renewable energy project. The result was a further $4.2 million in taxpayers' money going down the drain under the previous Labor government's watch. Unlike the former government, the coalition has taken on board the lessons learnt from this mismanagement at the top level and will be working to ensure the transfer of ARENA projects is progressed efficiently and contract milestones are met.
Australia has a diverse energy mix, including coal, gas and, of course, renewable energy. This government supports each of these sectors and any projects that aim to reduce costs for providers and consumers—particularly with regard to renewable energy, those projects that aim to reduce Australia's emissions. The government will continue to invest in these sectors through various schemes and policy measures, but, unlike the former government, it will invest systematically and under a consolidated framework that is economically sustainable.
It is because businesses and communities across Australia know that the coalition government have the strength to make these tough decisions, and are economically responsible, that we were elected last year, and now we will do everything in our power to see our key budget savings passed through this place and the Senate. It is time those opposite stopped trying to block the passage of these necessary savings measures and instead supported the government's efforts to put Australia back on a sustainable path and reduce the debt levels they created. I commend the bill to the House.
I listened with great interest to the contributions from previous speakers, including the member for Swan and the member for Paterson, to this debate on the Australian Renewable Energy Agency (Repeal) Bill 2014. Yet again, they demonstrate, as all coalition members of parliament have demonstrated, a complete misunderstanding of industry development experience, the challenges of the renewable industry and the challenges of climate change.
I will start by remarking on the contribution from the members for Swan and Paterson, who lauded some great projects funded under ARENA. They were very proud, justifiably, of some of the projects. The logical question, then, is: if these projects are so deserving and they are so proud that ARENA funded them, why cancel this program? They are very proud to turn up at grant fundings. The member for Paterson, one of my neighbours, has turned up to the opening of envelopes, and grant announcements are his reason for getting out of bed in the morning. But he is often turning up to grant announcements for programs he then tries to cut. The consistency is just not there.
In this debate, on the abolition of the Australian Renewable Energy Agency, it is best to start from first principles. The first principle is a global need to combat climate change. Global warming is occurring, it is overwhelmingly man-made and each nation needs to make a contribution. By 2016, three billion people in this world will live in countries or provinces where there is an emissions trading scheme. So the world is taking action. We need to combat climate change. Australia needs to play its part.
And this is not just a great challenge; it is also a great opportunity to grow the jobs and industries of the future. Just as the countries that invested in steam and textiles, including Great Britain, dominated the first industrial revolution, and the countries that invested in and pioneered the work of steel and chemicals in the mid-19th century, the United States and Germany, dominated the second industrial revolution, and the United States and Japan, in the third industrial revolution, pioneered research into electronics in the middle of the 20th century, it is the countries that invest in clean energy products and clean energy technologies that will benefit most from the fourth industrial revolution, which we are beginning to see right now.
This government is squandering that opportunity. Across the globe more than US$250 billion was invested in clean energy technologies in the last year. This is the opportunity that we are squandering through the abolition of agencies such as ARENA. It is why Labor took action in the first place. I am proud to say that under the last Labor government jobs in the renewable energy industry tripled to 24,000, capacity in the wind sector tripled as well and solar PV installations on roofs grew from a paltry 7,000 under Prime Minister Howard to 1.2 million. This is a proud legacy of Labor, and ARENA was a vital part of this legacy. It complemented our other initiatives, most principally carbon pricing, putting a price on the negative environmental externality of carbon pollution—a policy that will stand the test of time, a policy that is consistent with what the rest of the world is doing, a policy that is economically literate and was the recommendation of every reputable economist around the country, unlike their dog of a scheme, direct action, which is an orphan their own front bench such as the member for Wentworth label a fig leaf for doing nothing.
So the carbon price was a vital foundation for our action to combat climate change and grow our renewable energy industry. This was complemented by policies to support the growth of renewable energy across the entire innovation chain, which was ARENA, the Clean Energy Finance Corporation and then the renewable energy target, which all complemented each other, targeting different parts of the innovation chain and identified market failures. ARENA combated the need to invest heavily in research and development. The Clean Energy Finance Corporation supported proof of type, the first large-scale prototype technologies being deployed into the market. The RET came in to support mature technologies to ensure their widespread deployment. Each part of these programs complemented each other and, I would argue, can be held up as a great example of industry policy targeting each part of a market failure to give us the best chance of developing a new industry.
What has the new government done when it has come into power? It has committed to destroying all this architecture that gave us our best chance to combat climate change and grow these industries. They have abolished the carbon price, they are trying to abolish the Clean Energy Finance Corporation and they are trying now to abolish ARENA. If you believe the reports in the newspapers, they are also well on the path to abolishing the renewable energy target. The last two things—abolishing ARENA and RET—are in direct contradiction to their commitments before the election. This is a coalition of two political parties that talk endlessly about keeping their election commitments, but they have breached so many I do not have time to list them all. They gave a clear commitment to maintaining the RET and they gave a clear commitment to maintaining ARENA, and they are breaking both of them.
What is even worse is that, not only are they breaking commitments to keep previous policies started by Labor; they are also breaking their own commitments to start new programs. The so-called Minister for the Environment was very proud of his one million solar roofs program that first appeared in 2010 and was a key feature of their Direct Solutions pamphlet that was the Prime Minister's shield whenever he went campaigning. That has disappeared completely—not a mention of it in the budget—abolished before it even started. This demonstrates yet again that the Minister for the Environment and, in fact, the Minister for Industry have no influence in cabinet. They are pariahs. I am surprised they even get invited to cabinet meetings, because anything they put up is said no to.
And what is the impact of all this? The impact is huge sovereign risk issues. Let me read a quote from the so-called Minister for the Environment from the lead-up to the 2013 election: 'One of the things we don't want to do is become a party where there is wild sovereign risk, where businesses take steps to their detriment on the basis of a pledge and policy of government. We're very clear that that's not what we want to be.' He is clearly out on a limb there, because that is exactly what they are going. Abolishing ARENA in a clear breach of an election commitment and abolishing RET or, at the minimum, incredibly watering it down are clear sovereign risk issues that industry will be deeply impacted by.
What is at stake? What is at stake is 24,000—and growing—jobs in the renewable energy industry and $18 billion of future investment. This is what is at stake by the economically irresponsible actions of those opposite that have already seen investment in this sector dry up. In the first half of 2014 investment in large-scale renewable energy in this country has fallen to $40 million. Not $40 billion—$40 million in the first half of this year. That is the lowest level of investment in 14 years and contrasts deeply with the $2.7 billion invested by the private sector in renewable energy in 2013.
It is not just aggregate figures where this drying up of investment is occurring. It is also identifiable in projects such as the cancellation of Australia's largest solar farm. This project was cancelled a few weeks ago, and the industry actors that were investing in this clearly identified the sovereign risk issues imperilled by this government as a direct cause. They identified the abolition of ARENA and the complete inconsistency and speculation around the RET as driving this impact. So we have seen investment in this sector drop from $2.7 billion last year to $40 million. This is a complete disgrace and mortgaging our future on the economically irresponsible actions of those opposite.
It is vital that we grow this industry as those opposite destroy traditional industries. They have already destroyed the automotive sector. They have already killed 50,000 direct jobs in the automotive sector and another 200,000 indirect jobs. Not only are they content to destroy traditional industries and impact the manufacturing regions of this country like the northern suburbs of Adelaide, Newcastle, the western suburbs of Sydney or areas of Brisbane; they are trying to put a bullet into industries that could fill that gap such as renewable energy. This is a great tragedy. We are the equivalent of a country investing in the horse-and-buggy industry in the early 20th century as the United States and other countries invested in automotive manufacturing. This is a government committed to driving us back not to the 1950s but to the 1850s, and they will be condemned by history for their actions on all this.
We have heard from the other side about how governing is about choices, you have to be responsible and we live in tight fiscal times. I completely agree that governing is about choices and deciding competing fiscal priorities. I ask then: why is it fair to spend $68 billion over the next decade on a ridiculous Paid Parental Leave scheme while cutting investment in significant programs that will grow jobs and secure the economic future of this country? Why is it fair to spend $68 billion so that wealthy mothers in the seats of North Sydney and Warringah can get $50,000 to have a baby while mothers in my electorate of Charlton get less than $20,000? Why is that fair when the government is destroying programs that are helping advance the economic future of this country? Why is it fair for them to abandon sensible taxation measures to cut down on multinational tax evasion, measures that would save the bottom line over $1 billion over the forward estimates, while they cut serious programs that would grow the jobs of the future in Australia? The truth is that governing is about choices, and almost every single decision, every single choice, the government have made has been clearly wrong. The great tragedy is that they are mortgaging not only their future but also Australia's future. They are condemning our children and our grandchildren to a rust-belt economy, an economy that will be the laughing stock of the rest of the world.
It is important to go back to some comments made by Asian countries in the early 1980s when Australia faced similar choices about our economic path. The then Prime Minister of Singapore, in 1980, said that Australia was becoming the 'poor white trash of Asia'. Given that period was a period of stagflation of an economy with very high inflation and industries that were overprotected and, quite frankly, not globally competitive, that description, while very brutal, was very apt. A reformist Labor government under Prime Ministers Hawke and Keating came in, made very significant economic reforms and put in place the foundations that have led to over 20 years of uninterrupted economic growth, with industries that are outwardly focused, globally competitive and able to export around the world.
We face a similar choice here, where we have a regressive government; a government not of conservatism but of reaction; a government driven by DLP sympathisers like the Prime Minister; a government determined to return to the past. This legislation is symbolic of that attempt to return to the past and abandon investment in serious industries like the renewable energy industry. As I said, it will be our children and grandchildren who will suffer from this. It will not just be employment, jobs and high living standards; it will be about taking action on climate change. That is one of our greatest obligations: to leave the planet a better place than we found it.
I notice the member for Riverina is at the dispatch box. He represents an electorate that will be one of the regions that suffers the most under climate change. The Garnaut report has forecast that if climate change is not combated we will see a 98 per cent reduction in farming in the Murray-Darling area—an area that the member for Riverina purports to represent. That is a choice we face in legislation like this where we have a choice of combating climate change—
Thank you, Mr Deputy Speaker. I agree. Obviously I have touched a sensitive spot in the member for Riverina, who is failing to represent the interests of his electorate and the future of farmers in his electorate. And this is what the debate is about. This debate is about the future of Australia in combating climate change—
That is what this debate is about. This debate is about the future of Australia. Do we want to have a country that is investing in clean energy jobs and growing its industries, moving from 24,000 jobs to perhaps over six figures, over 100,000 jobs in this industry; supporting $18 billion of clean energy investment that is to come in by 2020; and playing our part in a global scheme to combat climate change? Or do we want to put our heads in the sand, with a government that is breaking election promises and that wants to return to the horse and buggy era in the era of the automotive car? This is what the choice is about in this legislation. I am proud to say that I stand up for the environment. I stand up for a modern economy; an economy that is investing in clean energy jobs; an economy where I can look my daughter in the eyes and say, 'I fought for your future, and I fought for the future of every child in this country.' Those on the other side stand condemned for their reactionary views, which will go down in history as a very bad and wrong path.
It is always good to follow the member for Charlton. It demonstrates just what is wrong with the Australia Labor Party, which was once a great party, I must say.
Before I commence, I would like to inform the House that I am an electrical fitter mechanic and was a registered professional electrical engineer in Queensland for many years, until I entered this place. And at the outset, I must say that I fully support targeted government assistance for power solutions for remote area power supplies, or RAPS units as they are more commonly known.
However, I do not support a renewable energy industry which is subsidised so substantially by the taxpayer and the electricity user. At its simplest, my position is this: effectively, renewable energy projects are subsidised for up to half of their capital costs and are then guaranteed a market price at least twice that of their competitors. Add to that a further guarantee that they can supply an already oversupplied market to the detriment of all other employing providers. I know plenty of businesses in my electorate—every single butcher, every baker and every newsagent—who would love to have such a great deal from the federal government.
The purpose of this bill is to abolish the Australian Renewable Energy Agency, ARENA, by repealing the Australian Renewable Energy Agency Act 2011. The management of existing ARENA projects—around 200 worth over $l billion—will then be moved into the Department of Industry. Abolishing ARENA will return uncommitted savings of almost $1.3 billion to the budget. This government has committed to return the budget to surplus. Savings of $435 million were already achieved when ARENA funding was reprofiled as part of the carbon tax repeal package in July 2014.
ARENA supported all renewable energy technologies and projects across various stages of the innovation chain from research in the lab to large-scale technology projects, regardless of the likelihood of success, it would seem.
According to its website, ARENA was established by the Australian government to make renewable energy solutions more affordable and increase the amount of renewable energy used in Australia. It had a budget of approximately $2.5 billion of the taxpayers' money to fund renewable energy projects, support research and development activities and support activities to capture and share knowledge.
ARENA's projects span solar, marine, biofuels and energy storage. In Queensland, ARENA is responsible for 11 projects worth $63 million. For example, $11 million of taxpayers' funds were committed to a high-penetration solar project worth a total of $23 million. This will allegedly displace diesel generators in a community, port and bauxite mine at Weipa in Far North Queensland. According to the ARENA website, almost $4 million was committed to the Oceanlinx greenWAVE device in South Australia, which is now sitting off the South Australian coast, damaged beyond repair, not recoverable and never to operate.
