Senate debates

Monday, 9 December 2013


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

5:57 pm

Photo of Carol BrownCarol Brown (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Families and Payments) Share this | | Hansard source

As I was saying earlier in my contribution to the debate on the Clean Energy Finance Corporation (Abolition) Bill 2013, Ms Broadbent and Mr Yates said that the Clean Energy Finance Corporation had lent $536 million, which had been matched by $1.5 billion in private investment. That is $2.2 billion in loans invested in clean energy, increasing energy efficiency for business and industry, renewable energy and lowering carbon emissions. These are loans that would otherwise be missed by normal commercial banks.

That is the role the CEFC plays. It facilitates investment in renewable energy. It is making money by doing so. It reduces pollution by doing so. It allows these new, ambitious renewable projects to get a foothold. As the shadow environment minister, Mark Butler, told the House of Representatives on 18 November, the Clean Energy Finance Corporation is:

… a body making loans on commercial terms to help new, ambitious renewable projects get a foothold—projects like the Macarthur wind farm, the largest wind farm in the southern hemisphere.

Do we want to see these sorts of schemes fall by the wayside? Do we want to see smart, environmentally intelligent businesses fall over or head overseas? They are making money. Why should this initiative stop? It defies logic. Many parties including the government, no less, are making money from the CEFC. There is no reason at all to disband it, especially when that would happen at a considerable cost to the taxpayer.

The Clean Energy Finance Corporation should be allowed to continue to drive investment, reduce carbon pollution and boost the government's bottom line. The value of the Clean Energy Finance Corporation extends beyond carbon pricing. It impacts both our economy and our environment in a positive manner. Regardless of the other policies that the government seeks to implement, there is no valid argument that the CEFC should be disbanded—absolutely none. How then under those circumstances can senators and those in the other place vote to tear it down? They should not.

Is this a government that wants to shut down profitable government enterprises at a time when it bleats about a budget crisis? How can that be justified? It was reported in The Australian Financial Review that the projects that receive these loans already account for an annual reduction of 3.9 million tonnes of carbon emissions. The projects account for a net benefit to taxpayers of $2.40 a tonne. Mr Yates went on to say that the CEFC's actions were 'probably the lowest cost action' the government could get. So why spend more? Why destroy an entity that is achieving so much? Why take the hit to the budget bottom line?

Those opposite surely cannot argue that it should be solely driven by private lenders. The government must show leadership in this area. Many of those enterprises who have received the loan would not have under the traditional banking model as they would have been seen as too risky, too small, too unprecedented. Significantly, none have defaulted. Those businesses have been given the incentive to take their ideas and run with them. Surely the Carbon Energy Finance Corporation must be persisted with. To scrap it at a cost of up to $1.5 billion to the budget and then implement a direct action policy Mr Abbott wants to jam through makes no sense. All Direct Action does, as we know on this side of the chamber, is pay the polluters. Surely we should be lending money to those who are reducing pollution, not paying those big polluters who contribute to it. That is what those opposite want to do. They want to pay polluters by destroying initiatives that are reducing pollution.

The Australian Financial Review's political editor Laura Tingle sums it up perfectly in her 27 November column 'Numbers add up to keep Clean Energy Finance'. She writes:

Not only has the CEFC been a screaming success, making a positive return on taxpayers' funds, with virtually no exposure to concessional loans, its very existence only once again highlights the flaws in the Coalition's alternative Direct Action plan.

If this government is scrapping the CEFC simply because it proves how ineffective Direct Action is then they really do have a problem. Their problem is that they are stuck with a hopeless, anti-science policy that no one with any economic or environmental nous or clout will back. But Mr Abbott and his main advisers and ministers are too narrow minded, too bloody minded to listen to the experts. They know better than the leading scientists. They know better than the leading economists. It is a frightening attitude when dealing with an issue crucial to the future of Australia and the world. (Time expired)

6:03 pm

Photo of John FaulknerJohn Faulkner (NSW, Australian Labor Party) Share this | | Hansard source

I am very pleased to speak in this debate regarding the Clean Energy Finance Corporation (Abolition) Bill 2013 and note that this afternoon in this debate we are asked to turn our backs on an effective and efficient means of reducing Australia's carbon emissions and replace it with an untested and ineffectual one. The government's attempt to rush this legislation through the Senate with, of course, very little consultation I do not think could be described as the hallmark of a measured and methodical government, which the government has come up with as its slogan to represent the way it does work. Nothing really could be further from the truth. As I have said in this chamber many times before, it is essential that we keep the reality of global warming and the science of climate change as the critical focus in this debate. The science should be the catalyst for government action, and the most effective and efficient measures for reducing emissions should be our means of action.

Today, as I have done in so many debates on issues related to climate change, I would like to commence my contribution to the Clean Energy Finance Corporation (Abolition) Bill by highlighting the science and the fifth report of the Intergovernmental Panel on Climate Change. It was only released on 27 September this year. I would like to take this opportunity to put on the public record some of the report's findings and address their national implications. In the process, I would want to help counter some of the predictable-yet-regrettable misinformation that was circulated at the time of the report's release. I would also want to make the case that the coalition's Direct Action policy is far from the most effective means of reducing the nation's carbon emissions.

The scientific case for climate change grows stronger, and the importance of taking responsible and effective action grows more pressing. The fifth IPCC report begins with a simple statement:

Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia. The atmosphere and ocean have warmed, the amounts of snow and ice have diminished, sea level has risen, and the concentrations of greenhouse gases have increased.

These two sentences outline simply and clearly the current global climatic trends. In doing so, I think they set out the environmental challenge that confronts us. The focus of the IPCC's latest report is, of course, on the latest science on climate change, and this report, like those before it, is the product of the painstaking work of the world's top scientists, constructed by drawing on the expertise of literally hundreds of researchers in more than 30 countries, working across a raft of disciplines from atmospheric science to glaciology and from oceanography to biogeochemistry. Among these experts were many Australian scientists drawn from some of our nation's finest universities and most trusted scientific institutions—institutions like the CSIRO and the Bureau of Meteorology. The work of these experts points to yet more evidence that our climate is warming, which should prompt us all to consider the most effective and efficient means of reducing carbon emissions.

The IPCC predicts that if carbon dioxide emissions track along the lowest scenario then global average temperature could rise by 0.9 degrees to 2.3 degrees Centigrade by the end of the century, but if the worst-case scenario is met this could be as much as 3.2 to 5.4 degrees Centigrade. The global climatic implications are clear. This is what the report says:

It is virtually certain that there will be more frequent hot and fewer cold temperature extremes over most land areas on daily and seasonal timescales … It is very likely that heat waves will occur with a higher frequency and duration.

The consequences of global warming are already impacting on our environment, and again the latest science indicates this. Let me use the words of the report:

… the Greenland and Antarctic ice sheets have been losing mass, glaciers have continued to shrink almost worldwide, and Arctic sea ice and Northern Hemisphere spring snow cover have continued to decrease in extent …

The consequences of global warming are also being felt in our oceans. From 1901 to 2010 the global mean sea level rose by 19 centimetres. In the 19th century the sea rose on average at a faster rate than in the previous two millennia, and global sea levels are predicted to continue to rise right through the 21st century.

So I would say that the cause of global warming is clear. The science says that the cause of global warming is clear. The catalyst for rising temperatures and oceans and receding glaciers is an increase in atmospheric greenhouse gases. The fifth report of the IPCC points out that atmospheric concentrations of carbon dioxide, methane and nitrous oxide have increased to levels unprecedented in at least the last 800,000 years. So let us just put this into perspective in this debate. Humanity first began practising agriculture 10,000 years ago, the first cities appeared 5,000 years ago and the Industrial Revolution began in the 1700s. These events might seem like easy, contrived or pithy historical comparisons, but I choose them quite deliberately because the expansion of agricultural production, the industrialisation of our economies and the urbanisation of communities all contribute to a rise in atmospheric greenhouse gases, and the current configuration of our settlements, our economics and our food production means that we remain more vulnerable now to shifts in climatic conditions than in any other period in human history.

Climate sceptics are very fond of pointing out that the earth has undergone shifts in its climate before, but they have not been of this rapidity or magnitude and they have never been when our populations and economies are so deeply invested in their present geography.

The source of global warming is the rise in greenhouse gases. Its cause is man-made. The latest science points that out. I quote again from the report:

Human influence has been detected in warming of the atmosphere and the ocean, in changes in the global water cycle, in reductions in snow and ice, in global mean sea level rise, and in changes in some climate extremes. This evidence for human influence has grown … It is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century.

These are strong words from a typically cautious scientific community. On a continent that has famously been called a continent of droughts and flooding rains, in a country with one of the most urbanised populations on the planet, there are clear consequences. By mid-century, the IPCC suggests a median average temperature increase of 1.5 degrees to two degrees over most of Australia. By 2100, temperatures could increase by two degrees Centigrade on the coast and three degrees Centigrade elsewhere. Under a worst-case scenario, average temperatures in Australia's north are projected to rise by almost five degrees Centigrade. The frequency of heatwaves has increased, and this latest IPCC report predicts that there will be more droughts in southern parts of Australia.

Recent history tells us that global warming is not a giant conspiracy or an abstract theory but part of our new reality. Australia has just experienced its warmest 12-month period; its warmest month on record; its hottest summer day on record, 7 January 2013; and its warmest winter day on record, 31 August 2013. Yet, despite the growing evidence, in the days leading up to the publication of the IPCC report several prominent news outlets and commentators argued that the IPCC had got it wrong and that since 1998 global warming has stopped. This is a judicious partial truth, for 1998 was an exceptionally hot year. Global average temperature increases have slowed since 1998—that is true—but warming has not paused. As Thomas Stocker, the co-chair of the IPCC's first working group, pointed out, measuring recent years in comparison to 1998 is misleading because global climate trends need to be compared over much longer periods—decades or more.

Contrary to such misrepresentations, the latest report of the IPCC shows that the science of climate change is becoming surer, not less certain and:

Limiting climate change will require substantial and sustained reductions of greenhouse gas emissions.

It is crucial that we focus on the science of climate change and that we consider the most prudent and efficacious methods of reducing greenhouse gas emissions.

