Monday, 25 June 2012
Clean Energy Finance Corporation Bill 2012; Second Reading
I may be being very generous, Senator Ronaldson, but I assume that that is not what the government is all about. We are also not talking about projects which are themselves already commercially viable and which can readily obtain finance in the private sector, bearing in mind that we now have many years of experience in solar and wind projects in this country and it is not exactly cutting-edge technology that private banks and investment houses do not understand. There is a lot of investment today in the private sector in these areas, so why do we need to provide for this government sourced finance? It is supposedly because there are some investments which are very good but which do not attract the eye of the private sector.
So we have to hope that this corporation, with $10 billion to spend—$10 billion which ultimately comes at least with the risk resting with the taxpayer, $10 billion which is going to be pushed out into the private sector—goes not for commercially viable projects and not for complete duds but for those things that fall in that sort of sliver between those two points. Do we know that there are $10 billion worth of projects of that kind, which cannot attract investment at the moment or are unlikely to be able to attract that kind of investment in the next five years? We do not know, because the government has not done the homework of looking at what the market is currently confronting and examining whether there is a gap in the marketplace that this scheme will fill. We just do not know that.
The corporation is also conspicuously not charged with investing in the lowest cost technologies in order to produce the cheapest emissions reduction. You could understand if this were not so much about an overall goal of getting more clean energy operators in the marketplace in the hope that that would create critical mass for more competition. If it were actually about producing the cheapest emission reductions we possibly could, that would make some sense, but that is not part of the brief of this corporation.
We run the risk with this that projects may be funded which could have gone to the private sector and could have got market investment, which in fact compete with projects already in the private sector or already receiving private sector finance but which, because they have come later and are now eligible for this direct subsidy provided through the Clean Energy Finance Corporation, may be competing with those earlier projects in a way which puts the latter at a commercial disadvantage. Again, I cannot see anything in the legislation that prevents that from occurring. If I have missed something, I would be very grateful if the minister would point it out. It seems to me that, unless the minister uses those very broad powers I referred to before to correct these sorts of potential problems, we will see subsidies being provided to newcomers in the marketplace which have not been enjoyed by existing players. When that occurs, we have a serious problem with breaches of the basics of good competition within our marketplace.
The explanatory memorandum to this bill notes:
The fiscal and underlying cash balance impacts include a prudent recognition that some investments will not be recovered, and interest revenue. The fiscal balance impact also includes the concessional component of loans.
So concessions are being granted to some players in the marketplace. Some investments will be risky, and I suppose every private sector financier factors in a certain level of bad debt, of investments that turn out not to be such a good idea in the long term. But to what extent is this body being set up to focus on those very kinds of high-risk investments which would not be generally covered by the private sector? We do not know. Those details have not been spelt out. We—that is, the taxpayers—may find ourselves financing a lot of such investments without being in a position to know in advance how much is being financed, because, again, the government has not done the homework of testing the market or of explaining how the principles by which this corporation will operate will work.
All of this goes on against the background of a situation where Australians are facing the largest carbon tax of its kind in the world and we are seeing falling confidence in the government's ability to plot a pathway to produce a less carbon-intensive world. We know that the cost of its failure will be measured by ordinary people, ordinary families, ordinary businesses, particularly small businesses, all over the country.
In the case of the ACT, we know from the work that has already been done that Canberra will see a $641.58 increase in the cost of living caused by a number of factors, principal among which is the carbon tax. Of this, $460.87 has been attributed directly by the ACT government to the carbon tax and general rises in power prices. When I asked the minister last week to tell us how compensation would work in the ACT, despite the fact that she had figures for other states, she did not have any figures for the ACT—a rather conspicuous omission, I think. But I can tell the minister, if she is not already aware, that the ACT government has already done some work on this and has determined that, on its estimate of the compensation arrangements to be made by the federal government for the effects of the carbon tax in the ACT, some 60 per cent of ACT people will be undercompensated for the effect of the carbon tax and 22 per cent of Canberrans will receive no compensation whatsoever. That leaves a very large part of the ACT community with its standard of living being shaved by the decisions of this government, with nowhere to go but backwards. On top of that, the government imposes the reckless folly—
Sitting suspended from 18:30 to 19:30
As I was saying before the interruption, I am deeply concerned that this legislation effectively creates an enormous cheque for the federal Labor government to write—$10 billion worth of 'investment' which could be well spent, but it could also be spent spectacularly badly. In an environment where we have so much evidence of the Labor government's ability to waste money, we have to be extremely fearful that such a large amount of it is being put into the hands of a government which has shown its ability to contumeliously disregard the important constraints on spending taxpayers' dollars wisely.
It is important to acknowledge that this $10 billion is in part a payment of a debt by the Labor government to the Greens. The Greens demanded this fund be of this order. Half at least of the funds which the Clean Energy Finance Corporation is to spend should be spent on renewable energy. Irrespective of whether that is the proportion which reflects the needs of energy providers in the marketplace, whether that is where the gaps fall, whether that is a good value for money proposition for the taxpayer, we are expected to support the bill with that promise to the Greens built into the way in which this corporation will work. The fear that this may be money not well spent is very real.
I was saying before the break that the edifice of carbon pricing that this government is undertaking is one that does not inspire much confidence. We have already seen in the context of the ACT many signs of that. We have already seen major and small businesses having to make decisions which reflect not a priority to save the environment but a priority to cut back on costs, which are spiralling because of the decisions of this government. For example, a small airline operating out of the ACT, Brindabella Airlines, have had to axe their Canberra to Albury route because they see very large amounts of money being spent simply to pay the extra costs occasioned through the carbon tax to the aviation fuel that they purchase. It simply makes the enterprise unviable. They believe $10 per passenger has had to be added to the cost of running the airline and that simply does not make it viable.
My colleagues in the Legislative Assembly have discovered through freedom of information requests that one directorate of the ACT government will have to find an extra $4.9 million in this year's budget to deliver the same services that they delivered in last year's budget. Why? Because of the extra costs occasioned by the carbon tax hitting ACT government services. Health will need an extra estimated $4.2 million, rising to $5.9 million extra in 2015. The additional cost to the ACT budget has been estimated to be about $20 million.
What do we get for $20 million extra on the backs of ACT taxpayers? Absolutely nothing. This does not add to or improve any services that have been provided to the ACT community. Of course, we know already that this government is unable to point to any improvement to the level of world greenhouse emissions because what we are doing in this country is not synchronised with what is happening in other parts of the world where emissions are rising, and rising precipitously. This amounts to a very uninspiring set of plans to address climate change and a very dangerous set of conditions in which to establish a major new $10 billion government business enterprise. It all adds up to a recipe for disaster. I simply hope that the taxpayers and voters of Australia will have a chance to pass judgment at the ballot box on this very unsatisfactory situation before much longer.