Tuesday, 10 December 2013
Clean Energy Finance Corporation (Abolition) Bill 2013; Second Reading
I rise to make a contribution to this debate today on the Clean Energy Finance Corporation (Abolition) Bill 2013. I know that there have been many people on this side of the chamber engaged in the debate and not too many on that side of the chamber wanting to put their names and voices to this activity. There is probably a very good reason for that. For those who are watching this debate today: the abolition of the Clean Energy Finance Corporation is something that the opposition, Labor, is vehemently opposed to, and let me tell you why.
The Clean Energy Finance Corporation was conceived by the original multiparty climate change committee process and then had more scrutiny under the expert review panel, which was chaired by Ms Jillian Broadbent, who is the chair of the board of the Clean Energy Finance Corporation. Quite importantly, she said at the time of the review:
The establishment of a $10 billion fund dedicated to invest in clean energy will catalyse and leverage the flow of funds for commercialising and deploying renewable energy, low emissions and energy efficiency technologies. In this way we will be preparing and positioning the Australian economy and industry for a cleaner energy future.
It seems that there is no debate that we all want a cleaner energy future; it is just that the coalition government has decided that it is ideologically opposed to the notion of a Clean Energy Finance Corporation and what it represents.
Recently at the Senate inquiry into this bill the chair of the CEFC, Ms Broadbent, gave evidence about the performance of the Clean Energy Finance Corporation, and I think that it is very important that we place this on the record. The evidence that she provided supporting the Clean Energy Finance Corporation's establishment has been soundly reinforced by the experience and the results of their 15 months of operation. They have not had long to set their processes in place but have achieved an extraordinary amount in that time.
First of all, the Australian government of the day had used the medium of the investment mandate that the Clean Energy Finance Corporation was given to instruct the corporation to use commercial rigour and avoid excessive risk. We have heard through many of the contributions in the debate the extent to which the corporation was very diligent in exercising that responsibility of managing excessive risk. The board adopted a very conservative approach to building its investment portfolio, principally focused on debt investments on terms matched by private sector co-financiers and with a minimum of funds invested in equities. Again, it was using the investment mechanism of the corporation to partner with industry partners, private sector partners and co-financiers to ensure that commercial rigour was applied. It was a very conservative and, as you will hear, very successful approach to its investment portfolio.
We have heard many people focus on the fact that the Clean Energy Finance Corporation is actually making money for the Commonwealth over and above the cost of the funds, which means that the taxpayer is actually getting the lowest-cost abatement from Australia's investment in this fund. We have also heard that the board had put in place a very rigorous system of risk management, investment selection and corporate governance. The reason that we had those very key rigorous systems in place is that the Clean Energy Finance Corporation board members are very experienced private sector board directors. They are seriously engaged in industry. They do understand the financial systems and the issue of investment regulation in Australia. So the board has put in place a system which allows every Clean Energy Finance Corporation investment to provide positive externalities and demonstrate how it successfully addresses market barriers.
I think it is most important for us all to register that not one of the Clean Energy Finance Corporation's investments or, before the Clean Energy Finance Corporation, those of Low Carbon Australia has fallen into default after three years of collective experience. So we are not talking about high-risk experimental investments. We are not talking about venture capital into things that were experimental. We are talking about serious investment in a constructive portfolio of investment projects that are very seriously targeted at creating our clean energy future.
We also heard from the Clean Energy Finance Corporation that in the very short period of time that it has existed it has funded projects involving over 500 megawatts of clean energy generation capacity that have been installed or supported, covering renewables and low-emission technologies. So, right across the board, innovation has been the key in all of this. The CEFC has developed a portfolio of $536 million and, through the co-finance partners, has invested in projects with a value of over $2.2 billion. It is delivering abatement at a negative cost—that is, at a net benefit to the taxpayers—of $2.40 per tonne of CO2 abated. The CEFC is investing across a broad range of technologies, including wind, solar, bio-energy, energy efficiency and low-emission technologies. Many speakers in the debate have had the opportunity to showcase some of the really successful projects in their own states and territories that demonstrate the extent to which these investments have taken place. We only need to drive along Lake George to see the massive wind farm investment that is there. We had an announcement only last week of the Collector wind farm. We have seriously invested in wind technology in this capital region. It has been a priority of our regional development strategy, yet it is something that is just not being valued by the government today.