The coalition's Direct Action Plan is neither prudent, nor an efficient means of reducing our carbon emissions. Work by the Productivity Commission suggests that a broad based market response like a carbon price is the most efficient and effective means of reducing carbon emissions. And yet today we are asked to replace a proven measure with an alternative that is fancifully optimistic about its capacity to reduce carbon emissions. The coalition's Direct Action Plan will directly take taxpayers' money and spend it on measures that are untested. The political party which prides itself as the party of the free market, rather than choose an effective market mechanism, is instead extending the powers of the state—picking winners—calling for greater government control in the area of environmental policy.

The coalition's Direct Action Plan is the unloved orphan of environmental policy, unloved by economists and environmentalists—a policy that will leave us increasingly isolated from the rest of the world. A problem of the magnitude and complexity of climate change requires national responses that are internationally competitive and compatible. The atmosphere does not respect national borders. I am very confident that the international community will not embrace the coalition's direct action policy. Increasingly, countries are adopting carbon markets as the most efficient means of reducing carbon emissions, and we all know that is true.

Given the strength of the science and our recent climate history, surely it is time to look to the future and to move toward and not away from the most effective and internationally competitive means of reducing our carbon emissions. I believe that this is the responsibility that we in this parliament must meet now, and that is why I am speaking this way on the Clean Energy Finance Corporation (Abolition) Bill 2013.

6:23 pm

Photo of Mark FurnerMark Furner (Queensland, Australian Labor Party) Share this | | Hansard source

I rise to speak against the Clean Energy Finance Corporation (Abolition) Bill 2013. I do so in my capacity, not as a climate scientist or an economist, but as a senator who has been fortunate enough to be a member of the Standing Committee on Economics and to be involved in the hearings of the Carbon Pollution Reduction Scheme inquiry. I was equally fortunate to be involved in the Select Committee on Climate Policy. As result of hearing the evidence in those inquiries, I speak here this evening with some degree of experience and knowledge and with a grasp and understanding of the science and the effects on the economy and, most importantly, the environment.

Initially, I will use some examples of what the impact will be if we find ourselves in a situation where we have done away with the CEFC. In my home state of Queensland—forgive me if you are unfamiliar with some of the areas—I was fortunate enough, particularly in the lead-up to the election, to have the opportunity to have employers show me with some pride the outcomes that they have received as a result of some of the funding. I will use the example of a company in the seat of Forde, which is around the southern side of Brisbane, heading down to the Gold Coast. There is a large industrial area there called Yatala. Luis Laing, the Managing Director of a company called Pacific Food Industries Pty Ltd, with pride showed me around his factory where they had installed 125-kilowatt solar panels across the three buildings of their manufacturing plant and warehouse distribution area. That company produces and manufacturers sauce in that plant in Yatala in Queensland.

The project, as was explained to me by Mr Laing, is expected to reduce the carbon emissions intensity of the site's electricity usage by 31 per cent which will result in a saving in energy costs of $19,000 per year. The grant amount that was provided to the company at the time was $109,213. You can quickly do your sums and realise that, within a matter of approximately five years, that investment would have paid for itself. We realise that the revenue from the carbon price was being used by the previous Labor government to help businesses across Queensland and Australia cut energy, reduce emissions and become more competitive. In fact, the $1 billion Clean Technology Investment Program that the government provided has worked for manufacturers and food processors by providing investment in energy efficiency, clean energy and renewable energy. In Forde alone, there was $2.9 million invested at that point in time to assist those businesses. So, once again, we are able to understand that this is a remarkable investment that businesses are receiving, or have received, from the previous Labor government.

A bit further south is an area that I used to work in in one of my many previous careers. When I used to drive semitrailers, I carted meat containers out of A J Bush and Sons, a business in Beaudesert. David Kassulke, manager of A J Bush and Sons, was previously a sceptic. This may have been the result of some of the mistruths or propaganda that was provided to him by the then opposition. In fact, in July last year, then senator Barnaby Joyce and the local member, Scott Buchholz, toured the business and pledged that they were going to repeal the carbon tax if the coalition won the next election. We know the result of that, and it is still a position that the current government supports. We know that they went to the election on that basis, but Mr Kassulke has turned his view around. I must point out that he was one of Australia's top 500 polluters and was expected to pay a carbon tax bill of approximately $1.2 million. As a result of the investment of the previous Labor government, he has been able to achieve a dollar-for-dollar $6.2 million grant from the government's Clean Technology Food and Foundries Investment Program. That has put A J Bush well ahead in slashing emissions, and, apparently, the company is reasonably confident of meeting their targets. It would be one of those companies that would have been removed from the top 500 polluters list.

The way Mr Kassulke has gone about achieving that is with the construction of new biogas plant—hopefully it has started by now; I have not had the chance to follow up on it. The company expects to cut its carbon emissions from 82,000 to 25,000 tonnes per year. That is a significant cut in emissions with the assistance of the government and the commitment by the company to match the grant dollar for dollar. The company's expectations were to cut coal usage by 50 per cent and to produce 50 per cent of the company's electricity requirements on site, which I am sure have been achieved. The end result is the introduction of new biogas technology which will save millions of dollars in energy and carbon cost and is also an opportunity for the company to be positioned in cutting-edge renewable energy technologies in the rendering industry.

Sitting suspended from 18 : 30 to 19 : 30

Before the break I was referring to examples of what companies have done, certainly in my duty seats, with regard to improving efficiencies and reducing the carbon footprint. I was discussing the company AJ Bush & Sons, which is in Beaudesert in the south-east corner of the seat of Wright. I was relating of a Mr Kassulke and explaining how he was a sceptic of climate change but is now converted after seeing the benefits of the tax. Relying on the Beaudesert Times, he indicated that he has now changed his view and he refers to the tax as a positive thing, so much so that he is confident that there will be a more competitive position in the marketplace as a direct result of the carbon tax. He commented:

We have always been focussed on energy efficiency because we use one million kilowatt hours of electricity per month and use around 2000 tonne of coal per month.

The (biogas technology) investment is a good way to modernise and will dramatically reduce our emissions.

It will mean that we will reduce our emissions to the point where we will no longer be a big polluter any more.

That is just a typical example of how someone in business can see the benefits of what you can do with providing efficiencies and programs to improve the carbon footprint in our country.

Another area I want to concentrate on is directly a result of what the Queensland Liberal National Party has done up there with regard to an amazing opportunity for solar powered energy. It was called the Solar Dawn and the previous Labor government in Queensland was going to provide $75 million towards a $1.2 billion Solar Dawn solar research power plant at Chinchilla, which is out there west of Toowoomba. It was to be one of the biggest solar energy plants throughout the world.

Since then there has been a change of government in Queensland of course and the Liberal National Party has mothballed or actually withdrawn that particular investment. It is a real shame because not only would we have seen investment in renewable energy and investment in solar powered energy up there; it would have seen the creation of literally hundreds and hundreds of jobs in the regional centres—those centres that the National Party purports to represent and assist. Here you go in a place in regional Queensland, Chinchilla, where we will see no jobs created as a result of the Liberal-National Party government in that state shutting that investment down.

Had it been approved, we would have seen a 250-megawatt solar thermal project using the sun to heat water in tubes to produce steam-driven energy. It did have the backing of the federal government at the time, and it is a shame that these initiatives have at times been jeopardised by the result of those sceptics, not only in the then opposition, now federal government, but also in state Liberal-National party governments where they do not accept or are not prepared to assist in clean energy and do something about our emissions in this country.

I also want to move onto some statistics that the ABS have been kind enough to provide me with, about where we not only lose valuable resources and the effects of that on the economy but also the effects on lives. In many circumstances through the history of Queensland it seems to be an increasing theme up there: natural disasters. Certainly in recent times, from November 2010 to February 2011, we did see the most significant natural disaster effects in Queensland, where 99 per cent of the state was declared a natural disaster area. Unfortunately, it is the sad case that we lost 37 lives in those natural disasters of flooding and extreme weather conditions in my home state. I recall going around to a number of people and explaining the assistance that we provided to residents in that particular time of need through the flood levy assistance, providing assistance to those who needed it.

Queensland received at that particular time $2.256 billion under the Natural Disaster Relief and Recovery Arrangements. History can show that the then opposition—the Liberal-National Party in this place—opposed that flood levy, and I am yet to understand why. It was a time of need where people required assistance and here you had it at that particular time that the then coalition opposition opposed reasonable and good assistance to people who needed it when they were in dire straits.

I want to go to some stats about the past history of the disaster relief payments through the Insurance Council of Australia. It develops an interesting theme of the increase in price and gives you a good reason for why we need some form of abatement—some form of clean energy assistance and also some climate change legislation to deal with these natural disasters. When you go back in history, particularly in Queensland, you can see a growing trend of not only an increase in prices but also an increase in the effects of climate change.

I must stress in giving figures of costs that they are purely the costs associated with insurance claims for policy holders entitled to receive them because of the effects on their residences. They exclude those who were did not have entitlements as a result of policies and also exclude the costs incurred by emergency services, the local, state or territory and Commonwealth governments and non-government organisations and the costs for local governments during the clean-up times, which are cut out of the results. The remedial and environmental damage costs, including pollution of foreshores and riverbanks and beach erosion, are excluded. They exclude the costs associated with community dislocation. They exclude the costs associated with job losses and those associated with rehabilitation and recovery. They also exclude the medical and funeral costs associated with injuries and deaths.

I decided to go back to a period when I was quite familiar with natural disasters in Queensland. That dated back to 1970, when Cyclone Ada came down the Queensland coast and hit Bowen and Mackay. The estimated costs in claims to the insurance industry were $1.1 billion. In 1974 I was personally involved after the flooding in Brisbane resulting from a cyclone called Wanda, which came down the coast and had a huge effect on Brisbane. The claims from that flooding totalled $2.6 billion. I can remember assisting people to vacate their houses which were inundated by the flooding around Brisbane. Since that time there has been assistance to make sure that to some extent those homes will not be affected, although in the last couple of years we have seen the effect of extreme weather conditions that still cause major flooding. It is a recurring feature but it is happening on a more regular basis. In 2006 Cyclone Larry hit the coast in North Queensland, with the costs totalled $609 million. We are getting to figures that demonstrate how costly it will be if we do not do something about climate change which will result in increasing insurance costs. These costs have a flow-on effect to everyone because they affect everyone in society who has insurance for their homes. After Cyclone Yasi, the figure from February to July 2011 was $1.4 billion. So there is a theme of increasing costs involved from the effect of climate change and natural disasters, and it affects not only my state of Queensland. People in this chamber have spoken about the effects of fires and extreme weather.

