Senate debates

Wednesday, 18 June 2014


Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2]; Second Reading

10:27 am

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

The bill before us today, the Clean Energy Finance Corporation (Abolition) Bill 2013 (No2), shows the heights of absurdity and hypocrisy that the government has reached in its desperation to tear down each and every tool that Australia has in our arsenal to address climate change. Recently, those opposite have not been able to string a sentence together that does not include references to their confected budget emergency. Ludicrously, at the same time, they are busy trying to shut down the organisation that has not only leveraged $1.5 billion of private sector investment and cut carbon emissions by an estimated 3.9 million tonnes, but has added millions of dollars in profits to our national coffers at the same time.

We are often told by the conservative side of politics that only the free market can save us. However, when they are given a shining beacon example of a program that is leveraging private sector investment for the good of the nation, what do they do? They shut it down. If ever there was solid proof that this government is determined to maintain a fact-free zone around all policies relating to climate change, it is in this attempted repeal of the Clean Energy Finance Corporation.

The bill before us today shows with crystal clarity how those opposite are ignoring the advice of experts, presumably so their welded-on climate change blinkers do not shatter under the weight of real evidence. A recent opinion piece in The Age by Ian Berryman got it right when he said the Prime Minister has declared war on the Australian renewable energy industry, the environment and science itself.

If, as those opposite say, there is a budget emergency, why on earth would they be closing down the very organisation that has cut our nation's carbon emissions while returning a profit to Australian taxpayers? The plan to close down the profit-making Clean Energy Finance Corporation is not just a callous act of environmental and economic vandalism but one completely devoid of any reasonable justification. It is further proof that there is no budget emergency, just an unbridled ideological rampage that presents the clearest and most wide-reaching attack on the environment that I have seen.

If those opposite 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 climate change, then why would they make one of their own 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 defies belief.

Of course, a closer perusal of the budget beyond the three-word slogans will reveal that this is actually entirely consistent with their true agenda of attacking Australia's climate change response wherever possible. Last week Mr Abbott told the world that he takes climate change very seriously. But the truth is that he has not moved forward an inch from the days when he actually told the truth that he believes climate change to be 'crap'. If Mr Abbott really took it seriously, would he be trying to organise a global right-wing uprising against action on climate change? Again, it does not take a climate scientist to realise that it is nothing short of a bald-faced life.

To get to the truth of the matter, let us look at the government's record so far in this area. First, they banished climate change from the ministerial portfolio titles, significantly demoting and devaluing its importance. Then they cut the Climate Commission, which was set up to advise on the science and economics of carbon management. The Climate Change Authority, which provides advice on our national carbon targets and our progress towards meeting them is also on the hit list. The Australian Renewable Energy Agency is to be abolished. The promise of one million solar roofs is to be broken. The renewable energy target is set for the chopping block, with a review headed by former Caltex head, Dick Warburton, who has publicly questioned whether carbon emissions cause global warming.

There will be $111 million in cuts to CSIRO's overall budget, which will undoubtedly impact on Australia's ability to be at the forefront of climate research. Even the future of the government's climate policy, the Emissions Reduction Fund, appears in doubt. The budget committed only $1.14 billion over the next four years, well short of the $2.55 billion pledged by minister Greg Hunt nearly a month ago. In fact, the budget papers show funds for climate change related programs will shrink from $5.75 billion this year to $500 million by 2017-18. And we have the bill before us today, to eradicate the Clean Finance Corporation.

Against this backdrop, it is not surprising that the former head of CSIRO's atmospheric research team, Graeme Pearman, has labelled the government's response as an 'extreme ideological approach that all but rejects global warming as an issue, despite ever-mounting evidence'.

The truth is that Mr Abbott clearly does not believe the science on climate change. If he did, his government would realise that emissions reduction targets simply cannot be met without increased investment in clean and renewable energy technologies. And that is exactly what the Clean Energy Finance Corporation is doing.

Abolishing the Clean Energy Finance Corporation runs counter to expert opinion and global commitments, at the expense of future generations, our international reputation and the future. The truth of the Clean Energy Finance Corporation is that it has been a spectacular and widely acclaimed success. The truth of the Clean Energy Finance Corporation is that it is run by some of the brightest business minds in Australia. It has also leveraged investment from the biggest investors around. The truth of the Clean Energy Finance Corporation is that it actually grows government coffers to the tune of $200 million a year. By 2020, it will return $1.5 billion to our economy, while reducing carbon pollution at the same time.