The CEFC is also investing in projects that are demonstrating the benefits of proven technologies in the Australian market and helping to maximise the commercialisation of our expertise and its export to the world in very significant ways. There have been active discussions with 37 proponents for $4.5 billion in projects and an initial assessment of 142 projects, representing 179 innovative projects in clean energy technology and $14.9 billion of opportunity. So the CEFC has 39 investments in the portfolio as of August which are estimated to deliver 3.8 million tonnes of CO2 abated annually. The investments are building Australia's clean energy supply chain capability, which is quite critical and fundamentally important when we think about things like the solar farm in Moree. The investment in regional and rural Australia supporting 21st-century jobs in local communities has also been a critical part of the planning and investment management strategy of the CEFC.
Last night we heard speaker after speaker talk about the many industries that are benefiting from CEFC financing including agribusiness. We heard about greenhouses, we heard about flowers, we heard about Asian vegetables, we heard about manufacturing utilities and about local government. I know Senator Urquhart was talking about the local council in Tasmania that has taken up an investment in clean energy technology in this way. Through matched private sector funds of $2.90 for each one dollar of CEFC investment, the CEFC has been able to capitalise over $1.55 billion in non-CEFC private capital investment in projects and programs to deploy renewables and improve energy efficiency.
The investments originated by the CEFC to date exceed the five-year Australian government bond rate, so the yield that we are actually receiving from this investment is greater than the government's own bond rate. The five-year bond rate across the portfolio is 3.11 per cent and the average yield of these portfolios is 7.33 per cent. So it is difficult to understand why the government would want to abolish something as successful as the CEFC. There is no rationale except that the government is absolutely ideologically driven in this regard.
What is the result of actually doing this? First of all, there is no evidence of any plan for provision to another scheme or program so we do not know what is going to happen to the staff except that they are going to lose their jobs within four weeks of the bill being passed. What do we lose? We lose a very highly skilled pool of commercially savvy investment team advisers from the government. The government cannot afford to lose that expertise either but it is being lost in a way that no-one seems to have registered. People who can understand the investment market and the investment processes on the government side is such an important skill set. If we do not have those people with us then we will lose them to the commercial market. Without the CEFC as a focus fund to work with the sector to address market caps, the economy is very likely to start seeing a pullback of emissions-reducing project investment. The market barriers will persist and the positive budget outcomes from the emissions abatement will be foregone.
What the government is seeking to do in abolishing the Clean Energy Finance Corporation is take a tool, a very important potent policy tool, out of its own toolkit. It is a nonsense that we would be going down this path. The government is taking from itself a tool that can help it to galvanise and catalyse its own direct action plan—if we actually understood or had some detail about what direct action might mean. It is taking money out of its own coffers, a net return to taxpayers of over $200 million per annum, despite the fact that it would also contribute 60 per cent of the total abatement required to meet the bipartisan 2020 national abatement target. There is no logic to this abolition. The government does not believe that Australians should be innovative, responsive, or participate in national debate on the international effort to reduce emissions. The government believes that we should not be promoting energy efficiency, that we should not be stimulating the economy and that we should not be generating revenue for the government that is actually helping to grow and stabilise regional economies. It is irresponsible what the government is doing. What it does do is send to the market major confusing signals about how we are going to invest in these clean energy technologies.
There is a range of technologies. Those 129 projects that are in the investment pipeline at the moment that the CEFC has been asked not to continue discussions with are doing some amazing things we heard about, not just the wind farms but also the solar farms at Moree. There is a major solar farm planned for just outside of Canberra. Where that will go now, we do not know. I am sure ACTEW is quite concerned about that. We are starting to see renewable technologies used for food production in hydroponics, in the greenhouses that we heard about last night, and in technologies to manage drip irrigation and target irrigation in our wineries and agricultural industries. All of these projects provide export potential to the government. There are massive projects around the growing of Asian vegetables, addressing the bigger picture issue of food security in the world. We have got cherries from Young going to China. We have amazing investments in things like low-energy lighting, batteries and storage for solar generated electricity. We have clean grids and green grids—those kinds of opportunities that allow rural and remote communities to have access if not to baseload power then certainly enough power to manage if they are not on the grid.
These are the kinds of projects that are going to go down the gurgler because of the Clean Energy Finance Corporation being abolished. They are the projects that require a little bit of skin in the game from the government to promote and support investment by our banks, by our industry partners and by those who are looking to invest in our clean energy future. All of those are international organisations and international banks who are looking to Australia and saying that Australia has been leading the way in providing this kind of capital. It is patient capital, but it has been very productive capital.
We have provided for the world some models of investment instruments that are very different and very innovative. We have encouraged others to take up these models, yet we are about to throw the baby out with the bathwater. What's that all about? It is simply about the fact that this government does not believe in climate change, does not believe in reducing our emissions, does not believe that we should invest in a clean energy sector and does not believe in local solutions for our industry. The shame of it all is that we are all going to have to live with the legacy of this.