I mentioned in my opening comments that I was on the select committee on climate policy. Time will not permit me to go into extensive detail, but there was no disputing what the professionals explained to the committee about the climate science. The IPCC, the Intergovernmental Panel on Climate Change, has accepted that the best peer reviewed reports on the topic from the world's leading academics in a range of relevant disciplines have accepted and endorsed the science. So we are not coming here saying something different from the specialists and professionals in this area about what is affecting the environment. In fact they indicated in their evidence that warming of the climate system is unequivocal. I think that identifies what is happening to our climate and our environment. For the reasons I spoke about earlier and also demonstrated with the figures on insurance costs, we need to address this issue not only for the sake of our environment but also for the sake of our economy.

With regard to my personal experiences, I have seen what the effects could be if we do not address climate change. In February I was up in the beautiful Whitsunday islands for a week and went over to Long Island with my son and daughter-in-law and saw copious numbers of tourists spending quality time on the outer reef. If we do not address climate change we are going to have issues associated with a reduction in tourism. People are not going to be willing to come to the Sunshine State, as it is known, or anywhere else in this country to enjoy such opportunities. It would be a great shame if my granddaughter and others of her generation were to miss out on the opportunity to see and enjoy the Great Barrier Reef as it currently exists.

7:43 pm

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

I have listened keenly to this debate over the last couple of days and I think it is important to address a matter that Senator Whish-Wilson first raised, and that is that in the insurance industry there are reinsurers. The reinsurers—Swiss Re, General Re and the like—are the ones who are actually charged with predicting and costing disasters such as cyclones, typhoons, tornadoes and earthquakes. It is a very interesting subject. Having had a very minimal involvement in reinsurance through the Motor Accident Commission of South Australia, I have got a little bit of an understanding of how it works. They actually test your organisation. They look at all of the potential catastrophes that could happen to your organisation, and then they price the risk. You buy that insurance and you go on then and do your business.

This is a really interesting area and it should be right at the heart of the economic rationalists. It should be right at the forefront of their thoughts because, if they do not believe in climate change or if they do not accept the scientific evidence—their gut feel is that it is not really climate change—then the money men in those reinsuring industries will tell them. They will tell them that the prevalence of tornadoes, the prevalence of cyclones and catastrophic storms in the American Midwest or in the UK or in Europe, demonstrate that something is happening here. Something is changing. It is to their eternal shame that they do not actually evaluate all of the factors. They can deride the scientific evidence—it is a wish list; we cannot do anything; we are a small population and we cannot impact climate change globally, and all of those things have some modicum of truth—but the reality is that the moneyed people of the world, the people who reinsure the insurers, are operating that insurance on the premise that something is happening globally. In that environment, it is extraordinary that the Liberal government, the Liberal coalition, puts its head in the sand and says, 'We are on a mantra of abolition of the carbon tax.'

I will address that phrase 'carbon tax' a little bit later, but one of the really good things that happened during the initial debate on this matter was that I attended a briefing at, I think, the Norwood Town Hall. Quite unrepresentative of the group there was a lecturer in economics from Adelaide or Flinders university. The basic premise he put was in economics: if you want to change behaviour, you price it. If you want to change behaviour you need a price on it. It is a fundamental economic principle. And I suppose, if you want to change behaviour of people who are speeding on roads, you price that behaviour—so if you speed you pay a fine, and you slow down. So fundamentally, I think economists accept that price in the economy will change behaviour.

That has stuck with me right throughout this whole debate. What we have seen in my home state of South Australia is a growth in renewable energy which is far in excess of the rest of the states of Australia. We have wind energy and we have solar energy, and I will say this: it was mainly driven by former Premier Rann who lived in the solar-powered house long before it was fashionable, long before it was affordable. He had a passion about renewable energy and drove a lot of policy in South Australia, which has made us leaders in renewable energy.

Unfortunately, you cannot bank renewable energy and you cannot store it in a lot of cases. You can use it to offset peak flows and to offset peak demand, but basically it is not there on the peak days of the year in sufficient amounts to make redundant the gas or coal fired technology. In South Australia we have endorsed and adopted renewable energy.

The cost of it is spread out, there is no doubt about it, and it is something that I am not all that in agreeance with. It is shared out, if you like, on the bills of every consumer in South Australia. So if you are a low-paid worker or a low-paid pensioner and you do not have a solar system, you are probably paying a modicum for someone who is a little bit more fortunate and has chosen that renewable energy. But that was a decision that has been made.

When we look at the Clean Energy Finance Corporation, we see an organisation which is at the forefront of investing in future renewable energy products. It is set up and was designed to take the place of perhaps venture capital, which would invest in alternative technology. It is set up to make a return to the taxpayer and it is going along its way quite successfully. But it is been wrapped up in the 'no carbon tax' and the 'we will abolish the carbon tax' and everything that goes with it. Even if things are actually economically viable and sensible, they are all going as well.

Those on this side of the chamber do not agree and, fortunately, neither do those on the crossbenches—and I think that is all of the crossbenchers. So we are now in the situation where we are debating whether a good clean energy corporation should exist or not. A number of quotes can set the scene for why this activity by the coalition—or the noalition, as they really should be known—should be resisted. Mr Nathan Fabian, the Chief Executive Officer of the Investor Group on Climate Change, said:

The CEFC is one example of what are now 14 co-financing institutions around the world. These organisations are needed for five reasons. Firstly, governments cannot sufficiently finance low-carbon alternatives to meet a two-degree outcome and private capital is needed. Secondly, the low carbon investment market is relatively young and so deal flow needs to be supported. Thirdly, capacity in the finance sector must be increased through the experience of financing investments. Fourthly, financial participants welcome investment opportunities presented in a new market by an objective third party, even more than by investment banks. Lastly, cofinancing organisations can actually earn financial returns for governments, delivering abatement at negative costs—and we think this is appealing and makes sense to all parties. Given the government's infrastructure agenda, we think that dismissing co-financing as a useful policy instrument may be premature.

Having had a little bit of experience in the investment world, that sounds to me like venture capital. We do not really know what the outcome is going to be, but if we invest in enough bright people in the right sectors across a whole range of activities we will make a return. I do not think that is a bad thing for a government to be doing—I think it is a very good thing for a government to be doing. It is a much better thing than the direct action policy. I really do think that the coalition painted themselves into a terrible corner in their endless pursuit of an early election, their endless derision of anything that the Labor government tried to achieve and their endless opposition. They said, 'We will get rid of the carbon tax' and history will tell whether that is true or not. It is likely that, in six months time, they might be successful, but far be it for me to pre-empt their success or otherwise.

The reality is, they campaigned to the Australian public saying, 'It's a bad tax.' The reality is that it has added a modest increase to electricity prices, all of which was compensated. Most of the pain that the consumer felt in electricity prices was the rebuilding of the poles and wires; it was not as a result of the carbon price. But the coalition endlessly repeated the mantra, 'It's a bad tax'—and it would be a very brave government that went to an Australian election with a policy position of imposing a tax. We had the demonstrations at Parliament House and we had the endless repeated mantra—in fact, the mantra has not gone away. The mantra is still there. Every time we ask a question in question time, it is all down to the carbon tax.

With the electors that I speak to, with the barbeques that I attend, I honestly do not think that Australian electors are all that excited about the carbon tax. I do not think it has impinged dramatically on their day-to-day living. I think they do understand that something is there in the climate that needs addressing. We may have been guilty of not putting our position as succinctly and correctly as we possibly could have, and we certainly did not win hearts and mind. We lost that debate, but that does not mean that we should walk away from a position which is trying to deliver a clean energy solution for Australia.

We are one of the highest emitters per capita in the world. We have this awful conundrum where we are 25 per cent of the coal resources of the world and we make $30 billion from exporting coal. So why, in that environment, would we not back the Clean Energy Finance Corporation, which is looking for cleaner solutions and investments into alternatives which will wean us off the heavily polluting emitters? In South Australia I believe there are only nine companies paying the carbon tax, and we are the lowest emitters. We are a small state—we have a concentration around Adelaide and at the peninsula down at Mount Gambier, and a little bit out at Whyalla, but 82 per cent of the seat of Grey is pretty sparse.

There is not a lot of industry and there are not a lot of emitters. I think we only run our power station in Port Augusta when we can make some money out of it, so it might be down to three to six months a year and the rest we shut it down. It is a brown coal plant that is serviced out of Leigh Creek, and I have had the opportunity to visit Leigh Creek and meet the workers there, as well as the workers at the Port Augusta power station, and they were transitioning to a different energy future. The Clean Energy Finance Corporation could make that come along quicker. It could create clean energy jobs. Why would this coalition government take the Clean Energy Finance Corporation, put it into its mantra of 'It's bad! It's bad! It's bad!' when it does not look that way to any independent assessment? It just does not look like what they are trying to portray it as.

However, that is not unusual with this government. It is their way or the highway. The adults are in charge and 'We're open for business,' and as we have said earlier in the debate today, the first 100 days of their government have been characterised by 100 delays. Now they are in here trying to ram through some legislation which will shut down the Clean Energy Finance Corporation and actually hit their budget—it will take money out of their till. They have spent a lot of time on the stump saying, 'Debt's bad! Debt's bad!' This will actually hit their budget, and they are doing it for an ideological reason.

I think they ought to go back to the drawing board and have a look at some of the things that have been contributed in this debate. I doubt that they will, but I think it is an important point that Senator Whish-Wilson raised earlier in the debate: what are the reinsurers doing? They are money men, they are there to assess the climate of the world—they might not think its due to climate change, but they will know if something is going on. If they are pricing the risk in, then perhaps those climate change deniers on the other side might change their mind.

I had a brief moment today, when I heard Senator Sinodinos talk about a frog in warm water and boiling, where I thought, 'Aha! Climate change is back on the horizon.' but then he went on to refer to that analogy in economic terms. He really was not talking about climate change—he was talking about the economy being in a bit of trouble—but I did think for a moment that there might have been something in there finally recognising that climate change is real. Australians believe in it, and you cannot go anywhere in Australia without people having a view on it.

