Wednesday, 4 December 2013
Clean Energy Finance Corporation (Abolition) Bill 2013; Second Reading
Where there is a market failure, government intervention and investment can support and encourage private sector investment rather than discourage it. On that I turn to the Emissions Reduction Fund. Would this crowd out or crowd in investment? Would it encourage investment, or is it simply doling out grants? Almost every investment by the corporation has included co-financers that encompass many of Australia's major financial commercial entities. Would these entities—the big banks, investment funds et cetera—be interested in supporting a government grants program? Indeed, would they even have been asked?
The supposed party of the market appears to be doing its best to exclude the market from this vital area of investment and policy into the future. It is clear that demand for the CEFC in the market remains high. The question is: why abolish it? Is it about risk? Claims have been made that the CEFC invests taxpayers' money in high-risk ventures. Treasurer Hockey claimed in his second reading speech that the CEFC was investing in high-risk ventures. I am sure the Treasurer is actually aware of the Australian government's own direction to the corporation, which clearly states that the CEFC must invest 'across the spectrum of clean energy technologies'. It must in aggregate 'have an acceptable but not excessive level of risk relative to the sector'. It is not allowed to venture into the high-risk arena, so it has not. Its portfolio is mostly in relatively low-risk loan-based transactions, and none of Low Carbon Australia's loans are in default after three years in operation. In addition, to protect taxpayers into the future the CEFC has rigorous procedures in place. The CEFC knows finance and it knows risk. Further, not all projects make it to financing, with numerous checks by staff and the board ensuring that only the best investments are made. It is a sophisticated institution and it is embarrassing that the current Treasurer, Mr Hockey, has not bothered to move beyond the rhetoric.
Soon after the election, in seeking to beat his chest and show that he could be an anti-environment Minister for the Environment, Mr Hunt said that the CEFC was a 'giant green hedge fund' and demanded that the institution stop issuing finance. I would rather take on board the advice of the CEFC and Mr Fabian from the Investor Group on Climate Change on the role and purpose of the corporation. Firstly, the CEFC claimed that it is not in any way acting like a hedge fund with its $536 million of investments—no dollars are invested in hedging, derivatives or guarantees—while Mr Fabian noted at the hearing that the business model of the CEFC is not an investment banking business model; it is not there to maximise the returns for the broker. It is this distinction, that a finance corporation can exist to seek to grow a market rather than simply grow profits, that appears to be the real issue for those opposite—and that it is supposedly a great green hedge fund experimenting in all sorts of unviable projects.
A further slight on the CEFC purported by those opposite is that it is undercutting the market by providing concessional loans. This is despite it being established that there is insufficient private sector appetite for engaging in the type of finance provided by the CEFC and the basic fact that many private sector providers also offer discount rates. The facts are that the CEFC has only provided discounts amounting to $14 million, or just around 2.5 per cent of the total funds it has lent. This proportion seems very low and indicates that the rate of a loan has not been an issue for the clean energy industry, but the availability of finance is the issue. Plainly, the CEFC cannot be accused of undercutting the market. The facts are clear.
A final attack on the CEFC that I will use my time to debate is the notion that the CEFC does not produce any clean energy. The argument goes that as there is a renewable energy target of 20 per cent, why do we need to spend $10 billion of borrowed money? Basic maths shows that 20 per cent is not 100 per cent. Also, the renewable energy target is quite narrowly defined so cleaner energies, such as gas, quite rightly do not comply. Therefore, there is a strong potential for the CEFC to finance renewable and cleaner energy outside of the RET. The CEFC provided for the inquiry two examples of clean energy investments which are not RET-supported. Interestingly, both investments seek to lower energy costs for rural and regional users. Clearly, there are still a lot of questions to be answered, and I request that the chamber take these to the committee stage.
In conclusion, the CEFC is allowing Australia to get chief investment officers of renewable and clean energy projects and bank officials around the table talking about the deals they can do. Abolishing the CEFC comes at a huge cost to the taxpayer. It is reckless and irresponsible to remove this tool from a policy suite in tackling climate change.
As Labor made it clear well before the election we planned to terminate the carbon tax. But in the Clean Energy Finance Corporation (Abolition) Bill 2013 and the related bills before the Senate what we see is much more than a termination of the carbon tax. In fact, they leave us with nothing—absolutely nothing. One of these bills abolishes the Clean Energy Finance Corporation, and this is one of the reasons why Labor is opposing these bills.
The Clean Energy Finance Corporation is, and should continue to be—despite the wants and desires of the now government—an independent body established to stimulate investment in clean energy projects. The CEFC has a proven track record. It has enabled the development of new business opportunities. Importantly, new business opportunities which play a role in redefining the Australian economy for a cleaner energy future.
The Clean Energy Finance Corporation plays a transformational role. Whatever our future direction in reducing carbon is, carbon reduction policies will never play a role in developing and deploying clean energy with lower costs. The CEFC works with the private sector to support the development and deployment of technology in Australia by mobilising investment in renewable energies, low-emission and energy-efficient projects and technologies.
The Clean Energy Finance Corporation delivers real and tangible change. The CEFC has financed innovative projects across our economy in both cities and regional areas. I would like to take a few minutes to elaborate on a few of these projects. There was $10 million in clean energy finance in Central Park, in Broadway, Sydney, through an environmental upgrade agreement with the City of Sydney and other partners. That $10 million will be used to install a $26.5 million, highly efficient, gas powered, tri-generation plant for the landmark Central Park precinct in Sydney—smack-bang in the middle of Sydney, at Broadway. The environmental upgrade agreement will be repaid by a charge on the land, levied by the Sydney City Council.
The project occupies a 5.8 hectare precinct, and it is under construction right now—you cannot miss it if you go into Sydney. It includes 14 new buildings with 3,000 apartments, 900 student accommodation units, 50,000 square metres of commercial office space and 25,000 square metres of retail space. This two-megawatt, tri-generation plant will be used to provide low-carbon thermal energy heating and cooling for this major new development. The plant will reduce greenhouse gas emissions by 190,000 tonnes over its 25-year design life. That is equivalent to taking 62,500 cars from the road.
In regional New South Wales, Rivalea, a major pork producer owned by Golden North—in fact, Rivalea is Australia's largest pork producer—has, through finance from the Clean Energy Finance Corporation, upgraded its refrigeration in projects designed to improve energy productivity. The upgraded refrigeration has improved Rivalea's production capacity, something I would have thought the government would be quite keen to capitalise on. Not only has it improved its productivity, but this upgrade in refrigeration is now enabling Rivalea to bid to expand its business in South-East Asian markets.
Another example in a regional area is Sundrop Farms, in Port Augusta. The CEFC will co-finance a world-leading innovative project in South Australia—namely, a sustainable greenhouse developed by Sundrop Farms. The sustainable greenhouse is the first of its kind to use solar-thermal technology to provide irrigation from desalinated seawater, and heating and cooling for the greenhouse. Sundrop Farms, which already has a commitment to be a low-energy producer, is building a 20-hectare greenhouse facility. This facility will use a renewable power supply and a sustainable water source to produce over 15,000 tonnes of tomatoes a year for metropolitan markets across Australia.
Not only is the CEFC involved in that, but it is helping catalyse other finance for this innovative application of proven, world-leading green technology. This project will demonstrate the potential to transform the Australian economy and create new industries in regional areas. When fully operational it will create around 200 new jobs. Not only that, this project has flow-on effects because it will demonstrate Australia's leading position in agriculture for semi-arid environments, extending this to sustainable horticultural practices and using clean-energy technology.
It staggers me that the National Party, which purports to represent the bush, has agreed to the abolition of a finance corporation that creates jobs and brings new businesses to regional areas. So where are the National Party voices on this issue?
Senator Ludlam interjecting—
Thank you, Senator Ludlam. Where are they? They are completely silent on this issue. Their voices were heard long and loud on GrainCorp, but now their silence around the CEFC—which is bringing new business and creating jobs in the bush—is deafening. I am sure the likes of Rivalea and Sundrop Farms and other regional and rural businesses who have benefited from the Clean Energy Finance Corporation would be appalled to learn that the party which purports to represent the bush is not supporting them this time. It is not saying a word and is in fact complicit in winding up and abolishing a corporation which is working in the interests of regional Australia. It just goes to show, when it comes to National Party politics, any kind of belief or commitment can be bought off.
Is the abolition of the Clean Energy Finance Corporation another mistake by the coalition government? Has it failed to do its homework on the real value of the CEFC? The Clean Energy Finance Corporation is an opportunity for the coalition to do something about climate change. The CEFC's role is to stimulate the economy in a way that contributes to solving the issues of climate change. Isn't this what the government and indeed all Australians want—a rich economy and one leading the way in climate change solutions? Not only is the CEFC contributing to new business, cleaner technologies, jobs in the bush, new businesses in regional areas—which the National Party are absolutely silent about—and fabulous innovative projects in big capital cities like Sydney; guess what: it makes money. The government, prior to the election, was going on and on about the emergency budget situation. It likes to go on and on about how it has got to cut spending and fix up a mess and carry on about money. Here we have a corporation which is making money, and that still does not motivate the government. The CEFC is currently making about $200 million per year. If we project that through to 2020, we expect it to be around $1.5 billion. For a government that is so concerned about balancing its budget and finding additional cash, the CEFC makes money and reduces carbon pollution—but the government seems to be denying that.
Earlier in the week the government was trying to gag debate on the Clean Energy Finance Corporation and it tried to roll debate on this bill into the broader debate on its repeal package—because this government just wants to talk about the carbon tax. Despite the fact that Labor said before the election that we would repeal it, the government just wants to bang on about the carbon tax, at any cost. It leads me to conclude that this was nothing but a shameless attempt by the government to hide the fact that the Clean Energy Finance Corporation makes money. It wants to hide that from Australian voters, because Australian voters would never understand—I certainly do not understand—why a government would shut down a corporation which is doing amazing work, which is doing world-leading work in regional parts of the country and which is making money. Why would you shut it down?
I can only conclude that the government is playing politics here because it does not want to have anything to do with any success that the Labor government might have introduced. 'We have to shut it down and pretend that it was costing money, when the facts are far from that.' But perhaps Senator Abetz is just trying to hide yet another embarrassing mistake. Perhaps it is another government blunder, and he is trying to hide that from the Australian voters. Well, voters in Port Augusta and Sydney will know, when the money stops flowing to those projects, exactly what the government has done. Senator Abetz said the government's reasons for abolishing the Clean Energy Finance Corporation are there for all to see. What is there for all to see is that it is a profit-making, carbon-reducing, innovative clean energy corporation. That is what is there to see. He went on to say:
… setting up a government bank with $10 billion … of borrowed money … to invest in high-risk ventures should be a thing of the past in this country.
What is high risk about supporting an already viable pork producer? What is high risk in that? What is high risk in enabling that pork producer to improve its productivity so it can bid for markets offshore? Where is the high risk in that? I would have thought it is something that this government, which apparently is open for business, would be willing to do. I have heard the Prime Minister go on and on: 'We're open for business.' Well, tell that to Rivalea, because with regard to Rivalea actually we are shut for business. Particularly if it is about clean energy, we are definitely shut. We do not want to know anything about that. So it is completely the opposite to what Senator Abetz says. These are not high-risk investments but ordinary businesses that the Liberal Party government and its National Party partner go on and on about wanting to support: 'We're here for business.' Well, they are not. These are businesses making smart decisions around clean energy and clean technology but, for whatever reason, that is not good enough for this government.
