Wednesday, 18 June 2014
Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2]; Second Reading
My remarks will be relatively brief. I want to comment first on the process by which the Clean Energy Finance Corporation (Abolition) Bill 2013 (No. 2) was brought on, which was a resolution of the Senate that I supported. I want to put on the record that I supported that resolution with some reluctance, because I am concerned about the business of the Senate being taken out of the hands of the government. But, ultimately, it is the will of the Senate to determine how the business is determined.
I do understand the urgency that Senator Milne placed on this piece of legislation, and I respect that. I did vote for the resolution for this bill to be given precedence over all other bills. I want to say that there ought to be a heavy onus before you vote in such circumstances to take away the business of the Senate from the government of the day. I thought that, on balance, it was justified, but it was still a close call in my view as to whether it should have been done at this time.
Let us go to the legislation at hand and the Clean Energy Finance Corporation. I previously spoke on this back on 4 December 2013, so I do not want to unnecessarily restate what I have already said, but there have been some developments in respect of that. I want to set out that, rather than attacking the government in respect of this, I want to put forward a different perspective. I am taking a conservative view in respect of this piece of legislation, and the conservative view—in the small 'c' conservative way—is that we ought not to abolish the Clean Energy Finance Corporation for a number of reasons.
Firstly, it is set up to provide a commercial rate of return. Secondly, in relation to the government's position that this is a piece of legislation that is not needed because the market will sort it out, there are precedents here and elsewhere that show that, where there is evidence of the markets not working, of market failure or of market dysfunction, there is a role for government to play to provide a finance mechanism. Back in the 1960s and 1970s, until the early 1980s, we had the Commonwealth Development Bank that had a very valuable role for regional Australia in helping rural businesses obtain finance and succeed where they could not get finance through the commercial banking sector. So there is a precedent—a sensible precedent—in terms of having this sort of mechanism to provide finance for the sector.
Thirdly, there is the issue of the state of play of carbon bills and carbon legislation. I did not vote for the carbon tax and I raised a number of concerns, not least because it was a reverse mandate of the former government not to introduce it, given the promises made my former Prime Minister Gillard. Notwithstanding that, there is a bipartisan commitment, which was given at the last election, that there ought to be a five per cent reduction on greenhouse gases by 2020 based on 2000 levels. That is an important commitment. It is basically a bipartisan commitment where both sides—the major parties—are saying that we ought to be reducing our greenhouse gases, not increasing them, and tackling it in an effective way. There is a debate as to whether that five per cent target is adequate, and many scientists and commentators are saying that we need to go further in relation to that. Notwithstanding that, there is that commitment that the government, when in opposition, made of a five per cent reduction.
The government also made a commitment not just to abolish the Clean Energy Finance Corporation but also to maintain ARENA, which is the Australian Renewable Energy Agency. That was a commitment that was broken in the budget. I do not want to talk about which commitments were broken and which were not kept, but I think we need to look at the overall issue of climate policy in this country. I think that getting rid of ARENA is a retrograde step for a number of reasons. We have huge reserves of geothermal energy in my home state of South Australia. Geothermal energy can provide a real alternative to coal-fired power stations. Because of its nature, if you can tap the technology and overcome the technical difficulties there are at the moment in this sector, you can have 24-7 power. Between them, each of those geothermal pools can last 20 to 30 years, and it provides that stable, long-term power. I think that planning to get rid of ARENA, the Australian Renewable Energy Agency, is a backwards step and it must be considered in the context of this piece of legislation in relation to the Clean Energy Finance Corporation. That is why I am taking a conservative approach to say that it is very unwise to be looking at abolishing the CEFC.
I know I have had many arguments with my colleagues from the Greens about the whole issue of wind energy and its impact on communities, and one of the issues that I have raised in respect of wind energy—leaving aside the issues of community impact—is that the economics of wind energy concern me for a number of reasons. Firstly, it is not reliable. It is intermittent in its nature and, on those very hot days when energy demand is at its highest, a number of wind turbines have to be shut down because of a number of operational issues, including the risk of being a fire hazard. So I have an issue with the extent of wind energy we have in this country, particularly in my home state of South Australia where I believe the Rann and now Weatherill governments have gone down a path of over-reliance on wind energy in the renewable energy basket, because of the effects it can have on electricity prices, the distortion it can cause on the merit order of electricity pricing and also on the investment in other forms of renewable energy. I think it is a bad move and I think there is a lot of scope for, effectively, baseload renewables in terms of solar thermal and even PV solar being much more reliable than wind energy—without the community concerns and impacts that have arisen in relation to the proliferation of wind energy that we have.