There are certainly people who are against tax but they are against all tax and certainly all new taxes and they think that it is an imposition on them that they are paying things, and the opposition has clearly distorted that message. We have made mistakes and there is no doubt about that. We did not communicate our message effectively but we cannot walk away from a clean energy finance corporation that is set up to invest in renewable technology which may well be world beating and so we would lead the world in terms of delivering outcomes in respect of climate change. There is no part of the world that is ignoring climate change and saying, 'We'll simply plant a million trees or a thousand trees' or 'We'll have direct action and we'll pay polluters not to pollute.' If I were a polluter and someone would pay me not to pollute, I would do it as slowly as possible so I would get the maximum dollars out of it.

The reality is that there are major companies in Australia as I speak who are taking action on their carbon pollution because it saves them money and because they are a better corporate citizen. The other thing is that unless you have the price on carbon I am sorry but I do not think there will be a tremendous result. Economists will say time and time again, 'If you want to change behaviour in the marketplace, you put a price on it.' That crew over there, the 'no-alition', have been able to characterise that as a tax on every Australian. If you believe them, when you open a packet of Weet-Bix in the morning it has gone up 2c because of the carbon price. If you actually believe their rhetoric, all of the ills of the world or all of the ills of the economy in Australia will be blamed on the carbon tax. Well, the proof will be in the pudding. If and when they are able to axe the tax, as they call it, and get the carbon price out of the way—

Photo of Sean EdwardsSean Edwards (SA, Liberal Party) Share this | | Hansard source

We've had the election on this.

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

I'll take that interjection, Senator Edwards. As I said to you the other day, you won the election but you need to be a little patient because there are six months to go here. You do not run the show here. In six months time, when your mate Mr Palmer comes in and the Motoring Enthusiasts come in, they will make their decisions about it but until then you will have to suffer the indignity of not getting your way in this chamber. But, returning to what I said, Australians do genuinely believe that something is happening with climate. I do not know anyone in my immediate family and friends who actually says nothing is going wrong.

Photo of Sean EdwardsSean Edwards (SA, Liberal Party) Share this | | Hansard source

You should get out more.

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

I will take that interjection, Senator Edwards. I do get out as often as I can. I am sorry that I probably do not get out as much as you but I do try. The reality is that people believe something is in this climate change argument. I do not meet people who are saying that the carbon tax has crucified them. They get on with business and they get on with their working lives. You cannot change behaviour in a proper functioning economy without pricing behaviour. If you are going to pay people who already have bad behaviour to do it slowly, I am not sure that that is a workable philosophy. Most economists who would not take the carbon price out of it would probably agree with me that the things that have worked with economies over history is a price on behaviour and that that price will dictate business investment decisions and their activity in the economy and more than likely will change their behaviour for the better.

8:03 pm

Photo of Claire MooreClaire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | | Hansard source

A couple of months ago the Clean Energy Finance Corporation brought down its first annual report. Normally, as you know, Mr Acting Deputy President, when we work in the Senate, particularly through the Senate estimates processes, we actually get hold of such annual reports and we look through them and we see what the background to them is and we read the contents. I think this report is the first time I have read an annual report with a proviso. The report was introduced by the chair, with that statement followed up by various members of the board and it welcomed the opportunity to give the annual report and it talked about the background and it clearly stated the CEFC's mission:

Our mission is 'to accelerate Australia's transformation towards a more competitive economy in a carbon constrained world, by acting as a catalyst to increase private sector investment in emissions reduction'. The Board—

as stated—

has pursued this mission with the goal of minimising the cost to Government.

The chair went on to talk about the structure of the report, how they were going to set out the process, their background and their goals and then, at the back, they had the whole list of their financial statements. But, unlike a lot of the other annual reports I was reading, this one actually had the proviso in it. At the end of the introductory chair's report, Ms Broadbent states:

At the time of writing, the future of the CEFC is in doubt, with the Australian Government preparing legislation for the repeal of the CEFC Act, making this possibly my first and last report as Chair.

It is fairly unusual when you actually have something being brought down where all the people involved in putting forward a report about their actions and talking about their financial processes and talking about the areas that they have funded—also with a whole section of the report talking about future plans and building on the work that they have done in their initial year—is actually overshadowed by a statement that says they know, and they know that their audience knows and they know that their shareholding ministers know, that immediately there will be a debate in this place which is going to talk about the fact that they will no longer be required. It gives a special poignancy to the whole process. But, given that, I thought it was important that we saw what the work of the CEFC had done in that 12 months. It talked about the fact the body itself had come out of an expert review panel which had looked at the merits of a CEFC model. This model is not peculiar to Australia and it was not out of some thought bubble where someone said, 'Hey, this might be a good idea.' There was actually an acknowledgement of the idea of a professional financing body that would work to operate to educate the community and investors and organisations on the options that they could have to look at effective financing for alternative energies in our country as well as to provide, as clearly documented in the annual report, professional financing services. This model is not peculiar to Australia: one of the core issues is the fact that there are international networks that talk about this kind of process and they have a proven record.

The CEFC model in Australia was looking at how it could be an effective tool to develop the sector, its financing skills and technologies, and thus enhancing Australia's industry preparedness for a lower-carbon world. And as Senator Gallagher has just pointed out, the whole impetus for this organisation was a commitment by the Australian government and also by the Australian community to share in a low-carbon world. Again, nothing that is peculiar to Australia. In fact what we have, through this debate, is an acknowledgement that we are part of something much larger than decisions that are impacting on just Australia. We are part of the desperate need for an international response so that we, together, can work at coming up with ways to have a low carbon world. All of the debate, all of the energy—good and bad energy—in this debate should be focused on that; that is, how best we can achieve a low-carbon world.

Amid that, the role of the CEFC was clearly defined. It was there to ensure there would be appropriate financing to allow businesses, people in the community and industries—all of whom needed to share in the commitment to a low-carbon way of operating—to have effective options to finance their businesses. Senators would remember that throughout the series of debates we had in this place, one of the clear concerns raised by industry and by community members generally was at what cost would people have to make the decisions to make change. What we all knew was that we had to make change. The reason for having the quite painful debates that we have had, which have been damaging—people have engaged in these debates in a very personal way and there has been a lot of worry, a lot of concern and a lot of passion. But what all of that focused on was the fact that we needed to change.

We have heard in part of the debate that has been going on over the past couple of days on the CEFC, which is really one element of the wider debate, the acceptance that the arguments and the debates about science have been had. That is real progress because we all remember that, in previous debates in this place when we were talking about why we needed to make a change in Australia, the science was actually in dispute—and not just in this place, but also in the wider community. I know, having attended many community meetings, there are a number of people in our communities who genuinely reject the science, who create their own science to say there is no need for any change. But one of the positive aspects of the past couple of days is that across this chamber, no matter what part of the debate it was, people have agreed that there is a need to look at having a low-carbon world. The thing that is at doubt is how we do it and who is going to be responsible for the pain that it causes to make the change.

When we moved through the range of legislation that came up previously to put a cost on carbon, and then working through the range of things that had to happen in our community, one of the immediate responses was to ensure that there would be a professional finance knowledge in the whole discussion. This meant we would be able to have the appropriate education for all levels: for people who are in the investment market, for people in finance and for people who are looking at developing their own businesses and developing their own community responses. One of the needs was to have this kind of professional model, which operated not in opposition but in cooperation with existing finance organisations.

Ms Broadbent, in her report that came out only quite recently, was at pains to point out that this was not an organisation that was there to steal or dominate the market. One of the core aspects, which is part of the international model of energy finance, was to see that they worked alongside and in cooperation with existing finance organisations. The mark of their success, which has been brought out in a number of the contributions we have heard in this debate as well as in the annual report, is that there has been that acceptance, that there is the ability for people to work effectively together to come up with cooperative ways of funding.

One of the things I most enjoy about any of these debates is having the case studies put before us, where we move beyond the theory, we move beyond the rhetoric and we see how the goals are achieved on the ground. Remember the mission was:

Accelerate Australia's transformation towards a more competitive economy in a carbon constrained world…

I have picked just two of the case studies that were put in the CEFC annual report, and they are two case studies that I particularly like because they relate to areas that I know. The first one was an area in retail. Again, senators would remember that when we went through the debates about whether we needed to have a carbon reduced or carbon constrained world, one of the areas that was put forward as where there could be great problems was in the area of retail. We heard information that already there were great pressures in the retail environment: competition, the impact of the Australian dollar—all of those things. I was particularly interested to see this kind of work—using the CEFC, working with other finances—and how that could be marketed effectively in the retail environment, what kinds of tasks could be put in place and what the results were.

In the annual report, on page 49, it states:

Retailers face competitive market pressures due to changes to consumer habits and online commerce, as well as rising energy costs.

The example that is given is:

The CEFC is working with co-finance partners and strategic alliance partners to encourage retailers to access the benefits of clean technology sooner and has found that bundled expertise and finance is proving attractive to small business owners.

That meets the goal of encouraging people in industry to seek finance to make changes in their workplace. The example they put forward is the IGA at Milton. Mr Acting Deputy President Furner, I know both you and I have shopped there at different times. I must go back. I have to admit that I have not checked out their lighting system, but now I will. Milton is in Brisbane's inner west and is an interesting suburb because it is close to a range of universities where people are moving forward.

The IGA at Milton used Origin on-bill finance for a $28,000 lighting upgrade. They replaced old fluorescents with LED lighting in a project that was cash flow positive from day one and reduced the store's annual electricity bill by more than 22 per cent. That is what the whole focus of the legislation was. This small but strong business used the CEFC model and expertise and worked with Origin on-bill finance. It took out finance for an important but not overwhelming amount of money—$28,000 is a big investment for a small business. It invested in changing the lighting system and moved to a more environmentally-friendly lighting system. It met their needs immediately—and also people like me will go in to see how it works, whilst hopefully buying something from the store—and in the future they will have an annual electricity bill reduction of more than 22 per cent. So that fits the model perfectly.

So that is a retail investor. The other one I have to include is Darling Downs Fresh Eggs. This is one I particularly enjoy. We all know of the high energy costs in the poultry industry. Only today upstairs we had the people who do special innovation and study into areas of change. They have a stream that looks at poultry. I was discussing with them the issues in poultry farming and development in our country. Darling Downs Fresh Eggs is based at Pittsworth, which is quite close to where I come from. It is also an area that is known for the development of agricultural businesses. I know this is particularly important. You will remember when debating changing to a carbon constrained future how we were strongly lectured by representatives of the National Party about the special imposts on and importance of the agricultural sector that must be noted and understood.