At least 100 of the 139 projects in the pipeline are there because of the challenge of putting together an investment portfolio. Without the investment and support of the Clean Energy Finance Corporation—guess what—they are going to really struggle to pull together the risk matrix that will enable overseas investors, many of whom are interested in being here. Without the key investment from the Clean Energy Finance Corporation, it is going to make it so difficult for those investors to get past their own prudential regulations and their own risk management approach. That is basically going to mean that these projects will struggle to get up.
Of all of the innovation that we have been hearing about in this debate, be mindful of what we are going to lose here and what the reason for that is. The consequences of closing down the Clean Energy Finance Corporation are going to be lost jobs, lost opportunities, lost futures, lost businesses—small businesses that were developing this innovation and working collaboratively—lost opportunities for research, lost opportunities for Australia and, of course, lost opportunities for the planet because we are leading in many of the innovation projects that are being supported by the Clean Energy Finance Corporation. The day that the Clean Energy Finance Corporation is abolished is a day of shame for Australia.
It has been very clear that there is nobody on the Nationals' side of the parliament prepared to stand up and support this because they know the projects in their communities that are going to be impacted very significantly by the abolition of the Clean Energy Finance Corporation. It is up to them. They are the ones who are going to have to go back to their communities and justify why they did not stand up in this parliament to support the Clean Energy Finance Corporation, which is continuing to do a great job and lead in innovation and investment in our regions.
I rise to make my contribution to the Clean Energy Finance Corporation (Abolition) Bill 2013, but, before I do, I congratulate Senator Stephens on the very passionate presentation that she just made to the chamber. All of us who know Senator Stephens know that, as a New South Wales Labor representative from Goulburn, her commitment to rural and regional Australia, agriculture and horticulture is unquestioned. Well done.
While in government, Labor did recognise that Australia did need to act on climate change. We need to take action as Australia is the biggest polluter per capita in the world. In government, we responded to the science and to an overwhelming concern from the Australian community that action needed to be taken to reduce the amount of carbon that is emitted into the atmosphere. Prime Minister Abbott, then Leader of the Opposition, made an admission in October 2009 that around:
… 80 per cent of people believe climate change is a real and present danger.
That quote was made in Beaufort in Victoria on 1 October 2009, yet he still chose to obstruct the Labor government's plan to protect the environment and, of course, future generations.
This should surprise no-one. However, as the Prime Minister has a long history of climate scepticism, it is now his duty to explain to the Australian people in detail how the coalition will combat the impacts of climate change and why he wants to axe the successful Clean Energy Finance Corporation. When it comes to the environment and climate change, unfortunately, this Prime Minister is a walking contradiction. After years of confused statements on the issues of climate change and global warming, it is time for the Prime Minister to get serious on this very important issue.
On 27 July 2009, Mr Abbott said that he was:
… hugely unconvinced by the so-called settled science on climate change.
That was in an interview with Kerry O'Brien on The7.30 Report. He also said that he thought the issue was 'absolute crap'. When questioned by Barrie Cassidy in February 2010 about his comments, the then opposition leader's response was:
I think what I actually said was that the so-called settled science was a little aromatic.
Well, Mr Prime Minister, we know what you said. You did not say that. The Australian people know exactly what you said, and I suggest, Prime Minister, that you should at least try sticking to the truth.
After Mr Abbott made his views on the science behind climate change quite clear he then shocked us with this little pearl in a television interview in 2009:
… if you want to put a price on carbon, why not just do it with a simple tax? Why not ask motorists to pay more, why not ask electricity consumers to pay more, and then at the end of the year you can take your invoices to the Tax Office and get a rebate of the carbon tax you have paid?
It would be burdensome, all taxes are burdensome, but it would certainly change the price of carbon, raise the price of carbon, without increasing in any way the overall tax burden.
That was on a Sky News interview in July 2009.
So is this supposed to be one of those moments where we were not to take him seriously because what he said was not written down? Perhaps what he said was not the gospel truth? At the time of that interview a price on carbon was Liberal Party policy. While Mr Abbott was clearly trying hard to toe the party line, eventually his climate change scepticism got the better of him. Mr Abbott cemented his position on climate change when he replaced Mr Malcolm Turnbull as the Leader of the Opposition, after he and other coalition members revolted over Mr Turnbull's cooperation with the Labor government on an emissions trading scheme.
This should have been a very clear signal to the people of Australia that the new opposition leader, being Mr Abbott, had no interest whatsoever in climate change or global warming. The Prime Minister's conduct throughout this whole debate has proven, unfortunately, that you cannot take him at his word. So where does this leave us now?