I want to put on the public record in Hansard that the Clean Energy Finance Corporation is one of 14 organisations across the world that acts as a catalyst for investment in renewable energy and clean technologies. It fills a groundbreaking role in mobilising capital for clean energy technologies—a groundbreaking role, yet we want to get rid of it. This is a corporation which stands on its own two feet, a corporation that makes an average return of seven per cent per annum, yet the government with its National Party colleagues wants to shut the Clean Energy Finance Corporation down. Never mind that it returns seven per cent per annum. For the ordinary Australian investor that is more money than you would make putting it in the bank. Since created by Labor—I think that is the crux of the issue here, that it was created by Labor so it has to be smashed down regardless of how effective it was—
Senator Ludlam interjecting—
You can say that in your speech. The CEFC has committed $536 million of its own budget whilst mobilising over $1.5 billion in private capital—a success in anyone's terms, except apparently the government with its National Party mates. I only learnt this the other day and I wish I had known about it beforehand because it is something as a West Australian to be really proud of: in Western Australia the Clean Energy Finance Corporation invested in a fantastic project with Richgro. For those of you who come to Western Australia, Richgro is a name you see all over the city. They are a major Australian garden products supplier using waste energy technology which meets all of their power needs. They are doing that by recycling organic waste. That is a brilliant project and it is only made possible by CEFC funding—a project well and truly worthy of investment but one obviously that the coalition government sees absolutely no merit in.
To go further, this government claims it is fiscally responsible, it is open for business, it knows how to manage money; it goes on and on about its economic and financial credentials. Yet this government has done not one scrap of due diligence on the CEFC. It has put no business case as to why it should be closed down. It has undertaken no analysis, it has done no review. It is just acting out an ill thought out, poorly conceived, sloganistic election line. This bill, the Clean Energy Finance Corporation Abolition Bill, winds up the clean energy corporation, which is an institutional investor and underwrites projects. Its assets and liabilities will be presumably transferred to a government bureaucracy and left to wither and die, on the heads of the coalition.
What we have heard from the government is that they had some kind of mandate and that this was a key election issue, that the election was a referendum on the carbon tax. Guess what: that is simply not true. It is only in the minds of coalition senators and MPs that this was a big issue. Despite the continuing rhetoric on the carbon tax, it did not rate as a key issue for voters in the election period; it was not a top five issue. In fact, the only time it rated at all was when Prime Minister Rudd announced that he would terminate and that we would terminate the carbon tax—a fact now conveniently forgotten. So we support the repeal but not to leave us with nothing and not to knock off effective organisations like the Clean Energy Finance Corporation. It is a shameful act and those opposite will rue the day that they did it.
I rise to oppose this bill in the strongest possible terms. That we are even here debating this bill is an indictment on this government, a government that seems to take perverse pride in its destructive attitude to the renewable energy industry and anything else that might prevent our slide towards climate chaos. What kind of government brings forward as its first act, its highest priority, the dismantling of a functioning carbon price scheme? What kind of government lines up every political and legal weapon that it can muster to attack the Australian clean energy sector? What kind of government takes stock of the collective years of experience of the public sector, bolstered with the kind of private sector expertise that we see within the Clean Energy Finance Corporation, and immediately embarks on a process of mass sackings and redundancies? Well, the same kind of government that we see in Western Australia and in Queensland. We know who has set the template: people like Colin Barnett and Campbell Newman, a yawning vacuum of imagination, yesterday's men who have somehow deluded themselves into thinking that something as powerful and dangerous as the global climate system can be subordinated for momentary political advantage.
So this is the finest hour of the Abbott regime and is arguably your entire reason for being. Yours is a government that was defined from opposition almost entirely as negative space, an opposition defined by the absence of anything approaching an agenda apart from dismantling the achievements of the last two parliaments. So this is your big moment. This is the moment where you propose to dismantle the Clean Energy Finance Corporation, which will cost the budget something in the order of $200 million a year and crash the renewable energy sector in Australia just as it is finding its strength. What I do not understand is why all of you on that side of the chamber are suddenly looking so shaky. All the bluster has gone out of you. The Liberals put up one speaker yesterday, Senator Abetz, who quickly ran through the same tired talking points that he has been reciting for three years and then sat down. The rest of the Liberal Party have stayed in their offices and the Nationals have not showed up at all at your moment of triumph, and that is what I am struggling to understand.
Who remembers Tony Abbott's people's revolt? Does anybody remember that? It was the anti-environment movement that was meant to rise up. I can remember some revolting placards and a handful of desperately overhyped rallies that ran out of puff after a couple of weeks once Alan Jones's attention started to wander, but that was it. The people's revolt—the people rising up against the socialist renewable energy industry and the carbon price—actually never happened.
In one year, the Clean Energy Finance Corporation has already achieved nearly four million tonnes of carbon emissions abatement—more than half of our annual target. For all of the strange financial illiteracy on display on the other side—people calling it a hedge fund or Bob Brown's bank—this is not a grants organisation and this is not writing out cheques that the Commonwealth does not get back. It is making money for the taxpayer of approximately $2.40 for every tonne of carbon abated. Who knew that you could actually make a financial return to the taxpayer at the same time as eliminating greenhouse gas emissions and creating jobs in the sunrise industries of the 21st century? It is generating a 7.3 per cent return on investment, which is nearly four per cent above the standard government bond rate. It is an entity that is filling the budget vacuum that has been left by your proposals to abolish the carbon price and the mining tax and it attracts just under $3 from the private sector for every dollar that it invests.
How awkward for you to discover in a committee hearing that this entity that you propose to wreck is actually making a financial return to the taxpayer. How exactly does that square with your budget emergency and your desperation to attack the Public Service, cut education spending, cut health spending and abolish public transport funding because you are in such a desperate budget emergency? Yet, at the same time, you line up to kick apart an entity that is making, and intends to make, a $200 million return on the taxpayers' investment. How awkward for you. How interesting that Senator Abetz in his contribution yesterday, before he scurried back to his office, did not mention the words 'Clean Energy Finance Corporation'. He ran through the three-word slogans and then he went home. He did not mention that the premise of the bill is to attack and dismantle this entity that is already doing so much to show how we can actually take control of our greenhouse gas emissions.
The CEFC, as others have noted, is one of 14 co-financing institutions around the world that are catalysing and creating huge investment in renewable energy. Bloomberg New Energy Finance believe the investment in one year is upwards of $58 billion in renewable energy and $109 billion in energy efficiency globally. At last we have the Australian parliament and the Australian government doing its bit. As the empty government benches show, maybe you are not quite as proud of this as you might have displayed during the people's revolt.
Were you at those rallies, Senator Birmingham, with 'ditch the witch', 'axe the tax', the people's revolt and the pitchforks? I am not sure that you were. Senator Birmingham, you are one of the people who I hold in quite high regard on that side of the chamber because I know that you get climate change and renewable energy. I have no idea how you can show your face in here as we contemplate the dismantling of an entity that makes money for the taxpayer while reducing carbon emissions and creating jobs. How on earth do you people sleep at night?
As I said, we know the mentality. What kind of government would do this? A government like that of Premier Barnett in Western Australia. This is a government that is spending upwards of $330 million to resurrect the obsolete and defunct Muja coal-fired power station in Collie. What could you do with $330 million? Why not pump it into a coal-fired power station that our energy grid does not even need? The government unsuccessfully tried to kill off a feed-in tariff into solar voltaics and had to suffer a humiliating backdown when the huge number of people in Western Australia who have installed home PV marched on parliament and demanded that the government uphold its obligations and its contracts.
This is a premier who presides over the Synergy, the energy retailer that passed on the carbon tax to customers in full. People like me, who avail ourselves of the 100 per cent renewable energy product, got a polite letter from Synergy saying, 'We will be passing on the carbon tax in full; there is nothing you can do about it; you might like to consider withdrawing from the 100 per cent clean energy contract that you have.' That is the solution that they proposed. At Western Power, all 100 staff in the smart grid division have been cut and all sustainability staff, science educators and outreach staff are being pulled out. There are only two people left in the state bureaucracy with expertise over matters of climate change. They say it is federal issue at the same time as opposing any federal action. That is the template.
My colleague from Queensland, Senator Waters, no doubt has similar experiences inside the Queensland bureaucracy as anybody with the word 'climate' or 'energy' on their business card is washed out the door after the election. It is systematic and deliberate destruction of expertise within the public sector while you go about crippling private sector activity at the same time. I cannot think of any other explanation. You are not attacking the renewable energy industry because it cannot do the job; you are attacking it because it is doing the job a little too well. If there is another explanation, I would be fascinated to hear it. Just at the point that we are seeing the overtaking of investment in fossil and long-dead investment in nuclear power by investment in renewable energy in global energy markets, along you come to kick the hell out of an entity that is getting the job done here in Australia.
As you well know, Senator Birmingham, private sector industries such as energy, telecommunications or anything else are supported by the taxpayer. The taxpayer, in the public interest, created the coal-fired power stations that got the disparate colonies of the Australian Commonwealth on their feet a hundred years ago, before the Commonwealth even existed. More recently—taking the Western Australian example—getting the gas industry on its feet in the 1980s took huge public investment in the Dampier to Bunbury Natural Gas Pipeline. These are massive subsidies for industries in the public interest to broaden the energy sector and to reduce our reliance on coal-fired power. Taxpayer-funded investment in new industries is how they get on their feet when they are not mature. That is why you have a feed-in tariff for industries that are expensive, like solar PV. It props them up, and, as they become commercial, you withdraw the subsidies. That is how the German government, through the German Greens in the German parliament, got the German PV industry on its feet. Now it employs hundreds of thousands of people. It then took the Chinese government, also using strategic public funding, to get economies of scale and now we see solar at grid parity even in countries like Australia.
Under this government, Australia is not open for business. How you create and set up industries such as baseload renewable energy industries—the next generation of technologies coming down the line—is with public support and public assistance. What better way to do it than with a clean energy investment arm—people who understand the particularities of the technology and the risk; people with substantial private sector experience, taking advantage of the low borrowing cost of the Commonwealth, leveraging three dollars for every one they spend and returning a small return to the taxpayer? That, I should say, is what then tops up the ARENA grants funding for research and development. You have people—the start-ups, the innovators, the people taking risks—who need assistance to get on their feet. That is what ARENA does. If you knock over the CEFC, you knock over the mechanism that helps finance ARENA and get things on their feet.
We should also acknowledge that Tony Abbott does not go around talking about climate change as though it is crap anymore, does he? His minders have got to him and said, 'You can't actually call climate change crap. You have to pretend to care. You have to pretend to have a policy, just to sideline it, just to get it out of the way—to get it off the front page and, therefore—
Neutralise it. Exactly, Senator Collins. What better way of doing that than a bucket of money to hand out to your National Party colleagues to go plant trees? 'We will call that direct action.' I tell you what, Mr Abbott: if you want direct action, you are going to get it. You are going to get it at the coal terminals in Newcastle. You are going to get it around gas fracking. You are going to get it when farmers lock the gate. If you want direct action, direct action is what you will get. Coming out, then, and saying that this government is open for business in matters of technology and energy investment—while doing everything you can to wreck progress in that sector—belies the fact that this is a government that is setting out to systematically undermine renewable energy technology because it threatens the vested interests of the coal and gas industries which donate so generously to the Liberal and National parties every year. That is why the Nationals take the side of the gas industry over farmers; it is why the Liberal Party takes the side of the oil, gas and coal industries over the new industries we hold in trust to prevent the catastrophic impacts of climate change.