Here we have a local agricultural business at Pittsworth that has significant investment in what it was doing. In this case the CEFC and the National Australia Bank are co-financing an innovative waste to energy project. The $2.86 million project cost is met with CEFC finance of $950,000, NAB finance for nearly half of the project costs and an Australian government grant of $333,823 through the Clean Technology Food and Foundries Investment Program. That is another incredibly important element of the package of information and services that was wrapped around the series of bills that were put together to ensure that we had a community that was moving towards a carbon constrained future.

That is a huge investment for Darling Downs Fresh Eggs. What they have done is identify an immediate need in their business—and it is a significant business. Their aim is to achieve a cost saving of more than $250,000 a year and eliminate about half of the labour and transport costs associated with the disposal of poultry farm waste products. That will also reduce grid electricity usage by 60 per cent in the first year and will produce 100 per cent of the company's energy requirements in non-peak periods. Darling Downs Fresh Eggs, one country business, will reduce carbon emissions of up to 1,000 tonnes per annum and reduce methane emissions by over 6,000 tonnes of CO2 a year.

That is the reality in the business world. We have debates in this place that are important, because we need to set up the policy parameters effectively, but the reality is in these two local business cases. They have been able to use the CEFC model and work with that organisation to find appropriate financing to personally develop energy efficient programs in their own businesses to look at exactly what we are all after—clean energy.

This model is effective. It is not competition to existing financing models. It provides innovation and hope for people who have accepted the need to reduce carbon, which we have debated here for so long. The CEFC model makes that happen and allows businesses and organisations to develop their own plans—not have to rely on someone from outside telling them what they must do but to be able to respond to their own economic needs to be successful. There are not just one-off savings. In both of those cases there will be future savings that will make their businesses more effective.

Ms Broadbent, signing off on her first—and, if the government succeeds with this legislation, only—report as Chair of the CEFC, said:

The CEFC has been an effective catalyst for the public and private sector to overcome current market failures in financing carbon reducing investment at scale.

She states that she and her board are proud of the work they have done. They have a future plan which they have incorporated in their annual report about what more they can do to work both locally and internationally to develop effective models of financing so that people will not be fearful of the change. They will acknowledge that there needs to be a change but they will not be fearful. They will know that there are people and organisations available to provide support. They will be able to be strong economically whilst being strong environmentally, and that is the aim of the work that so many people have been involved in over the last few years.

The commercial approach of the CEFC means that we assess investments on a case-by-case basis, looking to provide funds on generous terms for a project to proceed—that is, as close to market terms as possible—not forcing one model to fit all but ensuring that people will be able to work at their own pace and develop their own knowledge and confidence while seeing things that work.

A core path of moving to a carbon constrained world is to ensure that there is an effective business model and effective financing available. The CEFC in their annual report can prove that they have a basis on which to work for the future. To slice this opportunity from the businesses and communities of Australia would be to show little commitment to what we all know we must have, which is a carbon restrained world.

8:23 pm

Photo of Nova PerisNova Peris (NT, Australian Labor Party) Share this | | Hansard source

I will cut right to the chase here. I rise to speak on the Clean Energy Finance Corporation (Abolition) Bill 2013. Mr Abbott and the coalition government are scrapping the Clean Energy Finance Corporation for one reason: they do not believe in clean energy. They do not believe in climate change and therefore they do not believe that clean energy is required. But this government is out of touch. Leading scientists and members of the Australian public know and understand that carbon pollution is real and changing our weather, our landscapes and our future. This is why I rise before you today to discuss, inform and advise people of the benefits of having corporations such as the Clean Energy Finance Corporation.

The coalition will continue to come up with a range of ridiculous reasons as to why the Clean Energy Finance Corporation should be discontinued, but it all really comes back to the fact that the Abbott government does not believe in clean energy. The corporation was set up by the previous government to invest up to $10 billion in renewable energy products and to promote private sector investment. It was off to an extremely positive start with over $500 million invested in projects to cut greenhouse gas emissions. The $10 billion served to leverage private sector investments into projects.

According to the chair of the corporation, Jillian Broadbent, the corporation would have been in a position to return $200 million to the government once the $10 billion was invested. Economically speaking, this was a very impressive start and confirmed what leading countries around the world have found—that the future of economic investments includes clean energy.

The Clean Energy Finance Corporation operates like a traditional financing business. It works collaboratively with co-financing organisations, project advocates and stakeholders to seek ways to secure finance to grow and further develop the clean energy industry. The Clean Energy Finance Corporation adds a great deal of value and effort to tackle climate change in Australia and around the globe by reducing carbon pollution, and looking at ways of establishing and improving clean energy production to ensure that our carbon footprint is reduced and the global environment is preserved for future generations. By investing in projects, the corporation works differently than by simply providing grants. Grants can be very worthwhile but they are essentially a handout to kick-start a supported project as opposed to an investment in a project and an investment for our future.

The CEFC does not engage in a risky loan. It helps to develop the relatively new clean energy investment sector. This corporation provides and develops financing solutions across the clean energy sector connecting renewable energy, low-emission technology and energy efficiency. It seeks to assemble and leverage funding for development in the commercialisation sector and the development of clean energy technology and research necessary to assist Australia to transition from a carbon reliant nation to a clean energy nation.

The Abbott government clearly does not believe the science of climate change and, if it did, the government would realise that reducing carbon emission targets simply cannot be met without increasing investment in clean and renewable energy technology as a progressive view. Since created by the Labor government as part of the Clean Energy Future package, the CEFC has committed $536 million of its own budget while mobilising over $1.5 billion in private capital—a success in everyone's terms.

The corporation's annual report for the last financial year says every dollar of investment has attracted $2.90 in private sector spending. This is an achievement beyond what it set out to do. The projects that the corporation is involved in are wide and varied, big and small. They cover three main areas—that is, renewable energy, low emissions and energy efficiency. Some of the projects that the corporation is involved in include a very large scale solar-powered project to power approximately 15,000 homes, a wind energy project to power over 100,000 homes, projects converting from biogas to natural gas, so cutting greenhouse gas emissions by 44,000 tonnes per year, and smaller projects like the installation of low-emission street lights.

So many of the companies and organisations involved are quite varied, ranging from ice-cream makers, wine producers, beef processors, pork exporters, rugby league clubs, hotels, many retailers, tomato growers and gardening suppliers just to name a few. No industry was too big or too small. Companies were both saving money and cutting emissions.

I know that the Australian Agricultural Company is using the scheme to install solar photovoltaic units in 15 sites across Queensland, reducing its grid energy consumption and associated carbon emissions by around 30 per cent. That company is currently building an abattoir near Darwin and I hope it is able to have similar energy savings systems in place in that facility. This bill will stop projects like that occurring.

This bill tilts the weight back in favour of the coal industry instead of renewable energy and that is what the Abbott government wants. This bill will cost companies money and make it harder for them to cut their emissions—but, most of all, our environment will suffer. There are 14 similar organisations that exist throughout America, Europe and Asia but, sadly, not in Australia if the Abbott government gets its way.

These countries will not only achieve greater success in cutting greenhouse gas emissions; their industries will also be more cost effective. I commend the fact that the corporation will continue to invest in worthwhile projects until such a sad time as it is scrapped by the Abbott government. On this side of the house we hope that day does not come.

In conclusion, the CEFC is working—it has not only met its targets, it has exceeded them. But, because it is about supporting clean energy, the coalition wants to scrap it based on nothing more than pure political pandering. The government has decided to ignore the many people who have clearly outlined that the corporation is working. This side of the house supports clean energy, and hence we cannot support this bill to scrap the Clean Energy Finance Corporation. We understand that emission reduction targets simply cannot be met without increased investment in clean and renewable energy technologies.

8:30 pm

Photo of Joe LudwigJoe Ludwig (Queensland, Australian Labor Party) Share this | | Hansard source

I rise to oppose the Clean Energy Finance Corporation (Abolition) Bill 2013. In doing so I will be speaking in defence of solid, grounded economics that drives investment, reduces emissions and supports jobs in the Australian economy. This bill introduced by the Abbott government is, quite frankly, a triumph of political opportunism over common sense. The government has moved to deny Australian industry effectively participating in the clean-energy future. It does appear that no-one from the government has stopped to examine the record of what they are abolishing. If they had seen the record, they would not be doing this now, although it is plainly evident that this is a government that acts first and then thinks, followed by a fumbling mess of the half-backflips and confused responses that we have seen in recent weeks.

The CEFC was established to invest directly and indirectly in renewable energy, energy efficiency and low-emission technologies. The CEFC annual report makes the case as at 20 August that this year their investment portfolio was valued at $536 million. The total value of projects associated with the body's investment was about $2.2 billion. It is a stunning result for an organisation so young. It is even more unbelievable that the government would end it so quickly, even before they have established their own model of direct action—but we will come to a little bit more of that later. This is a government that has said it would head down the path of direct action but has not said what that would actually look like.

But let's look at what direct action actually is. Direct action says that the market cannot or will not cope with a floating carbon price. It says that the government, not the free market via an emissions trading scheme, is more adept and efficient at delivering the outcomes of reducing carbon emissions. This is supposed to be a government and a party that purports to believe in a market based approach over regulation, and here we have it walking away from an emissions trading scheme because this is an example of a good market based approach.

So let's take a look at some of the work of the CEFC. To date it has invested in new technologies to reduce Australia's emissions of greenhouse gases—importantly, at lower cost. To that end the CEFC has created jobs, grown Australian businesses and spread the use of low-carbon and renewable technologies across industries. The body has demonstrated time and time again over a very short period that it has a positive cost-benefit outcome for taxpayers, businesses, the economy and, importantly, the environment. It has clearly demonstrated a positive outcome in reducing CO2. Around 3.88 million tonnes have been abated.

This has not come at a cost which the government would want taxpayers to believe. In fact it has led to positive returns to taxpayers. What the government has been doing is spreading mixed messages about the role, function and results of the CEFC in order to justify why it is now seeking to abolish it. Some of these claims are, quite frankly, just plain wrong. It has said that it will crowd out private investment. Wrong. The investment mandate it operates under explicitly directs it to avoid this outcome. There is an unmet need in the business world for this type of body.