We have a Prime Minister and a government who do not believe in climate change; they have made that clear. The arrogance of this government has been astounding when dealing with questions surrounding this issue. We must not forget the moment when Mr Abbott accused the United Nations climate chief of, in his words, 'talking through her hat', while being interviewed by Neil Mitchell on 3AW on 23 October 2013. Following the disastrous fires in New South Wales in October this year, the Executive Secretary of the United Nations Framework Convention on Climate Change, Ms Christiana Figueres, said that while there had not yet been proven a direct correlation between the New South Wales fires and climate change, what is:
… absolutely clear is the science is telling us that there are increasing heat waves in Asia, Europe, and Australia; that these will continue; that they will continue in their intensity and in their frequency.
Christiana Figueres, Executive Secretary of the UN framework—those were her words.
Further to Mr Abbott's responses on Neil Mitchell's 3AW show on 23 October, the Prime Minister continued on to say that bushfires are 'just a function of life in Australia'. Tracy Bowden reported on the ABC's 7:30 on 21 October that many climate scientists have confirmed that there is a link between global warming and bushfires. John Connor, CEO of the Climate Institute said:
Carbon pollution is a heat-trapping greenhouse gas that is like putting the weather on steroids. It drives the greater extremes. It's not just warmer weather, it's wilder weather.
So here we have scientists who have research based on extensive data, and the Prime Minister simply brushes off their expertise and settles it by saying, more or less, that we should just put up with these natural disasters because they are part of our Australian lifestyle. Prime Minister, this simply is just not good enough.
There is one person in the coalition, however, who has the courage to stand up to Mr Abbott on climate change.
Yes! Former leader, Mr Malcolm Turnbull, observed that any coalition climate change policy that did not contain an emissions trading scheme would:
… simply be a con, an environmental fig leaf to cover a determination to do nothing.
After all, as Nick Minchin observed, in his view the majority of the party room:
… do not believe in human caused global warming.
That is a quote from Mr Malcolm Turnbull. So, according to the member for Wentworth, any policy that the coalition produces relating to the environment is purely a policy for the sake of having a policy, with no intention to carry out or deliver on it.
Things are starting to become a lot clearer now. Certainly, we can see that Mr Abbott has not been getting his ideas on climate change from Mr Turnbull. But who has been most influential in shaping the Prime Minister's views on climate change? A study of the views of former Prime Minister John Howard, who Mr Abbott affectionately describes as 'his ideological father', proves enlightening.
During 2007 Mr Abbott stated his support for an emissions trading scheme and the then Liberal government went to the election with an ETS as part of its platform. This would therefore seem to be at odds with Mr Abbott's firm scepticism on climate science. However, Mr Howard has recently enlightened us as to what his views really were when he publicly promoted an ETS. In a speech to the climate sceptics' Global Warming Policy Foundation on 6 November this year, Mr Howard made it clear that he had not accepted the science on climate change and that his support of an ETS was purely for political expediency before an impending election.
The revelation of Mr Howard's views is important for a number of reasons. First, we now know that Mr Howard and Mr Abbott are in agreement on their views on climate change, confirming that once again Mr Abbott has followed the example of his mentor. But we also discover that Mr Abbott is not of the same political calibre as his hero. While Mr Howard was prepared to put his own views aside and accept that the Australian people were demanding action on climate change, Mr Abbott continues to show both indifference and a concerning lack of respect for the Australian public. It is clear that he does not view himself as accountable to the voters on this issue.
From long before the election campaign Mr Abbott has told us that he has a plan for the environment and that we can trust him on his commitment to cut emissions by five per cent. We all know about the coalition's direct action policy. It aims to cut emissions mainly using a 15,000-strong army to plant trees and using money to buy emission reductions from polluters who voluntarily sign up to the coalition's Emissions Reduction Fund. But, rest assured, Mr Abbott has a plan for 'real action', which confuses me. Why would you take real action against something that you don't think exists? Mr Abbott's policy removes the legal cap on pollution and allows the big polluters open slather. Instead of making the polluters pay, Mr Abbott is setting up a slush fund of billions of taxpayer dollars to hand to polluters. Experts agree this will cost households more, while failing to cut pollution. The direct action policy, a thought bubble of the Prime Minister and his Minister for the Environment, Mr Greg Hunt, is a token set of talking points used to fend off accusations that the coalition are unwilling to act on climate change, while at the same time ensuring a good deal for their friends in the big end of town. As we know from Mr Turnbull, this plan is a con and it takes the mickey out of the Australian people.