I also note an article recently published in Climate Spectator by Arena CEO Ivor Frischknecht and Dan Sturrock:
ARENA strategically provides funding support to renewable energy projects during the development stages. This will greatly reduce the time it would have otherwise taken for the renewables industry to flourish to the point where it no longer requires long-term government support.
The deployment of renewable energy solutions in remote communities and businesses is considerably less than that in urban and metro areas. This is due partly to the increased cost of constructing and operating projects in remote areas, but also due to the lack of experience in assessing, planning and developing off-grid projects in Australia.
At this point, I would like to note the work done by organisations such as Ergon Energy, who have been supplying remote area power supply systems and solutions to remote areas of Queensland for decades. Furthermore, the article says:
It is ARENA's role to find ways to overcome such barriers. In 2013 ARENA launched the Regional Australia's Renewables program, which is developing local know-how and reducing the cost of renewable energy projects in the off-grid mining, fringe-of-grid and remote community sectors.
RAR … represents an opportunity to displace a significant amount of the comparatively expensive diesel generation that currently powers remote Australia, with the installation of up to 1 GW of off-grid renewable energy capacity.
With a budget of $2.5 billion to invest, it is only now that ARENA thinks to start providing more opportunities for regional Australia. On what basis? So they can replace existing diesel systems. Why? Because they are diesel. This could simply be an outline for the latest program from Utopia on ABC. I am sure it is something they could pick up.
If these units are due for replacement or if there are no systems then I can understand a need to invest the taxpayers' money, but to knock them out simply because they operate on diesel is more of the same thinking that has led us to an oversupplied electricity market in which renewables are heavily subsidised to the detriment of all users of electricity.
The article goes on to say that ARENA's off-grid projects will displace certain percentages of diesel usage in particular communities. Once again, we are building systems which are incapable of replacing the existing system in its entirety, resulting in two sets of supply, both of which need to be maintained, operated and managed. Is it any wonder that electricity user-pricing continues to rise? Just imagine how long we could have supported cheaper electricity prices for low-income households and our age pensioners with the $2.5 billion that ARENA had at its disposal. The article also states:
ARENA expects all its projects to be viable without subsidy within five years due to cost reductions and efficiency Improvements.
That is good news. Unfortunately, it would seem they cannot supply 100 per cent capacity in most cases, so the need for other sources will continue. They provided $5 million to James Cook University—a great university, not in my electorate—to establish a demonstration-scale facility that produces biocrude from seaweed, an innovative and renewable resource that does not compete with arable land, potable water and food production. When I look at how difficult it has been to get environmental approvals for a boat ramp or to have tourists swim with the whales, I can just imagine the explosion of indignation a commercial seaweed harvesting process would result in in the Great Barrier Reef Marine Park, especially given the high volumes of product that would be required.
The previous Labor government spent $19 million supporting 82 fellows and PhD candidates focused on applied research, at approximately $232,000 each. The renewable energy industry has received billions of dollars of support in recent years through the RET and other federal and state government schemes, such as financing for renewable energy projects through the Clean Energy Finance Corporation, state based feed-in tariffs and various grant programs to provide community support to install renewable technology. This has resulted in an industry almost completely reliant on user subsidy. It makes no practical sense to continue to increase capacity into a system which is already 30 per cent oversupplied, nor into a network which is not designed for multiple-generating sources at what should be the final point of distribution. No-one with any knowledge of network distribution would build a system like this.
Businesses, families and every user of electricity in my electorate are desperate for a reduction in the cost of energy. They cannot continue to pay the exorbitant prices, and they are being disconnected at an increasing rate due to non-payment. Electricity pricing is hurting farmers, businesses and families. The median weekly personal income in Hinkler is just $411. They need cost of living relief and they need it now. At a federal level, there are three things which we can do to reduce the price of electricity, and we have done one already. We have repealed the carbon tax. Well respected and successful businesses in my electorate have had a lot to say about the coalition keeping its promise to repeal the carbon tax. Wayne Edwards, manager of Bundaberg Sandblasting, said:
In a bid to combat spiralling electricity costs, we invested some $200k into newer equipment to bring down our operating costs. Increasing our charges to cover the cost of the tax would have been a nail in the coffin for our business. The repeal of the Carbon Tax will help ensure we get a return on our investment. It has given us confidence for the years ahead, to keep employment strong.
Larry Burch, owner Aquavue Cafe Watersports, said:
When the carbon tax became a reality we made the decision not to pass the costs associated with it to our customers, as we believed that it would negatively affect our bottom line. Its repeal is a big relief for small, family-owned and operated businesses like ours.
Teena Mammino, owner Mammino Gourmet Ice Cream, said:
Our small, family-owned boutique ice-cream business operates multiple freezers 24hrs per day, seven days a week. Any reduction in our major operating costs, such as electricity and refrigerant gasses, will greatly enhance our long term viability.
Stephen Murphy, manager of Hervey Bay Cold Stores, said:
Our family business operates a fleet of fishing vessels and a cold storage facility in Hervey Bay QLD. Repealing the carbon tax will save our business tens of thousands of dollars over the year on our power bills and refrigeration gas costs.
Secondly, we can get the RET under control. Those who have invested in good faith need to have those contracts honoured, but that does not mean we should continue to throw buckets of taxpayers' money at renewable energy.
Thirdly, the government will prepare an energy white paper that will set out an integrated and coherent position on energy to support a stable and predictable policy environment to give households and businesses confidence about their energy future I would like to see the white paper closely examine the N-component, the network component, set by the Australian Energy Regulator. It makes up around 50 per cent of the cost of electricity in Queensland.
This government has given a commitment to the people of Australia that it will get the budget under control and reduce the cost of living for all Australians. This bill is one step of many in achieving that goal. I told the people of my electorate that I would be a common sense voice on government policy. This is one place where we can start.
I rise in opposition to this bill and move:
That all words after “That” be omitted with a view to substituting the following words:
“whilst not declining to give the Bill a second reading the House notes:
(2) the ARENA adds a great deal of value to efforts to tackle climate change in Australia and around the world by supporting new commercial models and new technology developments to reduce carbon pollution;
(3) the ARENA has invested $940 million and mobilised over $1.8 billion in private investment, totalling $2.75 billion in total value since 2012;
(4) the ARENA is a critical part of a suite of policies implemented to address dangerous climate change and to accelerate renewable energy infrastructure;
(5) the role of the ARENA along with the Renewable Energy Target and the Clean Energy Finance Corporation are vital to a clean energy future; and
(6) the ARENA has been a clear success in driving investment, reducing carbon pollution and boosting the Government bottom-line.”
This is part of a suite of policies being pursued at the present time by the government. It is right that this parliament consider the ARENA abolition bill in the context of those different policies, as indeed the previous member, the member for Hinkler, did in his contribution to this debate.
ARENA—the Australian Renewable Energy Agency—was established by an act of this parliament in 2011 and started operation on 1 July 2012. It is important to note that the passage of that legislation was supported by the then opposition—the now government. It was not supported by the opposition in the bad old days when it was being led by that climate-friendly member for Wentworth; it was supported by the opposition when it was led by the current Prime Minister.
This was a very sensible reform by the last government that consolidated the work of three different government agencies that had all been working on different aspects of the development of new renewable energy technology. It consolidated the work, firstly, of the then Department of Resources, Energy and Tourism, which is now the Department of Industry, in a range of programs that had been operating under that department, including, notably, the Solar Flagships program. It also brought in the work of the then Australian Centre for Renewable Energy, which had been established to focus particularly on commercialisation opportunities for renewable energy, as well as the development of cutting edge technologies in this very fast-moving area of industry. A bit later, in December 2012, ARENA also took over the work of the then Australian Solar Institute. So it was the consolidation of a range of existing programs that had been started at different times by different governments in the renewable energy space.
ARENA was established by the government—and by this parliament, as I said, with bipartisan support—with a view to giving the government of the day but also the parliament a single lens to channel finance for a range of functions; firstly, for research into renewable energy technologies; for development, demonstration, commercialisation and deployment of that technology; and knowledge acquisition in an area that is moving very fast and developing very fast and also the sharing of that knowledge. This was a critical part of the suite of policies concerning renewable energy that had been initiated by the government and almost invariably supported by the Liberal Party in opposition—a suite of policies that were intended to transform Australia's domestic energy supply and position Australia as a world leader in clean energy technology. I will talk a little bit about that later.
Another aspect of the establishment of ARENA was to ensure that the operations of this new single entity, bringing together some very complex challenging programs, was overseen by an independent export board. The board has been chaired by Greg Bourne, who, frankly, has a blend of quite unique qualifications in this area. He has had a long and very senior career in the energy and resources sector, including as the regional president for BP Australasia, as well as then a career as the chief executive officer of WWF-Australia. It is quite unique blend of perspectives in this area. ARENA has also been blessed by a range of other very highly qualified board members and staff members, and remains blessed by very highly qualified and dedicated staff members, as I think was acknowledged by the minister in his second reading speech.
The establishment of an independent expert board to oversee the work of this agency reflected the view of the parliament at the time about the importance of strong, independent advice in this area. Not just advice channelled through a department or through a minister's political advisers, but strong, fearless, independent and expert advice in a very complex, challenging and fast moving area. As I said, that was a position supported only a few years ago by the then opposition led at the time not by the member for Wentworth but by the member for Warringah that reflected general support for a range of renewable energy policies that had been put in place previously by the Howard government and then by the Rudd and Gillard governments that were the subject of bipartisan support—a position that is changing quite rapidly at the moment, as observers of this policy area would know.
Indeed, only weeks before the 2013 election, the Minister for Industry confirmed his support for ARENA. The Financial Review on 14 June 2013 noted:
The Coalition has dispelled concerns that it would abolish the new national renewable energy agency, but said it could face a cut in funding.
That is ARENA—
Ian Macfarlane said the Coalition remained committed to the Australian renewable energy agency, known as ARENA.
… … …
…Mr Macfarlane told The Australian Financial ReviewtheCoalition was not seeking to make any changes to ARENA. "We are happy with its structure and happy with its personnel and we are not expecting to make any changes," he said.
"Of course, we will have to look at it in the context of the budget situation.
You can add this to a very long, fast-growing list of broken promises by this government. We understand that later today we are going to see the latest in a series of broken promises when this government releases, it would appear, the review report into the renewable energy target. This is notwithstanding the clearest possible promise before the election that this government would support the renewable energy target in the large-scale part of the industry of 40,000 gigawatt hours by 2020, extending bipartisan support over four terms of parliament that this industry has enjoyed. Four terms of parliamentary bipartisan support has underpinned literally billions of dollars of investment and thousands and thousands of jobs.
The member for Riverina said, 'That's right', when I mentioned the part of the quote that deals with the budget situation. Indeed, this bill was presented by the minister in his second reading speech as one almost exclusively designed, if you read the second reading speech, to deliver savings of $1.3 billion. I listened to the member for Hinkler's speech. Obviously he has the talking points from the minister's office. This is a bill designed to deliver $1.3 billion in savings from the ARENA budget, as was specified in the 2014-15 budget papers. There was absolutely no argument in the second reading speech that ARENA has not been performing its functions or that those functions were not functions that were of continuing importance to Australia. There was no suggestion in the second reading speech by the minister that those functions would be better performed in the future by the department, working on the instructions of the minister's political advisers. If you read the second reading speech and listen to some of the other contributions from members of the government backbench, this bill is all just an innocent savings exercise.
But as members would know the $1.3 billion in savings that this bill apparently is all about has already been delivered. It was delivered by this parliament only a few weeks ago as part of the carbon repeal package. It has already been delivered. If you look at the current version of the ARENA Act, the part dealing with funding has been amended by the parliament in accordance with the $1.3 billion savings measure that was part of the 2014-15 budget and apparently is the sole motivation of the bill now being debated before the House. So the only purpose of this bill that was argued by the minister to this parliament is now completely odious. Were that correct that this is the only motivation for this bill, then one would assume that the minister would come into this parliament now and withdraw the bill and tell members of parliament, tell members of the community who are interested in this policy area: 'We achieved our $1.3 billion in savings. The industry minister has done his job according to the budget. I now no longer need to abolish ARENA because the purpose of this bill has already been achieved.'
But of course that is not the purpose of this bill. The purpose of this bill, the motivations behind this bill, are very, very different. They are essentially threefold. The first is this blind ideological commitment that the Liberal and National parties have recently acquired to completely tear down anything connected with the idea of clean or renewable energy. This blind ideological commitment now permeates the coalition party and all of its members—and if some are not committed, they are not talking up or speaking up to defend the importance of renewable energy. They will tear down these reforms even if they voted for them only a couple of years ago. Again, not in the bad old days when the member for Wentworth was leading the Liberal Party astray; in the days when the member for Warringah himself was leading the Liberal Party. He led the party to vote for this body to be established. He led the party to vote for continuing to support the renewable energy target at two elections while he was the Leader of the Opposition. Even if the coalition made the crystal clear election promises that were made in this area, they will still try to tear down every remaining part of the clean energy framework that was put in place not just during the past six years of the Labor government but extending back to the Howard government as well.
