Senate debates

Monday, 9 December 2013


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

9:30 pm

Photo of Jacinta CollinsJacinta Collins (Victoria, Australian Labor Party, Shadow Cabinet Secretary) Share this | Hansard source

It is important that we can now focus on the Clean Energy Finance Corporation and this government's betrayal of the environment. This corporation is perhaps the best example of how this government are in reality climate change deniers. Their attempts to repeal the Clean Energy Finance Corporation highlight that direct action is indeed a fraud, yet another fraud, yet another backflip, yet another demonstration that they are not serious and that they have perpetrated this fraud in an attempt to neutralise issues in the last federal election. We have seen it in education policy, we have seen it in industry policy and now we are seeing it with respect to the environment. Why indeed should we be shocked?

But let us take a closer look, as indeed have many of my colleagues, at the standing of this corporation and why it is that indeed some Liberal Party ministers at first, before central control took over, had indicated that they had indeed a preparedness to relook at the issue. That was until they were stamped upon and told that was not an option. This corporation is a beacon of light for business and the environment working together. The unique thing about the Clean Energy Finance Corporation is that they do the legwork that commercial banks will not do. If the projects are too small or complex, banks just will not spend their time doing the research. The Clean Energy Finance Corporation specialises in renewable projects, low emission technology and energy efficiency. It helps the smaller players access funding, and it is working. It is a classic example of what Direct Action should be rather than this government's current policy of just a further inquiry, once again highlighting the laziness and the sloppiness that this government executed in opposition, why they do not have a clear and adequate policy position and why they are seeking to repeal organisations that are indeed working.

Other senators might recall—in fact Senator 'Sine Dei' might recall this but perhaps I will come to that a bit later—the countless backflips that the current government has undertaken in dealing with environment policy. This is perhaps the best example of one that they should undertake, Senator Sinodinos. I would encourage Senator Sinodinos to perhaps not sine dei his discussions on these issues but indeed set a date to reconsider his position and indeed reach a position which enables this corporation, which has been doing very constructive work, work that shines a light on what can be achieved with a serious effort around Direct Action, to indeed be used as a component of a future policy around Direct Action.

Instead, unfortunately, we see almost a vengeful, irresponsible approach to a corporation that is getting constructive work done. For instance, we saw an extraordinary event in recent Senate estimates, on Tuesday, 26 November, with the CEFC chairperson, Jillian Broadbent, informing a Senate estimates committee that if the Clean Energy Finance Corporation is abolished it would cost taxpayers up to $200 million a year in lost revenue. Why on earth would the government be taking this action if not as a demonstration that in reality it is the ideological bent and approach that they will push to the fore rather than sound economic and environmental policy? 'Who is Jillian Broadbent?' some people might ask. She has the authority to speak on economic issues, being a former Reserve Bank board member and having a long career in Bankers Trust Australia. So I hope that Senator Sinodinos did indeed go back and have a look at the annual report of the corporation and did at least see the merits of the case before he was stamped upon by central control. It is unfortunate that ministers such as Senator Sinodinos can at one moment suggest that, yes, this is an issue that warrants further attention and that perhaps we can take a more rational and sensible approach but, unfortunately, that approach is not able to be sustained within the current culture which is in the Abbott government.

Jillian Broadbent informed us that the Clean Energy Finance Corporation was exceeding all expectations. This is a funding body which is making a profit. The estimates are that CEFC projects would account for 50 per cent of the five per cent emission reduction target by 2020 at no cost—a remarkable achievement. Why, apart from ideological sabotage, would you seek to repeal it?

It is interesting to note that we have seen no cogent argument from the government, other than: 'It's a package; it's a package; it's a package. It's the package and we want the package. We've got a mandate for the package. We must have this package.' We have heard no cogent argument from the government as to why this corporation should be repealed.

This government budgeted a saving of $760 million over four years, but what they did not consider is that the Clean Energy Finance Corporation is making money, and estimates are that it could cost up to $1.5 billion to the budget; $1.5 billion to achieve their ideologically based gain of $760 million budgeted over four years. It makes no economic sense at all. We heard in Senate estimates the Clean Energy Finance Corporation has lent $536 million so far, matched by—and I stress and highlight this: 'matched by'—$1.5 billion in private investment. In total, $2.2 billion in clean energy projects. The average return—an important issue—on the CEFC's investment is seven per cent. A clear argument for retaining it. The projects already committed to equate to a reduction of carbon emissions of 3.9 million tonnes, with a net benefit of $2.40 a tonne. Again, the environmental benefit, quite aside from the economic benefit, needs to be highlighted.

The government want to give grants to companies to bring their carbon footprints down. The problem with that is you promote a less cautious attitude to finance. When you loan money out, where there is a debt businesses are usually disciplined about paying that debt off. It is one of the reasons the CEFC is working well. Between private investment and the CEFC funding, these important projects are being leveraged in a way that the current government will not be able to match. Again, I stress my first point: direct action is a fraud. The suggestion that direct action will work in the current political environment, where much of it is subject to review or further investigation, is just that: a fraud.

Indeed, as I said after question time today, this fraud about the climate change debate, and it being a screen to shield the government from its other inadequacies as a government, will not last for long either. We saw in question time today the suggestion that everything is about climate change. Indeed, I was surprised we did not hear them try to justify the backflip flip-flop flip-flop on Gonski as related to climate change—although perhaps that is just one small step too far. Certainly, we have heard them try to justify their ineptitude on industry policy, their poor management of Qantas and of Holden and of other issues, as related to climate change and the management of climate change issues. But what this government will ultimately be held account for is the mysterious number of flips and changes in position they have made over a lengthy period in opposition, and about how they proceed in the future. This is where perhaps some of the more rational members of the Abbott government's ministry, who were at first prepared to say, 'Actually, this is a corporation that's been established and it does seem to be working, so perhaps we should take a closer look at it', have very unfortunately, in these early days of the Abbott government, been stamped upon.