The government has also headed down to the last place climate change deniers go. That is that—and I have even heard Senator Abetz use this phrase—it 'encourages risky investment and puts at risk taxpayers' money'. The Treasurer himself in the second reading speech for the abolition of the body stated that the CEFC was investing in high-risk ventures. My guess is that those on the government side will repeat this claim many times before this debate ends. It is false. The Treasurer knows it. The government knows it. Those on the other side know it. The body is required to seek to develop a portfolio across the spectrum of clean-energy technologies that in aggregate must have an acceptable but not excessive level of risk relative to the sector. Myth two exploded. The CEFC has in its operation not looked to high-risk ventures. The organisation has demonstrated a relatively conservative approach to investment.

One of the most outlandish claims of all, though, is that it is some green hedge fund. Again false; it does not operate like a hedge fund. It has not invested in hedges, derivatives or guarantees. What it has done is invest $534 million in Australia's future.

It is claimed that its ability to offer concessionality has negatively affected its ability to have a commercial orientation. That is another claim that those opposite raise for why this body should be abolished. Again, it is plainly wrong. It defies logic. It is grounded in the belief that the private sector does not offer concessions or discounts of the regular market price. This caps it off for this government critique: the private sector does not offer discounts. That is what they are effectively saying. As we approach the pre-Christmas and post-Christmas sales, I wonder what sort of world those opposite live in to think that businesses do not offer concessions. The CEFC can offer concessions to give effect to public good outcomes, which is a good thing. Achieving technological expansion, dispersion and take-up, a demonstration effect, and emissions reductions are all very good things to have. The private sector does this for other reasons and not always in the public interest. They do it for things that I will not cavil with, such as gaining market share, retaining business or undercutting competitors.

Another outlandish claim is that the CEFC does not generate any renewable energy—plainly false again. The CEFC has invested in projects responsible for 500 megawatts of installed new generation capacity, and this is additional generation capacity. Two of these are worth making some comment on to absolutely make the point. One is the CEFC investment in the Sundrop Farms project in Port Augusta in South Australia, which uses solar thermal technology to provide irrigation from desalinated seawater and heating and cooling for a 20-hectare greenhouse complex. This ticks the box of creating jobs in regional Australia. Most of all, though, it drives innovation across the farming sector. The second is the co-financed solar PV installations by Australian Agricultural Company across a number of its regional and remote facilities. It drives home the message that this is about reducing costs and increasing competitiveness through greater use of solar PV and renewable energy sources.

The CEFC is gaining support in regional Australia, and you can see that across many areas. What is even more stunning than the move this government is making to abolish this body is that the Nationals, and even the Country Liberal Party in the Northern Territory, are with it on this. You wonder why when you look at the types of outcomes across regional Australia that this body can provide funding for. If you think about the Nats, they oppose foreign investment, and now they seem also to be opposed to direct investment from a local corporation. I think the truth is that they oppose anything that they do not understand—which is considerable. That can be the only logical answer to their opposition to a corporation that is helping drive innovation and efficiency in the rural sector.

Of course, the arguments by the government that we are acting alone here in seeking to reduce emissions and provide investment certainty and the opportunity for businesses not only in regional and rural Australia but right across Australia to drive emissions down are also plainly wrong. We are not acting alone. The UK has a Green Investment Bank which has the explicit objective 'to accelerate the UK transition to a green economy and to create an enduring institution, operating independently of government'. Germany's main development agency is also a significant financier of green energy. KfW funds up to 80 per cent of Germany's newly installed wind energy and 40 per cent of the solar panels installed in 2010. I should not leave out the US. It also issues and guarantees loans to encourage early-stage commercial use of new or significantly improved technologies in energy projects, through the Loans Program Office. China also provides funds to clean energy through its development banks, including the China Development Bank. Korea's Green Climate Fund is a fund within the framework of the UNFCCC, funded as a mechanism to transfer money from the developed to the developing world. It is aimed at developing countries in adaptation and mitigation practices to counter climate change.

The stupid argument that the government is providing for the CEFC's abolition rests on the mantra that without a carbon tax you do not need the CEFC body at all. Wrong—unless, of course, you take the poor view that the government is telling big fibs when it states that it believes in climate change and will meet the 2020 target of reducing our carbon emissions by five per cent of 2000 levels. After listening to the debate in this place on these bills, I think that is exactly what this government's position is. The government has released its terms of reference for the establishment of an Emissions Reduction Fund, but only lately. We do not know what it will look like, though. The stated objective of this is to efficiently and effectively source low-cost emission reductions that will contribute towards our 2020 target. There is already a body that can do this. A mechanism that can meet this aim is in fact working well right now.

It seems that the ideological obsession by the government has blinded them to the opportunities that exist right now for them to support. What they think they are going to get with a new fund looks like a slush fund for industry—a fund that the government can use right across their electorates to pork-barrel. You do not have to go back too far to find that the government has form on this. Remember Regional Partnerships? Many of you in this chamber might remember it more for what it really was: regional rorts. This program spent money on any harebrained scheme the minister or his colleagues dreamed up for their electorates. It did not work as a program. It was, however, very popular for sitting coalition members. The national interest got lost along the way.

Let me make a prediction that the government's fund will end up exactly the same, and the public interest, of meeting our 2020 targets, will not be met through this fund. It will end up more like the 'regional rorts' program. You will not make the National Party happy, you will not meet your targets and it will end in tears. Because the fund will be grant based, someone will have to pay for it. Yes, you guessed it: the taxpayers funded 'regional rorts' and I suspect they will also be funding the coalition's slush fund, or should I say direct action fund. In stark contrast, the CEFC to date is expected to earn an average return of approximately seven per cent. So not only does it not cost government any money; it actually contributes to the government's bottom line through dividends.

Let me address what we will miss if this bill passes. Those opposite want to wrap this up as part of the carbon debate, but the CEFC is an investment vehicle that will benefit regional and rural Australia. It will provide much-needed co-investment in good technologies to reduce emissions but also drive efficiency and investment in regional Australia. The National Party have signed up to the abolition of this without understanding, I think, the benefits that this vehicle will provide. The CEFC will provide fantastic opportunities for things like the new wind farm, with the capacity to generate enough wind power for about 45,000 homes, that is currently being built near Taralga in New South Wales. There will not be another one like it if the CEFC is abolished. A large-scale solar PV plant is to be constructed near Moree in New South Wales which, when operational, will generate enough power for about 15,000 homes and abate more than 95,000 tonnes of carbon emissions. It may be the last of its type. Without a body such as the CEFC to provide that co-investment, you may not see another plant like that in regional Australia to provide that benefit. And we heard tonight from Senator Moore, who has a great interest in the Darling Downs, about the chicken waste used by Darling Downs Fresh Eggs.

Without the CEFC, there will not be the opportunity for projects like these that drive innovation, that provide opportunities for regional Australia to get a return on their investment and find alternative sources of income to add to their farming income. There will not be that transfer of technologies. There will not be the opportunities that are there now. What we will get instead will be something like we saw with the 'regional rorts' program—a $5 million investment in a railway line that went nowhere. It was going to start in Brisbane and end in Beaudesert. Guess what: it never got completed. The $5 million evaporated. That is the type of the outcome we will get. We will not get outcomes like Richgro garden products harnessing groundbreaking waste-to-energy technology to meet all its power needs by recycling organic waste. A 3.3 million anaerobic digestion plant with a capacity of up to two megawatts is being built to produce enough power for Richgro's operations in WA.

I have given some examples of projects that are currently underway or have been completed. We will not see the likes of them again without the opportunities that the CEFC can produce. They will be lost to us. Instead, we will get a railway line that goes nowhere. More than anything, the abolition of the Clean Energy Finance Corporation is the perfect example that the coalition stands for nothing other than political point scoring. Not even its long-held ideological views on the role of the free market stood in the way here.

If you believe in science and protecting our environment and are concerned about the length and frequency of droughts, bushfires and floods, vote against these repeal bills. If you believe in a market based mechanism and big polluters paying, not taxpayers, vote against these repeal bills. If you believe that Australia should be a nation that leads, not follows, and that makes policies for our future, not just an election cycle, then I urge you to reconsider your position on this bill. That is why we have given you a separate opportunity to have a very long, hard look at this bill. The CEFC should not be abolished. You should keep it in place. It is an important vehicle for rural Australia. (Time expired)

8:50 pm

Photo of Deborah O'NeillDeborah O'Neill (NSW, Australian Labor Party) Share this | | Hansard source

I want to commence my remarks on the Clean Energy Finance Corporation (Abolition) Bill 2013 by expressing my complete agreement with the remarks that have just been placed on the record by Senator Ludwig. As a representative of a regional area, I believe the need to make sound investments for our future could not have been more clearly enunciated. I appreciate the work that my fellow senators on this side of the chamber are endeavouring to undertake in debating this particular element of the carbon bills, because it is such a critical dimension of how we organise moving forward as a country to ensure that there is a pool of funds adequate to make the sound investments that are necessary for our future.

I would like to commence my remarks tonight with a bit of an overview of the custodianship of the place in which I live and why that informs the decision making behind the point of view that is put by the Labor Party on these matters of great importance for our country. I want to make some very specific remarks about the CEFC, and, in closing, have a bit of a look at the public debate, some of which did get some airing in the press in the last week with the very hasty Senate inquiry that was called.

Where I live, I see the sun rise from the ocean at the horizon and I hear the of rolling waves of the grand ocean that surrounds the island home that we share. Where I live, I hear the waves that beat on the shore like a heartbeat. Where I live, I see the whales that pass by on their way north growing in number each year. Where I live, I experience every day the incredible beauty of this land, which I see as a gift from those who have taken seriously their stewardship of land, sea and sky. Living where I do informs my contribution to this debate on the stewardship of our earth. We do not own the land, sea or sky; we simply pass through. It is our responsibility to make sure that we do not leave it corrupted and impoverished to those who follow us. This is what I believe.

I am not alone in that belief; I am supported by my Labor colleagues in this legislation, which does evidence that we take our responsibility for the local, national and global environment very seriously. We have legislated in ways that reflect that belief in science. Our policy is an expression of belief in the integrity of the academy of scientists, and, indeed, this piece of legislation is an expression of our belief in the academy of the financial institutions of this country—people who know about money, people who know about investment and people who have a grander vision for this country than the miserly and narrow-minded dogmatic representation of climate science denial that we are seeing represented in this legislation from those opposite.