The second motivation is that there is a general strategy beyond this portfolio, beyond the climate change portfolio, being driven by this government to abolish and to silence all strong and independent voices that have been established to advise not only the government but also the parliament and the community. They will no longer have access to the strong, expert, independent advice that boards like the ARENA board were set up to provide. There is a very long list of boards and commissions and other authorities established for that purpose that have been or are in the process of being abolished by this government. It is very clear what this Prime Minister wants. This Prime Minister wants every piece of advice about contentious policy areas to come through his office—and if not through his office, then at least through a relevant minister's office—and be put through the filter of political advisers, making sure that whatever advice goes to the parliament or to the Australian community accords with the blind ideological positions that this government has in so many policy areas.
The third motivation has nothing to do with the $1.3 billion that has already been saved. It is that this government or this Treasurer—I am not sure which—want to get their hands on the remaining money that is in the ARENA Act, the remaining money that the government itself voted for in the Senate only a few weeks ago to keep in the ARENA legislation. There was no mention whatsoever in the minister's second reading speech about the fact that the ARENA Act has a whole lot of money left in it for ARENA to continue to do its important work. I have read this speech a couple of times: there is no mention whatsoever of the remaining $2.4 billion that is still retained in section 64 of the ARENA Act. Section 64—this is subject to the amendments that were passed by the Senate not on the votes of the Labor Party, but on the votes of the government and a range of crossbench senators—is the version of the ARENA Act that was voted for by the government only a few weeks ago. It includes, in section 64, yearly maximum payments to ARENA still out to 2021-22 that amount to about $2.4 billion over that period.
There is not a single mention of that in the minister's second reading speech. There is not a single mention of the fact that there is a clear, legislated process put in place by this parliament for ARENA to apply for those funds, to be granted those funds from Treasury up to the maximum amounts, the $2.4 billion out to 2021-22. There is no mention of the fact that parliament requires that any unspent funds be carried over—that is, not returned to Treasury but carried over. There is no mention of that whatsoever. There is no mention of the fact that Section 65(5) says:
If ARENA makes a request for payment in accordance with this section … the Commonwealth must, as soon as practicable, pay ARENA the amount requested.
There is no mention whatsoever of the remaining funds.
The minister says in his speech that the consequence of abolishing ARENA would be to transfer the functions of managing the existing contracts to the department. What he says is there are a range of existing contracts that are part of the almost 200 projects that ARENA has overseen over the last few years. They need to be managed, obviously. If ARENA were abolished, that job of managing those existing contracts, based on past payments by ARENA, will transfer to the department. But the second reading speech says nothing about what the department might do with the funds that are set out in section 64. And we know why he says nothing about it, because this is, essentially, a smash-and-grab exercise. This is a smash-and-grab exercise. Whether it is motivated by the Minister for Industry, or whether it is driven by the Treasurer or the Prime Minister, who knows? They will not tell us. But we do know that it is a smash-and-grab exercise.
There are two conclusions about what this will mean. Firstly, Treasury may just take the money back and put it into consolidated revenue. It will be lost to the renewable energy sector, which is developing new, cutting-edge technologies, commercialising those technologies and working out and acquiring the knowledge, and sharing that knowledge with the rest of industry. That opportunity will just be lost to Australia into the future. If that is not the consequence, and if Treasury does not take the money back, then what will happen is that the money will presumably be put into some great big new slush fund managed by the Minister for Industry and doled out according to the views of the political advisers in the minister's office to pet projects that are favoured by the backbench of this government.
They are two possibilities that we face in this parliament. Frankly, either conclusion means that this bill should just be thrown out by the parliament not only on the basis of ARENA's track record alone—which I think the minister acknowledged, generously, in his second reading speech—but also on the basis of the important work that remains to be done in this fast-moving and highly competitive area. ARENA should be left in place to do that work.
Even this minister was gracious enough to recognise the great work that has been done by ARENA over the past few years—the great work of the very expert and committed board and also the very qualified and hardworking staff. It is not easy work to discharge the functions that are set out in the ARENA Act by the parliament, because it is about identifying cutting-edge technologies, sorting out the wheat from the chaff and knowing, through your gut instinct and the experience you have developed over many years in an industry like this, what technologies are likely to work and what technologies are likely to become winners. It is not easy work. But there are almost 200 projects that have been the subject of support by ARENA—far too many to list and, frankly, too diverse to list. But suffice it to say that all those projects, together, span the full range of functions that ARENA was given under the ARENA legislation.
I want to talk about a few highlights of those projects. Last year, in my incredibly short duration as the climate change minister—which will never be surpassed, I am sure, as it was a matter of only a few, but a wonderful few, weeks—I was able to announce—
I still have a lot of business cards left over, I can say! It is hard to get them all out in four weeks! But I was able to announce a wonderful project—the AGL solar project in northern New South Wales. It is a project split between Nyngan and Broken Hill, together amounting to about 155 megawatts. This is the largest PV solar farm in the southern hemisphere. As it happens—not that ARENA was involved in this—we were, only a few months after, able to announce the largest wind farm in the Southern Hemisphere, demonstrating the degree to which Australia had become a world leader in this area. With 155 megawatts of PV solar—equivalent to about 50,000 households with three-kilowatt solar systems on their roofs—it is a very, very large project, with about two million panels.
ARENA had provided about $167 million to this—the largest ever grant, I think, that ARENA had provided. The New South Wales government matched this with a grant of $64 million. Also, obviously, there were a whole range of different bits of private finance, particularly from AGL. It is a project worth about $440 million. It has a power purchase agreement—a PPA—with AGL, given AGL's involvement. But it also involves some wonderful knowledge acquisition and sharing opportunities involving the University of Queensland and the University of New South Wales. This had everything. It is a very big project, creating a lot of jobs in northern New South Wales and regional New South Wales.
The project reflects—and the member for Riverina will be interested in this—that 70 per cent of ARENA funds are distributed to rural and regional Australia. The renewable energy sector is, almost by definition, a regional industry—at least the large-scale part of the sector. This is where the jobs are going: to regional Australia. But there are knock-on impacts beyond the actual project itself in northern New South Wales. There is a factory in Salisbury in northern Adelaide, for example, that is using Australian steel to construct about 100,000 frames on which those two million panels will be placed. So the panels are being manufactured by Australian workers using Australian steel in northern Adelaide and being sent over to northern New South Wales to build this farm. These are the sorts of knock-on job opportunities that come with this work.
The second project—that, I think, was actually mentioned by the minister in his second reading speech—is the Carnegie Wave Energy project. This really is cutting-edge technology. It is based in Fremantle and is working very closely with the Department of Defence—particularly the Garden Island naval base—to provide clean power and desalinated water through the extraordinary wave energy resources that Australia has, particularly around the Southern Ocean. A $13 million grant from ARENA, plus some finance from the Clean Energy Finance Corporation and private finance as well, means that the Carnegie Wave Energy group really is a world leader in wave energy. Wave energy has extraordinary opportunities for a range of countries, but particularly Australia, given the Southern Ocean resources.
Another opportunity that I think ARENA has identified is exemplified in the Coober Pedy Renewable Diesel Hybrid project. Coober Pedy is a significant opal mining town in outback South Australia, the sort of town that has always been off grid and has always relied upon diesel generators to provide the community's power. EDL, a very reputable company in this area, has partnered with ARENA and a range of other partners to put together a very important demonstration project to show the capacity to provide cleaner energy to those off-grid communities that have traditionally relied upon diesel generators. About 50 per cent of the power under this project for Coober Pedy will be provided by the very abundant solar and wind resources that I can tell you from experience are available in outback South Australia.
These are just three projects of the 200 that have involved about $1 billion of grants from ARENA, leveraging about $1.8 billion in matching investment from the private sector, which, as I said, has involved about a 70 per cent weighting towards rural and regional Australia.
ARENA is part of a suite of policies that the previous government put in place, many of which were building upon Howard government policies to ensure that Australia was able to take the enormous opportunities in this area and become a world leader. We were having so much success in this area. By the middle of last year, the main global index in this industry, the Ernst & Young Renewable energy country attractiveness indices, which is published every three months, showed that Australia had reached one of the top four places to invest in renewable energy in the world, with the big powerhouses in this area. China, the US, Germany and Australia were the top four places in the world to invest in renewable energy.
Mr Deputy Speaker, you may be a little bit dismayed, but you will not be surprised that our position in that table has been plummeting ever since. Every quarter we drop a couple of places, because the uncertainty that has been created by the extraordinary breaches of election promises by this government means that investment, particularly in the large-scale sector of renewables, has completely frozen.
In the first six months of calendar 2014, about $40 million was invested in the whole of the large-scale renewable sector. Across the world, we reckon that about $80 billion in the same period was invested not in household rooftop solar but in large-scale renewables. Australia had been one of the four best places to invest—$40 million out of $80 billion. It is an extraordinary turnaround in investment fortunes.
This government's approach to renewable energy policy is, frankly, inexplicable. This has been an out-and-out success story. Thousands of jobs have been created over our period in office. The number of jobs in the renewable energy sector more than tripled. Billions of dollars have flowed in investments, starting from John Howard's mandatory renewable target in 2001-02. We reckon that so far there has been about $18 billion or $19 billion of investment because of the renewable energy target and supportive financing mechanisms such as ARENA's, with about $18 billion more in the pipeline between now and 2020, which, as I said, is essentially frozen because of this government's views on renewables.
There has been downward pressure on wholesale power prices in particular but, as a consequence, on retail power prices as well. We know that to be true. Four reports have been published in the last few months, all of which have confirmed that renewable capacity has a downward or a suppression effect on wholesale and retail power prices. Even the government's own modelling for its RET review, conducted by ACIL Allen, confirmed that. It was not published; it was leaked by people who attended a workshop. But even that modelling confirmed that this does not drive up power prices; it suppresses power prices for consumers.
Lastly, there was a significant reduction in carbon pollution, particularly over the last couple of years because of the addition of renewable capacity. You can see that in the National Electricity Market data. But you can particularly see it in a state such as South Australia—my own state—that has been such a leader in the addition of renewable capacity. Our carbon pollution, in the five years from 2008-09, from our electricity sector dropped by 25 per cent. It is down by a third since the mid-part of the last decade, about 2004-05. It is down significantly because of not only the addition of renewables capacity—I see people in the government advisers box keep shaking their heads, which is very helpful! —but also the switch to gas-fired power, which is obviously also going through significant change.
Who knows where this government is headed on this debate? We all have a very bad feeling about this, particularly because of the signals being sent through the media in the lead-up to the release of the RET review. The media coverage has shown, firstly, that this government seems utterly committed to breaching its clear election promise on the renewable energy target but also that this government is at war with itself over what the landing point on the renewable energy target should be.
It has been very difficult to work out whether the Minister for Industry, who has primary portfolio responsibility for the RET, and the Minister for the Environment agree. It would appear on media reports this morning that they do not. In any event, even if they did, they clearly do not agree with the Prime Minister and the Prime Minister's office on this matter. So two things are crystal clear.
This government is set to breach the clearest possible election promise on the renewable energy target and, through this bill, is also breaching an election commitment to keep ARENA in place. The second thing is that, whatever the final outcome is, there will be a devastating blow to investment and jobs in the renewable energy industry.
Before I conclude, I go back to the minister's second reading speech. The second reading speech explains the purpose of this bill very clearly: 'The purpose of this bill is to achieve $1.3 billion in savings as outlined in the 2014-15 budget.' We know that was done through legislation passed in the Senate a few weeks ago, with the support of the government, which continues to retain about $2.4 billion in section 64 of the ARENA Act for ARENA to continue its important work. If the minister was being straight with the parliament, that that was the purpose of this legislation, then this legislation should be withdrawn. Its work has been done in other ways, with another piece of legislation as part of the carbon repeal package. ARENA has a proven track record. No-one has come in and argued against that. The minister did not say that ARENA has not done its job. All he said was that he wanted to achieve $1.3 billion in savings. This bill, if it is not going to be withdrawn by the government, because the purpose of it has already been achieved, will be opposed by the opposition in this House and in the other place.
I am delighted to support the Australian Renewable Energy Agency (Repeal) Bill 2014 and, of course, the end of the work of ARENA. The previous speaker, in putting forward the opposition's position, falls for that sequential failure that Labor thinks the more authorities they can create the better the world will be. We tend to forget that this is not really about how many bureaucrats we can employ in an authority to do the job that the department should be doing; this is genuinely about what Australia is doing to contribute towards more cost-effective renewable energy and more availability of renewable energy. That is what it is all about.
For those who are watching in the gallery, what they are witnessing of course is an opposition utterly focused on inputs. How big is the authority? How many water bubblers, cubicles and lumbar supports are there, and how much money is being spent? And you have a government over this side utterly focused on outcomes. And that is exactly what we owe the Australian people. In the end what we want are successful and well-managed projects.
And many of those were being managed very well by ARENA. But the test is not whether or not we like ARENA, if we like the acronym or how many authorities we managed to set up back when we were in government. The true test of all this is what the most effective way to bring on new technology is. I would argue that you do not need just another authority to do it.
