Monday, 25 June 2012
Clean Energy Finance Corporation Bill 2012; Second Reading
I rise also to express serious concern about the Clean Energy Finance Corporation Bill 2012 and note that yet again the parliament is being presented with the opportunity to make the cardinal mistake of investing huge amounts of money in harebrained Labor Party schemes, with the evidence of previous attempts at such investments so often having come up with spectacular failures. One has to look at the evidence in this case with a sense of dread that the same kind of outcome is very likely to occur here, too.
The parliament is being asked to provide for a massive investment, $10 billion, to be available to the Clean Energy Finance Corporation over five years to invest in renewable and other clean energy options. It assumes that the independent board which has been created will have the capacity to make good decisions about what should be invested in and the capacity to avoid making decisions about what ought not to be invested in. If we were looking at investing in a process of making commercial decisions in a way that generated a lift to a sector facing difficulties in convincing conventional finance sources of its worth and its value, if it were simply a case of giving those sorts of businesses a little extra advantage within a tight market, one could sort of understand what it is that the government is doing and perhaps even lend it a measure of support. But there are features of this legislation which I think cause anybody with a prudential sense of what ought or not be done by government real concern. For example, the legislation stipulates that the Clean Energy Finance Corporation will make investment decisions independently of the government. That is a very good thing. Such bodies should operate in market-like conditions, even if they do not purely operate in an entirely market based situation. The extent to which they work to the standards of the market is important in making this a basically viable use of the taxpayers' money. But there is a proviso to the independence of the board—that is, the capacity of the minister to issue what the legislation calls an 'investment mandate' to the Clean Energy Finance Corporation. That investment mandate, it appears, will have extremely wide power to affect the commercial environment in which the corporation might operate. The explanatory memorandum to the bill says:
The investment mandate may include, but not be limited to, directions on matters of risk and return, eligibility criteria of investments in renewable energy technologies, low-emission technologies and energy efficiency projects, allocation of investment, limits on concessional investments, types of financial instruments in which the Corporation may invest and broad operational matters.
The question that springs to my mind when reading through that list of things that the minister may do to impose on the corporation is: what can the minister not do? What is left to a board should the minister decide for, say, political reasons to strictly control the types of decisions that the board might make? Would the minister be in a position to mandate particular kinds of investments which the minister might want for political reasons—for example, because a particular investment might happen to fall in certain marginal seats? What could the minister not do to push the board in the direction of such investments? Very little, I would suggest, because this legislation effectively creates a very broad power for the minister or the government of the day to take effective control over the decisions of the independent board. We know from countless previous examples that, when you get Labor governments, with political criteria in mind, interfering in the effectiveness of the marketplace and controlling decisions that ought to be made on a commercial basis, you are asking for trouble—you are begging for it.
I do not need to mention the Labor Party's spectacular failures in areas such as the State Bank of South Australia, WA Inc., and the ZeroGen project under the Bligh government in Queensland, the latter of which led to $100 million of losses for the poor taxpayers of Queensland and which could been avoided, had other principles applied to these sorts of investments. But they did not. What is the common denominator here? It is interference by Labor governments in decisions that ought not to be interfered with. At the federal level, we have had the spectacular failures of the Solar Flagships program in Moree and the Queensland Solar Dawn Project. Those investments have been enormously costly for the taxpayer, and that is not to mention other related so-called environmental investments in things like the combustible pink batts in people's roofs. The record is not a good one, yet the Senate is being invited to perpetuate this record of inappropriately structured investments in what ought to be purely commercial areas of the economy.
What the Clean Energy Finance Corporation is being tasked to do, apparently, is identify projects which have a clean energy underpinning, investment in which is in the public interest but which apparently are not likely to receive commercial backing from private sector finance. Presumably it is not the government's intention that we should be investing in things purely because it likes the idea but they have no commercial viability, so projects which are complete duds ought not to be invested in.