This is not simply a technology debate we are having. This is not an industry policy debate we are having. This is debate about whether, in 40 or 50 years time, we live in a world with two degrees of climate change or whether we are on the path to four degrees. Four degrees will put us into a new geological era. It is the other side of a mass extinction. It means sea level rise and communities having to withdraw from coastlines. It means withering droughts that destroy farming communities permanently. It means, by the end of this century, towns like Kalgoorlie, Darwin and Port Hedland being in climate zones that do not presently exist on the planet. We are not just having a technology debate here. The people who will look back from those future times on the debates occurring in this parliament, over bills like this, will not thank us. They will not appreciate the three-word slogans. They will not have joined the people's revolt—the one that did not happen.
As it happens, I have had a bit to do with the Clean Energy Finance Corporation in Western Australia. They briefed a meeting, ironically enough, of your stakeholders—the mining industry—in Kalgoorlie earlier this year to explain how the mechanism would work. They said: 'We are not a grants organisation. We are not here to write out cheques that we won't see again. We are here to get the industry on its feet.' And the first people at the front of the queue will be the gold and nickel producers in the goldfields who are looking for some kind of hedge against skyrocketing gas and diesel prices. They are the ones who will build the first iteration of this technology in Western Australia. Not because they are driven by the climate imperative—they are driven by commercial imperatives and they are looking to get technology into the ground that can protect them from rising energy costs. I say to those interests, those mining companies who will be the first ones to build the next generation of this technology: go for it. You have our backing. You have our blessings. If there is anything we can do, inside or outside of this parliament, to make sure those investments are made and those projects are built, the Greens will do it.
We wrote the policy because the state government failed to do so. Having sacked and washed out the entire bureaucracy and the people with expertise in these matters, there was nobody left in the state government to write the renewable energy strategy for Western Australia, so we did it with the help of some consultants, some engineers and some people with experience in the Western Australian energy market. We developed a proposal called Energy 2029 that put the question: could we go 100 per cent renewable on the south-west energy grid of WA? Could we keep the refineries and the chemical industries in Kwinana, keep the lights on and the air conditioners running, and go 100 per cent renewable by the year 2029? That will be the 200th anniversary of the establishment of the Swan River colony and the occupation of south-west Western Australia.. Let's give ourselves something to celebrate in year 2029 with a 100 per cent renewable energy industry.
But before we put that on the bumper sticker we asked the engineers if it could be done and at what cost. What would be the technology mixes? Where would you build the kit? What would it look like and what would the jobs implications be? Before we put it on the bumper sticker, let us find out if it is possible. So we released a costed technical report in March, outlining two scenarios to reach 100 per cent renewable energy in Western Australia by 2029 and one for 'Barnett as usual'—one where we just keep on polluting until we have firmly turned the weather against us and business as usual is no longer possible. We showed we can get there for the same cost as business as usual because, by the year 2029, we will have eliminated fuel costs.
That is the key thing I do not think the coalition gets about renewable energy: it is capital intensive and costs very little to run because sunshine is free. Tidal energy is free. The wind is free. That is what you do not get. That is the profound change that our energy networks are in the early stages of going through and they need government assistance to get there. What has never been manifested on that side of the chamber is any sense of urgency about the challenges we face.
We found that construction for the Energy 2029 program would create more than 26,000 new jobs, including 8,000 to 18,000 in solar thermal farms and 2,500 in energy storage. That is three times as many people as are presently employed in the coal, oil and gas extraction industries in Western Australia. If you are serious about jobs—if you really want people to believe you are open for business—then lift your eyes to what is happening in energy markets around the world. We need to catalyse this change in WA.
Renewable energy can be used as another crop in rotation, providing a new and reliable source of income for our farmers. Senator Lines touched on some of these issues before. There are huge potentials in the wheat belt for farmers who are really struggling with changing climate patterns and volatile world markets for their commodities to introduce an energy crop into the rotation. I am speaking in particular of the instance of oil mallee cropping in the Western Australia wheat belt.
The CEFC briefed the goldfields mining interests, the council and the development commission on the possibilities for large-scale solar thermal. This is the really interesting technology where we can dispose of the notion that when the sun goes down the lights go off. We can now build baseload solar thermal plants that run 24/7.
Senator Milne and I visited a utility-scale plant in the south of Spain about this time last year. It had just been running for a full 365-day cycle. It is like a magnifying glass a mile across. It cooks a molten salt solution up to 600 degrees. You bank that for use after dark, and you can run steam turbines 24/7 as a baseload plant. A company called SolarReserve are setting up a plant, which they are commissioning this month in the high country of Nevada, that is six times the size of that plant in Spain. They are scouting Australia to open an office here. I have been putting the proposition that they open it in Western Australia because I seriously believe that the goldfields in central Pilbara are the first places in Australia where these stations should be built. My colleague Senator Hanson-Young, from South Australia, might disagree. I am happy to get in a race with Port Augusta for the first one to be built. I do not mind—we just need to get on the go.
These are the new technologies that need the kind of support that is being provided by ARENA and the CEFC. The last thing these industries can put up with is the idea that you would pull it apart around them.
We hear a lot in this place and from this government about red tape and green tape—and, on a bad day, if you have Aboriginal interests that you are trying to sideline over land rights, it will tell us about black tape. But this package of bills represents a mass of brown tape—a cynical and systematic attempt to hobble the clean energy technologies that are poised to outcompete 20th century coal and gas interests. Brown tape is what is keeping the Australian economy in the fossil age even as the world moves with determination towards the clean energy age.
What kind of government wants to be the first in the world to dismantle a functioning carbon price system? It is the kind of government that has failed the most basic obligation that it owes to its electors: the long-term wellbeing, protection and security of its people.
Some bills that enter this place contain subtle nuances but not so this bill, the Clean Energy Finance Corporation (Abolition) Bill 2013. The point of this bill is very simple: it is just the government trashing the joint purely for the self-interest of their friends in the non-renewable energy sector. Slash, cut, trash—that is already the hallmark of the Abbott government. They do not believe in climate change, so they will destroy the Clean Energy Finance Corporation. They are like small children having a tantrum and smashing their toys to bits.
The objective of the CEFC is pretty simple to see. It is to overcome capital market barriers that hinder the financing, commercialisation and deployment of renewable energy, energy efficiency and low-emissions technologies. The CEFC invests in firms and projects using these technologies as well as manufacturing businesses that focus on producing the inputs required.
This move to destroy the Clean Energy Finance Corporation is pointless and is counterproductive. Confirmation of just how pointless and counterproductive this move is came in the recent supplementary Senate estimates hearings. Under questioning from Senator Wong, Clean Energy Finance Corporation chair Ms Jillian Broadbent highlighted just how successful the corporation had been at leveraging private sector investment for clean energy projects. She said:
We have invested $536 million. That has been matched three-to-one with private sector funds, so it has resulted in $2 billion of capital investment in the sector. There has been $2 billion worth of capital expenditure in the sector because with every $1 we invest we have mobilised $3 of private sector funds.
This shows that the Clean Energy Finance Corporation is performing exactly the way it was intended to. What makes this move to abolish the Clean Energy Finance Corporation even more bizarre is that it is making a profit. I quote Ms Broadbent again:
We have comfortably covered the government's cost of funds and our own operating costs, so we are earning about three to four per cent over the government bond rate.
And she said:
If we continue at the pace of investment, we certainly would be paying dividends to ARENA …
… … …
… at the end of 2015.
So this government wants to abolish an organisation which is not only spectacularly successful at leveraging private finance for clean energy projects but turns a profit as well. The government claims it wants to reduce debt, yet here today it is seeking to close an agency which is turning a profit. I do not know that I would call that good economic management. It is utterly incomprehensible to us on this side.
I will quote the CEO of the Clean Energy Finance Corporation Mr Oliver Yates, who also appeared at the supplementary budget estimates. He said:
The projects that we have done so far actually achieve emission reductions of approximately four million tonnes per annum. … That already constitutes about three per cent of the government's challenge in meeting its negative five per cent baseline.
That is, they have already provided finance for projects that will deliver 60 per cent of our emissions reductions target and have leveraged $1.5 billion worth of private sector investment, all while making a four per cent profit. And those opposite want to close it down!
On top of that, closing the Clean Energy Finance Corporation—an enterprise, as I have said, that is making a profit—will involve a significant cost. To once again quote Mr Yates at the supplementary estimates hearing:
The best indication of that is the underlying cash balance forecast, which actually shows that the government would actually lose $80 million over the forward estimates period by closing the CEFC down, before we even get to any of the close-down costs of staff costs and everything else.
To repeat: that is a loss of $80 million before the costs of redundancies and breaking leases and other contracts.
This decision and this bill are utter lunacy. It is madness. The Clean Energy Finance Corporation is there to encourage investment in the clean energy sector, and it is performing this role exceptionally well. The contracted CEFC portfolio consists of 12 CEFC transactions, including one subsidiary transaction under the CBA Energy Efficient Loans to a value of $483 million and the Low Carbon Australia investments to a value of $54 million. This represents a total of 47 projects. Its portfolio represents a diverse mix across the economy with projects comprising 56 per cent of renewables, 30 per cent in energy efficiency and 14 per cent in low-emissions technologies. The projects are spread across the country in agribusiness, property, manufacturing utilities and local government. It has financed projects involving wind, solar and bioenergy across Australia, both on grid and off grid, as well as energy efficiency and low-emissions technology projects in manufacturing, buildings and local government.
One of the projects funded by Low Carbon Australia, now the Clean Energy Finance Corporation, was a lighting upgrade for the local government civic centre across the road from my office in Kingston, Tasmania. As another Tasmanian senator, Senator Bushby should be very interested in this. That has cut the building's lighting energy costs by 75 per cent. The Kingborough Council replaced the building's fluorescent lighting system with more energy efficient LED tube lighting to make energy savings of more than $11,000 a year. The council covered the $45,000 up-front cost with finance from Low Carbon Australia, now the CEFC. I do not know how Senator Bushby will be able to support this bill, bearing in mind that that is just one example of help that the organisation has given to a great Tasmanian council. Of course, with that it has the expected 20-year life expectancy of LED lighting compared with four years for the old fluorescents, so that means the council is also saving on its maintenance costs.
Other projects as outlined in the Clean Energy Finance Corporation submission to the Senate inquiry into this package of bills include a $100 million energy-efficient loan facility, co-financed with the Commonwealth Bank, to provide funding to smaller businesses, particularly supporting the needs of the manufacturing sector, to upgrade facilities and equipment to be more energy efficient and reduce energy costs while reducing carbon emissions.
