Monday, 25 June 2012
Clean Energy Finance Corporation Bill 2012; Second Reading
I would like to say that it is a pleasure to rise to oppose this particular legislation, the Clean Energy Finance Corporation Bill 2012, but it is actually a tragedy that this legislation has been brought into this place. The Labor Party of old—the Labor Party of Hawke and Keating—would have had nothing to do with legislation like this. The Labor Party of Hawke and Keating ran a million miles from the state governments of Victoria, led by John Cain and Joan Kirner, and South Australia, headed by Mr Bannon. But the Labor Party of today has sold its soul to the people in the corner—the Greens. This legislation represents the depths to which the Labor Party has fallen. The Labor Party of Hawke and Keating, the Labor Party of Peter Walsh, would have gone nowhere near this. But that is not the modern-day Labor Party. Its agenda and what it does in government are driven by the people in the corner in this chamber, the people formerly led by Senator Bob Brown.
It is not for nothing that this is known as the Senator Bob Brown bank. This $10 billion of borrowed money represents $10 billion of future taxes being paid by Australians who might even still be in school. This bill represents the price of the Labor Party's soul. It represents what the Labor Party will do to stay in power. It does not matter that they made an explicit promise to not do something and then introduced a carbon tax. It does not matter that this legislation and this so-called clean energy fund goes against everything they did when they were last in office. But it does illustrate the depths to which they have fallen.
The $10 billion that is being appropriated with this legislation—$2 billion a year for the next five years—is being appropriated in such a manner as to try to keep it off the budget books in a formal sense. It is being done in a way that it does not add up to Labor's record debt and deficits, with nothing less than an accounting trick. But we know that the alleged surplus is also made up of nothing less than an accounting trick by pulling billions of dollars of spending forward into this financial year, pushing it out to the subsequent financial year. They hope against all hope that if they can actually turn their back on their record of the last few years they will deliver some sort of measly surplus of less than one per cent of Commonwealth revenues in what may well turn out to be an election year.
Importantly, this money is borrowed. This legislation seeks to put this policy beyond the people. And that is exactly what the Greens have hoped for. That is exactly what the Greens have sought to do with this whole policy area, year after year after year. At the last election the overwhelming majority of people in this parliament went to the election with a promise of no carbon tax. A sole member of the House of Representatives and five senators in this place were elected on a platform of introducing a carbon tax or an emissions trading scheme. But, because of Labor's desperate desire to retain the perks of office at all costs, those others folded on the promise the Prime Minister had made through the barrel of a camera: 'There will be no carbon tax under the government I lead.' And this represents part of that.
This legislation, by seeking to appropriate over the next five years $2 billion each and every year, is yet another attempt in the ongoing attempts by Labor and the Greens to put this whole issue beyond the people. I say that this side of parliament intends to put it before the people. This side of parliament intends to go to the next election and aggressively put our case that policies like this put our economic good fortune at risk, that policies like this stand only to add costs to the Australian economy, that policies like this stand only to add to the future debts and deficits that must be paid back by all Australians.
There are many things wrong with this approach, and I want to go through a few of them now. Firstly, the whole idea that the government is in a position to finance technologies and to enter the finance markets to finance particular industries and companies has been disproven in my own lifetime. I grew up in Victoria. I finished high school in the year of 1990, when my home state was in something akin to an economic depression. People in South Australia had a similar experience. And what drove that? It was a borrowing binge by state government instrumentalities that lent money out. They thought they were making the best guess about what might turn out to be economically substantial projects, but in the end governments are not fit for the purpose of determining what happens in a commercial marketplace. Billions of dollars were lost, through Tricontinental, the State Bank of Victoria—and I remember, when the Victorian Economic Development Corporation story broke in 1989, we thought that was a disaster because it involved about $140 million of government funds being wasted. That was merely the beginning of a tidal wave of government losses that led to the effective sale and closure of the State Bank of Victoria and debts for the State Bank of South Australia being borne by taxpayers for many years.