At some point we just had to stop the party. The current government appreciated that what we have inherited is an economic mess, where a former Labor government had no idea where the money was coming from and they had already given the money away. That is what has been inherited—not an easy position to take over. But, of course, we are used to it, because we did the same thing in 1996 and we are up to the task.
In my seat in Queensland there are some wonderful renewable energy projects. I want to devote a little bit of time to those. And those continue to be managed; they continue to be supported. But let us not forget that we are part of a global renewable energy push and while there might be a unified public good in progressing with renewable energy, Australia is just a very small but significant part of it. In the end we have to make sure that we are looking after our national interest and that the projects we are doing are utterly irrelevant to Australia. Many that were being managed by ARENA were.
But I thought that the previous speaker, who represents the view of the Labor Party in all these matters, made a very interesting comment when he said that this government had provided no evidence that the role of ARENA could be 'better done and better performed by the department'. Do you notice that subtle switch? This is a former Labor government that created authorities like mushrooms and then insists upon us that we have to prove that the department is better at doing it.
Let's just come back a couple of steps: isn't that the job of a department? To carry out the instructions of the government of the day in a strong, fearless and independent manner? Back in the old days, departments used to do that! Remember? But no, not any more. No: we still have growing and overgrown departments and then we create authorities over and above.
Did you hear the Labor speaker saying what was so good about ARENA was that, unlike the department, 'they were strong and fearless and independent'? Weren't they the three adjectives that public servants across this nation raised their hands and swore to when they joined? To give strong, fearless and independent advice to the government of the day. But suddenly Labor has reinvented all this and only authorities can do that. These are separate agencies because the department could not do it. If you keep taking that direction then you simply end up with 23, 24 and 25 per cent of this great nation's GDP just being consumed in bureaucrats and public servants who are working in authorities rather than departments. It becomes preposterous.
At some point, when you are leaking hundreds and billions of dollars in deficits every year and a surplus or balanced budget is nowhere in sight, you just have to pull on the handbrake. You just have to slow thing downs and revisit. At this point there are a billion dollars of excellent projects that are currently being managed and will continue to be managed. But this Labor Party patronising view is that the department is not good enough to do it. The department is not up to it because we need someone truly fearless and independent. What are we left with and where do we go if we have this view that these large federal departments that neither treat a patient nor educate a child need to remain with thousands of employees? And then we are going to set up even more authorities on the side.
I never saw a Labor minister who did not dream of setting up an authority. I never saw a Labor minister who did not know how to spend a dollar. But I never saw a Labor minister who knew where the dollar was coming from.
Mr Hutchinson interjecting—
That is right—we just racked up the debt because it was in the national interest. What is fascinating is that we went into debt, and then suddenly economies were on the move and interest rates started to rise, and the Labor Party forgot that we actually have to pay that interest back, in 70 per cent of cases, to foreign interests. That is where we borrowed the money from: we borrowed the money for all of this dream from the Middle East and from China. They are the people we are now paying back—their sovereign wealth funds and their superannuation funds. That is where Australia's hard-earned taxpayer dollars are going. All they way from the seat of Solomon down to the wonderful state of Tasmania.
The billion dollars a month that we pay because of Labor excesses and their dreams that were unfunded are a billion dollars that I cannot spent on that young child who needs laser treatment for their retinopathy of prematurity. That is a billion dollars a month that I cannot spend in fine schools or early intervention for the children who need it, who come from vulnerable families. These people, who live in remote and Indigenous Australia, must remain right at the centre of our focus. We must never lose sight of the billion dollars that is never spent on these fine Australians because of Labor's decision instead to pay interest on debt.
We are not talking about this momentary GFC global financial collapse, where everyone had had to engage in some fiscal stimulus and, obviously, increasing liquidity. What we are talking about is that long after the GFC had passed, long after economies all around the world had realised that this was going to be a couple of years and not a decade of recession, we saw, as the evidence came in that Australia was not going to have a single quarter of recession, that we still had the pedal to the metal. They were spending money as fast as they could. They were writing cheques for foreigners and for dead people and transferring money as quickly as they could. It was mostly spent on flat-screens and imports. It helped South Korea to avoid a recession; it did nothing to help Australia. These massive cash transfers that were utterly unfunded—Labor had no idea where the money was coming from—is emblematic of their attitude here, which is just that we set up another authority to do the job that we do not want to do and that we cannot trust the department to do.
Let's wind it all back. These are brilliant projects. They do not require much more than sophisticated assessment to make sure that they are good value for money, and then careful contract management. We do not need a high-rise building full of publicly funded officials to do much more. These things are running with the private sector putting a dollar in, putting a shoulder to the wheel, and knowing exactly what they are trying to do.
Let's go up to Doomadgee, where they are assessing the technical viability and the systematic reliability of a hybrid energy system. It is only small—it is 1.2 megawatts—but the PV generation bolts onto their diesel that runs the community. What a great idea! We do not need a high-rise building full of people micro-managing that project. It was assessed. It cleared the bar. This is basic business of the Public Service 101; it is not for ARENA.
I recognise that good people like Greg Bourne devoted the last two years to seeing ARENA doing great work, but that time has closed. The money has been disbursed. The projects are up and running. Now let them just go, without the added interference of a free-standing authority.
The Collinsville Power Station is currently generating 180 megawatts of power. They are completely reconfiguring that power station to a 30 megawatt hybrid solar-thermal-gas power station. That is very important work. It was assessed as being worthy and able to demonstrate benefits. We do not need an authority to manage all of that. This is just old Labor thinking. And, too often, jobs were given to Labor mates to run these authorities at hopelessly over-bloated public salaries. I would like to know some of the salaries that are paid in these authorities.
Algal bio-fuels are creating great excitement around the world. The US Navy is now committed to running some of their own vessels purely on algal bio-fuels. This sort of micro-algal biomass is very exciting. It is actually consuming the CO2 that we have nowhere to put. It is creating, as a waste product, algal bio-fuel and a fertiliser. In a world that is short on phosphate fertiliser this is producing a nitrate fertiliser that can be used in our farming sector. It is exciting stuff. You do not need to have an authority to manage stuff. Historically, this was all done—and done elegantly—by a department.
The Kogan Creek Solar Boost Project is much larger. It is a 44 megawatt-addition of renewable energy to a 750 megawatt coal fired power station. It will be largest of its kind in the world. It is well worth funding. It is still being funded; please do not panic. We can take away an authority but still have the money invested, where it counts, on the front line, with the smartest people working on the break-throughs that ensure that we have more renewable energy.
Re-deployable hybrid power is a uniquely Australian solution. Remote projects consume large amounts of energy for things like drilling and prospecting. Why not have a fully 'put-up, pack down system'—or whatever the term is—to lower costs and to be able to provide power in these camps that can then move on to a different site? This reduces the need for expensive trucked-in diesel. It is a great idea. To be honest, when it comes to contract management, after you have approved it, it is not that complex a job. Re-deployable hybrid power with a portable hybrid solar-diesel plant is very exciting, promising work.
Working on reflective coatings to make solar panels more efficient is something that we are doing for the whole world. We are leading that with mineral technology to make sure that solar panels are as efficient as they can be, particularly in the household situation, where they are popped on a roof and rarely maintained.
In Weipa, not far away from Doomadgee, there is enormously energy-hungry activity in the bauxite operation run by Rio Tinto. There they already have a solar farm, and they are operating a 6.7 megawatt solar farm, which has been added onto a solar village which is already operating under a power purchase agreement. So these are remote parts of the world where a significant amount of the expense is due to the provision of power.
The speaker for the opposition immediately prior to me did refer to Labor's views about the RET, and where things are heading. Obviously, we are looking forward to seeing announcements about the government's review, which are due very soon. But do not mistake the fact that renewable energies offer us a cheaper alternative when the fact is that the RET expanding from 20 per cent compels energy users to pay relatively high marginal amounts for power. That is the truth behind elevated short-to-medium-term power prices.
But, yes, there is the potential to bring prices down over the long term. Over the long term it will be cheaper, but in the short term it is not. The problem with that is that we are seeing a reduction in the consumption of power in Australia, anyway. That is partly because of changed domestic practices, but mostly because, like most wealthy economies, we are expropriating a lot of our high-energy-intensive activity to China. We are closing our smelters, and that is having an enormous effect and leading to an oversupply of power in this country.
So, any modelling that assumes that conventional power providers are simply going to keep churning that power out is hopelessly erroneous. They are going to respond to the market. My view is that we can get to a sensible middle ground. We will have a renewable target and a very important role for renewables. I am sure that will continue. There is an enormous number of us on this side who are going to fight to make sure that it does, and we will not be made to look like villains by the other side.
In conclusion, what we saw from the previous speaker from the Labor Party—despite his relatively short but glorious career as a minister in this portfolio—were his halcyon recollections of running around with his business card in the few weeks that he had in the portfolio. That is probably not the best example of where we are heading. In reality we can lead the world, still, in many of these areas, but we do not have to have to be replete with authorities. It is only appropriate that we achieve the outcomes, that we invest the money on the front line. That is consistent with the coalition's approach. Ultimately, you can only have so many non-service-providing public servants in the system before it becomes unwieldy, expensive and it bogs down. I am delighted to see that ARENA is being repealed. The projects will go on. They will continue to be managed. That is the kind of nation that Australians are looking for.
We heard the envy in the voice of the member for Bowman as he talked about the ministerial career of the member for Port Adelaide. He could not disguise that envy. It gives me great pleasure to rise to speak on the Australian Renewable Energy Agency (Repeal) Bill 2014, and to follow our shadow minister for the environment. My colleague the member for Charlton said some very good things and I was pleased to go before the member for Melbourne.
We all have one thing in common: we join with the vast majority of Australian people who support renewable energy and support the economic and environmental benefits that flow from investment in renewable energy in Australia.
There are many ways that the Abbott government is taking Australia backwards, whether it is in higher education funding, schools funding or international profit shifting—all of those important issues. But one of the starkest examples of the Abbott government taking Australia backwards is when it comes to renewable energy in this country. The whole world is looking for new ways to power its economies. People in smart countries through Europe, Asia and every continent are trying to work out how to power their economy and how to change their energy mix to get a bigger proportion of renewable energy so they are less reliant on fossil fuels. Some people will dispute the degree of fossil fuels versus renewable energy, but all the smart countries are working out ways to increase the renewable energy component of that mix. Unfortunately, in Australia we are seeing our government heading in the wrong direction again.
I want to talk briefly about an example in my electorate and specifically about solar energy. There is a myth around, when it comes to renewable energy, that it is just the concern of the inner city or the concern of a certain part of the national political and economic debate and there is only a cluster of people around Sydney and Melbourne that care about renewable energy. I know that in my own electorate in the outer suburbs of Brisbane—the northern suburbs of Logan City—people, often people of modest means, are very keen to take up renewable energy opportunities. I had a fantastic meeting last month with the Australian Solar Council. They gave me some really encouraging statistics about my own electorate of Rankin. It is not the wealthiest electorate in the country. It has its challenges in socioeconomic terms. It was encouraging to see that more than 30,000 households in Rankin—42 per cent of the total households in my electorate—have installed solar technology. That is incredible when you consider that the national average for take-up is 22 per cent, so my electorate of Rankin is almost double the national average. That shows how many people in my community care about future generations.
It was also encouraging in the meeting with the Solar Council to have a young fellow, Matthew Butler, from Calamvale Community College join me. He was doing work experience in my office at the time. It did give us a sense and a focus that a lot of what we are doing in the renewable energy space is about ensuring that when Matthew is my age, in 20 or 25 years, the economy he lives in and the country he lives in is increasingly powered by renewable energy. I am proud that my community has embraced solar energy technology. Forty-two per cent of families in Rankin have made that investment and that eclipses the take-up rates in some of the other areas. For example, the take-up in Warringah is about six per cent and the take-up in North Sydney is about four per cent. It shows you that it is clearly not about the money and it is not only the concern of the wealthier parts of the country. I think the people in my community are driven by a better life for their kids. They also know that it is important that as a nation we start to move away from fossil fuels.
Another important issue that gets lost in the debate is that, in the medium and long-term, renewable energy drives down power bills. I think what people are doing in my electorate is that they are making that investment. They understand that they get less bill uncertainty. They know they will have lower bills when they invest in this way. On average, solar cells deliver a return on their investment five to seven years after installation, so people are being very wise with their limited funds to invest in solar cells.
There are a lot of myths about solar power being spread by the enemies of climate science. It is widely claimed that solar cells are driving up the price of power for everyone. The greatest driver of power prices is investment to upgrade and develop the network. Fifteen years of data from the Australian Energy Regulator shows that peak demand occurs in the heat of summer when families and businesses have the greatest demand for air conditioning, and solar power cells takes some of the burden off that network during these times and help lower the peak demand capacity required for the network. The downward trend of peak demand experienced by the market corresponds well with the increased prevalence of solar PV technology. This means that solar power can help lower the price of electricity for the average consumer, which is true even after the costs of feed-in tariffs are taken into account.
I could go on and on about solar energy. I am a big believer, as are my colleagues on this side of the House. The point I am trying to make is that with all these good things going on in renewable energy, whether it is solar in my electorate or right around the country, it does beggar belief that this government want to wind back investment in renewable energy. They want to break the promises they made to the Australian people almost a year ago on their commitment to solar energy and renewable energy. They were pretending that they were not a threat to all of these jobs and all of these advantages. Of course, as with a lot of other things, what they promise before an election and what they do afterwards are very, very different things.