The CEFC is co-financing Sundrop Farms' 20-hectare greenhouse development near Port Augusta, South Australia. This will use solar thermal technology to desalinate seawater to provide irrigation and to heat and cool the greenhouses. Sundrop Farms' facility will produce over 15,000 tonnes of tomatoes a year for metropolitan markets across Australia. The project is an exciting demonstration of how new technology can be applied to transform the Australian economy and create new industries and jobs, which are most important, in regional areas. This project will be a demonstration of sustainable horticultural practices at scale, addressing the challenges of food security, water and energy availability.
A new wind farm near Taralga, New South Wales, co-financed with ANZ and EKF, which is the Danish government's export credit agency, will use Australian-manufactured towers made in Portland, Victoria, from BlueScope Steel. This project is providing a boost for the local wind-engineering sector and will further develop Australian manufacturing capability in supply-chain scale, creating valuable regional employment.
The CEFC is providing $75 million in corporate finance to Energy Developments Limited for investment in new projects generating energy from waste coalmine gas and landfill gas. Using fugitive emissions from coalmines and landfill to generate electricity that would otherwise come from higher emission sources creates significant environmental and economic efficiency benefits.
The CEFC and National Australia Bank are co-financing Australia's largest beef company, Australian Agricultural Company Limited, for the installation of solar photovoltaic units across 15 grid-connected sites in Queensland and an innovative on-site waste-to-energy project at Darling Downs Fresh Eggs at Pittsworth, also in Queensland. These small-scale projects provide a good demonstration of the strong business case for on-site renewable power plants. The CEFC has received a strong market interest for productivity-enhancing projects like this one.
The CEFC's participation in the Macarthur Wind Farm refinancing and sale by Meridian Energy has demonstrated that developers of large-scale renewable energy projects in Australia could successfully complete a development and finance exit cycle. CEFC's finance helped ensure efficient market pricing and encouraged other banks to participate.
The CEFC is providing up to $60 million of debt finance to Moree Solar Farm for the development and construction of a 56-megawatt solar photovoltaic power plant in northern New South Wales. The CEFC's participation in this project is a first in the Australian market for financing large-scale solar photovoltaic projects.
The CEFC has provided finance to enable the final stage of the Portland Wind Energy Project to start construction after 10 years of development. This is a world-class wind site, and the project involves significant local industry participation. It has strong community support, all of which makes this hallmark project demonstrate the CEFC's vital role in driving new investment.
In their submission to the inquiry into this bill and the other carbon repeal bills, the Investor Group on Climate Change said:
The Clean Energy Finance Corporation has played an important convening role in the finance community and increased the pipeline of investable low carbon opportunities. In what is a nascent low carbon investment market, an independent, third party co-financing organisation, with a commercial, approach builds confidence and capacity in the market. CEFC has played such a role.
Evidence from the CEFC's early operations indicate that the organisation is delivering on its mandate of attracting private investment (with a 3:1 contribution of private to public finance) and achieving low cost abatement (a negative cost of $2.40/tonne).
Co-financing is likely to continue to be a key element of climate policy globally and it is in Australia's interests to use this model as part of its climate change policy suite.
I guess we have to ask ourselves: what is the impact of shutting down the Clean Energy Finance Corporation? Mr Yates, once again in Senate estimates, said:
But the impact of the shutdown of the CEFC would actually be quite broad at this stage. There is considerable uncertainty in the market, and the CEFC is playing a very active role in trying to enable people to continue to pursue transactions in an environment of uncertainty. So, for many project participants, this will continue a trend which will probably see them not be able to finish projects that they would have liked to have finished.
In their written submission to the inquiry into this bill, the Clean Energy Finance Corporation said:
As at 20 August 2013, the CEFC had … received proposals … from over 170 project proponents seeking CEFC finance of over $5 billion (with total project costs of over $14.9 billion) … It is clear that demand for the CEFC from the market remains extremely high.
And they said, 'This means that billions of dollars worth of investment, maybe over $10 billion worth of investment, is at risk were this bill to pass.'
We have seen that the corporation has been successful financing clean energy projects, that it has been successful at leveraging investment from the private sector, that it has been successful at increasing the investment pipeline of renewable energy in Australia and that it has even been successful at turning a profit. So why are we here today? Why are we debating this bill? Why are we closing down the Clean Energy Finance Corporation, when, to quote Mr Yates yet again, 'Bloomberg New Energy Finance is indicating that there is $58 billion being lent by equivalent agencies like the CEFC this year alone on the renewable energy sector and about $109 billion in the energy efficiency sector?'
Why are we closing down the Clean Energy Finance Corporation when the UK, Japan, Malaysia and the US are setting up similar bodies? Even Mr Abbott's conservative friend in the UK, Mr David Cameron, has set up the Green Investment Bank for similar reasons and on a similar model to the Clean Energy Finance Corporation. Why are we going to allow other nations to take the lead and develop new industries, leaving Australia stuck in the last decade? Is it really because those opposite are so petty that they want to trash absolutely everything the last government did?
This bill we are debating today says that the government are willing to destroy thousands of jobs in the clean energy sector, that they are willing to close an agency making a substantial profit, that they are willing to cost the taxpayers over $80 million closing it down and that they are willing to completely destroy any chance we have of reaching our five per cent emissions reduction target by 2020 so that the former Labor government gets no credit. This move is unbelievable. In fact, it is quite disgusting. What is more disgusting is that those opposite are so arrogant that they have presumed the power of this place and are seeking to shut down the Clean Energy Finance Corporation without the agreement of this Senate.
The Treasurer, Mr Hockey, recently wrote to the board of the Clean Energy Finance Corporation instructing it to 'suspend operations and cease making payments'. Mr Hockey cannot just order the closure of an independent statutory agency without the consent of this place and the other place. He knows this, and that is why we have this bill in front of us today. Those opposite have to actually get this bill passed, not just bully the CEO and the board. The CEO and board have legal obligations under the CEFC Act and the Commonwealth Authorities and Companies Act 1997. The board has received advice that:
A direction to cease activities or cease investments, or to cease payments, would frustrate the legislative purpose of the CEFC Act and would be inconsistent with the CEFC Act ... the CEFC's activities cannot be terminated by executive action.
Mr Hockey is asking the board to act against its own responsibilities under the CEFC Act, and I find this is extremely disappointing from the Treasurer.
Let us not forget that the Minister for the Environment, Mr Greg Hunt, has described the Clean Energy Finance Corporation as a 'giant green hedge fund'. I would like to take the opportunity to voice the concerns that the CEFC had with this statement and that they addressed in their submission when they said:
The CEFC is not a hedge fund in any way, shape or form. The CEFC has $536 million invested of which:
So while it has the ability to do so under its legislation, the CEFC has not engaged in any hedging, derivatives or guarantees.
The Abbott government have not given any clear reasons for wanting to close this corporation. If those opposite are concerned because its lending is backed by government bonds, as I said previously, it is making a profit of around four per cent. If those opposite are concerned that it is backing projects that the private sector will not back, as I said previously, it is leveraging almost $3 for every dollar it lends.
Is it because those on the government side really do not believe in climate change at all? Is that the real reason? Is it because Tony Abbott believes climate change is 'absolute crap'? Are those opposite really wishing to destroy the Clean Energy Finance Corporation, destroy the projects and jobs that are backed by the CEFC and destroy the pipeline of clean energy projects just because they do not believe in climate change? This decision makes absolutely no economic sense. This decision makes no environmental sense. If we are to make a five per cent emissions reduction target by 2020 then there is absolutely no environmental sense to this decision. If the government do not believe in climate change, they should just fess up. If they are acting on behalf of the interests of their friends in the oil and coal sectors, they should just fess up. They should just be honest with the Australian people. It is just a pattern of behaviour from an untrustworthy, backflipping, antiscience government. The Australian people deserve much, much better.
I would like to finish with one final quote from the Clean Energy Finance Corporation's submission to the Senate inquiry:
In the short time since its establishment the CEFC has demonstrated its capability and its potential to assist our economy making the transition to Australia's future energy mix. Through its activities (should it continue to exist), the CEFC can play a valuable part in the developing the capabilities and capacity of a globally competitive Australian clean energy sector and in catalysing investment in new energy infrastructure and energy efficiency across the economy.
I call upon the Senate to reject this extremely thoughtless, short-sighted and ideological bill.
Whilst I and the Democratic Labour Party have been critical of the carbon tax, we acknowledge that it is part of a much larger legislative package that includes some useful and important initiatives. I do not support the abolition of the Clean Energy Finance Corporation and I urge the government to amend its legislation and to retain the Clean Energy Finance Corporation.
I want the Australian population to be very clear: the Clean Energy Finance Corporation is not providing grants to fund projects. It is not giving away taxpayers' money. It is a pro-industry development bank that is helping drive private and public investment in lower emission and cleaner energy technologies. It prefers Australian manufacturers. It is helping our farmers and our manufacturers to reduce their costs and to use energy-efficient equipment. It requires borrowers to be responsible, to deliver on their project commitments and to repay their borrowings. It leverages private capital to invest in areas they might otherwise ignore, like energy generation using methane emissions from farms and industrial processes.
The Clean Energy Finance Corporation is dragging Australian financial institutions into investing in the 21st century. It is helping fulfil the role that used to be filled by the likes of the Commonwealth Development Bank, the rural and regional development banks and other public lending institutions that engaged in nation building. The Clean Energy Finance Corporation epitomises direct action on lower emissions to support the development of new technologies and to help commercialise cleaner technologies. Its eligibility criteria recognise the necessity to support transition technologies, Australian innovation and Australian manufacturing content. Energy and manufacturing are industries that demand a practical approach to complex but inherently practical problems.
I suggest that abolishing the Clean Energy Finance Corporation is ideologically driven. You do not solve practical problems by ideology. You solve these problems with practical solutions. The Clean Energy Finance Corporation is a vehicle that encourages and supports practical solutions. It takes the approach of building a diversified portfolio, encouraging cleaner energy generation using a range of technologies, encouraging efficiency and savings and encouraging private and public sectors to upgrade their technology using low-emission, efficient equipment. Examples include the Baw Baw Shire Council upgrading their street lighting, Castlemaine School of Mines reducing the energy use in their buildings, the CQ Melbourne building upgrading their heating system using trigeneration technology and many others.
Compare this to the idiocy of governments encouraging some $65 billion of private and public investment in gas export developments that have overcommitted Australia in export market activities. The export demand for our gas is so huge that our manufacturers are being left without gas and are unable to enter into gas contracts with suppliers. Gas prices are expected to quadruple and household gas prices will rise. The flow-on effects will erode our manufacturing base and, in some cases, destroy local manufacturers. How do we feel about the possibility of seeing our glass manufacturers close down, our paper mills stop production, our chemical manufacturers shut up shop? How do we feel about the possibility of destroying our artesian water supplies with more and more coal seam gas development to meet our gas needs, because we are exporting too much and we allowed private companies to invest too much money in gas extraction and processing in this country?
The Clean Energy Finance Corporation is the very opposite of this madness. It is contributing to sane, sustainable, measured investment in the short, medium and long term. It supports and encourages good local industry development on a responsible basis. I want an energy transition that promotes Australian jobs, Australian technology and innovation and Australian manufacturing and helps protect the environment to boot—economic, social and environmental outcomes we can all be proud of.
