Senate debates

Monday, 25 June 2012


Clean Energy Finance Corporation Bill 2012; Second Reading

5:56 pm

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | Hansard source

I rise to address the Clean Energy Finance Corporation Bill 2012. I would like to talk about some principles, the politics of this and, more specifically, the outcomes that these kinds of measures have had in other places around the world, and what we can look forward to here in Australia if the Greens-Labor alliance have their way in foisting this on the Australian people.

Firstly, I want to talk about principles to do with this bill. We stand here today in the Senate, the house of review. I well remember many comments, particularly from the Greens, about the fact that this place, of all parts of our form of government, should be the place that provides scrutiny of government spending to ensure that the spending is wise, appropriate, value for money and that we will not be wasting taxpayers' money. It is disgraceful that the Greens have lined up with Labor to guillotine debate on this bill.

In the House they had but two hours to debate legislation that commits the Australian taxpayer to spending $10 billion. That is $5 billion per hour. That figure is hard to get your head around. In this place we have the benefit of a committee report. As the previous speaker said, that committee inquiry was somewhat of a farce, I am sorry to say. They had three weeks to consider some 19 bills, some 1,100 pages of legislation and the over 4,500 responses that were sent to the committee, even though people had had only a week to do it. As many as 4,500 people made contributions to that committee, and yet there was less than a week to evaluate them, so many of the submissions could not be evaluated in time to be received as evidence. The coalition members on the committee did their best to go through and look at as many of them as they could.

When you consider the magnitude of this spending—$10 billion—to give a committee only three weeks to look at 19 bills and 1,100 pages of legislation is an outrageous abuse of power of an executive government and their alliance partner, particularly when you look at the make-up of the committee. There was a Labor chair and, going very much against the convention of this place, which is to have an opposition member as deputy chair, there was a Greens deputy chair and there were Independent members on the committee, nine all up from the Green, Labor and Independent alliance, and only five coalition members. It is worth noting that the Greens and Independents were all members of the Multi-Party Climate Change Committee, who are the people who had put together much of the package in the first place. So even that goes against some of the fundamental principles of review, that people who have had a hand in and have a deep interest in and commitment to the thing being reviewed should not be put in the position of reviewing it.

It is worth comparing just for a minute how this is looked at in other government departments. In the last budget, we saw the government commit some $200-plus million to enable detailed review and consideration of the future submarine program. Some three years have passed since they first announced that, and now they are putting in more time and a couple of hundred million dollars so that people can look at this with some scrutiny, because they have rightly said that billions of dollars is a lot of taxpayers' money. The estimates for that program go from around $18 billion to about $36 billion. But we are talking of at least four years and a substantial number of experts reviewing what the government will do so that they do not waste taxpayers' money. That is three years to date already. With this bill, there was three weeks for that committee inquiry, two hours debate in the House and not much more here in the Senate. That is a disgrace in terms of the principle of scrutiny that should be applied to the expenditure of taxpayers' money.

There are other principles that come into play here. Any time we commit the government to spending taxpayers' money we need to remember that it is not our money; it is taxpayers' money and there is an obligation to make sure we get value for money. So it is no surprise that the coalition committee members, in their dissenting report, were somewhat startled when they were looking at things like $57.3 million in start-up costs. Yet the Treasury officials at the inquiry could not explain how those costs were to be allocated. In government circles perhaps $57.3 million just rolls off the tongue fairly quickly, but I think most people in the Australian public would demand slightly more accountability of their government than to allocate $57.3 million with no breakdown, no disclosure and no transparency as to how those funds are going to be used in the start-up of this organisation.

It has already been highlighted that this fund will be paying for the initiatives and the ideas that have not been able to attract funding from the commercial sector. That means they are high risk. That means that the return they offer may not be as great. The estimates range from $600 million to $750 million that is expected to be written off—$750 million of taxpayers' money that is allowed for to be written off. When the Treasury officials were asked where that figure came from, what modelling underpinned that, what previous examples they had looked at in Australia or overseas, they had no answer. So with a program of this magnitude—$10 billion of taxpayers' money—Treasury officials had no answer as to where some of those kinds of assumptions, like a 7.5 per cent wastage rate, actually came from. There are no safeguards. They could not explain whether there were any stop-loss procedures in place, or when, if they had already invested a certain amount in a certain technology, they would cut it off. Where is the threshold, where is that line in the sand, to quote the Prime Minister, so that when they cross it they know it is time to stop?

In terms of return on investment, somewhat cynically this whole program is off budget, because they say it is going to make a return to government. But the Treasury officials were unable to detail whether any of the guidelines that apply to other government business enterprises would be applied to this. All of that says that there is not a lot of transparency and there has not been a lot of thought. In some ways it is no surprise that the Treasury officials were unable to give answers as to where much of this came from, because the Multi-Party Climate Change Committee, which was responsible for this, included people like the Prime Minister, the Deputy Prime Minister, Mr Swan, Mr Combet, Senator Milne, Mr Windsor, Senator Bob Brown and Mr Oakeshott—no climate scientists there, no great economic minds there in terms of something that we will be spending $10 billion of taxpayers' money on. When you look at the range of things that the committee came with up for the Clean Energy Agreement, like putting a price on carbon—something the Prime Minister said would never happen under a government she led—promoting innovations and investment in renewable energy, improving energy efficiency and creating opportunities in the land sector to cut pollution, the list of people on the committee does not exactly bring the world's widest set of skills to the things that this $10 billion is to be spent on.

