Senate debates

Monday, 9 December 2013


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

8:30 pm

Photo of Joe LudwigJoe Ludwig (Queensland, Australian Labor Party) Share this | Hansard source

I rise to oppose the Clean Energy Finance Corporation (Abolition) Bill 2013. In doing so I will be speaking in defence of solid, grounded economics that drives investment, reduces emissions and supports jobs in the Australian economy. This bill introduced by the Abbott government is, quite frankly, a triumph of political opportunism over common sense. The government has moved to deny Australian industry effectively participating in the clean-energy future. It does appear that no-one from the government has stopped to examine the record of what they are abolishing. If they had seen the record, they would not be doing this now, although it is plainly evident that this is a government that acts first and then thinks, followed by a fumbling mess of the half-backflips and confused responses that we have seen in recent weeks.

The CEFC was established to invest directly and indirectly in renewable energy, energy efficiency and low-emission technologies. The CEFC annual report makes the case as at 20 August that this year their investment portfolio was valued at $536 million. The total value of projects associated with the body's investment was about $2.2 billion. It is a stunning result for an organisation so young. It is even more unbelievable that the government would end it so quickly, even before they have established their own model of direct action—but we will come to a little bit more of that later. This is a government that has said it would head down the path of direct action but has not said what that would actually look like.

But let's look at what direct action actually is. Direct action says that the market cannot or will not cope with a floating carbon price. It says that the government, not the free market via an emissions trading scheme, is more adept and efficient at delivering the outcomes of reducing carbon emissions. This is supposed to be a government and a party that purports to believe in a market based approach over regulation, and here we have it walking away from an emissions trading scheme because this is an example of a good market based approach.

So let's take a look at some of the work of the CEFC. To date it has invested in new technologies to reduce Australia's emissions of greenhouse gases—importantly, at lower cost. To that end the CEFC has created jobs, grown Australian businesses and spread the use of low-carbon and renewable technologies across industries. The body has demonstrated time and time again over a very short period that it has a positive cost-benefit outcome for taxpayers, businesses, the economy and, importantly, the environment. It has clearly demonstrated a positive outcome in reducing CO2. Around 3.88 million tonnes have been abated.

This has not come at a cost which the government would want taxpayers to believe. In fact it has led to positive returns to taxpayers. What the government has been doing is spreading mixed messages about the role, function and results of the CEFC in order to justify why it is now seeking to abolish it. Some of these claims are, quite frankly, just plain wrong. It has said that it will crowd out private investment. Wrong. The investment mandate it operates under explicitly directs it to avoid this outcome. There is an unmet need in the business world for this type of body.

The government has also headed down to the last place climate change deniers go. That is that—and I have even heard Senator Abetz use this phrase—it 'encourages risky investment and puts at risk taxpayers' money'. The Treasurer himself in the second reading speech for the abolition of the body stated that the CEFC was investing in high-risk ventures. My guess is that those on the government side will repeat this claim many times before this debate ends. It is false. The Treasurer knows it. The government knows it. Those on the other side know it. The body is required to seek to develop a portfolio across the spectrum of clean-energy technologies that in aggregate must have an acceptable but not excessive level of risk relative to the sector. Myth two exploded. The CEFC has in its operation not looked to high-risk ventures. The organisation has demonstrated a relatively conservative approach to investment.

One of the most outlandish claims of all, though, is that it is some green hedge fund. Again false; it does not operate like a hedge fund. It has not invested in hedges, derivatives or guarantees. What it has done is invest $534 million in Australia's future.

It is claimed that its ability to offer concessionality has negatively affected its ability to have a commercial orientation. That is another claim that those opposite raise for why this body should be abolished. Again, it is plainly wrong. It defies logic. It is grounded in the belief that the private sector does not offer concessions or discounts of the regular market price. This caps it off for this government critique: the private sector does not offer discounts. That is what they are effectively saying. As we approach the pre-Christmas and post-Christmas sales, I wonder what sort of world those opposite live in to think that businesses do not offer concessions. The CEFC can offer concessions to give effect to public good outcomes, which is a good thing. Achieving technological expansion, dispersion and take-up, a demonstration effect, and emissions reductions are all very good things to have. The private sector does this for other reasons and not always in the public interest. They do it for things that I will not cavil with, such as gaining market share, retaining business or undercutting competitors.

Another outlandish claim is that the CEFC does not generate any renewable energy—plainly false again. The CEFC has invested in projects responsible for 500 megawatts of installed new generation capacity, and this is additional generation capacity. Two of these are worth making some comment on to absolutely make the point. One is the CEFC investment in the Sundrop Farms project in Port Augusta in South Australia, which uses solar thermal technology to provide irrigation from desalinated seawater and heating and cooling for a 20-hectare greenhouse complex. This ticks the box of creating jobs in regional Australia. Most of all, though, it drives innovation across the farming sector. The second is the co-financed solar PV installations by Australian Agricultural Company across a number of its regional and remote facilities. It drives home the message that this is about reducing costs and increasing competitiveness through greater use of solar PV and renewable energy sources.

The CEFC is gaining support in regional Australia, and you can see that across many areas. What is even more stunning than the move this government is making to abolish this body is that the Nationals, and even the Country Liberal Party in the Northern Territory, are with it on this. You wonder why when you look at the types of outcomes across regional Australia that this body can provide funding for. If you think about the Nats, they oppose foreign investment, and now they seem also to be opposed to direct investment from a local corporation. I think the truth is that they oppose anything that they do not understand—which is considerable. That can be the only logical answer to their opposition to a corporation that is helping drive innovation and efficiency in the rural sector.