Practical solutions that achieve such high performance standards take a long time to develop and commercialise—20 years or more. They also need ongoing government assistance along the way. It is extremely difficult to embark upon and keep alive the development and commercialisation process across the decades necessary to bring such technologies to market. The Clean Energy Finance Corporation is absolutely essential in helping the development and commercialisation of these absolutely essential technologies.
I look at some of the cleanest, greenest countries on the planet, such as Germany, which are eminently practical in their approaches to reducing emissions. German coalition governments take practical approaches to practical problems. They provide direct funding and capital grants to develop and commercialise low-emission technologies. They assist companies and households to buy low-emission technologies. They are driving down emissions by using a combination of direct action, including capital subsidy programs and regulation, as well as taxing pollution.
Even if we do not like the carbon tax—and I have never been a big fan—I do not believe in throwing the baby out with the bathwater. I urge the government to retain the Clean Energy Finance Corporation. Several times, when I have asked questions in this place or of people in the other place, I have been told about 'sovereign risk'. What is the sovereign risk if the Clean Energy Finance Corporation is abolished and uncertainty is brought to the market you profess to protect?
I rise to speak on the Clean Energy Finance Corporation (Abolition) Bill 2013, something I hoped I would never have to say in this chamber. I would like to inform those opposite me that it was a ridiculous proposition to debate all of the repeal bills at once. The coalition would like it very much if we remained quiet whilst they busily swept away hard-fought legislation designed to address climate change and reposition Australia's economy. But we did not allow that to happen. We will not do it, because there has been minimal time for committee consideration and, perhaps even more importantly, no genuine examination of just what they are proposing to do. When all you have is a hammer, every solution is a nail, and so we have a coalition getting ready to repeal legislation wholesale in 2013 and beyond. All they know how to do is block, repeal, frustrate and hack away at policy reforms that are in long-term interest of Australia. They are acting in government just as they did in opposition.
Proper debate needs to happen. That is why we are here; it is why parliament is sitting. The Prime Minister seems to somehow have forgotten that. He is leading the least transparent government in living memory. What the government have failed to adequately explain to the Australian people is that once they repeal this legislation of Labor's, including the price on carbon, they will not be introducing anything to replace it. Instead Australia will be a country without a climate change policy, which is quite simply unacceptable.
The value of the Clean Energy Finance Corporation is well known to those with any sort of interest in combating climate change. That does not include those opposite, so allow me to educate you a little. The corporation itself is critical in Australia's efforts to reduce our reliance on carbon emissions. By facilitating comprehensively commercial loans for renewable clean energy technology investments, it acts as a vital catalyst for investment and growth. When it comes to encouraging new forms of energy technology and repositioning the Australian economy, it is a real game changer. Also it must be pointed out that the government's alternative plan as part of its Direct Action policy, the Emissions Reduction Fund, will cost taxpayers billions of dollars. The fund would not be self-sustaining and it would not boost government coffers. In contrast, the CEFC funds emissions reductions at a negative cost to the government, so that means a negative cost to the taxpayer. In fact, it has the potential to return $200 million per year to the government coffers, all the while reducing carbon pollution and changing how this country meets its energy needs in the 21st century. It sounds like value for money to me, but perhaps I do not understand because I refuse to embrace things like a 'commission of cuts' to repeat what Premier Newman has done in Queensland on a national scale.
It really is extraordinary that the government do not see the value of retaining this body. They are blind to scientific evidence. They are blind to commercial opportunities. They are blind to common sense. They are reckless zealots who would make Nick Minchin blush. I wish he were here right now. He would shrink in his seat to see the monsters he has created on the other side.
The CEFC's role is so important in the fact that it has been tasked with managing $10 billion to invest in renewable energy projects. As the Climate Institute chief executive, John Connor, said recently:
We still need the Clean Energy Finance Corporation to help commercialise new technologies and to build the skills in our own financial services sector.
The CEFC has achieved this great success so far in transitioning Australia from a higher carbon economy to a lower carbon economy as efficiently as possible. Even though it has only been up and running for a year and a half, it has led to $1.6 billion in private sector investments through co-financing schemes—that is $1.6 billion of new investment. This is something that Labor should be proud of, and we are.
It is particularly dispiriting, though not at all surprising, that the government has not offered the CEFC chairwoman, Jillian Broadbent, proper respect and courtesy. She knows and indeed the entire corporation knows that the Prime Minister is not listening and the government is not open to new advice. Ms Broadbent is an economist and a successful businesswoman, but her insights are no match for the cynical political calculus favoured by the current government. It is a case of David versus Goliath, and in this instance David will not win.
The coalition machine has latched on to something where it can see a distinct political advantage. Never mind the future of Australia's economy, never mind Australia's future energy consumption, never mind the incredible work of the CEFC and never mind boosting investment to combat climate change. None of this matters to those on the other side. By abolishing the CEFC, the Abbott government plans to drag Australia backwards and make us significantly less competitive in the emerging 21st century markets of renewable and cleaner energy technologies.
Australia of course is not the only country to devise a body with the aim of providing commercial loans and investment in this area. In fact, about 14 similar organisations exist around the world. What the coalition has to realise is that these countries will capitalise on the Abbott government's parochialism and short-sighted self-interest. They are not going to pack up shop; they will pounce on our mistakes, and they will reap the rewards. These are countries in Europe such as Germany that recognise where the world's future energy needs will be supplied, and they want to be at the forefront of new technologies for decades to come.
What the Prime Minister cannot see is that real work is required to boost these fledgling markets to ensure that Australia can compete with other countries that have the potential to race ahead of us. As Ms Broadbent herself said:
Getting financiers to move to new areas is very hard to do and you can say there's a market and it just happens. I really believe the market should solve these things. But I can also see when markets aren't working and this is a very focused effective tool to help the market to work.
That is the key to all of this. The coalition's stubborn mindset holds that the market should be the arbitrator of everything, that the businesses should be left to thrive or perish. But what they do not recognise is that there are many barriers to private financiers in the renewable and clean energy sector, and we need to foster and encourage private investment in emissions reductions. Ms Broadbent has noted:
If you say to one of the major banks go out and find energy efficiency projects of half a million to one million they won't really do it.
It is as simple as that. The market as it currently stands will not allow Australia to move into a low-carbon world.
The CEFC board comprises individuals who understand how markets work and how to commercialise new technologies. It is made up of former investment bankers and energy executives. They know business. They are market based people at the top end of the game. Yet we are set to ignore their expertise, intellect and drive at the expense of commercialising renewable and clean energy growth.
Perhaps senior coalition figures have not yet been properly briefed on this subject—apparently, they are still busy trying to fill ministers' offices with staff. I am told that people are reluctant to serve under this government without a boost in pay, and I certainly cannot blame them. But, if they had conducted their research, they would know that the CEFC is fundamentally about building commercial expertise.
It is honestly heartbreaking that they cannot see that. Instead of focusing on renewable energy projects that could transform the nation's economy, the environment minister has labelled the corporation a fund 'borrowed in taxpayers' name for investing in speculative ventures'. How pathetic. These are not speculative ventures; renewable energy is the future. If you really are a party that is open for business, you should be embracing opportunities to take advantage of these new technologies. If you cannot see that, you should not be in power; it is as simple as that.
Of course the abolition of this body is part of something broader. It is about the Abbott government's reluctance to embrace renewable energy and cleaner technologies and act on climate change. I am here to tell you that such an approach will prove disastrous for Australia and it may well prove particularly disastrous for my home state of Tasmania. That is why it is so disappointing to have senators like Senator Bushby, who is in the chamber, neglecting future opportunities for Tasmania.
During the federal election campaign it was clear that the chief concerns for many Tasmanians were jobs and growth. The challenge lies in identifying precisely where Tasmania can exploit competitive advantages and in the process find new, innovative ways of boosting the economy. One such area where Tasmania and other areas of Australia with relatively high unemployment can get ahead and achieve positive change is the renewable energy sector. This is of course an important component of the modern economy—
Senator Bushby interjecting—
something that Senator Bushby over there does not understand—that is no doubt bracing for the worst now that the Abbott government is in power and repealing climate change bills left, right and centre. Once again, it is all about negativity.
Unfortunately, as I have indicated, the Prime Minister and his party do not understand that encouraging developments in renewable energy has the capacity to transform the Australian economy and lower total carbon emissions. A typical example of this parochial mindset has been observed in recent months with the new member for Bass claiming that abolishing the price on carbon will 'boost growth, increase jobs'. This is a statement that deserves careful scrutiny. It also is blatantly obvious to everyone that the new member for Bass does not understand new technologies. He does not understand climate change.
We need to remember what placing a price on carbon was designed to achieve: a transition from a reliance on carbon emissions to greater utilisation of cleaner technologies. Without carbon pricing, many experts fear—these are experts—that there will not be the same investment in renewable energies, and projects will not reach their full potential.
As I noted in the Senate chamber earlier this year, in recent times the policies delivered by Labor have ensured that the renewable energy industry has gone from strength to strength. To take one example, wind capacity in Australia rose from just over 1,100 megawatts to over 3,000 megawatts during Labor's time in power. In fact last year wind farms in this country produced enough electricity to power over one million homes, a target that seemed impossible not that long ago.
Tasmania was the recipient of several grants under the Clean Technology Investment Program and the Clean Technology Innovation Program, which allowed numerous local outfits in northern Tasmania and indeed across the state to upgrade equipment and reduce emissions intensity.
As I also noted, there is much planned for the future of Tasmania's renewable energy sector as well, including a 200-turbine wind farm development on King Island. It will not surprise many Tasmanians to learn that the state has a distinct advantage when it comes to wind power development. We are of course placed squarely within the roaring forties, which means that we receive some of the most reliable winds anywhere on the planet. According to Hydro Tasmania, the project on King Island will bring hundreds of millions of dollars into the local community as well as infrastructure upgrades and new jobs—and we need those jobs in Tasmania. But right now companies across Australia are expressing alarm at the Abbott government's lack of commitment to national renewable energy growth goals.
Andrew Thomson, the chief of an energy company which is a recognised leader on the Dow Jones Sustainability Index, is particularly concerned. Earlier this year he said that vital investments in renewable energy targets were dependent on the coalition affirming its commitment to the bipartisan Renewable Energy Target. He also said that power purchase contracts are being delayed due to the uncertainty of the coalition's approach. This is not what we want. The government, which previously committed to the target of sourcing a fifth of Australia's power from renewable energy by 2020, plans to review the RET in 2014. Given the coalition's indifference to the aim of reducing our carbon footprint via renewable energy and its outright hostility to pricing carbon, it is apparent that Mr Thomson's concerns are entirely justified. Now is the time for us to really embrace the renewable energy sector and make sure that the Abbott government does not hinder progress.
If approached intelligently, renewable energy will allow us to take advantage of new innovations in the coming decades that promise to revolutionise how energy is produced. It is not good enough to stick our heads in the sand—and we know that that is what they do best on that side. If we don't jump on board and do everything possible to encourage renewable energies then the accompanying jobs and growth opportunities will flow elsewhere overseas. Renewable energy represents a potential goldmine, but only if we work to make it happen. Proactively fostering developments in the renewable energy sector, including the work of the CEFC, is about long-term vision. I know I should not use 'the Abbott government' and 'vision' in the same sentence, but this really is about long-term vision. It is about considering what sort of planet we want to leave behind us. In particular, it is about new jobs that can be created in rural and regional areas, like my home state of Tasmania. These opportunities have the potential to enhance our economic prospects for generations to come.