So it is nothing short of perverse for the coalition to 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?

Last time we considered this bill, it was interesting to note that many of the government speakers hardly mentioned the Clean Energy Finance Corporation in their contributions, despite the fact that that was the very reason we were talking. This leads me to believe that those opposite know, just as I do, that the arguments to justify this action simply do not exist and that it is, quite simply, indefensible.

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 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 technological 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 still so young.

On its own, this is a very laudable 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 impressive 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.

There is little doubt that the CEFC is 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 $2.40 per tonne of abatement.

Really, it is not surprising that the Australian Financial Review recently said:

Getting rid of the CEFC makes sense to few business people who have observed its commercial success in its short existence.

In its submission to the Clean Energy Finance Corporation inquiry, the Responsible Investment Association Australia said:

The CEFC co-investment model is a prudent and cost effective way to allocate limited public funds to leverage private investment to do the heavy lifting in the investment into a low carbon transition. A testament to this model is that global trend by many countries to put in place such public finance institutions to help catalyse investment flows into low carbon assets, including the UK Green Investment Bank, Germany's KfW, China's Development Bank, the US Department of Environment's Loan Program Office, the New York Green Bank, California Clean Energy Fund, European Investment Bank and many of the multilateral development banks such as the Asian Development Bank.

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. 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, Ms Broadbent presented a compelling overview of the incredible achievements of the CEFC.

She 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 policymakers right around the world.

It baffles the mind that the coalition would choose to waste more than a billion 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.

Currently, I serve as the Chair of the Senate Environment and Communications References Committee, which was recently charged with considering the impacts of the government's Direct Action policy. The inquiry received more than 100 submissions from across the country, and the overwhelming message we got was that the Direct Action Plan is simply not up to the task; it is expensive, is riddled with design problems and will not come close to meeting Australia's carbon emission reduction targets. In fact, the committee did not hear evidence from one single witness who was willing to support Direct Action as an effective or appropriate stand-alone solution to address climate change.

The greatest failing of Direct Action is that it throws away the widely accepted market based model of 'polluter pays', in favour of an under-resourced 'taxpayer pays the polluter' plan. Direct action is nothing but a billion-dollar slush fund for big polluters. But, worse than that, it's virtually a foregone conclusion that it will not meet its emission reduction targets. In fact, we heard last week that Direct Action may fall as much as 300 million tonnes short of Australia's 2020 emissions reduction goal, according to modelling by RepuTex. To meet the 2020 target, Australia needs to cut emissions by 421 million tonnes of carbon dioxide equivalent between 2015 and the end of the decade. However, the Emissions Reductions Fund is likely to buy just 30 million to 120 million tonnes of emissions, leaving a shortfall of about 70 per cent of the abatement challenge. 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.

Last year, China's second-largest province, Guangdong, which has a population of around 100 million, set up the world's second-largest emissions trading scheme. In fact, 99 countries have pledged to reduce or limit emissions by 2020. This covers 80 per cent of global emissions and includes all major emitters.

The truth is that the global economy has embraced the renewable energy industry. Last year wind power grew by 25 per cent worldwide and solar power by 30 per cent. On May 11, Germany met 74 per cent of its electricity demand with renewable energy. Only Australia is moving backward.

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. They tell us again and again that it is the Senate's responsibility to rubber stamp whatever nonsense is placed before us, and to suggest otherwise is somehow antidemocratic. Those opposite seem to hold the curious idea that being in government makes it somehow illegal or unethical for anyone to oppose them. They seem to say 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.

What the government did achieve was a mandate to introduce their policies and present the arguments for their passage through this place. And it is our democratic responsibility to stand up against regressive ham-fisted policies like this one. We in Labor will not 'get out of the way'—as Mr Hockey so arrogantly put it yesterday—and acquiesce to the dishonest and dangerously antiscientific policy regime that the government is waging. We also have a responsibility to the Australian people to fight as hard as we can for the very best policy outcomes for all of us, not just for the rich and entitled. So, no, a win at the election does not mean we will simply wave through bad policy. We will stand strong and we will not be bullied into supporting a bill that will be detrimental to the budgetary bottom line, our nation and the planet.


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