Senate debates

Monday, 9 December 2013


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

1:07 pm

Photo of Lin ThorpLin Thorp (Tasmania, Australian Labor Party) Share this | Hansard source

The plan to close down the profit-making Clean Energy Finance Corporation is not just a narrow-minded act of economic and environmental vandalism, but it is completely devoid of any rational justification. This decision runs counter to expert opinion and global thinking at the expense of future generations, our international reputation and the future of our planet. If ever there was concrete evidence that this government is hell-bent on ignoring the advice of experts in order to maintain the integrity of their welded-on climate change blinkers, the repeal of the Clean Energy Finance Corporation is it. Simply put, the government plans to shut down the very organisation that has cut our nation's carbon emissions while returning a profit to Australian taxpayers. This is an organisation which has not only leveraged $1.5 billion of private sector investment and cut carbon emissions by an estimated 3.9 million tonnes, but it has added millions of dollars to our national coffers in doing so.

Let us take a step back to consider the logic of the government's position. Let us cast our minds back only a few months to the point when those opposite could not talk for more than a few minutes at a stretch without screeching about a budget emergency. Of course even the most basic perusal would show that the facts did not support this perspective, but let us give those opposite the benefit of the doubt, that they do not understand the fundamentals of economics and that they truly believed that this was the case. If they do truly believe that the budget is in such a dire situation and if, as they say, they believe wholeheartedly in the very real risks of human created climate change, then why would they make one of their first acts the shutting down of an organisation that has a proven track record of cutting carbon emissions while turning a multimillion-dollar profit? Frankly, it baffles me.

The truth of the Clean Energy Finance Corporation is that it has been a spectacular and lauded success. The truth of the Clean Energy Finance Corporation is that it is run by some of the brightest business minds in this country and has leveraged investment from the biggest investors around. The truth of the Clean Energy Finance Corporation is that it actually brings profits to government coffers to the tune of $200 million a year. So it is indeed a mystery that the coalition would set out to dismantle something that is so undeniably successful in meeting its objectives—the very objectives that they purport to support. How could it be that those opposite are willing to force a $200 million hit to the budget whilst the chance to meet our carbon targets recedes further and further into the distance?

I was hoping to gain some insight into this mystery by listening to the speech of Senator Abetz in this place last Tuesday. I thought there was a chance that there was something I and a multitude of experts across the country and around the world had missed in our analysis. But do you know what? In his whole 20-minute speech, Senator Abetz did not even mention the Clean Energy Finance Corporation, let alone provide reasons for eradicating it—not a peep; not a whisper. This is despite the fact that Minister Abetz was speaking directly to the Clean Energy Finance Corporation (Abolition) Bill. This leads me to believe that Senator Abetz knows, just as I do, that the arguments to justify this action do not exist and that it is, quite simply, indefensible. Perhaps this is the reason that we have barely heard from any other speaker of the Liberals or National Party, despite the fact that they have spent the last three years waging vicious scare campaigns against Australia's clean, green energy policy. This should be their moment in the sun and their realisation of victory in their three-year war against action on climate change. So where are they?

The $10 billion Clean Energy Finance Corporation was set up by the previous Labor government to mobilise private sector investment in the commercialisation and deployment of Australian-based renewable energy, low emissions and energy efficient technologies. Its self-described mission is:

… to accelerate Australia's transformation towards a more competitive economy in a carbon constrained world, by acting as a catalyst to increase private sector investment in emissions reduction.

That is exactly what it has been doing. The CEFC was created to respond to a slow uptake on the behalf of investors when it came to adopting green investment opportunities. This was not due to a lack of financial viability of energy-efficient projects, but it resulted from investor unfamiliarity, the size of the loans required and the relative level of technical complexity involved. The CEFC helped address these problems by acting as a bridge between investors and projects. It provides invaluable independent advice, tailored finance and advocacy in the marketplace. In its short life, the CEFC has provided $1 for every $2.90 of private sector investment in green initiatives. In doing so, it has leveraged more than $1.55 billion in private capital investment and facilitated more than $2.2 billion in projects. Together, these projects account for a reduction of 3.9 million tonnes of carbon—an impressive outcome for an organisation so young.