At times the response from sections of the media and the Australian public to announcements on climate change policy and renewable energy in this country has been closed-minded and short-sighted. I certainly hope that the coalition does not continue to exploit outdated views to suit their own political objectives.
I would also like to add that numerous commentators over the past few weeks have revisited the events that led to the Prime Minister opposing an emissions trading scheme for Australia, and it makes for grim reading. Everyone seems to have conveniently forgotten that in 2007 then Prime Minister John Howard had undergone a personal transformation on the matter of climate change and was preparing an emissions trading policy to take to that year's federal election. We also know that key Liberal figures on the shadow front bench, including the current Prime Minister, supported this policy—that is, they supported John Howard's policy that would of course have tremendously benefited renewable energies and cleaner technologies. So what changed?
I think we all know the answer: the Prime Minister figured out that he could tap into suspicions that persisted in the electorate and exploit them to his own advantage. He defeated the member for Wentworth but sacrificed any sort of real stand on climate change. In contrast, I would remind those opposite of the stance taken by the United Kingdom's Prime Minister, David Cameron—an actual Tory—on climate change following the typhoon that wreaked havoc in the Philippines. He said:
I'm not a scientist but it's always seemed to me one of the strongest arguments about climate change is, even if you're only 90 per cent certain or 80 per cent certain or 70 per cent certain, if I said to you, there's a 60 per cent chance your house might burn down, do you want to take out some insurance? You take out some insurance. I think we should think about climate change like that.
If only this view were shared by the coalition in Australia. Let's hope that the next 100 years sees even greater investment in renewable energy. We have an awful a lot to gain from such a commitment.
It is nothing short of disgraceful that the government does not see a place for the Clean Energy Finance Corporation. It is a key component in positioning Australia for a low-carbon world. But really, it says all you need to know about the coalition's priorities on climate change and renewable energy in this country. Shame on Greg Hunt. Shame on Joe Hockey. Shame on Matthias Cormann. And shame on Tony Abbott for neglecting our younger generations, and our future generations.
I would like to indicate my opposition to this bill. At the outset, I want to make it clear that I support government-led action on climate change. I believe climate change is a very real threat, and we need to take action that provides real results in terms of both environmental benefits and economic stability.
I agree that the carbon tax has created a poor economic outcome without any reasonable environmental return for the economic impact involved. I also think it is very important to note that back in 2010 the then Gillard government had a reverse mandate to introduce the carbon tax. In other words, it promised the people of Australia that there would not be a carbon tax and one was introduced despite that, and I think it is very important to put that reverse mandate, if you like, in context.
I did not support the former government's legislation to introduce these measures for these reasons, but not because I do not believe we need to take action on climate change. For me, the debate on these issues is about finding the most cost-effective way to abate greenhouse gases. As such, I will be supporting the government's move to repeal the carbon tax. However, I believe it is vital that the government release draft legislation or detailed policy as soon as possible, both to demonstrate their commitment to this issue and to provide certainty for businesses and investors. I strongly encourage the government to do so. But I do not support this particular bill, and I welcome the opportunity to debate it in further detail, separate from the rest of the package of bills.
The aim of the Clean Energy Finance Corporation is to promote fiscally responsible investment in the clean energy sector. During the inquiry by the Senate Environment and Communications Legislation Committee into these bills, we heard compelling evidence from the CEFC, and in particular from its chair, Jill Broadbent. The CEFC stated that, to date, the investment of $500 million of its fund had resulted in $2.2 billion worth of projects getting off the ground. The flow-on effects, including the creation of much-needed manufacturing and construction jobs, will have an additional financial benefit.
Ms Broadbent further explained that, if the CEFC's full $10 billion funds were to be invested in line with its current strategy, the resulting emissions abatement would be more than 50 per cent of the 2020 bipartisan target. There would also be a $200 million return per annum to Australian taxpayers after the administration costs were subtracted. So it seems on the basis of that evidence from Ms Broadbent, the chair of the Clean Energy Finance Corporation, that this corporation is already making a return to taxpayers through investment.
It is also important to note that the CEFC's mandate goes beyond renewable energy. They are also investing in measures to improve the efficiency and reduce emissions from traditional energy sources, and to improve the transition to cleaner forms of energy—in a sense, that low-hanging fruit. Much more can be done in terms of energy efficiency.
I acknowledge there are concerns about the cost of the CEFC—in particular, the $10 billion investment fund. I understand where the finance minister, Senator Cormann, is coming from on this, given that that is money that the government has borrowed. But, on the basis of the evidence I have seen to date, it appears to be a case where there is a reasonable and prudent return on investment, and that these projects are subject to sufficient scrutiny.
I also acknowledge the argument from some independent economists that you would not need this fund because you can get the finance from capital markets anyway. Where I take issue with that line of argument is that sometimes it is appropriate, particularly for emerging technologies and different types of capital raising, to have some government support. Many years ago we had the Commonwealth Development Bank that provided much-needed finance to the rural sector. Tomorrow I will be introducing a bill into this place to basically provide a mechanism for rural finance, following work that I have done on this with the member for Kennedy, the Hon. Bob Katter, and I know that my colleague Senator Madigan in this place is particularly concerned about access to rural finance and failures of market mechanisms. When I was in Victoria a number of weeks ago in the town of Beaufort—thank you, Senator Madigan—it was very interesting to hear from a number of farmers who were distressed as a result of not being able to access finance, despite the fact that they had good businesses. Because of the nature of the businesses, the ebbs and flows, the lack of consistent returns in the short term, traditional finance mechanisms do not work.
I think the same sort of thing can be said in the context of the Clean Energy Finance Corporation—there are some parallels there. Ms Broadbent pointed out that the organisation has not yet reached critical mass. Abolishing the CFC now will throw out any future benefits to the budget, in essence maximising the cost without any of the returns on investment. I think we need to be cautious. This is not the time to abolish the CEFC, given that it is early days and given the potential it has shown to date. Ms Broadbent stated to the Senate committee inquiry:
… our objective is to try to build the financial market participation, and when you are building something and you stop building it, it usually does not go on building in its own right. If you kept going for a while, we would like to think that those who have co-financed and participated with us would keep going. But I do not think they will keep going at the same pace without having an advocate or a catalyst there.
So it is a question of having a suitable catalyst in this marketplace. Ms Broadbent went on to explain how the CEFC has become a key tool in encouraging investment that would not normally occur, because of the relationships it has built with finance organisations. She said:
I have been very surprised at the capacity to be effective, to get banks around the table, and I think it is because all of the people, from the board to the executive and the employees, are commercially trained people who are used to dealing with bankers, and perhaps we have a capacity to persuade them to come to the table and to be there, and I think they have a respect for our motives. The industry participants seem to trust us to be a trusted banker who will work with them to bring banks to them rather than going to their bank who wants to finance something that is a little bit small for them to get a focus.
I think those words of Ms Broadbent, the Chair of the CEFC, are very pertinent in the context of its potential benefits.
I also want to raise a particularly important issue in this context. I was shocked to discover during the committee inquiry that Treasury has not undertaken any modelling to determine whether it is more effective to spend money to reduce high-emissions activity or to spend money to increase cleaner generation activity. I do not want to upset Senator Cameron, whom I have enormous regard for, but I want to mention here the work on this of Frontier Economics with Danny Price. Ask any credible economist about this. You need to look at where you spend the money. And if you spend the money on cleaner generation activity, that has a different price effect in the marketplace that is of benefit to consumers and of benefit to the environment. I find it extraordinary that Treasury to date has not done that modelling. I think it is very important, for Senator Cormann in his role as finance minister and for the Treasurer, to get Treasury to do that modelling because it has huge implications in terms of the potential benefits to consumers and to the environment. So there is a huge gap in key information. How can the government construct an effective policy or model when its own department has no idea how it actually works?
Abolishing the CEFC, when we know it works and when we have no modelling to suggest any other form of investment would be more effective, I believe is the wrong thing to do. If there is a better, more effective way then we should do that—but, to date, there does not seem to be. I strongly believe the government should allow the CEFC to continue. If further research or modelling in the future provides us with a better alternative then we can return to this debate. But there is no reason to abolish an organisation that is actually achieving both economic outcomes and emissions reductions when, at this stage, the assumption that there is a better way is only that—an assumption. And, Mr Acting Deputy President Furner, we all know what people say about the word 'assume' and what it can make of you and me.
Could I assure Senator Xenophon that I will not be upset by the mention of Frontier Economics. At least Senator Xenophon and Frontier Economics understand the importance of dealing with the issue of climate change. There may be different arguments about how it is done, but I have to say I do not think Frontier Economics's approach to this is anywhere near as stupid as the approach that is being proposed by the coalition in the so-called direct action policy approach. So I think the debate is fine, Senator Xenophon. I think the issues are clear. It is clear in my mind that the science says you have to do something about climate change, and the Clean Energy Finance Corporation is one aspect of dealing with climate change. I have come to the conclusion that you cannot deal with these issues, either on the floor of the Senate or publicly, without actually going to the question of why we are dealing with an organisation such as the Clean Energy Finance Corporation—why do we want it there? If I have not made it clear already, I oppose this bill, the Clean Energy Finance Corporation (Abolition) Bill 2013.
The Clean Energy Finance Corporation is part of a suite of actions that the former government took to try and deal with climate change. There are things that you can do, as Senator Xenophon said, about reducing emissions. The International Energy Agency have made it clear that 15 per cent of all emissions reductions around the world has to come through the process of carbon capture and storage. I know that upsets other people in this place, but environmental groups around the world have said that the coal is there, it will be burned and we need to look at doing it more efficiently than it is being done at the moment. Carbon capture and storage is one of the technical, scientific approaches to reducing carbon pollution in the atmosphere.
Why do we want to reduce carbon pollution in the atmosphere? Why do we need a Clean Energy Finance Corporation? It is simple. The Academy of Science in Australia, the IPCC internationally and the CSIRO, our pre-eminent scientific body, say that you have to deal with these issues, that anthropocentric—that is, man-made—pollution is real and that CO2 is a pollutant of the atmosphere, which causes problems because of the physics of putting it into the atmosphere. The CSIRO, who are not some rabid tree-hugging lunatics, are saying this is the situation. They are saying climate change is one of the greatest ecological, economic and social challenges facing us today. This is a recent report from the CSIRO. They say that you cannot simply look at the weather. Weather is different from climate. Weather is brief. It comes and it goes. It is a rapidly changing condition. It is a condition of the atmosphere at a given place and time and it is influenced by the movement of air masses. When you hear people in here say things like, 'We had a massive storm and the dams were filled up recently,' they are talking about an aspect of the weather. The weather can do these things. But the climate is a completely different thing. It is the longer term issue. It is the term applied to the average weather conditions over longer periods, of years or decades. We need organisations like the Clean Energy Finance Corporation because there are climate changes taking place as a result of the CO2 in the atmosphere. That is unquestionable.
You will hear coalition senators in here say, 'I believe in the science but,' and the 'but' always goes back to: 'We will deal with it through direct action. We will plant trees. We will pay the polluters to reduce pollution.' All of these approaches have been dismissed by anyone who has got any environmental or economic understanding of the issues. The current Minister for Communications, Malcolm Turnbull, when he was critiquing direct action, indicated clearly that the best thing about direct action was that you could get rid of it quickly. He was not a fan of direct action and he is still not a fan of direct action.