What is more, the creation of the Emissions Reduction Fund will come at a high cost to the Australian taxpayer, mainly through the planned axing by the government of climate change organisations including the Clean Energy Finance Corporation, which is one of the most important organisations established by the former Labor government. In a blatant political move, the Prime Minister is going to cut this program that is actually making a significant difference to the environment and to the economy, as we have heard numerous times from various speakers on this side of the chamber. The $10 billion CEFC was created to encourage industries and businesses to invest in green technology. The CEFC facilitates comprehensive commercial loans for both renewable and cleaner energy technology investments and is set to fund emissions reductions at a negative cost to government. The CEFC is one of about 14 organisations across the world that act as catalysts for investment in renewable energy and clean technologies. It fills an important role in mobilising capital for investment.
The North Queensland Register reported on 2 December that interest in and demand for the work that the CEFC conducts has led to the board meeting no fewer than 27 times in the past 15 months. The report went on to say:
As of August, the CEFC had 37 projects under discussion, which were seeking over $2 billion in finance, and it had received proposals at varying stages for 170 projects seeking finance of over $5 billion.
One of these projects involved the CEFC and the National Australia Bank working together to co-finance Australia's biggest beef company, the Australian Agricultural Company, to install solar photovoltaic units across 15 grid connected sites in Queensland. The North Queensland Register article said this allowed the Australian Agricultural Company:
… to cut its grid energy consumption and carbon emissions by just under a third.
How can the government ignore these results? Simply because they do not believe in the science and they refuse to understand that there is a link between better environmental management and what that can do for industry and business productivity.
The decision by the government to scrap the CEFC, therefore ceasing the valuable work that they do, highlights once again the Prime Minister's disregard for the science behind climate change and the work that the CEFC are achieving. If the Prime Minister and his government took the time to understand the science they would understand that emissions reduction targets simply cannot be met without increased investment in clean and renewable technologies. At a recent Senate committee hearing, Jillian Broadbent, the Chair of the CEFC, said that it would be antiproductive to shut down the corporation and that it would actually cost the taxpayer more for the government to do so. So far the CEFC has invested no less than $536 million in emissions abatements, which equates to around four billion tonnes. According to Ms Broadbent, this equates to over 50 per cent of the per annum rate of emissions reductions that the government has to achieve to reach its five per cent emissions target. The average return on the CEFC's investment is seven per cent, a clear argument for retaining the corporation.
The government's alternative plan, for an Emissions Reduction Fund, will consume billions from consolidated revenue. A damning report by the Climate Institute using modelling from Sinclair Knight Merz MMA and Monash University's Centre of Policy Studies has also said that it is going to cost in excess of a further $4 billion in order for the coalition to meet the five per cent emissions reduction target by 2020. Mr Abbott of course responded by saying that he did not accept the findings of the report—cop that! At the heart of the research, however, was a finding that without that extra $4 billion needed to reduce our emissions on time, as highlighted by the Climate Institute, Australia's emissions will actually increase to a total of nine per cent. How many times will Mr Abbott deny the science behind climate change?
Ms Broadbent expressed concern at the coalition's Emissions Reduction Fund model, and its time frame, which will give grants to businesses who bid for funding to carry out projects that target emissions reductions. The government is yet to reveal in detail how it is going to do this. These grants are a direct expense by the government to businesses, whereas the CEFC are actively investing in emissions reductions projects which earn on average $2.40 per emission and these earnings are returned to the government. Ms Broadbent believes that if the CEFC are allowed to continue, not only will they be covering their operational costs within 12 months but they will also be helping to deliver the reductions target while providing a return to the government of $2.40 per emission. Instead, if the government cuts the CEFC, as it says it will, it will cost approximately $200 million in lost revenues to the Australian taxpayer. Simply put, it will cost the taxpayer more to shut down this organisation than Mr Abbott believes that will save.
From the outcomes based data shown by stakeholders including Ms Broadbent, it is easy to see that the value of the Clean Energy Finance Corporation extends far beyond carbon pricing and that it should be retained regardless of the headline policy approach that we end up with. I want to hear from the government in detail why they want to get rid of the Clean Energy Finance Corporation. During the inquiry into the government's carbon tax repeal bills, the Senate Environment and Communications Legislation Committee heard from a number of stakeholders, and not one person, whether they be an investor or a representative from an NGO or someone from the business community, gave evidence as to why the CEFC should be shut down.
Epuron, a leading Australian renewable energy company, said:
The role of the CEFC is pivotal in enabling renewable energy projects, particularly solar PV, to reach financial close so that more are built and the market in Australia matures at a faster rate.
Given the government's infrastructure agenda, … dismissing co-financing as a useful policy instrument—
as used by the CEFC—
may be premature.