The Clean Energy Finance Corporation is one of 14 organisations across the world specialising in mobilising capital, leveraging investment from the private sector and targeting it towards renewable energies and clean technologies. So Australia are not alone in promoting their clean energy industries through government financing bodies. This is perhaps the best example of about how direct action can work, but, no, the Abbott government is to seeking to repeal it. The government's plan for an emissions reduction fund will mean money coming out of consolidated revenue—not co-investment, as we have encouraged here, and as we do encourage in our industry policy. But, no, the laziness and ineptitude of the current coalition on policy will mean that eventually they probably will do some sort of backflip. They probably will end up supporting industry directly out of consolidated revenue rather than promoting joint investment, which we know demonstrates commitment towards both profitability and better outcomes for all Australians.

The Clean Energy Finance Corporation mandate is to fund emissions reductions while turning a profit. But the laziness and ineptitude here in this approach will leave us, at the end of the day, with an extra draw on consolidated revenue and no real or genuine industry commitment. So 50 per cent of the five per cent emissions reduction target by 2020 is the aim of the Clean Energy Finance Corporation. And the corporation is indeed successful. Many stakeholders are on record about the Clean Energy Finance Corporation and the important work that it does. They argue strongly that it should be retained. The corporation is reducing carbon pollution, driving investment and making money for the government.

What I would like to do now though is to go through some of the quotes people in the industry have had to say about the CEFC. The reason for doing this, aside from highlighting senior members of the government who have indicated a preparedness to have a closer look—as I already have done, and I may come back to——is to see whether we really should persist in this vengeful, ideologically based attempt to repeal a successful corporation.

I would like to put this on record also because, again like earlier today, it is sad to see the selective quotes that come from the government when they are seeking to justify their position, rather than giving a broadly based, well-rounded representation of what key stakeholders and interested parties say about a particular policy position. We have all become used over many, many years to the approaches of Senator Abetz and others, highlighting one or two industrial relations ideologues as support for their policy or, indeed, one or two other narrow-based stakeholder groups.

I may not have time to conclude, but let me commence—and I will probably come back to it later in the discussion of the package of bills as a whole—with some representation of key stakeholders' positions on this. The first of those is Matthew Warren, the Clean Energy Council chief executive, from the Fin Review on 27 October 2011:

The debate about whether Australia should have a carbon price is partly redundant. Banks and financiers now factor in carbon risk on most long-term energy investment. It's virtually impossible to build a coal-fired power station in Australia because no one will finance one.

…   …   …

The Coalition is entitled to be sceptical about the Clean Energy Finance Corporation (CEFC). It could become a financial black hole for risky investments. But—

I emphasise 'but'—

at its best, it could unlock billions of dollars of private capital, spread risk across a range of investments, underwrite carbon risk and facilitate a market-driven, lowest-cost investment path for cleaner energy and supporting infrastructure.

Remember, that was October 2011 and we have now had the opportunity to see what has happened. Indeed, Matthew Warren's 'but' has demonstrably been the case—but we are left now with a government based on ideology and on ignoring the progress that has been made in this area in this vain attempt to use climate change as a shield for its broader policy incompetence and ineptitude. We can see Matthew Warren's comments from October 2011 proving correct. The CEFC is at its best now and will become better in the future to bring us to that 50 per cent. Let me refer to another quote of Matthew Warren's, from 12 October in a media release:

Not only is the Federal Government’s clean energy legislation one step closer to becoming law, the appointment of Jillian Broadbent—

whom I referred to before—

as Chair of the CEFC brings closer a key institution needed to help deliver the transformation of Australia’s energy sector.

…   …   …

Our industry is ready to take Australia’s energy sector into the next age of energy development.

The carbon price is a once-in-a-generation reform that will signal a new era of policy stability for the entire electricity sector, unlocking the billions of dollars in investment capital required to transform the way we generate, deliver and consume electricity over the coming decades.

Why damage this? I see Senator Smith here. Maybe he can present the cogent argument that no-one else has been able to and that, indeed, Senator Sinodinos has not seen. But he has had central control exercise their authority in other ways, judging by his public statements—or, at least, that is the only interpretation I can make. Perhaps Senator Sinodinos might make a contribution to this debate. He will be able to inform us on what happened between his public comments, which I may refer to in a bit more detail. I will move on to Kane Thornton, director of strategy from the Clean Energy Council, from 5 October 2011:

Clean energy is a race in which Australia is fortunate enough to have a winged keel, but we haven't done nearly enough to harness our abundant renewable energy resources. The CEFC will go a long way towards addressing a generation of underinvestment in this area.

Dr Zhengrong Shi, Suntech founder and chief executive officer, said—again, back in 2011:

By providing finance for renewable energy projects through commercial loans, concessional loans, loan guarantees and equity, the Clean Energy Finance Corporation will provide a much needed boost to the renewable energy sector by incentivising investment and employment growth. The establishment of the CEFC represents an exceptional commitment to the future of renewable energy in Australia.

Let us look at John Grimes from the Australian Solar Energy Society. He says:

Innovative, independent institutions like the CEFC and ARENA, together with the Renewable Energy Target, are needed to drive investment in clean energy research, development, demonstration and commercialisation. The Australian Solar Energy Society also calls—

Debate interrupted.


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