On its own, this is a very worthwhile outcome, but it becomes even more remarkable when you learn that the CEFC has also been able to secure a return to Australian taxpayers of over seven per cent for their investments. This is particularly laudable when you consider that the five-year bond rate across the portfolio was only 3.11 per cent. The CEFC has invested in a diverse portfolio mix across the economy. It has invested in projects including wind, solar and bioenergy across Australia as well as energy efficiency and low-emissions technology projects in manufacturing, building and local government. They boast benefits including improved energy productivity, faster technological advances and greater acceptance of green projects in the finance sector. We have also seen improvements in technology design, supply chain depth, construction practices, operating skills, financing structure and market risk appetite.

As at 20 August this year, the CEFC had active discussions underway with 37 project proponents who were seeking finance of more than $2 billion, which would help leverage projects worth more than $4 billion. They had also received proposals from over 170 proponents for green projects with an estimated value of close to $15 million.

They have also set the ball rolling for some very worthwhile projects. In New South Wales the large-scale solar PV plant to be built near Moree will generate enough power for about 15,000 homes and abate more than 95,000 tonnes of carbon emissions. In Port Augusta, South Australia, Sundrop Farms is building a 20-hectare greenhouse facility which will use a renewable power supply and a sustainable water supply to produce over 15,000 tonnes of tomatoes a year.

In Queensland, JBS Australia, the country's largest meat processor and exporter, will capture and use biogas in its existing natural-gas-fired boiler plant at its Dinmore facility to reduce dependence on grid connected natural gas by over 48 per cent. The project will cut the facility's greenhouse gas emissions by the equivalent of 44,000 tonnes of carbon dioxide per year. In my own home state of Tasmania, the Clean Energy Finance Corporation supported a project in Kingston which has cut the civic centre's lighting costs by 75 per cent. By replacing the existing fluorescent lighting with more efficient LED tube lighting, the Kingborough Council was able to make savings of more than $11,000 a year.

Through projects like these, the CEFC is also supporting 21st century jobs in rural and regional Australia and building Australia's clean energy supply chain capability. If allowed to continue to do their good work, the CEFC has the capacity to make investments that would make up half of our five per cent emissions target by 2020, and in doing so they would return a profit to the taxpayer of $2.4 per tonne of abatement.

It is not surprising that Mr Nathan Fabian, CEO of the Investor Group on Climate Change, outlined five reasons we need to retain the CEFC. In his words:

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, co-financing 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.

Clearly, he has not been talking to Senator Macdonald. He went further to say:

Given the government's infrastructure agenda, we think that dismissing co-financing as a useful policy instrument may be premature.

This perspective is backed up by Rob Murray-Leach, chief executive at the Energy Efficiency Council who said of the CEFC that it has encouraged:

… a lot of investment in energy efficiency, probably more than we’d have expected in a short period of time, and we’re also seeing it really catalyse changes in the finance sector.

He also said that it is not clear:

… whether the finance sector will continue to evolve and invest heavily in energy efficiency and clean energy after the CEFC is repealed.

The truth is that co-financing is a tested and proven model to encourage private sector investment, reduce emissions and provide a return to taxpayers.

The CEFC is just one of 14 such co-investment schemes across the globe. As I said earlier, the work is guided by some of brightest economic minds in the country. Its work is overseen by chair and respected businesswoman Jillian Broadbent, who has a distinguished career in the banking sector and was one of the longest-serving members of the Reserve Bank Board. In her evidence to the recent inquiry into the package we are considering today, Ms Broadbent presented a compelling overview of the incredible achievements of the CEFC. I recommend that all senators revisit this inquiry, in particular Ms Broadbent's evidence, as she presented a persuasive case for retaining the CEFC and saliently showed us what we stand to lose if it is abolished.

Ms Broadbent was also clear when asked about the government's proposed Direct Action scheme which will provide grants to big polluters. She said:

I don’t think you have to make a grant to get that emissions reduction. Our experience is you’re better to make an investment to get the emissions reduction.

