Senate debates

Monday, 9 December 2013


Clean Energy Finance Corporation (Abolition) Bill 2013; Second Reading

7:43 pm

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | Hansard source

I have listened keenly to this debate over the last couple of days and I think it is important to address a matter that Senator Whish-Wilson first raised, and that is that in the insurance industry there are reinsurers. The reinsurers—Swiss Re, General Re and the like—are the ones who are actually charged with predicting and costing disasters such as cyclones, typhoons, tornadoes and earthquakes. It is a very interesting subject. Having had a very minimal involvement in reinsurance through the Motor Accident Commission of South Australia, I have got a little bit of an understanding of how it works. They actually test your organisation. They look at all of the potential catastrophes that could happen to your organisation, and then they price the risk. You buy that insurance and you go on then and do your business.

This is a really interesting area and it should be right at the heart of the economic rationalists. It should be right at the forefront of their thoughts because, if they do not believe in climate change or if they do not accept the scientific evidence—their gut feel is that it is not really climate change—then the money men in those reinsuring industries will tell them. They will tell them that the prevalence of tornadoes, the prevalence of cyclones and catastrophic storms in the American Midwest or in the UK or in Europe, demonstrate that something is happening here. Something is changing. It is to their eternal shame that they do not actually evaluate all of the factors. They can deride the scientific evidence—it is a wish list; we cannot do anything; we are a small population and we cannot impact climate change globally, and all of those things have some modicum of truth—but the reality is that the moneyed people of the world, the people who reinsure the insurers, are operating that insurance on the premise that something is happening globally. In that environment, it is extraordinary that the Liberal government, the Liberal coalition, puts its head in the sand and says, 'We are on a mantra of abolition of the carbon tax.'

I will address that phrase 'carbon tax' a little bit later, but one of the really good things that happened during the initial debate on this matter was that I attended a briefing at, I think, the Norwood Town Hall. Quite unrepresentative of the group there was a lecturer in economics from Adelaide or Flinders university. The basic premise he put was in economics: if you want to change behaviour, you price it. If you want to change behaviour you need a price on it. It is a fundamental economic principle. And I suppose, if you want to change behaviour of people who are speeding on roads, you price that behaviour—so if you speed you pay a fine, and you slow down. So fundamentally, I think economists accept that price in the economy will change behaviour.

That has stuck with me right throughout this whole debate. What we have seen in my home state of South Australia is a growth in renewable energy which is far in excess of the rest of the states of Australia. We have wind energy and we have solar energy, and I will say this: it was mainly driven by former Premier Rann who lived in the solar-powered house long before it was fashionable, long before it was affordable. He had a passion about renewable energy and drove a lot of policy in South Australia, which has made us leaders in renewable energy.

Unfortunately, you cannot bank renewable energy and you cannot store it in a lot of cases. You can use it to offset peak flows and to offset peak demand, but basically it is not there on the peak days of the year in sufficient amounts to make redundant the gas or coal fired technology. In South Australia we have endorsed and adopted renewable energy.

The cost of it is spread out, there is no doubt about it, and it is something that I am not all that in agreeance with. It is shared out, if you like, on the bills of every consumer in South Australia. So if you are a low-paid worker or a low-paid pensioner and you do not have a solar system, you are probably paying a modicum for someone who is a little bit more fortunate and has chosen that renewable energy. But that was a decision that has been made.

When we look at the Clean Energy Finance Corporation, we see an organisation which is at the forefront of investing in future renewable energy products. It is set up and was designed to take the place of perhaps venture capital, which would invest in alternative technology. It is set up to make a return to the taxpayer and it is going along its way quite successfully. But it is been wrapped up in the 'no carbon tax' and the 'we will abolish the carbon tax' and everything that goes with it. Even if things are actually economically viable and sensible, they are all going as well.

Those on this side of the chamber do not agree and, fortunately, neither do those on the crossbenches—and I think that is all of the crossbenchers. So we are now in the situation where we are debating whether a good clean energy corporation should exist or not. A number of quotes can set the scene for why this activity by the coalition—or the noalition, as they really should be known—should be resisted. Mr Nathan Fabian, the Chief Executive Officer of the Investor Group on Climate Change, said:

The CEFC is one example of what are now 14 co-financing institutions around the world. These organisations are needed for five reasons. Firstly, governments cannot sufficiently finance low-carbon alternatives to meet a two-degree outcome and private capital is needed. Secondly, the low carbon investment market is relatively young and so deal flow needs to be supported. Thirdly, capacity in the finance sector must be increased through the experience of financing investments. Fourthly, financial participants welcome investment opportunities presented in a new market by an objective third party, even more than by investment banks. Lastly, cofinancing organisations can actually earn financial returns for governments, delivering abatement at negative costs—and we think this is appealing and makes sense to all parties. Given the government's infrastructure agenda, we think that dismissing co-financing as a useful policy instrument may be premature.

Having had a little bit of experience in the investment world, that sounds to me like venture capital. We do not really know what the outcome is going to be, but if we invest in enough bright people in the right sectors across a whole range of activities we will make a return. I do not think that is a bad thing for a government to be doing—I think it is a very good thing for a government to be doing. It is a much better thing than the direct action policy. I really do think that the coalition painted themselves into a terrible corner in their endless pursuit of an early election, their endless derision of anything that the Labor government tried to achieve and their endless opposition. They said, 'We will get rid of the carbon tax' and history will tell whether that is true or not. It is likely that, in six months time, they might be successful, but far be it for me to pre-empt their success or otherwise.