It is not only the economics of households that matter when we talk about renewable energy, as good as they are, but also the economics of nations. The renewable energy sector remains globally one of the fastest growing industries in the world and by far the fastest growing energy sector. The International Renewable Energy Agency's annual review into renewable energy and jobs found that the sector is responsible for almost 6.5 million jobs annually, and there are not a lot of jobs going around the global economy at the moment. Solar PV is the largest contributor to these jobs. According to the US National Renewable Energy Laboratory, the installed global renewables capacity nearly doubled between 2000 and 2012, and over the last three years the global solar PV industry also doubled in capacity. So there is huge momentum behind solar energy and solar technology as part of the broader gains being made in renewable energy more broadly.
Some of the breakthroughs required to make solar energy more competitive in Australia have been achieved through the work of ARENA and its predecessors. Others have mentioned that ARENA's role is to fund renewable energy projects, support research and development activities and support activities to capture and share knowledge. ARENA is currently funding 190 projects across Australia, across the whole mix—solar, bioenergy, ocean, geothermal and hybrid power technology. For every $1 that ARENA invests, there is more than $1.80 co-invested by industry and business. That is why ARENA does act as a force multiplier for investment in renewable energy technology. And it is not just a driver of innovation, as important as that is. It is also an important driver of employment.
It is estimated that more than 20,000 people are employed in a variety of roles across the renewable energy sector in Australia. We had reports from Professor Andrew Blakers, the director of the ANU's Centre for Sustainable Energy Systems, that the abolition of ARENA could cost thousands of jobs, with these jobs concentrated in rural areas.
It is for these reasons that the opposition will be opposing this legislation—and we have moved an amendment to it—to repeal the Australian Renewable Energy Agency Act. We believe in the science; they do not. We believe in the need for action when it comes to climate change; they do not. We believe in supporting renewable energy, and, unfortunately, they do not.
This attack on ARENA is one part of the suite of attacks that that side of the House is making on the renewable energy sector and in the area of the environment and the economy and climate change. In particular, we have seen lots of reports this week about what the Prime Minister wants to do to the renewable energy target—again, contrary to what was promised before the election. When the RET was introduced by the Howard government in 2001 it had, and ever since then it has had, bipartisan support—until now. We improved the RET. But one of the first acts of this government, unfortunately, was to appoint Mr Warburton—and we all know what he thinks about the RET. The Prime Minister knew when he appointed him, and the Prime Minister is getting the result that he paid for. The Prime Minister has said that he does not want to pre-empt Mr Warburton's report. Well, he has been pre-empting it, in The Australian Financial Review and other places, so we can see what the government intends to do to the RET.
On top of the attacks on the renewable energy target and ARENA, there is a whole range of other attacks that the government is making in this space. Its attack on the Clean Energy Finance Corporation is another.
The government's CEFC abolition bill is sitting on the forward program to be debated in the coming weeks. I have spoken in this place previously about the virtues of this organisation. I worked on it in a former role. I am very proud of the CEFC—I think it is an incredible initiative—and of what it does to catalyse investment in the renewable energy sector in Australia and to create jobs.
The CEFC was set up to encourage investment in clean energy technology. Over the first year of its existence alone, through matching private sector funds of $2.90 for each dollar of CEFC investment, the corporation has catalysed over $1½ billion in non-CEFC private capital investment in projects to deploy renewables and to improve energy efficiency.
The CEFC has performed so effectively that it has been making the government money. The average return on the CEFC investment has been 7.33 per cent, which is pretty tidy when you look at some of the other investment opportunities that are around. Eleven projects in the first year of the corporation's operation achieved a yield above that of the government's five-year bond rate. The direct effect of scrapping this corporation and this program, according to the explanatory memorandum, is an $83 million hit to the underlying cash balance over the forward estimates.
But it goes further than this. A committee inquiry report released yesterday said that abolishing the CEFC would cause an annual fiscal balance loss of between $125 million and $186 million per annum once the corporation reaches an investment base of $5 billion. That is a lot of money for the government to waste. They have got this so-called budget emergency, and yet they are prepared to see some serious dollars go down the drain by pursuing this ideological vendetta against renewable energy.
These attacks on clean energy are particularly bad on top of the government's refusal to accept the market based solution to climate change. We have debated this issue at length over many years, and I have made my contribution to that debate each time.
But I think it is worth noting that we have been, since 17 July this year, the first country in the world to go backwards on climate change—to take action and then to walk it back. I think the glee with which members on the benches opposite celebrated this environmental and economic vandalism was a really shocking image, and I think it will be an image that will come back to haunt them in the years ahead.
The bottom line of this entire discussion is that this government and its Prime Minister simply do not believe in the science or the economics of climate change.
A government member interjecting—
It beggars belief that on that side of the House—including the interjecting member—they think they know more about the science of climate change than 97 per cent of the scientists who have contributed to this conversation. Ninety-seven per cent of peer reviewed scientists think that climate change is real and caused by humans, and, remarkably, people on that side of the House think that they know better.
It is the same when it comes to economists. In a Fairfax survey of 35 prominent economists, just two of them said that they preferred the coalition's dodgy policy. Chris Caton from BT Financial Group said that any economist who did not opt for emissions trading should hand their degree back. That gives you a sense of the near unanimity in the forward thinking, right thinking, rational conversation, whether it be among environmental scientists or economists, about this issue. And those opposite think that they know better.
This bill is just another in a series of attacks on the sensible response to climate change introduced by the last Labor government. It is another demonstration of the government placing ideology over the advice of experts, whether they be scientists or economists, who are unified in agreement about the need to respond to the threat of climate change. This is just the type of legislation we have come to expect from the climate change denialists, conspiracy theorists and enemies of science who currently occupy the government benches.
Labor will be opposing the repeal of the Australian Renewable Energy Agency Act and all that that means for renewable energy in Australia, in my electorate and right around the country, because we care about the economy, we care about the environment and we care about the climate we will leave to future generations of Australians.
Over the past few years, the coalition has very clearly enunciated its fiscal objectives to the Australian people. We want to restore a measure of sanity to public spending and ease the overall debt burden placed on Australian households and businesses, and scrap the unnecessary taxes lumped on them, by the previous, Labor administration.
The carbon tax has now gone, and there are already benefits flowing through to families in the Northern Territory. It is estimated that, in power costs alone, Territory families will save almost $250 a year and small businesses in excess of $750 a year following the removal of Labor's toxic carbon tax. The City of Darwin has also announced a reduction in rates as a result of the carbon tax being scrapped, and I congratulate them on taking this welcome cost-of-living reduction measure. As power bill cuts take hold, further savings are expected to come online not just in the Northern Territory but right around the country, and I think that has to be welcomed by most Australians. So Australians are already reaping the benefits of the carbon tax being scrapped. Bit by bit, inch by inch, we will continue to work to restore the budget to a sensible state, because without a strong budget it is not possible to have a strong economy.
One such measure that will take us down the path towards achieving this goal is the repeal of the Australian Renewable Energy Agency, a body that was established in 2012 by the Labor government, along with a slew of other quangos—all of which were established without consideration of their impact on the budget bottom line. This is the type of fiscal recklessness that underlined the Rudd-Gillard-Rudd administrations and created the environment where this government has to deliver the tough measures on the nation's behalf. Let nobody be under the delusion that, had the unthinkable happened and had Labor been returned to office last year, they too would have had to make the hard decisions to get the budget back on track. The difference, though, is that the coalition would have supported them, in the national interest. Let nobody be confused here: Labor's opposition to our budget is about political expediency and base populism rather than anything to do with the greater good. Labor has no shame. But I digress.
The Renewable Energy Agency is not without merit. An independent statutory authority, it was set up to improve the competitiveness of renewable energy and technologies and to increase the supply of renewable energies in Australia. It is worth noting that the coalition supported the establishment of the Australian Renewable Energy Agency, or ARENA, as it is better known, as a way to coordinate the multiple overlapping renewable energy programs and policies that had evolved over the years. That said, it is an extremely expensive agency. ARENA is in the process of delivering some extremely positive outcomes but falls very much into the 'are there alternative ways to deliver the projects' basket. The government is already providing $1 billion worth of ARENA funding to contribute to supporting around 200 renewable energy projects right across Australia. The Commonwealth will continue to fund these 200 projects, an investment of over $1 billion, but in future these will come under the oversight of the Department of Industry. The closure of this agency is a tough decision and one that in no way diminishes the very good work that has been done by its executive team and indeed the board. As I have already said, its disbandment is a measure taken by the coalition with some reluctance but with an eye on the budget and with the budget priorities in mind.
I will say, though, to the members opposite in the chamber—both to the Labor member for Parramatta and the Greens member over there, the member for Melbourne—that Australia is not walking away from renewable energy. Rather, we are making common-sense decisions about how to better deliver renewable energy projects and budget prudently at the same time. The government has already saved $435 million in agency funding through scrapping the carbon tax. The passage of the Australian Renewable Energy Repeal Bill is expected to deliver savings of almost $1.3 billion. Commonwealth investment of more than $1 billion in 200 projects, as I have already mentioned, will continue under the new arrangements, and private industry has more than matched that spending with inputs totalling around $1.8 billion. That brings total investment in renewables in this country to around $2.8 billion.
ARENA has involvement in three different projects in the Northern Territory with a total value of $36 million. One of those, the Daly River Solar Research Project, was completed at the end of last year and its findings were released this year. That particular project's focus was on the integration of solar energy into diesel minigrids, which will have a particular application in remote Territory communities. The key question for the Territory's Power and Water Corporation when looking at this innovation was how to maximise solar energy penetration in minigrids to achieve the highest possible diesel fuel savings while also maintaining an efficient power system and a reliable energy supply for Territorians. The key outcomes of that project were the Solar/Diesel Mini-Grid Handbook and a minigrid power system modelling tool. ARENA and the Power and Water Corporation also undertook a report on the impacts on the Alice Springs township power grid of increased solar energy penetration. This is a bit of a new area of electricity generation and, with Alice Springs being a sun city and with the increased emphasis on solar energy generation in recent years, this report aimed to better understand the technical, economic and regulatory requirements needed to achieve high levels of PV penetration of electricity grids.
These and the other projects undertaken by the agency will have short-, medium- and long-term benefits, and the coalition government is still eager to see the completion of the rest of the Renewable Energy Agency projects that are currently underway. That is why we are transferring supervision of these projects to the minister's office and indeed the department. This way we will ensure that the existing projects are well managed and still meeting key indicators along the way. We will ensure that what we learn from these projects is shared to allow the renewable energy industry to continue to grow and prosper.
Darwin and Palmerston residents are innovators at heart. They have welcomed renewable energy with open arms, and many homeowners now have an impressive collection of solar panels and other alternative energy sources in their homes. Instead of the pernicious slug of a carbon tax on all Australians, the coalition is going down the same path as the rest of the world through policies that provide direct incentives to adopt new technologies that reduce emissions will improve energy efficiency. These policies can be pursued with or without agencies such as ARENA. Our emissions reduction fund offers a carrot approach, not a stick approach, to the reduction of emissions to achieve our goal of a five per cent reduction by 2020.
It should never be forgotten just how 'successful' the carbon tax was at achieving its stated goal of reducing emissions: domestic emissions, under the carbon tax, actually continued to rise. The previous government's own modelling, which it submitted to the United Nations Framework Convention on Climate Change, shows that, under the carbon tax, Australia's emission would have increased from around 560 million tonnes in 2010 to 637 million tonnes by 2020. So the carbon tax was estimated to accrue $16 billion over two years for no change in domestic emissions.
The Emissions Reduction Fund takes a more holistic view of carbon emissions reduction than simply imposing a tax on Australians. We will look at direct abatement purchasing schemes such as Norway's commercial carbon procurement facility, which purchases abatement worth millions of dollars through a competitive tender process. Japan's joint credit mechanism is purchasing abatement and funding low carbon technology diffusion through bilateral agreements with developing countries. As well, the United Nations clean energy development mechanism operates as an abatement procurement scheme. It has registered over 7,000 projects and generated over 1.4 billion tonnes of abatement for market based purchase.
The government supports the science of climate change and is committed to reducing domestic emissions by 2020 without an electricity tax. Preliminary figures from the Department of the Environment indicate that our abatement challenges is now around 440 million tonnes to 2020 rather than the 750 million tonnes assumed in other previous projections. This government will focus on measures that directly address the 440 million tonne abatement challenge to reduce emissions through measures such as reafforestation, cleaning up power stations, claiming up waste landfill and cleaning up waste coalmine gas. We will also foster innovation. This can be done in lockstep with the private sector, which is already committing $1.8 billion to drive development of measures which will go a long way to reducing emissions.