That is not an argument to get rid of the CEFC; in fact, it is an argument to say that we should keep it to ensure that we can build up other forms of renewable energy in the energy basket. These are the sorts of issues we ought to be looking at. I believe the CEFC has played a valuable role in ensuring that renewable, cleaner energy is given a chance to be financed and to provide a commercial rate of return. I do not think it is inconsistent with the aims of the CEFC for the government to provide a directive to express its concerns in relation to wind energy projects, given the concerns that have been expressed in terms of the economics of wind and also the real potential that solar thermal and PV solar have, as well as other forms of renewable energy, such as tidal power, to fill the need for greater levels of cleaner energy. The CEFC needs to work in conjunction with ARENA, the Renewable Energy Agency, in some projects and the finance that that can provide. The two can work hand in hand. Abolishing ARENA, as proposed by the government, creates even greater problems for the CEFC. I think the CEFC does play a valuable role in ensuring that we meet that bipartisan target of a minimum five per cent reduction in greenhouse gases on 2000 levels by 2020.
I think that we need to take a conservative, cautious and sensible approach to this issue. We do not have enough detail about the Direct Action Plan—and I am not implacably opposed to Direct Action. I think with sufficient modification it can be an efficient way of reducing greenhouse gases, but not in the form in which it has been presented. We need to listen to sensible think tanks in relation to this. Before we go further on the Direct Action Plan, we need to listen to people such as the Carbon Market Institute, who, I think, have some sensible, practical ideas to improve Direct Action in a very substantial and appreciable way. But the details are scant in respect of that—and it is not a criticism of Minister Hunt who, I believe, genuinely wants to do the right thing by the environment and genuinely wants to see that target of five per cent, as conservative as it is, met by this government. But I think it is important that we achieve that in a sensible way.
I believe that to abolish the CEFC, the Clean Energy Finance Corporation, at this time would be most unwise. From what I have seen of its activities, its charter and the way that it has operated, it has done many good things in terms of the sector. So I think it is unwise. I think coalition supporters need to understand that there is bipartisan commitment to reduce greenhouse gas, and there also was a commitment by the coalition to keep ARENA, which itself could play a valuable role in unlocking the potential of geothermal energy, of which my home state of South Australia has enormous reserves. To seek to abolish ARENA—despite the coalition saying the contrary, and I am not going to beat up on the government in relation to that; I do not think that would be useful at this point—and to not have the details that we require in relation to Direct Action, and to not make it unambiguously clear that those targets will be met in terms of what the government is proposing, and then to seek to get rid of the Clean Energy Finance Corporation as part of that mix would be, in my view, very unwise and reckless. From my point of view, the government has not made the case to abolish the Clean Energy Finance Corporation.
I want to make it clear that I want to engage with the government and my crossbench colleagues constructively—with my colleagues in the Greens, with Victorian DLP Senator John Madigan and the incoming senators from the Palmer United Party, the Australian Motoring Enthusiast Party, the Liberal Democrats Senator-elect David Leyonhjelm and Family First's Bob Day—to get a good public policy result where we actually do something good for the environment and tackle the issue of unnecessarily high electricity prices, which are not simply due to the carbon tax. I think the research, the findings and the evidence show that only about one-third of our electricity price rises are due to the carbon tax and that about two-thirds of it is due to unnecessarily high network fees. This morning I was on radio, on the Leon Byner show in South Australia—which you are familiar with, Mr Acting Deputy President Fawcett—and the Australian Energy Regulator was explaining what their powers are and looking at the whole issue of network charges.
I think if we are serious about reducing unnecessary burdens on electricity prices we need to give more power back to the AER and reduce network spending proposals. We need to deal with the ability of the Australian Energy Regulator to conduct detailed optimisation analyses of electricity networks' asset bases to uncover instances of excessive or premature spending—and those powers do not exist to the extent that they ought to. If we give the AER more powers, and if we shake up the national electricity market rules, I believe we can give real and significant benefits to consumers in terms of lower electricity prices and to businesses, large and small, who are paying too high a price for electricity in this country.
If we can relieve that burden for those businesses, it gives us more scope to do good things when it comes to reducing greenhouse gases. If you can ameliorate the price effects of some of these antiquated rules that allow power networks to—I believe in some cases—price gouge consumers, then it gives you more leeway and scope to do more in terms of reducing greenhouse gases, given that renewable energy is generally more expensive. So that is where I am coming from in relation to this. I believe the CEFC does still have a useful and valuable role to play. I cannot support the repeal of it. I want to make it clear to the government that I actually want to see lower electricity prices in this country, but at the same time I believe you can do some sensible work in terms of being bolder in terms of reducing greenhouse gases. I am taking a conservative, cautious approach. That is why I cannot support this legislation.