The legislation that we as Labor advanced and enacted is an expression of our belief that our responsibilities to this great nation must not be determined in mere election cycles. Our legislation to price carbon was difficult, but it was informed and it was a visionary response to addressing the structural challenges of a carbon-based economy. Despite the shameful fear-mongering of the then opposition, we achieved in the 43rd Parliament that important structural economic reform and transition while presiding over continuing growth in our economy. We effected a reduction in emission intensity of 7.6 per cent and we did it in a way that was mindful and supportive of families on fixed incomes.

We, the Labor Party, believe in assisting Australians who are doing the very important work of parenting. We are the party that believes in supporting senior Australians, particularly those on fixed incomes, who have already given so much to the country, as we undertake economic reform that is necessary for the future of people who we want to grow and become elders in Australia. Heck, we are the ones who brought in the pension! We are proud of that expression of our beliefs. On that set of beliefs, and on this piece of legislation, you could not find a more stark contrast. Those opposite do not share beliefs about our legacy for the future, our important responsibilities to people who are living now, our economic care and concern for them as we undertake reformative legislation or our sense of commitment to the future of this country.

The piece of legislation that we are debating this evening will be looked back on with shame by children and grandchildren of the people who are in this place because it is about political expediency, it is an expression of a rising cynicism and it is certainly all about a short-term political gain—a branding exercise, if you will, trying to position themselves as the goodies on this issue and the rest of us who oppose them as the baddies. The reality is that this complex matter requires a much more sophisticated, a much more ethical and a much more nuanced debate and discussion.

As Senator Ludwig has just pleaded in his speech, by separating this part of the legislative package out, we are providing an opportunity for those opposite, who I can see are extremely studious and paying attention to the important work of state before them! Look further than the papers that are on the desk in front of you right now. Look to the future for your children, your grandchildren, my children and my grandchildren—all of us together as Australians. This is a national appeal and a time we should be considering this rather than acting in a party-political, partisan and small-minded way.

The abolition of the Clean Energy Finance Corporation is a clear example that the Liberal Party—the self-proclaimed party of capital—has absolutely lost the economic plot. The action in this legislation is proof that the Abbott government's claim that Australia is open to business is yet another lie. It is yet another example of an economically illiterate government that cannot seem to fathom the simple equation that economic growth requires capital investment. We have on display here this evening the government's lack of economic understanding and we have seen it on too many occasions already. We have seen it with Qantas, we have seen it today with its response to Holden, we have seen it with GrainCorp and, no doubt, we are going to see it again and again.

The CEFC is part of our market-based solution to climate change. It adds to the equation of pricing pollution. It acts by providing low-cost loans to stimulate investment in low-emission practices and technology. For example, there are the Macarthur, Taralga and Pacific Hydro Portland wind farms and the Moree Solar Farm, with 30 per cent going towards energy efficiency loans and 14 per cent going towards low-emissions technologies.

The fact that the CEFC-projected lifetime yield exceeds seven per cent is a powerful indication that it actually raises money. For a government that claims that there is a budget emergency, its actions are absolutely proving otherwise. This is a government that has spent almost an extra billion dollars each week that it has been in office. So I guess throwing away more money by winding up a profitable market-based investment mechanism is just par for the course of the way in which this government has started its term.

The risks posed by climate change are compelling, but it is also important to recognise the huge potential that we have unlocked for business through this market-based solution. By pricing pollution, Labor has established a cost incentive for companies to lower their greenhouse gas emissions. In the short time that it has been operating it certainly has already helped to foster and expand new and established companies to invest in services and infrastructure for a low-carbon economy, such as carbon abatement and renewable energy. I know that the farmers on the plateau in the electorate of Robertson and into Dobell on the Central Coast are very interested in this carbon abatement. They have been undertaking research and looking at their business models as to how they can be part of this transformation of our economy, grow their businesses and continue to grow their employment for the region.

Pricing pollution through a market based solution allows the government to get out of the way and simply provide a regulatory oversight role. Now, you would think that that would have to have an appeal to the Liberal Party. But here we are in this place as they seek to shut down, if you like, an effective business.

Labor's scheme recognises that the market establishes and develops the most efficient and effective means available to lower our greenhouse gas emissions. Indeed, a considerable part of the business community has already embraced a market based solution. And I am not talking about any small players here: the Australian Industry Group, for example, has long supported an emissions trading scheme. The chief executive of that group, Innes Willox, is on the record stating:

… emissions trading is the cheapest and most flexible path to reducing emissions.

And he is right.

The Australian Industry Group's policy mirrors the one that Labor took to the election, to move from a fixed price to an ETS one year earlier than initially scheduled. It also links Australia's ETS to Europe's, and will expand international carbon abatement in line with our liberalised trade practices, ensuring that our nation is well placed to profit—to profit from the international community's progressive embrace of market based solutions.

By and large, business recognises the need to act on climate change to preserve our way of life because business people are also mothers, fathers and grandparents, and they understand through their intimate connections with their families how vital it is that we act now—but not just for now. Action now must always have an eye to the future. In fact, that is the demand of us in this place, that we do not get so distracted and caught up in the pettiness of the things that might titillate those who want to report on what we do. Our challenge is as if we are in a helicopter, to rise above the traffic so to speak—to rise physically above and have a look—to rise ethically above and have a look to the future, which is in our gift at this time to do not just the most expedient, short-term and miserly response to the challenges that face our nation but to look with vision to the future as those who have come before us in this place have taken that responsibility. They looked to the future and provided us with this great nation and the opportunities that we have benefited from.

Business also recognised potentialities by pricing a commodity that was previously uncosted. Effectively, we have created a powerful market, a market that is growing and a market that has the potential to improve the life and living outcomes not just of Australians but of people who share this planet with us. Costing pollution means that companies have to think about the expense incurred by polluting. Once upon a time, I can remember growing up and the pall of smoke from local backyard incinerators on Saturdays and Sundays out in the western suburbs of Sydney; it was something that just used to lie over us. Anything could get tipped at the tip; recycling was a concept that we did not even talk about—really it was not a word that I heard until my children were at school and we started to think about it in a completely different way.

As things have changed and as there has been a cost attached to us in how we manage our local family waste we have changed how we behave, because money matters in the equation. By creating an expense when big businesses incur pollution—in my view, evening the playing field between ordinary households and big business—business has found ways to mitigate this as much as possible. And in doing so they have absolutely reassessed and audited their practices, and found more efficient ways to create and produce. In doing that they have not only improved the bottom line of their business practice but also had a positive impact by creating a cleaner atmosphere.

Releasing this incentive through an ETS is the most efficient means of effecting a reduction in carbon emissions, encouraging economic and environmental sustainability in the process. Too often the policy argument for climate change is framed around economic growth versus environmental sustainability, but essentially they go hand in hand. This is exactly what I was trying to say in my remarks earlier, that this determination to brand as different this new government is such a short-term, cynical play that is absolutely taking away from the much richer and vital conversations we should have about growing business and growing our environmental sustainability. If there was any vehicle that was implemented in the 43rd Parliament that has ensured that has happened, it is the element that is at the heart of this piece of legislation, the CEFC. This has been a powerful and effective body that has done great work in a very short period of time, and it does not deserve to have its head chopped off by those opposite in this quite disastrous and, in my view, limited-vision-view of the world.

Of course, the profits to be made in a low-carbon economy form as much of an incentive as the costs associated with inaction. In July, climate scientists produced new research published in the journal Nature, warning that the melting of the Arctic permafrost could slash $60 trillion from the world economy if nothing were done to mitigate the effects of climate change. Melting of the permafrost would release huge methane reserves that scientists predict will cause global mean temperatures to rise by over two degrees 15 to 35 years earlier than previously thought. Considering that the global economy was worth around $70 trillion last year, this piece of research absolutely highlights the financial cost of not acting in a way that looks to the future. It is also a powerful incentive for us to act and for us in Australia to retain the CEFC.

The coalition's supposed alternative offers no specific details beyond a series of one-line comments, a collection of thought bubbles, and motherhood statements about direct action. As they stand there with their hands in the air, smiling as sweetly as they can manage, they say: 'Just trust us, and we'll be doing the right thing for you. Don't ask any questions and don't look at any of the detail, because if you look at the detail you'll see that we're ripping the heart out of a powerful transformer for the Australian economy, and we just don't care enough about it to bother to do the right thing.'

Direct action is a joke of a policy. It has the government front and centre in true Soviet style, picking winners and subsidising polluters, all at the taxpayers' expense too. For the coalition, the self-proclaimed party of capital, to be abolishing a market based mechanism in favour of an inefficient centralised model that costs more to achieve less is an act that defies logic. Direct action is so ridiculous that the government has hidden its detail from public ridicule. One constituent wrote to the environment department in early October asking for documents or web pages explaining the direct action policy. Fortunately, he decided not to hold his breath, because to this day he is still waiting for a definitive response. Such is the lack of transparency of those who sit opposite me in this chamber, ready to destroy this very significant vehicle of transformative change for the Australian economy and for our environment.

In closing my remarks this evening I would like to refer to a very interesting article by Peter Hannam in 'News Review' on the weekend of 30 November and 1 December in which he put on the record a response to that very, very short—one day—Senate inquiry into the repeal of the carbon laws and especially the CEFC. It has a very nice summary of what has been going on and the level of investment. The article reported:

The fund's board told the inquiry that for every dollar invested, the private sector had spent three, for a total of $2.2 billion. Chief executive and former Macquarie Banker Oliver Yates said the CEFC would approach $1 billion in investments this financial year.

A little further on in the article, and in contrast with the claims of those opposite that this is a dead duck and liability to the Australian economy, we find that the Commonwealth Bank has tipped in half of a $200 million fund investment. We also find that China's biggest bank, ICBC, Spain's Banco Santander and FRV, Denmark's export credit agency and Shinsei of Japan have each embarked on forays into Australia or the local renewables sector because of the Clean Energy Finance Corporation. People who know, people who invest wisely , are into this. It is only the Liberal Party that are going to walk away and they should hang their heads in shame. (Time expired)

9:10 pm

Photo of Anne McEwenAnne McEwen (SA, Australian Labor Party) Share this | | Hansard source

I too would like to contribute to the debate tonight on the Clean Energy Finance Corporation (Abolition) Bill 2013 and I will state upfront that I oppose this bill. I do find it hard to believe that after so many years of debate about climate change we are still here in this place talking about the causes and effects of climate change and how best to tackle its challenges. I would have hoped that those arguments were done and dusted. Climate change is not a new concept. In contrast with what some government members have said from time to time, climate change is not something thought up by the Labor Party to incite worry and concern in the community. It is not a conspiracy theory. It is real. It is happening. And if we do not act to reduce the pollution that causes climate change then climate change will have a major impact on Australia's economy and our environment, and those impacts will increase significantly over time as the temperature rises because of pollution.