This repeal bill provides for the transfer of all ARENA's existing contracts and commitments to the Commonwealth, with the Department of Industry to assume management on the commencement of this legislation. Yes, this was a tough decision, but it was a common-sense decision when we look at the enormous capacity of our public service and industry to do the right thing by the nation and also at the savings to be made in the context of our budget. Some of the speakers here this morning have suggested that the coalition does not support renewables. Well, nothing could be further from the truth. We also support Australia and Australians, and we are doing everything we possibly can to ensure that we have a prosperous economy and a safe, secure Australia. That means we sometimes have to make tough decisions, but those decisions are always made to ensure that we have a prosperous economy and a safe, secure country.
Since being elected I have had the privilege of meeting some pretty remarkable people. One of those people is the climate change adviser to the German government. He said to me: 'When we in Germany look at Australia, we scratch our heads. With all your natural sunlight, wave power and wind, with all your advanced manufacturing capacity and the smart people that you have got, why aren't you leading the world in renewable energy? Why is it being left up to cloudy Germany to do that?' That is a very good question. The people of Australia want Australia to be a world leader in renewable energy and they are already taking steps in that direction. At the moment, three million people in this country live under a roof that has solar power on it. There is a diminishing demand for energy as more and more people are powering their own homes and their own lifestyles, including with solar power. The take-up of renewable energy in this country is actually growing faster than people expected. Knowing that we have got to cut pollution in this country to zero by the middle of this century at the absolute latest and that it is much better for people to live with the clean air, clean water and healthy surroundings that come from renewable energy, most would think that that is a good thing. But this government is intent on destroying the renewable energy industry in Australia. This government has declared war on renewable energy.
Elsewhere today there is the release of the so-called review into the Renewable Energy Target. The government appointed a renewable energy hater and climate sceptic to conduct that review so as to give them the answer that they wanted to hear, which is the answer that the fossil fuel interests backing this government have demanded. It was: 'Australia was trying to increase the amount of renewable energy we produce. We are actually doing better than expected. People are moving away from fossil fuels to renewable energy. Please, government, we would like you to come and help us, the polluting power stations, and stop this from happening.' The government seem to be on the verge of breaking an election promise they made to the Australian people who want renewable energy by obliging and by saying: 'We are very, very happy to do what you want, and we will change the rules so that the billions of dollars of investment in wind farms and solar plants that exist in this country are now rendered next to worthless. We are quite happy to do that, and, at the same time, we will continue to keep on giving you, in the fossil few sector, subsidies.' So, the government are out there to try to bring the renewable energy industry in this country to its knees. That is the government's first broken promise on renewable energy, but now this bill is another one.
In the lead-up to the election the government could not talk highly enough about ARENA, and even after the election they were telling the community and ARENA that its funding was secure. Why? Because what ARENA, the Australian Renewable Energy Agency, is doing is exactly what the people of Australia want. It is saying: 'We recognise that, at the moment, we are at a point of transition in this country.' We are a country that, up until now, has built our economy and our society on the back of fossil fuels. That was not because a cabal of people sat around and decided how we could wreck the environment the most, but was because, for the first 200 years since white settlement, that is what people thought you could do and that it would not come at a cost to the community or to the environment. Well, it turns out that digging up coal and burning it comes at an enormous cost to our community. We are seeing the effects of climate change now with more frequent and more intense bushfires and droughts and potential changes that will be permanent in parts of Australia, which will mean that we will no longer be able to grow the kinds of crops that we used to. In that context we have to immediately, as quickly as we possibly can, switch over from that polluting fuel source, which we have taken for granted, recognise the cost and move to renewable energies.
We are at the point where the renewable energy industry needs that support to grow in Australia so that we can become a renewable energy world leader. That is what ARENA does. It takes money that, in part, comes from other sources, like the Clean Energy Finance Corporation. It takes money and says: 'For those early-stage projects, we will support you until you can stand on your own two feet', and then you go out into the world and run yourself as a business. What is ARENA doing at the moment? In New South Wales ARENA money helped Australian scientists in the CSIRO work out how to heat steam using solar power to such a high temperature that that steam was then going to be able to power a coal fired power station, an ordinary turbine power station. In other words, by superheating the steam to a critical point, if they could get this technology up and working and make it commercial and proven, they could turn every coal fired power station into a solar power station by using the sun to heat the water instead of burning the coal to heat the water. What a good idea. You could keep much of Australia's existing electricity network, you could keep the jobs in the areas where the power stations currently are, but you switch every coal fired power station over to a solar one. That is something that ARENA is doing. ARENA is helping out with a 6.7 megawatt solar PV farm in remote Queensland. It is helping out with a huge solar project in New South Wales, and, excitingly, in Western Australia it is helping out with the Carnegie Wave Energy project. This is just the tip of the iceberg of what is going on in this country at the moment.
In Melbourne we have scientists and researchers working out how to print solar cells onto any surface. At the moment they are working with the people in this country who produce banknotes. They have worked out how to print solar cell straight onto the polymer surface of banknotes. One of the other partners in that project at the start was—I do not know if they still are—BlueScope Steel. They wanted to work out how you print directly onto corrugated iron or similar surfaces so that, when you put the corrugated iron on your roof, you do not need to put a solar panel on because the roof is the solar panel. Newcastle University has made advances in getting microscopic solar cells into paint so that you can paint the side of your house and that will become a power source. If we could just pause for a moment and think about how this could transform how we all use energy. You could print onto the cover of your laptop so that, when you are sitting in a room like this typing on your laptop, the light from the room powers the laptop. It opens up massive opportunities.
Storage is one of the key questions facing renewable energy at the moment—how do you store that energy that gets produced by the sun during the day so that you can use it overnight? We have a great work, again ARENA funded, going on in this country to work out how to make the batteries that will be able to capture that energy and store it and then be able to be turned on at the flick of a switch overnight when you wake up and want to turn the light on to get a drink of water—so that the sun during the day continues to power your home at night.
Think about what is happening in countries like India, where they are trying to lift parts of their population out of poverty but they do not have a centralised power network. We already have people from Australia taking products over to India that allow them to have solar lights that charge up during the day that will then shine at night, so that you can have a pollution-free power source in your shack, your home or your tent without the need to be connected to the electricity grid—all done by renewables.
All of these advances are happening now. It could be the kind of thing that Australia sells to the rest of the world in the 21st century. But they need support to get on their feet. But what does this government come and do? This government says, 'We are going to lop you off at the knees.' What has not been mentioned by any of the previous government speakers is that, in the budget, the funding to ARENA was cut from over a billion dollars over the next three years to just $341 million. Almost three-quarters of the money for new projects for ARENA are just gone.
And now the government wants to abolish the agency itself. The government says, 'It's alright because some of the projects will still be done under the minister.' The whole point of this agency was to have an organisation that is at arm's length from political influence, that is going to spend the money in the best way possible, that is going to spend the money not by picking winners of particular kinds of technologies that are liked but by saying, 'That looks like a good project that is worth investing in; we'll try that'—whether it is wave, whether it is solar, whether it is geothermal—and you would not have a minister looking over and saying, 'No, this does not meet my ideological agenda; take it off.' The government is now saying that that is exactly what it wants to go back to. The government wants to have a climate science denying government in charge of slashing funding to renewable energy instead of letting an arm's length independent agency do what the Australian people want.
Do not forget that this government went to the election saying that it would keep this agency, and has offered no justification for breaking its promise—other than the government is just a bunch of corporate shills doing the bidding of the fossil fuel industry. That is the only conclusion that can be drawn when you join the dots between this attack on renewable energy and the attacks through the renewable energy target. You might have some sympathy for the previous speakers'—and no doubt the future speakers'—arguments about, 'Government can't support industries and it is up to industries to stand on their own two feet.' We have seen today what has happened with Qantas after the government turned its back on them. We have seen what happened to Holden after the government turned its back on them.
The government has said all the way through, 'Unless you make chocolate in Tasmania in marginal seat, we are not going to come and give you industry assistance; we will let you stand or fall.' But, at the same time, every year the government gives $2.2 billion to fossil fuel companies just so the likes of Gina Rinehart can go and buy cheap petrol. When anyone in this country goes to the bowser to fill up they pay 38c a litre tax. When the likes of Gina Rinehart and the fossil fuel companies go and put diesel in their trucks, they only pay six cents because the taxpayer funds them the extra 32c. That is $2.2 billion a year. So why, Government, are you prepared to pour $2.2 billion a year into mining companies to help them out but you are not prepared to support solar, wind and renewable energy?
When you add up the other subsidies that this government gives to the fossil fuel sector, you see that there is $13 billion over the budget period—over the next four years—that is available to fund projects like ARENA. So when the government says, 'Businesses need to stand on their own two feet' and 'The age of entitlement is over', I will believe that when the government starts taking away those subsidies from the mining and resources sector. Until then, what you are doing is picking sides. You are not backing winners; you are backing losers in the fossil fuel sector and you are going out of your way to cripple renewable energy in this country. But people are slowing waking up. There is a reason that, according to the polls, if an election were held today the government would lose. It is because you can be disciplined in opposition and have three-word slogans as much as you like but, when you are in government and the veneer is peeled off, people start finding out the nasty things that you, the government, believe and they do not like it.
I am very pleased to rise to speak on the Australian Renewable Energy Agency (Repeal) Bill 2014—the bill which gives effect to the decision to close the Australian Renewable Energy Agency; a decision made as part of the 2014 budget. The bill also provides for the transfer of all of the existing contracts and commitments to the Department of Industry.
In the time available to me today I would like to make a couple of points. Firstly, this debate is not about whether or not renewable energy, and continued research and development and commercialisation in that field, is desirable and to be encouraged. Clearly, it is. Secondly, the key issue for debate is whether it makes sense to maintain the current structure for funding and government support of renewable energy and particularly whether a separate Australian renewable energy agency is necessary. I, thirdly, want to make the point that that would be an important question to ask at any time but it is a question that needs to be asked with even greater urgency given that, at the present time, we have the opportunity to capture significant savings out of the structural changes the government proposes under this bill at a time when there is a serious budget problem that needs to be dealt with on behalf of the entire community.
Let me turn to the first question, which is, 'Is this a debate about whether renewable energy is an important field of activity in which we need to engage in research, development and commercialisation?' and argue that, clearly, we do need to do all of those things, but that is not the question presently before the House this afternoon.
Why is it a good thing that renewable energy activities are vigorous and ongoing in Australia and around the world? One good reason is to have a diversity of supply. Electricity is key to modern life. If you are depending solely upon one particular source—whatever that might be; typically in Australia it is coal-fired generation to a lesser extent natural gas and then a range of other sources—or a narrow range of sources, then you have some exposures which you can mitigate if you have options to secure your energy from a broader range of sources. So the general proposition that it makes sense to explore as many alternative sources of energy as possible to mitigate the risk associated with an overreliance on any single source is clearly a sensible proposition.
The second question, which is one that attracts great intensity of opinion, is about the cost of delivering electricity through various means of generating it. The analysis of the relative cost of renewables as compared to more traditional energy sources is an extremely fraught topic. It is a question of economic models at 10 paces. It is a never-ending debate about whether you look at fully loaded cost, marginal cost or which cost of capital you assume and so on. But again, as a general principle, if you are thinking about the policy desirability of maintaining energy costs at the lowest possible level, for general economic reasons—and, equally importantly, for reasons of fairness so that those on low incomes are best able to consume the energy that they require—then you would tend to say, 'Let's have more supplies and more possible sources of supply than fewer, because that tends to improve the bargaining position of the consumer.'
One of the interesting questions here is: what is happening to price trends as between renewable energy and more conventional energy sources? As I have noted that is an extremely fraught debate with all kinds of methodological disputes that are running, it seems, on a never-ending basis. But certainly what can be observed is some encouraging trends in relation to the cost of some particular sources of renewable energy. I am looking here in a time series sense at what has happened to the cost of energy sourced from renewable sources. I am not looking at the question of the comparable cost at any one point in time between renewables on the one hand and the more conventional sources on the other.
According to the website solarchoice.net.au, the current cost of installing a full solar system in Australia is estimated to be around $1.40 per watt, down from around $4 in 2008. Further drops are expected as the cost of manufacturing panels continues to fall. It is also worth pointing out that a key driver of this is global developments, particularly the scale of manufacturers in China and other countries.
Another interesting consequence of an increasing use of photovoltaic cells in homes and businesses as a localised source of energy generation is that the electricity distribution network is increasingly changing its character. Historically, that network has been a one-way network. Energy is generated in large central generators and is then sent through the network to households and businesses. We have seen for some years now that households and businesses, generating their own energy locally, using solar panels, will—if they are generating energy at any one time, which is in excess of what they need—be able to sell that back to the electricity company using the feed-in tariff arrangements.
According to some pundits, in the future there will be markets for energy in which individual households can be buyers and sellers at different times. Again, the diversity and redundancy implications of this are significant and interesting. In other words, another reason why renewable energy is important and why the developments we are seeing now are of interest is that its capacity to make the supply of energy to any given customer is more resilient and flexible, and less vulnerable to disruption. It is interesting that this resilience to disruption reflects the same kinds of design principles that underpin the internet, which was originally designed specifically as a non-hierarchical network in part to make it more resilient if parts of the network are damaged.
One of the other very interesting trends which we are seeing globally in the renewable space is the increase in the storage capacity of batteries, at the same time as the cost of batteries and the cost therefore per-unit-of-storage capacity is coming down and is expected to continue to come down.