The reality is, they campaigned to the Australian public saying, 'It's a bad tax.' The reality is that it has added a modest increase to electricity prices, all of which was compensated. Most of the pain that the consumer felt in electricity prices was the rebuilding of the poles and wires; it was not as a result of the carbon price. But the coalition endlessly repeated the mantra, 'It's a bad tax'—and it would be a very brave government that went to an Australian election with a policy position of imposing a tax. We had the demonstrations at Parliament House and we had the endless repeated mantra—in fact, the mantra has not gone away. The mantra is still there. Every time we ask a question in question time, it is all down to the carbon tax.

With the electors that I speak to, with the barbeques that I attend, I honestly do not think that Australian electors are all that excited about the carbon tax. I do not think it has impinged dramatically on their day-to-day living. I think they do understand that something is there in the climate that needs addressing. We may have been guilty of not putting our position as succinctly and correctly as we possibly could have, and we certainly did not win hearts and mind. We lost that debate, but that does not mean that we should walk away from a position which is trying to deliver a clean energy solution for Australia.

We are one of the highest emitters per capita in the world. We have this awful conundrum where we are 25 per cent of the coal resources of the world and we make $30 billion from exporting coal. So why, in that environment, would we not back the Clean Energy Finance Corporation, which is looking for cleaner solutions and investments into alternatives which will wean us off the heavily polluting emitters? In South Australia I believe there are only nine companies paying the carbon tax, and we are the lowest emitters. We are a small state—we have a concentration around Adelaide and at the peninsula down at Mount Gambier, and a little bit out at Whyalla, but 82 per cent of the seat of Grey is pretty sparse.

There is not a lot of industry and there are not a lot of emitters. I think we only run our power station in Port Augusta when we can make some money out of it, so it might be down to three to six months a year and the rest we shut it down. It is a brown coal plant that is serviced out of Leigh Creek, and I have had the opportunity to visit Leigh Creek and meet the workers there, as well as the workers at the Port Augusta power station, and they were transitioning to a different energy future. The Clean Energy Finance Corporation could make that come along quicker. It could create clean energy jobs. Why would this coalition government take the Clean Energy Finance Corporation, put it into its mantra of 'It's bad! It's bad! It's bad!' when it does not look that way to any independent assessment? It just does not look like what they are trying to portray it as.

However, that is not unusual with this government. It is their way or the highway. The adults are in charge and 'We're open for business,' and as we have said earlier in the debate today, the first 100 days of their government have been characterised by 100 delays. Now they are in here trying to ram through some legislation which will shut down the Clean Energy Finance Corporation and actually hit their budget—it will take money out of their till. They have spent a lot of time on the stump saying, 'Debt's bad! Debt's bad!' This will actually hit their budget, and they are doing it for an ideological reason.

I think they ought to go back to the drawing board and have a look at some of the things that have been contributed in this debate. I doubt that they will, but I think it is an important point that Senator Whish-Wilson raised earlier in the debate: what are the reinsurers doing? They are money men, they are there to assess the climate of the world—they might not think its due to climate change, but they will know if something is going on. If they are pricing the risk in, then perhaps those climate change deniers on the other side might change their mind.

I had a brief moment today, when I heard Senator Sinodinos talk about a frog in warm water and boiling, where I thought, 'Aha! Climate change is back on the horizon.' but then he went on to refer to that analogy in economic terms. He really was not talking about climate change—he was talking about the economy being in a bit of trouble—but I did think for a moment that there might have been something in there finally recognising that climate change is real. Australians believe in it, and you cannot go anywhere in Australia without people having a view on it.

There are certainly people who are against tax but they are against all tax and certainly all new taxes and they think that it is an imposition on them that they are paying things, and the opposition has clearly distorted that message. We have made mistakes and there is no doubt about that. We did not communicate our message effectively but we cannot walk away from a clean energy finance corporation that is set up to invest in renewable technology which may well be world beating and so we would lead the world in terms of delivering outcomes in respect of climate change. There is no part of the world that is ignoring climate change and saying, 'We'll simply plant a million trees or a thousand trees' or 'We'll have direct action and we'll pay polluters not to pollute.' If I were a polluter and someone would pay me not to pollute, I would do it as slowly as possible so I would get the maximum dollars out of it.

The reality is that there are major companies in Australia as I speak who are taking action on their carbon pollution because it saves them money and because they are a better corporate citizen. The other thing is that unless you have the price on carbon I am sorry but I do not think there will be a tremendous result. Economists will say time and time again, 'If you want to change behaviour in the marketplace, you put a price on it.' That crew over there, the 'no-alition', have been able to characterise that as a tax on every Australian. If you believe them, when you open a packet of Weet-Bix in the morning it has gone up 2c because of the carbon price. If you actually believe their rhetoric, all of the ills of the world or all of the ills of the economy in Australia will be blamed on the carbon tax. Well, the proof will be in the pudding. If and when they are able to axe the tax, as they call it, and get the carbon price out of the way—


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