Why are we looking at taking practical steps to deal with the issue of climate change through organisations like the Clean Energy Finance Corporation and putting a price on carbon? Why do the Labor Party support that? We support it because we believe the scientists fundamentally. We support it because the scientists have said, 'You need to do something about it.' And the economists have said that the fundamental way to deal with it is to price carbon. When you put a price on carbon, the polluters will stop polluting. So you put a price on carbon, you do practical things and you adapt to where we are heading. But the impacts are quite unequivocal, according to the CSIRO. They say the impacts of climate change are already clearly visible, and they say further impacts are predicted to occur and will be experienced across all sectors of the economy and in all ecosystems.
Let us ponder that for a minute. I live in the Blue Mountains. My community in the Blue Mountains has been ravaged by bushfires. People say that this is a condition that has always applied in the Blue Mountains, but what we are being told by the scientists who are looking at what is happening, by the CSIRO, is that the fires are going to become stronger, that they are going to be affected by climate change. I understand you cannot simply say that the bushfires in the Blue Mountains were caused by climate change—no individual issue can be targeted back to climate change—but you can certainly say that climate change makes the condition worse when it happens. That is what the scientists say. So the bushfires are going to be even stronger, the cyclones will be stronger and the effects on our community will be more severe.
The CSIRO say that the reliability of southern and eastern Australia's water supply is expected to decline as a result of reduced rainfall and increased evaporation. They are saying that, over the long term, that is what is going to happen. They are saying development and population growth in Australia's coastal regions will exacerbate the risks from sea level rise and increase the likely severity and frequency of coastal flooding. It is not me that is saying that; it is the most eminent scientists in Australia. They are saying that there will be significant loss of unique Australian animal and plant species and that that will occur in sites such as the Great Barrier Reef, the Queensland wet tropics, the Kakadu wetlands, south-west Australia, the eastern alpine areas and Australia's subantarctic islands, disrupting ecosystem function and causing the loss of ecosystem services.
I was fortunate when I was the chair of the Environment and Communications Committee to go to the Antarctic and talk to the scientists there. When you go there they can show you graphs of CO2 in the ice cores in the Antarctic that match exactly the Industrial Revolution and the ongoing industrial changes in our economy over many years. They can show you the CO2 increasing dramatically as industrialisation takes place. I am not arguing that you stop industrialisation, but we have to mitigate, we have to take the appropriate steps to price carbon and make sure that the polluters pay, not the ordinary residents of this country.
The CSIRO go on to say:
The risks to infrastructure include the failure of urban drainage and sewerage systems, more blackouts, transport disruption, and greater building damage. Higher temperatures, altered groundwater and soil conditions, sea-level rise and changed rainfall regimes may also lead to accelerated degradation of materials.
Heatwaves, storms and floods are likely to have a direct impact on the health of Australians, such as causing an increase in heat-related deaths. Biological processes such as infectious diseases and physical processes such as air pollution may affect health indirectly; for example, by increasing exposure to dengue fever.
Moderate warming in the absence of rainfall declines can be beneficial to some agricultural crops, and higher levels of carbon dioxide can stimulate plant growth.
I have heard others say, 'Look, it is actually a good thing that this is happening.' The CSIRO go on and say:
However, these positive effects can be offset by changes in temperature, rainfall, pests, and the availability of nutrients. Production from cropping and livestock is projected to decline over much of southern Australia, as is the quality of grain, grape, vegetable, fruit and other crops.
For the life of me I cannot understand why the National Party, who profess to represent farming communities in this country, would not treat this seriously. Instead of talking about $100 for a lamb roast, they should actually treat this seriously. The people the National Party profess to represent are going to be some of the worst affected by climate change. That is why organisations like the Clean Energy Finance Corporation, as part of the broader suite of measures to deal with climate change, are absolutely important.
The CEFC is one of 14 organisations around the world that act as a catalyst for investment in renewable energy and clean technologies. It plays an important role in mobilising capital for investment. If it was not needed, if the entrepreneurs would just come in and actually invest, you would not need the CEFC. But that is not what is happening. These are threshold technologies, new technologies. Many businesses will not invest in these technologies and these processes until they know they can make a return that satisfies their shareholders. So in the meantime if we do not get investment we do not get the progress. It is not unusual for governments to invest in businesses and invest in processes that assist and help the community, assist and help the nation, and in the case of the CEFC part of their process is assisting the processes that are being done around the world, and that is to mitigate CO2 pollution in business. It is an important part of the toolbox, if you like, the tool kit to try and deal with carbon pollution in our atmosphere. You only have to see what the CEFC has actually been able to do.
We had Senator Abetz stand up here yesterday in his contribution and talk about this being some kind of slush fund, some kind of bank that was going to go bad. It is obvious that many of the coalition members do not read the reports, they do not know what is going on. They are blinded by ideology. They will come in here and say, 'Yes, the weather is changing, yes, the climate is changing—but I'm not sure if it is man-made change.' This is the case even when the scientists come and tell you. The other thing I cannot understand is that National Party supporters, the farmers out there, rely on the CSIRO to give them advice on a whole range of areas of scientific and technological advancement. They pick up the advances of the CSIRO. They accept the science of the CSIRO in many areas, but they will not accept the science on climate change. They run the arguments about $100 lamb roasts, the nonsense we have heard over the years in this place to try and muddy the scientific reality, to try and score short-term political points at the expense of future generations. That is the problem we have. The CEFC is absolutely important in doing this. I would have thought, given the success of the CEFC, that any government coming in that has an organisation that is reducing carbon pollution at a net negative of two dollars odds to the government, the government should support it. This is an organisation that has funded projects involving over 500 megawatts of clean electricity generation.
I have said here many times that I am a former power station worker. I worked in the Electricity Commission of New South Wales as a maintenance fitter at the Liddell Power Station. They have four 500-megawatt power plants that I used to maintain. If you saw the amount of coal that goes in to produce 500 megawatts of energy, you would know how much this 500 megawatts takes away from that coal usage, which is a good thing in terms of having alternative processes.
If the CEFC is abolished, there is no provision for a transition to another scheme or program. Direct action will not deliver. You are not going to have a situation where you can plant out the number of trees needed for in-soil carbon to give you a net reduction in CO2. The estimates that the CSIRO are talking about say that you would need to plant out an area twice the size of Victoria as part of the direct action approach. It is an absolute nonsense; it is an absolute joke. I think the fear campaign that has been run by the coalition on these parts of the tool kit to deal with CO2 pollution is ridiculous.
This country and the world will pay a price for politicians like the politicians we have in this country—politicians who simply bow down to and buckle under to the people who are paying for their election. The freight, mining and oil companies are pushing money into the coffers of the Liberal and National Parties, who are now here doing their bidding to destroy an effective response to climate change and destroy excellent programs like the CEFC. We should call them out when they are acting against the national interest. We should call them out when they are acting against the interests of future generations. We should call them out when they are simply refusing to recognise the reality of science and the reality of climate change. The CEFC is an important part of progress towards this country moving to a cleaner energy future, jobs of the future and taking a long-term approach. In my view, the coalition do not like it because it does not fit with their ideology.
I rise today to support the Clean Energy Finance Corporation and to speak against its abolition. The Clean Energy Finance Corporation is one of the institutions that came out of the multi-party climate committee negotiations on how to address global warming.
We are living in a period of climate emergency. Every day, virtually, there are new scientific reports showing that the world is on track for four degrees or more of warming, and that is an unliveable planet. That is the fact of the matter. Today, there is a new report out from the Australian National University saying that even trying to constrain global warming to less than two degrees is not enough, that two degrees is not safe and that we need to constrain it to less than that. This means going back to a 350 parts per million scenario.
The point here is that we have run out of time as a planet to address this issue, and we have to get on with it. The emission reduction cuts that we make have to be deep and they have to be fast. We knew that as we were negotiating in the multi-party climate committee for a clean energy package. The Australian Greens wanted to see Treasury model a 350 parts per million scenario, which would have given a carbon price that is much higher than the one that we really have. In fact, the two Treasury models were for 450 and 550 parts per million. The $23, $24 and $25 price, that has been the fixed price, is the 550 parts per million scenario. If it had been adopted at the 450 parts per million scenario, the price would have been more than $50.
The whole point here is that when you adopt an emissions target it has to be consistent with the science and the time frames. It has to be able to drive the transformation in the Australian economy to the low-carbon economy. In other words, drive hard and fast out of fossil fuel power into renewable energy power. That is the critical factor. You have to decouple economic growth from the use of fossil fuels and decouple economic growth from non-renewable resource extraction and environmental degradation. That is the key challenge in the transformation.
When the government and the multi-party climate committee, as a majority, determined that it would be the 550 scenario that would reflect the price, the Greens said, 'In that case, we need a substantial financial institution that will be able to assist in the funding of renewable energy at scale and fast enough, because that price will not drive the transformation in the time frame we have; therefore, we need, in addition to the Renewable Energy Target, an institution able to fill that role.' That is where the $10 billion going into the Clean Energy Finance Corporation came from. It was to set up the equivalent of what the United Kingdom had done with their green bank, as it was then known—now, the UK Green Investment Bank. That was the first of its kind in the world, and that was the model that the Australian Greens took into the multi-party climate committee to say that that is what we need to do in Australia.
Of course, since the establishment of the UK Green Investment Bank and the Australian Clean Energy Finance Corporation, we have 12 other countries that have adopted similar bodies to attract private sector capital to projects that drive down greenhouse gas emissions. The point here is: if we abolish the Clean Energy Finance Corporation then we are going to see substantial sums of money flow offshore. In fact, Nathan Fabian of the Investor Group on Climate Change said in the hearings we had just recently that half a trillion dollars' worth of investment in low emissions projects are at risk with the scrapping of the Clean Energy Finance Corporation. He went on to say that money and investment in skills will either sit on the sidelines or go to other markets.
The Clean Energy Finance Corporation which has been set up is working brilliantly in this space. It has been far more successful than I had even hoped it would be—it is one of those real success stories in Australian politics where the parliament has set up an institution which is doing its job. It is leveraging private-sector finance, with the government as a co-financier through the Clean Energy Finance Corporation, and it is investing in technology which is renewable, energy efficient, clean and creating jobs. Not only is it doing that specifically but, as a co-financier, it is giving confidence to finance markets to lend in this space. That would not be happening otherwise.
Let me give you some figures. In its first year, the Clean Energy Finance Corporation leveraged $1.55 billion in private finance from $536 million of its own investments. That is a pretty impressive sum. Within its first year of operation, it generated investments responsible for 3.9 million tonnes of CO2 equivalent abatement annually and that was generated at a negative cost of approximately $2.40 per tonne—pretty impressive. It has 179 proposals for projects in the pipeline and those 179 proposals have an estimated value of $14.9 billion of investment in clean technology. These are all good news stories: good for jobs, good for investment—particularly in rural and regional Australia—and great for addressing the climate challenge. Its investments are a diverse mix across the economy and across the country in agribusiness, property, manufacturing, utilities and local government. Its portfolio of contracted investment is presently expected to earn an average return of approximately seven per cent, around four per cent above the Clean Energy Finance Corporation's benchmark return of the government five-year bond rate. These returns cover the operating costs of the CEFC.