The Responsible Investment Association Australasia, in their submission, strongly pointed out:
… the CEFC co-investment model is a prudent and cost effective way to allocate limited public funds to leverage private investment to do the heavy lifting in the investment into a low carbon transition.
Despite these endorsements from people within industry, and despite the real results that the CEFC is achieving, the Minister for the Environment, Mr Hunt, has arrogantly brushed them off and has labelled the CEFC as 'incredibly speculative'.
I agree with Ms Broadbent, the Chair of the CEFC, when she said:
It's disappointing a tool that is fiscally responsible and effective is being abandoned.
It's also disappointing that it's so politicised. You just want to get on with what you think is in the public good, which is positioning Australia for a low carbon world.
In conclusion, I do not think any level-headed Australian—if I can refer to senators as being level-headed Australians—could disagree with that statement. I will not be supporting the bill.
I am very pleased to have this opportunity to speak before the Senate today on the Clean Energy Finance Corporation (Abolition) Bill 2013. It is a bill which the government tried to hide within a big package of bills—in a way, to veil the broad ideological attack in unpicking some very sensible, economically rational steps that the Labor government took to enhance our capacity to produce clean energy in Australia.
Senator Abetz has tried to suggest that there is a mandate for this legislation. I do not believe there is a mandate for this legislation. The carbon tax, for which the government are claiming a mandate, can be repealed without abandoning the Clean Energy Finance Corporation. We do not agree with that either, but the fact is that trying to hide this in a suite of bills has certainly failed for them, and that gives us the opportunity to talk specifically about the Clean Energy Finance Corporation and the fine work that it does within Australia at the moment and has done since its inception.
I guess we are not surprised as an opposition and as a former Labor government that the coalition has taken its attack to the Clean Energy Finance Corporation. We know that this government has chosen to proceed down a path on climate change that is driven by a very stunted and blind ideology. Consistently we see the government squirming around the facts of the matter, both on the science of climate change and now in defence of a very flawed Direct Action package that it claims is going to service the needs of reducing our carbon emissions into the future. Of course it will not, and we have heard already from many speakers in the chamber debating this particular bill about the pure folly of the Direct Action approach and about how in fact the government's abandonment of—its walking away from and now complete rejection of—an emissions trading scheme really underscores the failing and flaws within its Direct Action Plan.
The coalition do not appreciate that meeting an emissions reduction target needs investment in clean and renewable energy technologies. It is one thing to lay claim to an ideological package like Direct Action. It is another thing to prevent or disable Australian industry's capacity to develop its clean energy technology industry, and that is exactly what this bill seeks to do. The coalition government are choosing their narrow-minded ideology over the effectiveness of the Clean Energy Finance Corporation to enhance Australia's capacity for clean energy production into the future.
I would just like to focus for a moment on what the Clean Energy Finance Corporation actually does. The corporation facilitates comprehensive commercial loans for both renewable and cleaner energy technology investments. This corporation, like around 14 others across the world, acts as a catalyst for investment in renewable energy, adding a great deal of value to the efforts of tackling climate change in Australia and around the world by reducing carbon pollution. The CEFC is a key part of Labor's suite of clean energy strategies, which were geared towards having a comprehensive approach and leveraging all of the economic tools that we have at our disposal to do that. One of them, of course, is making sure that our capacity continues to grow.
This is not just for our own needs. Our own needs are incredibly important, as we have our targets to reach and our vision for a cleaner future to pursue, and Labor remains committed to that. But it is also about our place in the world and what we have to offer our neighbours and other trading countries. We know that around the world other countries are gearing up their renewable energy capacity for their own needs as well as the export potential. As we move through a period of transition in our economy more broadly, our ability as a nation to export renewable energy technologies is critically important. So the Clean Energy Finance Corporation, while serving the needs of the challenge we confront as a nation in reducing our carbon pollution, also serves to help build that foundation of what our future exports look like for Australia. Those capabilities have been strong in the past.
I remember—because I am that old—coming into this place in 1996 when the Howard government was newly elected and having a huge debate about the disinvestment that occurred at that time in a whole range of research and development projects. I know that Senator Cameron would have been watching that closely from his position in the union movement and looking at addressing the needs of manufacturing workers. What was happening at that time was that the reduction in R&D expenditure under the newly elected Howard government started to undermine and disable what had been a growing capability, for example, in photovoltaics. During that early period of the Howard government, Australia went from a leading position in the world on photovoltaic technology to one that was less so. We saw over quite a number of years in those early budgets disinvestment in Australia's research and development capability. That saw us lose our edge in a range of critical technology areas—technologies that are now exploding in export terms, technologies that are now in huge demand while we are playing catch-up as we try to restore, as we did in government, the gaps left by the early Howard government's disinvestment in research and development.