One of the key developments here is what is happening with electric cars. In particular, the US manufacturer Tesla has publicly announced plans for a so-called $5 billion gigafactory and their stated aim is to produce a mass-market electric car to leverage their projected demand for lithium-ion batteries to reduce the cost of those batteries more quickly than was previously thought possible. They have a stated plan of working with partners, including existing battery manufacturers, to build this so-called gigafactory to achieve economies of scale beyond those which have been previously achieved in the manufacture of batteries. Indeed, their stated aim is that, by the end of first year of volume production of the mass-market vehicle, the gigafactory would have driven down the per-kilowatt-hour cost of the battery pack used in the vehicle by more than 30 percent.
I simply make the point that it is uncontentious that the continued research development and commercialisation of renewable energy is very much to be encouraged, that there is an enormous amount of activity occurring around the world and that, despite some of the suggestions made by some speakers in this debate, the question before the House this afternoon is not whether renewable energy makes sense to pursue; the question is whether the specific agency, which presently exists, and the specific existing structural arrangements ought to be maintained or whether there are capacities for efficiencies.
Let me come to that question. What we saw under the previous government was a frenzy of spending in a whole range of areas, among them renewable energy and so-called green spending, resulting in a proliferation of initiatives with considerable overlap, duplication and internal inconsistency. Many of these initiatives, it pains me to say, were driven by base political calculation and the desire to get the support of the Greens during the minority years of the Gillard-Rudd government. Some would suggest that motivation was significantly more present to the minds of the then government than any genuine attempt to make efficient investments in clean energy sources for the future.
The relevance of that for present purposes is that, in considering whether it makes sense to maintain the present institutional structure of a stand-alone Australian Renewable Energy Agency with its own chief executive, its own chief financial officer, its own management team, a separate board and all of the apparatus that goes with a stand-alone organisation, it is important to bear in mind that this question is being determined against the backdrop of a chaotic and incoherent range of initiatives that were piled one after the other on top of each other. They have produced as a result a remarkably complex and inefficient set of arrangements. To mention just some of the torrent of initiatives we had under the previous government: there was the Clean Energy Finance Corporation, the Carbon Farming Initiative, the Carbon Farming Futures Program, the Indigenous Carbon Farming Fund, the Biodiversity Fund, the clean energy skill program, the Clean Technology Investment Program, the Clean Technology Food and Foundries Investment Program, the Clean Technology Innovation Program, the National Energy Savings Initiative, the Energy Efficiency Opportunities Program and the Clean Technology Focus for Supply Chain Program. There was a plethora of these measures. Only somebody who is grossly politically naive would accept the argument from the Labor Party that the only way to maintain and advance our national commitment to renewable energy is to retain the shambolic, duplicative and overlapping series of programs and bodies established by the Rudd-Gillard-Rudd government.
The third point I want to make is a related point. Thanks in large measure to the chaotic, incoherent and grossly ill-disciplined style of government perpetrated by the Rudd-Gillard-Rudd government, there is a very serious budgetary problem faced by the federal government on behalf of the Australian nation at this point. Any policy measure needs to be assessed against the backdrop of the urgent imperative to get the budget back on track. We are facing a situation in which the previous government racked up cumulative deficits of over $200 billion. We are on track to a gross debt of $667 billion if no corrective action is taken. The previous government left, over the forward estimates, $123 billion of planned cumulative deficits; therefore there is a measure of urgency as we consider various policy issues before this government. Are there opportunities to secure savings which can be put towards this critical imperative of getting back on track towards a sustainable fiscal position and, in due course, to a surplus?
That is the backdrop against which we need to continue to examine the question of whether the existing structure of the Australian Renewable Energy Agency can be justified or whether it makes sense to rationalise this agency—to merge it back into the Department of Industry—and also to assess the question of whether the current, unallocated expenditures ought to be allocated or whether it makes sense to pause and seize the opportunity to secure some savings.
The facts are that what the government proposes to do is maintain the existing portfolio of projects that the Australian Renewable Energy Agency has underway, but not proceed with uncommitted expenditure. By doing that, some $1.3 billion can be recovered and will contribute towards the very substantial savings task faced by the present government as a result of the incoherent, grossly ill-disciplined and fundamentally incompetent budgetary management that regrettably characterised the previous government.
I emphasise the point that, notwithstanding these measures, there remains some $1 billion in existing projects committed by this agency, so there is a continuing substantial ongoing forward program of activity when it comes to renewable energy projects. But at the same time this government is making the responsible decision to abolish the Australian Renewable Energy Agency as a stand-alone and separate agency; to merge it back into the department of industry; to capture the administrative savings that result; and, equally importantly, to remove the uncommitted expenditure and put that towards the compellingly important task of getting the budget balanced.
I thought for a minute during that speech that the parliamentary secretary was not going to come clean on the cuts to the budget for renewables. He spent the first half of his speech making it quite clear that the issue we were debating here today was not the value of ARENA, which he acknowledges is very high, or the value of the work that it does, which he acknowledges is also very high. The quality of the work that ARENA does was acknowledged by the minister in his second reading speech. So the quality of the work and the need for the work are not in dispute here; but according to the parliamentary secretary, in the first three quarters of this speech, the single issue we are considering is whether ARENA is the best mechanism to deliver it. Finally, toward the end of his speech, he came clean on what is clear in the bill and explanatory memorandum: this bill abolishes ARENA. It removes the remainder of its budget from the renewable energy space and transfers it to general revenue where, presumably, it can help fund the $20 billion paid parental leave scheme. They do have a budget hole to fill! They can take it from renewable energy and put it into paid parental leave; I guess to them it seems a reasonable thing.
This is about closing down an agency which has done good work. It is acknowledged as having done good work. It is acknowledged by the government as having done important work. They are removing its budget and transferring its existing contracts to be administered within the department. That is a wind-up. That is the shutdown of an organisation which fills an incredibly important function in terms of our country's future.
Before I talk further about what ARENA actually does and what we are going to lose, I want to point out, because I am fascinated by it, the government's red-tape reduction rhetoric relative to its delivery. The regulation impact statement says that business will save an estimated $1.8 million in costs annually, presumably from not receiving grants. That is really interesting. I assume that current contracts will still be administered as current contracts, as they usually are, so I can only see $1.8 million being saved here because they are not giving out any more. It is a really interesting argument to say to an R&D company, 'We're saving you read-tape dollars by not giving you a grant in the first place.' I am sure they will be delighted by that and will add that to that wonderful red-tape reduction achievement of this government. You do not receive grants; therefore, you do not have the cost of administering them. Fabulous stuff—really smart. It is great spin in what is probably one of the thinnest and least fulsome explanatory memoranda for such an important bill that I have ever seen in my now 10 years in this place.
It would be comedy if it were not serious. The wheels have fallen off the government's budget. The Treasurer cannot find the jack. The Palmer United Party has run off with the steering wheel. The Minister for Education is pumping out the fuel as quickly as possible by cutting education. Now we have the government making sure that we will not have a better car in the future. By cutting R&D, it is making sure that the efficiency and effectiveness of future cars simply will not happen. When this one fails, it is over. It is a government, with its eyes clearly in the rear-vision mirror, that cannot see what is happening in the world and the capacity of Australia to be part of it.
I want to talk about what is happening in the world because what is happening in the rest of the world is incredible. While our government is driving us backwards in the areas of renewable energy and action on climate change, it is really interesting to see what is happening in the rest of the world. And I separate this from the whole issue of whether climate change is real. I will not even go into that; I will just talk about the economics of growth. What is growing in the world in energy? Where is the money? Where is the investment around the world compared to what we are doing here today by pulling money out of future investments in technology that will drive growth in the future?
Solar PV has been expanding at a rapid rate, with growth in the global capacity averaging almost 55 per cent annually over the past five years. I remind the government that, prior to the Howard years, Australia was actually one of the leaders in this technology. In fact, we had 12 per cent of the global market share in solar back in the mid-nineties. We were one of the world leaders in this area. Are we now? No. The rest of the world has been growing, on average, by 55 per cent annually over the last five years, and we have a government that is pulling out the R&D investment in this area—in the bill that we debate today. In 2013, last year, renewables accounted for more than 56 per cent of net additions to global power capacity. It was not coal fired power; it was renewables. More than half of the investment in new power capacity around the world was in renewables. In Australia? No. Are we rushing to catch up? No. We have a government with its eyes in the rear-vision mirror, looking back to the sixties and driving us backwards as quickly as possible. This is a folly.
As the member for Solomon mentioned, sometimes tough decisions involve making sure that you are investing now in the future—that you are making sure that we are stronger in the future because of the decisions we made today. Sometimes tough decisions are those decisions. This is not a case of a tough decision; this is a case of a foolish decision that does not recognise what is happening in the world and does not recognise Australia's capacity to be part of one of the few growing sectors in the world. This is a sector which has grown while other sectors shrank. Through the whole global financial crisis, this is an area that continued to grow.
By the end of 2013, the countries that were at the top in the world for total installed renewable power capacity were China and the United States. In spite of all of the things that we hear about China and the United States not doing anything, China and the United States were Nos 1 and 2, followed by Brazil, Canada and Germany. The top countries for non-hydro were China, the United States and Germany. Among the world's top countries for non-hydro, Denmark had a clear lead per capita, along with Uruguay, Mauritius and Costa Rica—but not Australia. We cannot do as well as those countries, with all of our natural advantages: sun, wind, thermal technology and waves. With our large coastline, we cannot compete with developing countries in investments in renewables. In the rest of the world, more than 50 per cent of investment in new power capacity is in renewables. Not us. With all of our talent, not us. And what is the government doing today? Making sure that we will not be in the top 10; making sure we will not be anywhere near it; making sure we will be at the bottom. It is a folly—it is not a tough decision; it is a very foolish one.
In the European Union, renewables represented the majority of new electric generating capacity for the sixth consecutive year, with a 72 per cent share in 2013, in contrast to a decade earlier, when it was 80 per cent fossil fuel. They went to 72 per cent renewable from 80 per cent fossil fuel in a decade. That is an extraordinary effort by countries that know where the future is and want to make sure they are part of it. China's new renewable power capacity surpassed new fossil fuel and nuclear capacity for the first time. China produced more of its power capacity with renewables than with fossil fuel for the first time. This country that the government claims is not acting is doing so much better than us. You can bet that today they are not cutting their investment in renewable technology. You can bet today that they are increasing it.
The impact of all of this growth in this area on jobs is extraordinary. More than one million jobs were added to the renewable energy sector around the world in 2013, bringing it up to an estimated 6½ million people worldwide working in this sector. It is no doubt the future of power capacity—and Australia has a talent for it. We are one of the most creative nations in the world. We punch above our weight in science and innovation and have done for decades. We have the capacity in our minds and the natural capacity in our environment to be world leaders in this. Whether you believe in climate change or not—I do, but I know there are many people on the other side who do not—it is foolish to ignore the trends in the world and to ignore where the growth in technology is. To look at where patents are coming from, what fields they are coming from and how much money are other countries investing in order to be in this and not be there as a country is a folly. It is an ideologically driven folly by people whose failure to believe in climate change—to accept the science—has somehow transcended into an absolute ignorance of the economic trends around the world. For economic reasons alone you invest in renewable energy. For economic reasons alone you put a price on carbon to drive every business to find new solutions so that you can be part of the next decade, not part of the last one. This government is taking us back to the last decade, and what is happening today is shameful. There would probably be no other country in the world whose parliament would get together today to actually reduce their investment in the future, and that is what we do today.
I want to have a look at some of the great projects that ARENA has funded. There are 17 completed projects and about 100 or so in the pipeline that will now be transferred to what I assume is the highly qualified management of the department. I am going to read some of them out because I want to point out to those on the other side who claim to represent rural Australia so well that 70 per cent of the projects funded by ARENA are actually in regional areas. You expect that if you think about the nature of the next wave of renewable energy—biodiesel, biofuels, biomass and that range of growth areas. You would expect that a lot of the projects that take place in this country would be about the nature of the fuel itself, the nature of the plant, the nature of the material and the techniques for processing it into a commercial product.
We had the Australian feedstock and refining capacity to produce sustainable aviation fuel, with 12,000 jobs over the next 20 years. There was cane to fuel feasibility of producing biofuel from sugarcane waste, investigating the feasibility of producing biofuel from sugarcane bar gas. There was generating renewable energy from almond waste, production of generation to ethanol from sugarcane waste, production of biofuel from microalgae, sustainable production of transport biofuels from Mallee crops, the Daly River solar research product to demonstrate commercial production of biocrude oil from biomass and fabrication of thermionic device using advanced ceramics—that is the first one that is not regionally based. There was improving accessibility of system adviser model for Australian concentrating solar power users, which was also not a regional one. There was a model for community owned solar, which was in a regional community, new materials and architectures for organic solar cells et cetera. So the vast majority—70 per cent of these—are based in regional areas and are developing technologies that will fuel growth in our regional areas an develop complete new industries in large parts of Australia. They are incredibly important projects.