Of course, the arguments by the government that we are acting alone here in seeking to reduce emissions and provide investment certainty and the opportunity for businesses not only in regional and rural Australia but right across Australia to drive emissions down are also plainly wrong. We are not acting alone. The UK has a Green Investment Bank which has the explicit objective 'to accelerate the UK transition to a green economy and to create an enduring institution, operating independently of government'. Germany's main development agency is also a significant financier of green energy. KfW funds up to 80 per cent of Germany's newly installed wind energy and 40 per cent of the solar panels installed in 2010. I should not leave out the US. It also issues and guarantees loans to encourage early-stage commercial use of new or significantly improved technologies in energy projects, through the Loans Program Office. China also provides funds to clean energy through its development banks, including the China Development Bank. Korea's Green Climate Fund is a fund within the framework of the UNFCCC, funded as a mechanism to transfer money from the developed to the developing world. It is aimed at developing countries in adaptation and mitigation practices to counter climate change.

The stupid argument that the government is providing for the CEFC's abolition rests on the mantra that without a carbon tax you do not need the CEFC body at all. Wrong—unless, of course, you take the poor view that the government is telling big fibs when it states that it believes in climate change and will meet the 2020 target of reducing our carbon emissions by five per cent of 2000 levels. After listening to the debate in this place on these bills, I think that is exactly what this government's position is. The government has released its terms of reference for the establishment of an Emissions Reduction Fund, but only lately. We do not know what it will look like, though. The stated objective of this is to efficiently and effectively source low-cost emission reductions that will contribute towards our 2020 target. There is already a body that can do this. A mechanism that can meet this aim is in fact working well right now.

It seems that the ideological obsession by the government has blinded them to the opportunities that exist right now for them to support. What they think they are going to get with a new fund looks like a slush fund for industry—a fund that the government can use right across their electorates to pork-barrel. You do not have to go back too far to find that the government has form on this. Remember Regional Partnerships? Many of you in this chamber might remember it more for what it really was: regional rorts. This program spent money on any harebrained scheme the minister or his colleagues dreamed up for their electorates. It did not work as a program. It was, however, very popular for sitting coalition members. The national interest got lost along the way.

Let me make a prediction that the government's fund will end up exactly the same, and the public interest, of meeting our 2020 targets, will not be met through this fund. It will end up more like the 'regional rorts' program. You will not make the National Party happy, you will not meet your targets and it will end in tears. Because the fund will be grant based, someone will have to pay for it. Yes, you guessed it: the taxpayers funded 'regional rorts' and I suspect they will also be funding the coalition's slush fund, or should I say direct action fund. In stark contrast, the CEFC to date is expected to earn an average return of approximately seven per cent. So not only does it not cost government any money; it actually contributes to the government's bottom line through dividends.

Let me address what we will miss if this bill passes. Those opposite want to wrap this up as part of the carbon debate, but the CEFC is an investment vehicle that will benefit regional and rural Australia. It will provide much-needed co-investment in good technologies to reduce emissions but also drive efficiency and investment in regional Australia. The National Party have signed up to the abolition of this without understanding, I think, the benefits that this vehicle will provide. The CEFC will provide fantastic opportunities for things like the new wind farm, with the capacity to generate enough wind power for about 45,000 homes, that is currently being built near Taralga in New South Wales. There will not be another one like it if the CEFC is abolished. A large-scale solar PV plant is to be constructed near Moree in New South Wales which, when operational, will generate enough power for about 15,000 homes and abate more than 95,000 tonnes of carbon emissions. It may be the last of its type. Without a body such as the CEFC to provide that co-investment, you may not see another plant like that in regional Australia to provide that benefit. And we heard tonight from Senator Moore, who has a great interest in the Darling Downs, about the chicken waste used by Darling Downs Fresh Eggs.

Without the CEFC, there will not be the opportunity for projects like these that drive innovation, that provide opportunities for regional Australia to get a return on their investment and find alternative sources of income to add to their farming income. There will not be that transfer of technologies. There will not be the opportunities that are there now. What we will get instead will be something like we saw with the 'regional rorts' program—a $5 million investment in a railway line that went nowhere. It was going to start in Brisbane and end in Beaudesert. Guess what: it never got completed. The $5 million evaporated. That is the type of the outcome we will get. We will not get outcomes like Richgro garden products harnessing groundbreaking waste-to-energy technology to meet all its power needs by recycling organic waste. A 3.3 million anaerobic digestion plant with a capacity of up to two megawatts is being built to produce enough power for Richgro's operations in WA.

I have given some examples of projects that are currently underway or have been completed. We will not see the likes of them again without the opportunities that the CEFC can produce. They will be lost to us. Instead, we will get a railway line that goes nowhere. More than anything, the abolition of the Clean Energy Finance Corporation is the perfect example that the coalition stands for nothing other than political point scoring. Not even its long-held ideological views on the role of the free market stood in the way here.

If you believe in science and protecting our environment and are concerned about the length and frequency of droughts, bushfires and floods, vote against these repeal bills. If you believe in a market based mechanism and big polluters paying, not taxpayers, vote against these repeal bills. If you believe that Australia should be a nation that leads, not follows, and that makes policies for our future, not just an election cycle, then I urge you to reconsider your position on this bill. That is why we have given you a separate opportunity to have a very long, hard look at this bill. The CEFC should not be abolished. You should keep it in place. It is an important vehicle for rural Australia. (Time expired)


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