Of course, this opinion is entirely in keeping with the opinions of climate scientists, economists and policy makers right around the world. It baffles the mind that the Coalition would choose to spend billions of dollars on their Direct Action plan, which has been widely and vigorously criticised by experts, rather than maintain a body which has proven itself not only to reduce emissions but also to bolster the budget bottom line.

I share Jillian Broadbent's frustration when she said how disappointed she was that such a vital issue has become so politicised. I understand exactly how she felt when she said:

You just want to get on with what you think is in the public good, which is positioning Australia for a low carbon world.

This is exactly what we on this side of the chamber are trying to do. But unfortunately, the national interests have run counter to the coalition's desperate ploy to gain power at any cost by waging a massive scare campaign about Australia's clean energy policies.

Despite what those opposite say about believing in climate change, it is hard to believe them when they are systematically dismantling all the tools we have at our disposal to tackle it. They are not only flying in the face of scientific evidence but they are seriously threatening our international reputation in the process. Ironically, as we debate today whether we should let our climate policies disappear into oblivion, they are doing the exact opposite in China's second largest province, Guangdong, which has a population of around 100 million. In fact Guangdong is set to introduce an emissions trading scheme this week, if not next, which will be second in size only to that of the European ETS.

I cannot help but think it is ironic that, in the very week that China is making this progressive move, we in this place are talking about how we in Australia can turn back the clock and turn our backs on our ethical obligations, the planet and generations to come. But it is not just China that is making progressive changes to limit carbon emissions. The truth is that 99 countries have pledged to reduce or limit emissions by 2020. This covers 80 per cent of global emissions and includes all major emitters. In this context it is not surprising that, if the coalition is successful, Australia's rating will drop to 57 out of 61 countries on our efforts to mitigate climate change, according to the Climate Change Performance Index.

This bill and the others that make up this package are designed to systematically dismantle all the good work that has been done towards meeting our national obligation to combat climate change. This package, if passed, puts our future quality of life at risk. Of course, those opposite are so determined to shut down the Clean Energy Finance Corporation that they have not let such a small thing as legislation being passed in this place get in their way. In fact, in his very first day on the job, Treasurer Joe Hockey is reported to have written to the CEFC requesting that they desist immediately from making any new investments—never mind the fact that the CEFC are legislatively required to undertake this task by an act of parliament; never mind minor details such as the need for legislation to pass through this place before the CEFC can be abolished. This was an audacious act that showed complete disregard for parliamentary process.

The government would have you believe that just because they won a majority in the other place that gives them carte blanche to do whatever they choose. Given the chance, those opposite have proven they will gladly dispose of all the annoying dissenting voices, particularly those who provide rational, reasoned evidence of their failed policies. We have seen this happen already in this young parliament when they gagged debate in the other place on this bill. They seem to hold the curious idea that winning an election makes it somehow illegal or unethical for anyone to oppose them. They seem to be arguing that no-one in this place has the right to maintain opposition to their policies, regardless of how ludicrous, counterproductive and ideologically driven they may be.

The idea that a mandate somehow abolishes all rights to opposition smacks of totalitarianism. I and my colleagues will not be bullied by those opposite into selling out future generations. What the government did achieve a mandate for on 7 September was to introduce their policies and present the arguments for their passage through this place. They most certainly did not win the right to ram through any ham-fisted, ill-considered nonsense like this bill before us today.

We in Labor will not just sit down and acquiesce to the regressive and dangerously anti-scientific policy regime that the government seems to be waging. We also have a responsibility to the Australian people to fight as hard as we can to ensure the best policy outcomes for all Australians. We also have a responsibility to the people in our states and electorates to represent the policy stance that we took to the election, which was for a rapid move to an emissions trading scheme. So, no, a mandate does not mean we will simply wave through bad policy that runs counter to our strongly held beliefs, which are solidly backed up by the advice of experts. We will stand strong on our beliefs and will not be bullied by those opposite into supporting a policy that will be detrimental to the budgetary bottom line, our nation and the planet. I can only hope that the coalition recognise how breathtakingly irrational they are being in shutting down the Climate Change Finance Corporation and come to their senses before it is too late.


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