Many of the Labor government's investments in research and development on coming to government in 2007 were about rebuilding our capacity in this area. They were about putting in place the foundation for a strong future economy. You only need to look at Senator Carr's record in his stewardship of the industry and innovation portfolio, including science, research and development, to see just how strong Labor's record is in this regard.
So the coalition have form. This is another example of a government that are not willing to invest in the future. It is in the context of climate change. It is in the context of disabling and unpicking the former Labor government's clean energy package. A subset of that is unpicking one of the purest market mechanisms to actually achieve things. The Clean Energy Finance Corporation is not, as the coalition have tried to characterise it, some kind of ideological trimming on the clean energy package. It is a very pragmatic response to the demands of the market and industry to come at what is required to stimulate investment in a crucial area. But, nonetheless, the coalition still seek to unpick it.
Since it was established, the Clean Energy Finance Corporation has committed some $536 million of its own budget and managed to mobilise over $1.5 billion in private capital. I know many of my Labor colleagues have been through these figures, but it is success in anybody's terms. When you look at the range of government co-investment programs over many years in the innovation portfolio, this is a very good example of the ability to mobilise private capital investment. It stands up very strongly against a raft of programs of coalition and Labor governments alike over many, many years. The coalition would be very hard pressed to criticise the performance of the CEFC in the context of the performance of other government programs that have sought to stimulate co-investment in an innovative area of industry. I challenge the coalition to explain why they chose to attack this body that is playing such an effective role, has investments in place and is demonstrably delivering on those investments and managing to provide a positive return to government while all the while achieving the stated goal of the clean energy policy, which is to reduce the carbon emissions into our atmosphere.
I believe that the vast majority of Australians are tired of the Liberal government's general rejection of the science of climate change. I think they are highly sceptical of the Direct Action package being put forward. I believe that over time the Australian public in general will view with a great deal of cynicism the ploy and the trick that is being presented to them in the form of that Direct Action policy as it seeks, as we have heard from many of my colleagues in this chamber, to pay polluters. It will have a limited effect on reducing carbon emissions.
The Chair of the Clean Energy Finance Corporation, Jillian Broadbent, has urged the coalition government to spare the CEFC from their unscrupulous and illogical cuts, but it seems they have not listened. Those senators opposite have not listened to the fact that if the Clean Energy Finance Corporation were allowed to continue it would account for some 50 per cent of Australia's 2020 emissions reduction target at no cost to government. That is in contrast to a Direct Action Plan that is going to cost taxpayers an enormous amount of money, and all of that money will be going to the biggest polluters.
The coalition government claim a saving from the abolition of this corporation of some $760 million over four years. But they have forgotten that the Clean Energy Finance Corporation is making money. It is getting a return. The combined blow to the budget from its abolition could be as high as $1.5 billion. I look forward to Senator Cormann explaining exactly how he accounts for not just the saving they are going to claim from the abolition but the cost to government of the revenue forgone that the CEFC would return to the government coffers over the period of its existence.
Many senators have been told through representations to the hearings of the Senate Standing Committee on Environment and Communications that projects the Clean Energy Finance Corporation have invested in so far already account for an annual reduction in carbon emissions of some 3.9 million tonnes. The net benefit to taxpayers is some $2.40 a tonne. That abatement is delivered at a negative cost. That is, if the CEFC were allowed to continue, it would be able to do so while actually making a return and it would contribute significantly to the greenhouse gas reduction target. As Mr Yates, the CEO, told the committee, that is probably the lowest cost action you are going to get. As I said, it is still beyond me that the government would seek to remove this effective tool in the campaign against reducing carbon.
Just before I conclude I want to reflect on the diligence with which the CEFC has reported. There have been quite a few comments by coalition representatives about the CEFC implying that somehow it is a rinky-dink outfit. One look at the CEFC's annual report for 2012-13 will show that it has very meticulously reported on a range of key performance indicators, including setting a portfolio benchmark; its placement of funds; its investment in renewable-energy, low-emissions and energy-efficient technologies; building industry capacity, a key point I made earlier; and dissemination of information to stakeholders about the operation and work of the CEFC. The CEFC is attracting a great deal of international attention. The CEFC is a key part of the suite of clean energy package measures that we put in place and seeks to stimulate the development of Australia's, and industry's, capacity to provide renewable energy solutions for industry.
In conclusion, I acknowledge the members of the board of the CEFC. The board members obviously have found themselves to be in the middle of a political football match. That is in no way a reflection on their professionalism, abilities and leadership or on their contribution to the CEFC. I take this opportunity to acknowledge not just the chair, Ms Broadbent, but all of the board members, who have devoted their expertise to what is quite a noteworthy and extraordinary organisation that formed a key part of our clean energy package.