Importantly, when debts like this are run up, to the government it is just numbers on a balance sheet. In fact, someone once described to me the whole idea that we have a fiscal cycle where we run deficits in bad times and surpluses in good times. The whole Labor and Greens idea of a budget cycle is that when Labor is in office we run deficits. When the coalition is in office we run surpluses. The whole argument about whether we should have deficits or surpluses is a critical one, but it is not just a utilitarian one; it is a moral one. It is a moral argument because when we run deficits we are imposing costs on future Australians—we are living large at their expense. Professor Niall Ferguson, who is currently giving the Reith lectures in Britain, makes this very point in his first lecture—that all around the world this financial crisis we are seeing is being driven by governments living large at the expense of people who have not yet even been born. They are definitely living large at the expense of people who are not yet taxpayers, because the bill always comes due. And approaches like this only serve to reinforce the fact that Australians know this government is headed in the wrong direction—because if we were to believe Mr Swan and if we were to believe Prime Minister Gillard that the Australian economy is so great, then we would not be running up a measly attempted accounting fiction of less than one per cent of government revenues as a surplus. It takes 70 years to pay back the debt they have run up in four years. If this economy is so strong then this budget should be so much stronger, but it is not—and we know that it is genuinely in deficit. So there are the accounting tricks, and this is one of them.
Time will prove that this body will not deliver a commercial rate of return. For that reason it should be treated on budget. We have an admission from the government that they expect a 7½ per cent rate of money not being returned to the fund. That is $750 million over five years—$750 million that could otherwise be spent on services. It could build a hospital. It could fund new regional universities. But no, this government do not want to go down that path; this government want to kowtow to their Greens allies and create this fund for patronage, this fund for preferment, in order to simply buy more time in office. This fund is for people who cannot access commercial finance. It is therefore, by definition, picking losers. If we have a commercial operating finance market, one that funds every other business in Australia but will not fund these particular businesses, then someone with a sense of the market would say: 'These businesses will not provide a commercial rate of return.' We have seen it all around the world. We have seen it in Queensland. We have seen the disaster with Solyndra. But this government will not listen. This government simply want to create this slush fund and put it beyond the call of the next election and put it beyond the people so the people cannot have a say.
What is even more frustrating about approaches like this, where the government seeks to fund non-economic industries, non-economic sectors and non-economic companies, is that they give false hope to the people working in those areas. One of the great tragedies of sustaining a protected regime in certain areas—and this is the latest one—is that to people who may enter the workforce in those areas at some point in their lives, when there is a reckoning, when these businesses and sectors do not actually provide a commercial rate of return and become unsustainable, and the government drip dries up, then those people are going to go through substantial economic adjustment themselves. We saw that in the 1980s and 1990s on a massive scale. We had hundreds of thousands of mainly middle-aged, mainly blue-collar male workers lose their careers in the name of economic reform. That was for the great betterment of this country, and it is a great testament to the way this country handled that that we did it without substantial social dislocation. I had experience of that in my own family.
But why on earth would we try and set ourselves up for failure again? We have been through this period of economic restructuring that has delivered us unprecedented, unheard of economic good fortune. Since we entered the workforce people of my age have never really experienced mass unemployment in the way our parents have. I am 39 years old. Since we got out of the 1991, 1992 and 1993 recession we have had a relatively low unemployment rate. So, for the first time in many years, we have not had a huge recession that has forced people out of the labour market. Yet no-one denies, apart from the Greens in the corner, that it is economic liberalisation that has delivered that good fortune. Why would we turn our backs on it? Why would we create a fund like this, specifically to support non-economic industries and non-economic sectors and potentially to set more workers up for those difficulties that people went through in the 1980s and 1990s? Because that is what picking losers involves—it is actually about people.