I also want to talk about the impact of the removal of this kind of funding from business generally. Around Australia in communities like mine all around the country we have seen over the last 10 years a massive change in the range of skills people have in the renewables sector. In the Small-scale Renewable Energy Scheme, for example, in the solar area there are now about 13,000 full-time people and 3,000 to 4,000 small businesses that have come into the sector because of the advances in technology that are making those businesses viable and earning a living. Interestingly again, the biggest uptake in domestic and small-business solar is in regional areas. It is not in the cities, as you might expect. Perhaps it is because of the distances or the need to cut costs, but the majority of areas where the uptake is greater are regional. And we have a government that is not even prepared to stand up and commit to the government support that sustains that sector on its growth trajectory. It leaves a sector of 3,000 to 4,000 small businesses in extraordinary uncertainty, unable to grow, unable to invest, in a holding pattern waiting for a government a year in after it promised in the election to keep these things in place still not providing the certainty that industry needs, still not providing the certainty that business needs to survive, a government that claims to be about small business, a government that claims to be bringing certainty leaving large sectors—the renewable energy sector generally and the small-scale businesses that work in that sector as well—in a state of considerable uncertainty.
This is not a good day for the future of Australia. This is a day where a government is driving us backwards, is ignoring the economic realities of the world and is putting us in a weaker place than we were yesterday.
I rise to talk on the Australian Renewable Energy Agency (Repeal) Bill 2014. The purpose of this bill is to abolish the Australian Renewable Energy Agency. This bill gives effect to the government's budget decision to close ARENA as soon as practical by repealing the Australian Renewable Energy Agency. I listened to the member for Melbourne, the only Green represented in this House, referring to a guru from Germany who had spoken to him on renewable energy and how he should be urging our Australian government to go headlong into renewable energy projects. I point out to the House that Germany has looked at their renewable energy and their energy requirements overall and now gone back to coal fired power stations. This is a point he must not be aware of, because Germany has in the past used nuclear energy from neighbouring countries, but this is the decision of the German government to return to coal fired power stations.
I do have a conflict of interest here: I have three coal fired power stations in my electorate at Stanwell, Callide and Gladstone. These coal fired power stations are going along at a fine rate and producing energy when renewable energies do not stack up in peak demand and for those industries that are large consumers of electricity. I refer to industries like the aluminium smelter at Boyne Island or the Cement Australia project at Yarwun, who are big users of electricity and pay through the nose for their electricity to the point where they are becoming uncompetitive on the world stage. Cement Australia can already import clinker cheaper from China than they can produce it themselves—and keep in mind that Cement Australia bring in their cement and clay from a site about 30 kilometres from their main station. They also have coal at the back door, and thermal coal prices are the cheapest they have been for many, many years. So why should they be uncompetitive with the rest of the world? And why can they import clinker from China cheaper than they can make at Gladstone? These are the questions that I ask.
The member for Melbourne hit on a little point that I would like to make: he talked about bushfires and how they are on the increase in Australia. We all know that fire is caused by a spark, fuel and oxygen. The reason bushfires are on the increase is that we are locking up our forest and timber to the point where the fuel in the undergrowth builds up, and then all it takes is a spark of some sort—it could be lightning or whatever, but mainly lightning—to set it off and that is when the damage is done. The loss of our wildlife in the forest is because the fires move so fast that they cannot be controlled by man. In days gone by, the fuel and the fodder was eaten down by animals or people moving throughout the national parks and keeping the growth down. This does not happen anymore, and that is why we have increased bushfires.
The government acknowledged that renewable energies still have a major part to play in the Australian energy mix. We are listening, watching and building hybrid projects, hydro-powered projects, ocean energy projects, renewable energy projects and solar energy projects. They are all still on the agenda. The coalition has supported the establishment of ARENA in the past, when it was introduced in 2012. But things change, and we must change with them. It was first established to manage the myriad of environmental programs that were launched under Labor. The reason ARENA came in was to control those projects. Sadly, some of those projects went way off-line: pink batts, solar home programs, green projects—green funding projects cost this country a lot of money. We built kitchens to display the advantages of the renewable energy program. There were model kitchens set up. I do not know what has happened to those model kitchens. They are out there somewhere but, as far as I know, not put to any good use. Cash for clunkers was just another episode of a project gone badly wrong.
ARENA was established, as I said, in 2012 to improve the competitiveness of renewable energy technologies and to increase the supply of renewable energies in Australia. The government continues to support these renewable energies. The Renewable Energy Venture Capital Fund is committed to $100 million invested in innovative Australian companies. The government has made significant investments into the development of Australian renewable energy technology. In addition to the $1 billion supporting ARENA projects, the government has committed a further $2.55 billion to establish an Emissions Reduction Fund from 1 July 2014. The renewable energy industry has received billions of dollars of support in recent years: for example, the renewable energy target, the RET; other federal and state schemes such as financing for the renewable energy projects through the Clean Energy Finance Corporation, the CEFC; state-based feed-in tariffs; and various grants programs to provide the community support to install renewable energy technology.
The government is providing $1 billion worth of ARENA funding, which contributes to around 200 ARENA projects. Each state has benefited from ARENA funding: $28 million in 16 projects in the ACT; $526 million in 63 projects in New South Wales; $36 million in three projects in the Northern Territory; $12 million in two projects in Tasmania; $86 million in eight projects in South Australia; $54 million in 13 projects in Victoria; $106 million in 11 projects in WA; and in Queensland 11 projects at $63 million. Some of these projects have finished and some are continuing, and our government will support those projects.
ARENA has played an important role in the past. However, the majority of projects that ARENA has been managing were inherited from precursor programs. Many of the larger inherited projects have been or are in the process of being terminated or rescoped to ensure expectations are met and that the Australian government interests are protected. That means we are protecting the interests of the taxpayer—it is all based on taxpayers' dollars.
Australian businesses need to be able to grow and compete in a global market. I have already mentioned the two big industries in my electorate of Flynn, the Boyne smelter and Cement Australia, that continue to face high costs and an uncertain future, and that means uncertainty for the thousands of jobs involved in these two projects. Collectively, they provide thousands of jobs directly and many more indirectly. These jobs are under the microscope. These industries in my electorate and industries across Australia need our support.
I do not see many of the renewable energy jobs that the opposition talk about when I move around my electorate or around Queensland. I do not see many people working on windmills. I do not see many people working on solar projects, apart from the installers of solar. These jobs are overseas. The solar panels are mainly produced in places like China. The windmills come from Scandinavian countries or Scotland. These jobs have already gone offshore and are being supplied by overseas companies, so we are missing out on Australian jobs.
Industry and business generally need to be able to compete on a level playing field and that is what we have not got at the moment. We need business to have confidence and that is why we want to set the future energy requirements of Australia on a clear path. Our industries and our people who have jobs in these industries need a clear direction about where we are heading and what we are doing. We are facing a budget stand-off. The age of entitlement is over. We need more bang for our buck, now and in the future.
It is time that action was taken by members and senators on all sides of this House to bring the books back into balance. This is what the opposition seems to forget. Do we hear any suggestions from them as to how we can balance our books? We cannot go on forever and a day operating in the red. It will all catch up. We talk about catching up with the rest of the world; we will catch up with Europe, England, Ireland, Scotland, Greece and Italy in a hurry and their financial situation if we do not do something about it here.
Abolishing ARENA will return $1.3 billion in uncommitted funds to the budget, and the projects will still exist. Any existing projects will be moved to the Department of Industry so that they can be managed effectively and more efficiently. I urge the House to accept this bill.
I am glad to have the opportunity to speak on the Australian Renewable Energy Agency (Repeal) Bill 2014. So many bills in this area have been guillotined before many on my side of the House have had the opportunity to speak on them. This bill seeks to abolish the Australian Renewable Energy Agency. For the benefit of the previous speaker, I am from a regional area, Bendigo, and I disagree that there are no jobs in renewable energy with the wind turbines—not windmills, as the previous member referred to them.
Hofmann Engineering is in the Bendigo electorate and on my two previous site visits there, I found their team working on refurbishing and rebuilding wind turbines. Some of these wind turbines were built in Australia and some were built overseas, but the maintenance of these wind turbines is happening in the Bendigo electorate. Once they have been refurbished, a team from Hofmann Engineering go with the wind turbines back to their home. The Hofmann team, Bendigo employees, then reinstall these wind turbines.
There are lots of jobs in regional Australia involved in renewable energy and it is those jobs that are at risk because of the action of this government. So I speak today not just of the frustration of people in my electorate but of the frustration of people across regional Australia who have their hands up in the air, saying, 'What is this government doing to our renewable energy industries?' Tomorrow morning when I return to my electorate, the first thing I will be doing is having breakfast with the Bendigo networking group, which is a collection of small businesses from my electorate, including a number of businesses involved in installing solar panels or other forms of clean energy technology. Every month they say to me: 'What's our future? What is this government's plan? Do they have any vision whatsoever for renewable energy?' This bill is a demonstration of their lack of vision.
ARENA has been a success story. It has worked to reduce the cost of renewable energy technology development in this country and increase the uptake of renewable energy. ARENA has provided financial assistance for research, development and demonstration as well as the commercialisation of the renewable energy industry and related technology. It has helped develop the skills in the renewable energy industry and has promoted renewable energy projects and innovation both nationally and internationally.
I mentioned earlier about Hoffman Engineering. They have a great project on the books waiting to see what this government will do. What they are looking for is a partner in industry. Yet, because of the roadblocks by this government, and by the coalition government at the state level, this project remains in draft and not happening. These are jobs that could be created in my electorate by an engineering firm in the renewable energy sector but remain in the planning phase because this government is backwards when it comes to investing in renewable energy.
Currently ARENA is supporting over 190 renewable energy projects, including many in my electorate. In fact, 70 per cent of ARENA funding is going towards projects in rural and regional Australia, creating jobs. This is a government that said it would create a million jobs, yet they are axing agencies and funding that would seek to achieve that goal. In my electorate of Bendigo we often say, 'We have green energy jobs.' The future jobs in energy in my electorate are renewable energy jobs, whether it be the wind in Woodend—because it is quite windy there and the development of a community wind farm Park—or whether it be through the solar programs to the north of the electorate, what we have in central and northern Victoria is sun and wind. That is how we create energy security in my electorate and in regional Victoria. That is how we create energy jobs in our part of the world. Many of these projects are now in jeopardy because of the axing of ARENA. It is the responsibility of government to play a role in partnering with industry to create an industry that is viable. This bill risks not just domestic investment but international investment.
Renewable energy has been a great Labor success story—partnering with industry, partnering with community to create not only energy security but to ensure that we have jobs continuing in our energy industry. I will give just a few examples of what we have had go on locally when it comes to renewable energy. Before ARENA there was another program that has also been axed by this government, and that was the $1 billion that was set aside for the Clean Technology Investment Program. Manufactures in my electorate have tapped into this program, and I will give a few examples. MSD Animal Health Australia, a veterinary revaccination manufacturer, through the Clean Technology Investment Program was awarded a grant—it was a joint contribution; they paid part and the former government paid part—to invest in solar. This saw them reduce their carbon emissions by 22 per cent, a saving of about $44,000 on their electricity bill every year. The government's contribution was just under $336,000, which was matched by the company. The solar PV system they introduced cut the costs of manufacturing. It is the largest solar project in the City of Greater Bendigo. It occurred because a company and the government had the foresight to work together to build this new facility.
This is not the only one in my electorate. There was the Victoria Carpet Company which, through the assistance of the Clean Technology Investment Program, were able to buy a new dryer. This project will save the company $79,000 a year on their electricity bill. When I said to them, 'If you had the choice of not paying the carbon tax or this grant, what would be better?' They said, 'By far, moving to a renewable energy dryer and the government grant—that is what would help our business.' This has helped secure jobs going into the future. The new technology that they were able to buy has reduced their carbon emissions by 86 per cent. So not only are they saving money on their electricity bills; they are also using less power, which is better for our environment. That is the vision that this government lacks. It lacks the need for action on climate change. Moving to a cleaner, greener environment also means moving to a greener, cleaner economy.
When you talk to people in regional Victoria, they get it. To them it just makes sense. If there is sun and you put solar panels on your roof, that just makes sense, because it means your electricity bills will go down and you are using a natural resource that already exists. Without the Clean Technology Investment Program these two projects for these two manufacturers would not have occurred, putting the jobs in these facilities at risk. By helping companies invest in clean energy capital, lowering their emissions, has helped not only improve the prospects of that company but has also been good for the community and good for the environment. Axing these programs, as this government has done, means that other manufacturers in my electorate will miss out. That includes the manufacturer Keech Castings Australia. They are a foundry and casting firm involved in the innovation. They are frustrated and disappointed that they were one of the projects that will miss out and cannot apply for this clean energy grant under the Clean Technology Investment Program.
Another example of how my electorate tapped into ARENA and Low Carbon Australia and other programs of the former Labor government is the Castlemaine School of Mines refurbishment. It is one of the oldest buildings in the Castlemaine and therefore one of the oldest buildings in Australia. It was transformed into an energy-efficient community hub with a $2.6 million low-cost grant through Low Carbon Australia. The refurb that they were able to do was going to slash their electricity bill—
Order! The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour and the member will have leave to continue her remarks when the debate is resumed.
Order! The debate is interrupted in accordance with standing order 43, and the debate may be resumed at a late hour. The member will have leave to continue her remarks when the debate is resumed.