Senate debates

Monday, 9 December 2013


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

9:10 pm

Photo of Anne McEwenAnne McEwen (SA, Australian Labor Party) Share this | Hansard source

I too would like to contribute to the debate tonight on the Clean Energy Finance Corporation (Abolition) Bill 2013 and I will state upfront that I oppose this bill. I do find it hard to believe that after so many years of debate about climate change we are still here in this place talking about the causes and effects of climate change and how best to tackle its challenges. I would have hoped that those arguments were done and dusted. Climate change is not a new concept. In contrast with what some government members have said from time to time, climate change is not something thought up by the Labor Party to incite worry and concern in the community. It is not a conspiracy theory. It is real. It is happening. And if we do not act to reduce the pollution that causes climate change then climate change will have a major impact on Australia's economy and our environment, and those impacts will increase significantly over time as the temperature rises because of pollution.

More than 97 per cent of published climate scientists agree that climate change is real and is driven by man-made greenhouse gas emissions. I am talking about real scientists here. I am not talking about Alan Jones or the Tea Party or the Heartland Institute, or their acolytes here on the other side of the chamber in the Liberal Party who think they know better than the real scientists and who have hijacked the moderates in the Liberal Party and imposed their ultraconservative views on the so-called Liberal Party.

Labor, in contrast, listens to the real scientists and not to conspiracy theorists. We accept the science and we understand that our climate is changing as a result of carbon pollution. We recognise the harmful effects of that on our nation but, more importantly, we recognise the need to act urgently to mitigate the impact of pollution. Similarly, we accept the advice of the real economists amongst us that the best way to stop pollution is to put a price on pollution. It is basic economic theory that if you want to stop an undesirable behaviour then the best way to do that is to put a price on that behaviour—and that, more than anything, will cause people to change their behaviour. That is why the Labor Party have had a longstanding policy of putting a price on pollution. That is why we favour an emissions trading scheme that puts a price on pollution and enables polluters to operate within that system, which is effective and economically sustainable and is supported by most economists in this country and around the world. Indeed, it was the position that was supported by the former Liberal Prime Minister, Mr John Howard, who also supported an emissions trading scheme.

However, here we are tonight debating a bill put up by the coalition which is undoing the carbon pricing mechanism that Labor put in place with the intention of reducing carbon pollution in our country. As well, the coalition is of course refusing to implement an emissions trading scheme and instead have floated the very nebulous hard-to-pin-down and strange Direct Action plan, which no credible economist in Australia supports. The only people who seem to support it are the coalition; nobody else seems to understand what it is about.

Part of the deconstruction, if you like, of the framework for reducing carbon pollution in Australia is this bill before us tonight, which aims to abolish, as it says, the Clean Energy Finance Corporation. The overwhelming objective of the government, of course, is to allow polluters to have free rein and to put the brakes on the development of renewable energy technologies and of renewable energy itself. They want to go back to the bad old days when pollution is unregulated and people can just pollute as they will.

It would be a devastating blow to the impetus to reduce carbon emissions if indeed this bill were successful and the Clean Energy Finance Corporation were abolished. Here we have a very worthwhile organisation set up by the Labor government, that is helping to tackle climate change both in Australia and around the world. It is one of only a handful of organisations that act as a facilitator for renewable energy and clean technology investments globally, yet this government refuses to acknowledge that fact and, instead, they are wanting to get rid of it entirely.

Probably one of the most important aspects in the move towards a clean energy future is that the CEFC facilitates comprehensive commercial loans for both renewable and cleaner energy technology investments and funds emissions reductions at a negative cost to government. Remarkably, through investing $536 million of CEFC funds including Low Carbon Australia's portfolio and $1.55 billion in private sector co-financing the CEFC has facilitated over $2.2 billion in projects, delivered 3.88 million tonnes of abatement and achieved a net return to the taxpayers of Australia of $2.40 per tonne of abatement. In other words, the CEFC is reducing carbon pollution at a profit of $2.40 per tonne. It is making money for the government. But for some reason the government do not want to see that profit. Well, we know why—there is a reason of course. It is because they are fundamentally and ideologically opposed to tackling the problem of climate change.

Despite those figures, the government maintains that this is not a worthwhile organisation. We know that to dismantle this organisation—and this evidence was made clear in the Senate inquiry—will actually cost the government money. But these facts about the issues do not stop those opposite from pursuing their ideological objective, which I outlined earlier, to do nothing about carbon pollution and the effects that it has on our economy and on our environment. The CEFC is achieving abatement efficiently and at a low cost and the emission reductions that occur under it come at a much lower cost to many other programs that we have seen in this space. The investment model is generating abatement which is delivering a financial return for the CEFC, for the government, for business, for the taxpayer and for the economy. Although it is aiding Australia, the government is intent on obliterating the CEFC and leaving us one step closer to having no organisations helping businesses that want to reduce their carbon emissions.

The CEFC works collaboratively with co-financiers and project proponents to seek ways to secure financing solutions for the clean energy sector. It provides and develops finance solutions across the clean energy sector and, as a participant with other financial institutions, the CEFC is a policy winner with the ability to rapidly respond to changing dynamics. It has proven, as I said, to be cost-efficient for government and recipients and it develops a market through co-investment, participation and persuasion rather than through handouts. So this is a great model that involves industries and organisations and companies that, unlike the government, actively want to work together with investors and with government to reduce carbon pollution.