That then goes to one of the core challenges that this bill represents to all of us. This bill represents yet another step in the recreation of a culture of patronage in the Australian economy. I do not dismiss lightly the fact that the Greens have campaigned for this sort of attitude for many years, but I am amazed that the Labor Party, the party of people like Peter Walsh, has turned its back on economic liberalisation. When you set government up as a source of funds, when you set government up through regulation that can make or break industries, or through one-off grants like we have seen to car companies without criteria that are open and transparent, what you do is create a culture of patronage whereby the pathway to government and access to government support becomes even more important than genuine commercial success. That steers economic resources and capital—and, these days, scarce labour given our ageing population—away from the most efficient use, and away from where the country can do its best, and steers them towards less efficient outcomes. It steers those resources towards outcomes that do not produce the national wealth that we would all benefit from, so every Australian is directly worse off—except for the very few, of course, that benefit from this largesse; and this is largesse on an enormous scale. I was in this place when we knocked off the so-called Ruddbank. It was a bank introduced by the former Prime Minister, as part of one of the stimulus packages, in order to protect the commercial property construction industry. It involved about $4 billion of government funds, but with the potential to go up to $10 billion. This place knocked off that legislation because of the risk it was exposing taxpayers to. This bill represents a bigger version of that, and a bigger version of that invested in a much less secure environment, because this is supposed to pick the losers out of the commercial market. This is going to those very organisations that cannot access commercial finance because they cannot make a business case add up. While it provides an enormous advantage to some, it penalises every taxpayer and it will penalise future taxpayers, who will have to service the debt that this $10 billion is adding to.
One of the most bizarre aspects about this is that it does nothing to add to the government's alleged carbon reduction agenda, or that of the Greens. With this $10 billion plan we will see not one extra watt of renewable energy generated. We have the 20 per cent mandatory renewable energy target, and this will not in any way add to that. This will merely be a source of funds for people operating in that space. I say to the government: how is it fair that those who are in the marketplace at the moment servicing commercial loans, with business plans, will have to compete against people chosen by the government's nominees, who might get access to funds in a different way? The truth is that we know that borrowing money from the government is not the same as borrowing it from a bank. There will be political pressures to make sure that this particular fund does not do unpopular things just before elections. There is always the curse of patronage, which means that those with connections can potentially use them with the board. We do not know how this is going to work but we do know that the mandate is not as strict as it is for the Future Fund. How is it fair that people who now are operating in the commercial marketplace in the renewable energy industry will be up against potential competitors who have access to these funds? I put it to you, Mr Acting Deputy President, that it is not fair.
This bill represents a serious backwards step for this country, because the taxpayer again is going into the commercial finance marketplace, or, in this case, the non-commercial-finance marketplace. It is doing so purely as a political pay-off to the Greens, who demanded this slush fund of the Labor Party in order to get their carbon policy through this parliament. We are now debating it after a farcical inquiry in the House of Representatives and no inquiry in the Senate—and no inquiry by either of the economics committees of the two houses.
The fact that the Greens or the Labor Party can ram this legislation through with nothing more than a proforma inquiry in the House and, I believe, two meetings of the Senate Economics Legislation Committee, with no evidence being taken, shows what a farce this has become. It shows that this really is about re-creating a culture of patronage.
This bill is going to mean, according to the government, at least $750 million of losses to Australian taxpayers. I think it will be much greater, because the recent history of funds like this in Australia has been that they do not return the cost of capital and they expose the taxpayer to massive losses. Also, overseas we know these funds simply do not work.
This bill is nothing short of an abomination. It represents a pay-off from the Labor Party to the Greens, and it represents the re-creation of what I, and the many Australians who bear the cost of policies like this, had hoped was expunged from our country—that is, government deciding which businesses succeed and which businesses fail, and a culture of patronage. This bill should be opposed, and I stand firmly with my coalition colleagues in doing so and in making sure that bills like this are key issues in the next election so that the Australian people have a say on how their money is spent, even if it is money that has only been borrowed.