More than 97 per cent of published climate scientists agree that climate change is real and is driven by man-made greenhouse gas emissions. I am talking about real scientists here. I am not talking about Alan Jones or the Tea Party or the Heartland Institute, or their acolytes here on the other side of the chamber in the Liberal Party who think they know better than the real scientists and who have hijacked the moderates in the Liberal Party and imposed their ultraconservative views on the so-called Liberal Party.

Labor, in contrast, listens to the real scientists and not to conspiracy theorists. We accept the science and we understand that our climate is changing as a result of carbon pollution. We recognise the harmful effects of that on our nation but, more importantly, we recognise the need to act urgently to mitigate the impact of pollution. Similarly, we accept the advice of the real economists amongst us that the best way to stop pollution is to put a price on pollution. It is basic economic theory that if you want to stop an undesirable behaviour then the best way to do that is to put a price on that behaviour—and that, more than anything, will cause people to change their behaviour. That is why the Labor Party have had a longstanding policy of putting a price on pollution. That is why we favour an emissions trading scheme that puts a price on pollution and enables polluters to operate within that system, which is effective and economically sustainable and is supported by most economists in this country and around the world. Indeed, it was the position that was supported by the former Liberal Prime Minister, Mr John Howard, who also supported an emissions trading scheme.

However, here we are tonight debating a bill put up by the coalition which is undoing the carbon pricing mechanism that Labor put in place with the intention of reducing carbon pollution in our country. As well, the coalition is of course refusing to implement an emissions trading scheme and instead have floated the very nebulous hard-to-pin-down and strange Direct Action plan, which no credible economist in Australia supports. The only people who seem to support it are the coalition; nobody else seems to understand what it is about.

Part of the deconstruction, if you like, of the framework for reducing carbon pollution in Australia is this bill before us tonight, which aims to abolish, as it says, the Clean Energy Finance Corporation. The overwhelming objective of the government, of course, is to allow polluters to have free rein and to put the brakes on the development of renewable energy technologies and of renewable energy itself. They want to go back to the bad old days when pollution is unregulated and people can just pollute as they will.

It would be a devastating blow to the impetus to reduce carbon emissions if indeed this bill were successful and the Clean Energy Finance Corporation were abolished. Here we have a very worthwhile organisation set up by the Labor government, that is helping to tackle climate change both in Australia and around the world. It is one of only a handful of organisations that act as a facilitator for renewable energy and clean technology investments globally, yet this government refuses to acknowledge that fact and, instead, they are wanting to get rid of it entirely.

Probably one of the most important aspects in the move towards a clean energy future is that the CEFC facilitates comprehensive commercial loans for both renewable and cleaner energy technology investments and funds emissions reductions at a negative cost to government. Remarkably, through investing $536 million of CEFC funds including Low Carbon Australia's portfolio and $1.55 billion in private sector co-financing the CEFC has facilitated over $2.2 billion in projects, delivered 3.88 million tonnes of abatement and achieved a net return to the taxpayers of Australia of $2.40 per tonne of abatement. In other words, the CEFC is reducing carbon pollution at a profit of $2.40 per tonne. It is making money for the government. But for some reason the government do not want to see that profit. Well, we know why—there is a reason of course. It is because they are fundamentally and ideologically opposed to tackling the problem of climate change.

Despite those figures, the government maintains that this is not a worthwhile organisation. We know that to dismantle this organisation—and this evidence was made clear in the Senate inquiry—will actually cost the government money. But these facts about the issues do not stop those opposite from pursuing their ideological objective, which I outlined earlier, to do nothing about carbon pollution and the effects that it has on our economy and on our environment. The CEFC is achieving abatement efficiently and at a low cost and the emission reductions that occur under it come at a much lower cost to many other programs that we have seen in this space. The investment model is generating abatement which is delivering a financial return for the CEFC, for the government, for business, for the taxpayer and for the economy. Although it is aiding Australia, the government is intent on obliterating the CEFC and leaving us one step closer to having no organisations helping businesses that want to reduce their carbon emissions.

The CEFC works collaboratively with co-financiers and project proponents to seek ways to secure financing solutions for the clean energy sector. It provides and develops finance solutions across the clean energy sector and, as a participant with other financial institutions, the CEFC is a policy winner with the ability to rapidly respond to changing dynamics. It has proven, as I said, to be cost-efficient for government and recipients and it develops a market through co-investment, participation and persuasion rather than through handouts. So this is a great model that involves industries and organisations and companies that, unlike the government, actively want to work together with investors and with government to reduce carbon pollution.

I have been very pleased to hear of some of the successes of the CEFC and tonight I would like to share with the chamber some of those good news stories from my home state of South Australia. I will start with the iconic South Australian ice cream manufacturer, Golden North. Golden North is a very valued brand in South Australia. As its name suggests, it started in the northern part of my state and all of us who grew up in South Australia are very fond of Golden North ice cream and the brand.

Golden North used $895,000 of funding to upgrade their refrigeration and to help them expand their business into the South-East Asian markets. That upgrade increased Golden North's refrigeration system's compressor plant capacity by more than 40 per cent and the use of variable speed drivers, pressure controls and energy monitors helped produce refrigeration carbon emissions by just under half.

As a result of those changes, the time it takes to harden the ice-cream is halved and Golden North can increase their production levels. The company, which has a regional manufacturing base in Laura, north of Adelaide, employs around 50 staff and produces about 8.5 million litres of ice-cream annually. As a result of the upgrades funded by the CEFC, Golden North has subsequently been able to create more local jobs—a fantastic result and exactly what we need for our local regional communities in South Australia.

The CEFC provided finance to support a grant for 50 per cent of the cost from the Australian government's Clean Technology Food and Foundries Investment Program, and Food SA provided funding towards preparing a business case and grant application. That is a textbook example of government and private companies working together in partnerships to reduce carbon pollution.

In Port Augusta, also in my state, Sundrop Farms is building a 20-hectare greenhouse facility using a renewable power supply and a sustainable water source to assist them in the production of over 15,000 tonnes of tomatoes a year. Using solar thermal technology, Sundrop Farms will generate power to desalinate seawater for irrigation, as well as for heating and cooling the greenhouses. The system is ideally suited for agricultural production in much of Australia's semi-arid land and demonstrates the potential for meeting global food production challenges sustainably and profitably using renewable technologies.

Port Augusta is a regional centre which has lost a lot of its traditional sources of employment, so these kinds of projects will provide a major boost to the Port Augusta economy and will have wider benefits for both businesses and sustainable agriculture research both in South Australia and across Australia. Once fully operational, Sundrop Farms will employ about 200 people, with substantial opportunities for local and state-based business during the construction phase. The CEFC proudly financed approximately one quarter of the project cost and helped catalyse finance for this very innovative and worthwhile project in the north of my state.

In yet another success story for South Australia, global engineering and environmental professional services company URS Australia Pty Ltd has cut their lighting bills by more than 40 per cent by installing more efficient lighting and occupancy sensors in their Adelaide office. A $30,000 lighting system involved upgrades to existing down lights in the entry foyer with new LED fittings and the installation of occupancy sensors throughout the open-plan office area to reduce lighting when it is not needed. URS Adelaide used on-bill finance through Origin and the CEFC to cover the cost of the upgrade, which is helping to reduce carbon emissions from URS Adelaide's total electricity consumption by around seven per cent.

There are success stories like this around the nation as a result of the CEFC. By focusing on projects and technologies at the later stages of development, the CEFC can expect the organisations to have a positive expected rate of return as well as the capacity to service and repay capital. Typically, the CEFC expects a private sector co-financier to participate with them to support projects, demonstrating that the risk profile to be assumed by the CEFC is broadly market based.

To support the sector and achieve its purpose, the CEFC may provide concessional finance but does not make grants. The nature and terms of such concessional finance takes into account the external benefits that they assess the project generates, meaning concessional finance may be in the form of lower pricing, higher risk and/or longer duration. One of the CEFC's core objectives is to address financial impediments that reduce the availability of private sector finance. The CEFC seeks out innovative structures to address such impediments which prevent investments in the clean energy sector.

Apart from the success stories I have already mentioned, in their relatively short time since conception, the CEFC has realised a number of achievements. Since it was established under the former Labor government, the CEFC has committed $536 million of its own budget, while mobilising over $1.5 billion in private capital. Each and every investment is averaging a return of seven per cent, and that is a success in anyone's books. As I mentioned earlier, the corporation is averaging a return of $2.40 per tonne of carbon emissions abated.

The CEFC have many projects in the pipeline. As of June this year, they were involved in active discussions with more than 50 project proponents who were seeking around $2 billion of CEFC funds, with a further 100 projects lined up. If this bill is successful in this Senate this week, all of those future projects and all of the employment, innovation and carbon abatement associated with those projects are at risk. It is all at risk because of this government's ideological obsession with undoing Labor's commitment to addressing climate change by reducing carbon pollution.

It will be a sad day if this Senate agrees to abolish the Clean Energy Finance Corporation. It is one of the signature developments of the previous Labor government. It has been extremely successful, as I have said, and it is perhaps because of its success that the government wants to now abolish it. It is a passing strange thing that the government would want to do that to an organisation which has demonstrably been so successful in all of the objectives that it was set up to achieve, so I trust that those government senators opposite who heard me talk about the benefit of this organisation to my state of South Australia will think very carefully about their decision on this in the days to come. I for one will be extremely disappointed to see the Clean Energy Finance Corporation dismantled in favour of what the government intends to put in its place, which is a name, a thing, called Direct Action, which nobody understands and which nobody has the details of. More importantly, nobody has convinced anybody—any economist or climate scientist—of the effectiveness of it. We know that the way to go in reducing carbon pollution when reducing pollution overall is to implement an emissions trading scheme. That is Labor's objective and why we will oppose this bill. We will not stop in our quest to ensure that polluters pay and that there is a price on carbon.

9:30 pm

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

…   …   …

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

I emphasise 'but'—

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

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

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

whom I referred to before—

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

…   …   …

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

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

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

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

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

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

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

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

Debate interrupted.