Moving on to the politics, if we have broken so many principles in allowing this initiative to come forward, why? Clearly the motivating factor is politics. The motivating factor for this initiative is a pay-off by the Gillard Labor government to the Greens. The media and others have called it Bob Brown's slush fund, but the reality is that it is a pay-off to the Greens; it is the return for them supporting the Gillard government. One of the things which really leaps out and shows that is that someone like the retired Senator Brown was able to specifically exclude from consideration in this fund some of the things which he was ideologically opposed to. So carbon capture and storage and things were not included. Why? It was not because they may not be able to play a part in giving us clean energy. It was not because they may not be able to play a part in keeping energy costs down. They were excluded on the basis of ideology, which shows the very clear political lineage of this program.

You also know things are political when they tend to ignore previous programs. Treasury officials admitted during the inquiry that there had been no serious consideration of the $800 million that had been spent on the Solar Flagships or the ZeroGen programs or the failure rates that had occurred under them. They also admitted that there had not been a lot of the thought given to what they meant by 'Australian based'. Some of the discussion that led to this was: 'We need to be supporting ideas in Australia and innovation in Australia.' Yet, under questioning around section 61 of the legislation, the Treasury officials admitted that there were actually no guidelines for a situation where something occurred in Australia but it was actually owned by an overseas venture. There were no guidelines to say, 'No; this actually has to be an Australian idea or an Australian company.' So the politics has caused a lot of good principles to be undermined. The politics has driven a lot of nonsensical approaches. The important question is: what will the outcomes be for the people of Australia?

One of that premises of this program is to fund renewable energy technologies, to make clean energy cheaper than the fuels captured under the climate tax. The Department of Climate Change and Energy Efficiency has admitted that it had not done any modelling. So the department that is supposed to be supporting the committee that is to review the modelling admits that there is no modelling. If it has done no modelling and we have had very limited time both in the Senate and in the House and for the committee that is to review it to apply some scrutiny to these bills, these questions have to be asked: will they be well considered; will they be well designed; will there be unintended consequences?

It is fascinating to look at the report entitled Climate change and economic growth which was issued by the Commission on Growth and Development. This is not some climate change denier think tank that is funded by a conservative organisation. This is funded by AusAID, the Department for International Development, the Dutch Ministry of Foreign Affairs, the Hewlett Foundation, CEDA and the World Bank—so a fairly credible group. On page 8, the report states:

The marginal cost function of mitigation is very steep, especially in the short run. Dramatic immediate policies to reduce greenhouse gas emissions would be very costly. Further, by rushing into regulations in a panic, it is very likely that new programs would not be designed efficiently. The greatest threat that climate change poses to economic growth is that the world adopts a costly and inefficient mitigation policy that places a huge drag on the global economy.

What might that look like? Again, I go to an article from 11 May this year from the Financial Post. It talks about the situation in Europe. It says:

… Denmark, an early adopter … now requires its households to pay the developed world’s highest power prices—about 40¢ a kilowatt hour, or three to four times what North Americans pay … Germany, whose powerhouse economy gave green developers a blank cheque, is a close second, followed by other … nations such as Belgium, the headquarters of the EU, and distressed nations such as Spain.

The result is chaos to the economic well-being of the EU nations. Even in rock-solid Germany, up to 15% of the populace is now believed to be in “fuel poverty” …

The whole debate around climate change and green jobs and clean energy futures does not really use the term 'fuel poverty' very much. But 15 per cent of Germans are now believed to be in fuel poverty. That is defined by governments in Europe as needing to spend more than 10 per cent of the total household income on electricity and gas. Further, the article states:

Some 600,000 low-income Germans are now being cut off by their power companies annually, a number expected to increase as a … stream of global-warming projects in the pipeline wallops customers. In the U.K., which has laboured under the … politically correct climate leadership … some 12 million people are already in fuel poverty, 900,000 of them in wind-infested Scotland alone …

Fuel poverty is one of the unintended consequences of poorly designed, rapidly rolled out regulation attempting to mitigate climate change. It was forewarned in the report sponsored by AusAID and the World Bank. It is being reported on by the Financial Post, and the people in Germany, in Scotland and in other parts of Europe are living in fuel poverty. We have the warning. We have the demonstrated facts. Yet this government and their Greens alliance partners still wish to ram through this place, with insufficient consideration and scrutiny, a bill that stands to damage our economy as part of the broader carbon tax package.

It is interesting that the article in the Financial Post notes that, according to the US Energy Information Administration, power rates there will actually drop by more than 22 per cent by the end of the decade and then stay flat to 2035. Why? Because increasingly the Americans will be working from coal to natural gas, which is expected to account for 60 per cent of generating capacity in the future. Because of gas and their limitless amount of coal, Americans' power prices are actually falling, while we are seeing in Europe in response to schemes like the one before us an increasing number of people living under a new term called 'energy poverty'.

For matters of principle, for the denial of the opportunity for the Australian people to have their representatives in this place apply appropriate scrutiny, because of the crass politics behind this bill and because of the unintended consequences that come from this ideologically driven carbon tax package, of which the Clean Energy Finance Corporation Bill is a part, I will not be supporting the bill, and the Senate should oppose it.


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