So I am really stretched to understand why the government is so intent on removing and closing the Clean Energy Finance Corporation when it will not save the government any money to close them down. It will actually come at a budgetary cost and end a vital public policy tool that provides long-term benefits across the economy. That is why the only conclusion I can reach is that it is being done out of pure ideological spite. There can be no other explanation for it. I have not heard a single specific argument raised as to anything that the CEFC are not complying with, in terms of their investment mandate, and I have heard only complimentary things said about them both in the public arena and financial circles. You would be hard-pressed to find anyone who is not going to acknowledge that Jillian Broadbent as chair of the board and Oliver Yates as CEO have done a great job with the Clean Energy Finance Corporation. What is more, we are hearing financial institutions say that they will be really worried if this institution disappears, because of its convening and co-financing power. It can bring together the players in the financial sector that nobody else can or will, and by doing that it is building confidence and its profile.
I want to go through the sorts of investments the CEFC has been involved in. If you have a look at the breakdown, it has done over $2 billion for utility-scale renewable energy generation, $2 billion for energy efficiency in the building, manufacturing and commercial sector, $700 million for solar PV projects and $268 million for the mining sector. While not all of these projects will move to completion with the funding, the number of projects that have approached the CEFC for co-financing is indicative of the strength and breadth of demand. In terms of economic impact on the energy sector, it is critical that we make the transition out of fossil fuel energy and into renewables. The Clean Energy Finance Corporation is facilitating Australia making that change. Its unique financing role and ability to take a long-term risk position, providing depth and diversity in the financing of infrastructure, is really assisting.
The other reason I simply cannot understand why the coalition would want to get rid of the Clean Energy Finance Corporation is that it is successfully reducing emissions. There is no-one who can point to how direct action is going to reduce emissions. Yet, if we kept the Clean Energy Finance Corporation and let it keep on doing its work, it would do the heavy lifting for the coalition in the direct action space—it is already bringing emissions down. I would like to go into some detail on that.
The Clean Energy Finance Corporation undertook some analysis of what its continued activity could contribute to the achievement of the 2020 abatement target under direct action. Based on its existing portfolio mix, if it invested $10 billion over the next four or five years in a mix of projects like that of its current portfolio, it could achieve 64 megatonnes of CO2 emissions reductions in the year 2020, which represents about half of the total required to meet the 2020 abatement target.
In reality, as the CEFC says in its report, we could expect to see some levelling off, but, even by being conservative and applying a heavy discount for this assumption, the contribution that the CEFC could make is still substantial, and this abatement could be achieved at a positive return to the taxpayer—that is, lowest cost of emissions reductions. How could you go past that? How could you go past an institution which, at no cost to the taxpayer, can reduce emissions to that extent?
I will go through some of the criticisms that have been made. The government has said, 'Oh, well, the Clean Energy Finance Corporation is crowding out the market.' That is totally wrong. What we have seen with the CEFC is that, rather than crowding out the market, we would suggest that it is actually crowding in market finance—not the other way around. Almost every investment that the corporation has made has included co-financiers, and they include many of Australia's major financial and commercial entities. In fact, the CEO of Sundrop Farms, one of the companies that had a project funded, said:
I want to thank you personally and the CEFC team more broadly for making this deal real. Your pivotal role has been the difference. The equity community has been highly impressed and in fact has been mobilised by CEFC's involvement as a debt provider. We would not be here without you and our commitment to the CEFC is absolute.
Sundrop Farms is a South Australian rural project outside Port Augusta. So we have jobs, economic activity, rural Australia and the CEO saying: 'I want to thank you because the CEFC has been the difference. It has allowed that debt to be provided.'
In terms of risk, lots of claims have been made that this is a risk and that they are lending money in a risky way. But, in fact, they cannot do that—it would be against their investment mandate—nor is it what they are doing. That is demonstrable by the work that they have done to date. In terms of their being a 'green hedge fund', that is another accusation that is completely wrong. It is not borne out by the facts. They are not a hedge fund in any way, shape or form. The $536 million invested has zero dollars in hedging, zero dollars in derivatives and zero dollars invested in guarantees. They are not a green hedge fund, and the government should not continue to completely misrepresent what they are doing.
In terms of the CEFC giving too much concessionality in the loans they are making and not having a commercial focus, that is wrong again. They have motivators to offer concessionality, but they differ from the private sector because they are a public-purpose institution. They can offer a discount to achieve good public externality, such as technology expansion and development, research and then take-up, demonstration effect, financial leverage, expansion of investor base, market capacity, sector skills and emissions reduction. They have built the consideration of positive externalities into the investment process through their investment policies. The leadership role that they have played has been exemplary. As the CEFC say, 'Concessionality may be warranted when the cost of the benefit the recipient receives is exceeded by the benefit of the positive externalities that are created.' They are doing an amazing job in that regard.
As to the claim by the government that the CEFC do not generate any renewable energy, that is quite wrong. They are supporting renewable energy around the country. For example, they have co-financed a solar PV installation by the Australian Agricultural Company across a number of its regional and remote facilities. Obviously, that highlights the potential for business across the country to reduce costs and increase competitiveness through greater use of solar PV and other renewable energy sources.
When you sum up the Clean Energy Finance Corporation, it is bringing down Australia's emissions, it is investing in renewable energy and energy efficiency, it is creating jobs and it is building a whole lot of new capacity in the financial markets to address the climate challenge. On that basis, it would be so wrong for the government to tear that down. It would be wrong in the context of the climate challenge, and I will come back to that.
If you accept the science and you know the world is on track for four degrees, you know that Australia has to do a lot more and faster. Two-thirds of the fossil fuel resources—that is, coal and gas—have to stay in the ground, not be extracted; not coal ports, not coalmines, not coal seam gas: no.
Renewable energy and energy efficiency are where we need to go, and fast. That means we need these institutions to get these projects up and running in a very short time. They have demonstrated that that is exactly what they can do. To tear this down is part of what I think will be a crime against humanity. Wilful blindness to the science of climate change and the impacts that is already having and will have on future generations is nothing other than a crime against humanity.
I went to a breakfast this morning at the CSIRO discussing extreme weather events and their cost. If you look at the extreme costs of extreme weather events, by removing the price on carbon you are saying to the big polluters, 'You can pollute all you like and you can maximise the profits to your shareholders, but you are going to socialise the cost to the whole community.' It is the Commonwealth's budget that will have to stump up because the overwhelming losses from these extreme weather events are not insured for. It is the Commonwealth that has to stump up with the flood levy, and it will be the Commonwealth that has to stump up every single time there is an extreme weather event, because they are costing us billions.
That is why, when you have an institution—which is not costing the government money—bringing down emissions, rolling out projects and jobs and economic activity and at the same time addressing the issue of climate change, it is immoral to get rid of it. That is why the Greens will never agree to it. It is one of the very bright lights in addressing climate change in Australia. Apart from the actual projects, the contribution it is making to the climate literacy of financial institutions and the way it is developing confidence in those institutions through its convening and co-financing role are something that is irreplaceable. That is why the Greens will never agree to the abolition of the Clean Energy Finance Corporation.
I was sort of following Senator Milne until she got onto an argument she has made before. She did not put it in these words, but as I understand it she indicated that, because we are getting rid of the Clean Energy Finance Corporation, we are going to have more cyclones and floods, and that is going to cost Australia more money. It is typical of the stupid arguments that we have had in this debate from day one.
I am entering this debate today. There will not be a lot of government speakers. Why? It is because we want to get this voted on before Christmas, as we promised the electorate we would do. I am not going to have an opportunity to speak on all of the other bills as they come forward. As all of the other speakers before me have done, I will speak generally on all of the bills—the Clean Energy Finance Corporation (Abolition) Bill 2013 and the related bills. Even though the Labor Party and the Greens moved to separate them, they then continued to speak on all of them. I will do the same.
I would like to ask Senator Milne before she goes why it is that Australia needs to do more to save the world. Senator Milne, is it not true that Australia emits less than 1.4 per cent of carbon emissions in the world? Tell me, someone: is that not true?
Senator Thorp interjecting—
I hear 'per capita'. Australia needs to do more, we were told. We emit less than 1.4 per cent of the world's emissions of carbon. Labor's proposal, supported by the Greens and indeed supported by the coalition, was to reduce our emissions by five per cent. Five per cent of 1.4 per cent—you do the arithmetic. Australia is doing something, and it is proposed by the current government to be doing something. We will reduce our emissions, but we will do it by direct action. We will not do it with the imposition of the world's greatest carbon tax. We will not be leading the world when the world has to do something if it is as concerned as Senator Milne tells us it is.
This debate today, and this whole debate around this package of bills, is about keeping a commitment made to the Australian public prior to an election. That is what we are very keen and determined to do. We are unlike the Labor Party, who before the 2010 election promised us they would not be introducing a carbon tax. Then, immediately following the election, they broke their promise to the Australian public. We do not intend to do that. We intend to meet the commitments we made, which the Australian people supported. This is what the Australian people wanted and, under the Abbott government, this is what they will get.
Quite frankly, I get sick of hearing Labor speakers get up time and time again and tell us how good the carbon tax is and how good the whole package of bills is. I say to them: if it is so good, why did you promise not to introduce it before the 2010 election? Before the 2013 election, why did you try to mislead Australian voters by sending around pamphlets that said, 'We have got rid of the carbon tax; we've actually got rid of it'? You cannot say that the Labor Party has not been warned on how bad this tax will be. Coincidentally, I was just looking through the drawer of my desk here and I found this old report of the Senate Select Committee on Scrutiny of New Taxes from October 2011. I see that Senator Cameron, who made a very impassioned speech just recently, was the deputy chairman of that committee. The name of the report by that Senate committee says it all: The carbon tax: economic pain for no environmental gain. If you go through the report—and it is a very good, very detailed report—you will see that that Senate committee warned the then government that the tax would cost Australia at least $1 trillion, or at least $40,000 for every Australian.
That is why we want to get rid of it. We want to do our part in reducing the electricity bills for average Australians, for ordinary Australians. They agreed with us. That is why they voted for us in spades at the last election. That is why they are desperately waiting for this parliament to do what we promised to do to reduce their electricity bills and remove the carbon tax.
I see there is a long, long list of Labor speakers, because they are going to filibuster this debate through until 1 July, they would hope, and with the support of the Greens they will probably be able to do it. But I ask the Labor speakers, any one of them, to tell me these things. If the carbon tax is so good, why did you promise before the 2010 election not to bring it in? Is it true that Australia is emitting less than 1.4 per cent of the world's emissions of carbon? How is the Labor Party's proposal to reduce those emissions by five per cent going to save all of the ills that Senator Milne is predicting are going to confront the globe?
I am one of those who accept that the climate is changing. As I have often said in this place, once upon a time the centre of Australia was a rainforest. I understand that once upon a time the globe was covered in ice. Of course the climate changes. It always has done. But, in spite of Senator Milne's scepticism and accusation against anyone who does not agree with her, there are equally as many reputable scientists who challenge, or who doubt, that it is man's involvement that has caused the climate change in recent times. You will notice that the Greens used to call it global warming. Now, it is climate change.