I have been very pleased to hear of some of the successes of the CEFC and tonight I would like to share with the chamber some of those good news stories from my home state of South Australia. I will start with the iconic South Australian ice cream manufacturer, Golden North. Golden North is a very valued brand in South Australia. As its name suggests, it started in the northern part of my state and all of us who grew up in South Australia are very fond of Golden North ice cream and the brand.

Golden North used $895,000 of funding to upgrade their refrigeration and to help them expand their business into the South-East Asian markets. That upgrade increased Golden North's refrigeration system's compressor plant capacity by more than 40 per cent and the use of variable speed drivers, pressure controls and energy monitors helped produce refrigeration carbon emissions by just under half.

As a result of those changes, the time it takes to harden the ice-cream is halved and Golden North can increase their production levels. The company, which has a regional manufacturing base in Laura, north of Adelaide, employs around 50 staff and produces about 8.5 million litres of ice-cream annually. As a result of the upgrades funded by the CEFC, Golden North has subsequently been able to create more local jobs—a fantastic result and exactly what we need for our local regional communities in South Australia.

The CEFC provided finance to support a grant for 50 per cent of the cost from the Australian government's Clean Technology Food and Foundries Investment Program, and Food SA provided funding towards preparing a business case and grant application. That is a textbook example of government and private companies working together in partnerships to reduce carbon pollution.

In Port Augusta, also in my state, Sundrop Farms is building a 20-hectare greenhouse facility using a renewable power supply and a sustainable water source to assist them in the production of over 15,000 tonnes of tomatoes a year. Using solar thermal technology, Sundrop Farms will generate power to desalinate seawater for irrigation, as well as for heating and cooling the greenhouses. The system is ideally suited for agricultural production in much of Australia's semi-arid land and demonstrates the potential for meeting global food production challenges sustainably and profitably using renewable technologies.

Port Augusta is a regional centre which has lost a lot of its traditional sources of employment, so these kinds of projects will provide a major boost to the Port Augusta economy and will have wider benefits for both businesses and sustainable agriculture research both in South Australia and across Australia. Once fully operational, Sundrop Farms will employ about 200 people, with substantial opportunities for local and state-based business during the construction phase. The CEFC proudly financed approximately one quarter of the project cost and helped catalyse finance for this very innovative and worthwhile project in the north of my state.

In yet another success story for South Australia, global engineering and environmental professional services company URS Australia Pty Ltd has cut their lighting bills by more than 40 per cent by installing more efficient lighting and occupancy sensors in their Adelaide office. A $30,000 lighting system involved upgrades to existing down lights in the entry foyer with new LED fittings and the installation of occupancy sensors throughout the open-plan office area to reduce lighting when it is not needed. URS Adelaide used on-bill finance through Origin and the CEFC to cover the cost of the upgrade, which is helping to reduce carbon emissions from URS Adelaide's total electricity consumption by around seven per cent.

There are success stories like this around the nation as a result of the CEFC. By focusing on projects and technologies at the later stages of development, the CEFC can expect the organisations to have a positive expected rate of return as well as the capacity to service and repay capital. Typically, the CEFC expects a private sector co-financier to participate with them to support projects, demonstrating that the risk profile to be assumed by the CEFC is broadly market based.

To support the sector and achieve its purpose, the CEFC may provide concessional finance but does not make grants. The nature and terms of such concessional finance takes into account the external benefits that they assess the project generates, meaning concessional finance may be in the form of lower pricing, higher risk and/or longer duration. One of the CEFC's core objectives is to address financial impediments that reduce the availability of private sector finance. The CEFC seeks out innovative structures to address such impediments which prevent investments in the clean energy sector.

Apart from the success stories I have already mentioned, in their relatively short time since conception, the CEFC has realised a number of achievements. Since it was established under the former Labor government, the CEFC has committed $536 million of its own budget, while mobilising over $1.5 billion in private capital. Each and every investment is averaging a return of seven per cent, and that is a success in anyone's books. As I mentioned earlier, the corporation is averaging a return of $2.40 per tonne of carbon emissions abated.

The CEFC have many projects in the pipeline. As of June this year, they were involved in active discussions with more than 50 project proponents who were seeking around $2 billion of CEFC funds, with a further 100 projects lined up. If this bill is successful in this Senate this week, all of those future projects and all of the employment, innovation and carbon abatement associated with those projects are at risk. It is all at risk because of this government's ideological obsession with undoing Labor's commitment to addressing climate change by reducing carbon pollution.

It will be a sad day if this Senate agrees to abolish the Clean Energy Finance Corporation. It is one of the signature developments of the previous Labor government. It has been extremely successful, as I have said, and it is perhaps because of its success that the government wants to now abolish it. It is a passing strange thing that the government would want to do that to an organisation which has demonstrably been so successful in all of the objectives that it was set up to achieve, so I trust that those government senators opposite who heard me talk about the benefit of this organisation to my state of South Australia will think very carefully about their decision on this in the days to come. I for one will be extremely disappointed to see the Clean Energy Finance Corporation dismantled in favour of what the government intends to put in its place, which is a name, a thing, called Direct Action, which nobody understands and which nobody has the details of. More importantly, nobody has convinced anybody—any economist or climate scientist—of the effectiveness of it. We know that the way to go in reducing carbon pollution when reducing pollution overall is to implement an emissions trading scheme. That is Labor's objective and why we will oppose this bill. We will not stop in our quest to ensure that polluters pay and that there is a price on carbon.


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