I too will be opposing this bill, because it seeks to abolish the Clean Energy Finance Corporation. I urge other senators to do the same.
I thank all of those senators who have contributed to this debate. Abolishing the Clean Energy Finance Corporation is a priority for this government—indeed, it was a firm commitment that we took to the Australian people at the last election. We know that Labor senators in particular are suffering from government change denial, but not even the Labor Party could credibly suggest that we were not entirely transparent about our plans to scrap the carbon tax and to abolish the Clean Energy Finance Corporation. We know that there were Labor senators in Western Australia—the shadow parliamentary secretary for climate change, in particular—who went across Western Australia distributing pamphlets promising that Labor would terminate the carbon tax. Despite all of the backtracking since the election, there was no mention in the fine print of the pamphlets of any plans to replace a fixed price carbon tax with a floating price carbon tax, an emissions trading scheme or whatever the Labor Party wants to call it. The senator was making a very firm commitment that Labor would terminate the carbon tax.
Unlike Labor, coalition senators—this government—are delivering on the commitments that we made before the election, which is why we introduced this legislation in the first sitting fortnight of the new parliament. That is exactly what we said we would do. We made all of that very clear to the Australian people and we received the support of the Australian people, as shown by our strong election result. Labor takes at its peril the position that it has flagged again in this chamber today. It ignores at its peril the wishes of the Australian people as expressed at the last election. It is really quite arrogant to persist with something that has been rejected so overwhelmingly by the Australian people.
Claims that the Clean Energy Finance Corporation does not cost the budget—repeated again by Senator Lundy just now—are just another case of magic pudding economics. Claims that the Clean Energy Finance Corporation somehow would have a positive impact on the budget are a case of voodoo economics, because they do not take into account the public debt interest cost of the corporation. When public debt interest is taken into account the Clean Energy Finance Corporation clearly costs the budget bottom line over the forward estimates.
The Labor Party inherited a position of no government net debt and strong surplus budgets and in six years turned that into a situation of $250 billion of accumulated deficits, gross debt heading for $400 billion and beyond, and a budget situation that will be very difficult to turn around from where Labor left it. It is no wonder that the Labor Party left the budget in such a mess if it cannot understand such basic premises as: if you borrow money in order to spend money there is actually a cost attached to the borrowing. That is something that Senator Lundy ignored again in her presentation today—as have her colleagues. She is not Robinson Crusoe in relation to this, to be fair to Senator Lundy. All of the senators on the Labor side have faithfully delivered the Labor Party talking points during this debate, in order to keep the debate going, and have made the same erroneous assertion.
Let me be very clear and explicit in relation to this: abolishing the Clean Energy Finance Corporation will improve the budget position over that period, because the government will not be paying interest on the debt that it borrows to fund the Clean Energy Finance Corporation. By opposing our delivery of our commitment, made during the election, to abolish the Clean Energy Finance Corporation, those opposite drive the budget further into deficit than it needs to be.
But that of course is the history of the Labor Party. The Labor Party in government was pretty reckless when it came to financial management; but it is even worse now in opposition under the leadership of Mr Shorten, because Mr Shorten is essentially too weak to stand up to the different vested interests across the Labor Party. If there is somebody in the Labor Party who wants an emissions trading scheme, even though everybody knows that Bill Shorten personally wants to scrap it—everybody knows that; he has confided that to so many people that he could not credibly deny it—he is too weak to stand up to the vested interests in the Labor Party. So instead of picking a fight in the national interest, instead of picking a fight that will help deliver cost-of-living relief and help us to strengthen the economy, Bill Shorten goes the easy way and allows Labor Party people to get away with—
The Clean Energy Finance Corporation would have you believe that it is delivering projects achieving a total abatement of 3.88 million tonnes per annum and that it was doing so at a negative cost of $2.40 per tonne of abatement. These claims by the CEFC, which have been parroted by Labor and Greens senators in this chamber, are not supported by the facts. The CEFC is spending borrowed taxpayer money to invest in wind farms, many of which are already built and supported by private sector finance. About two-thirds of the CEFC's annual abatement claims rely on just three wind farms, Taralga, Portland and Macarthur.
What the CEFC and the Labor and Greens senators are not telling the Australian people is that these projects are already supported by the government's 20 per cent renewable energy target. With the CEFC gone, the renewable energy target will still be delivering these investments and emissions reductions at no cost to Australian taxpayers. It is ridiculous that the CEFC should take credit for emissions reductions that are happening anyway and that will happen without it. In one example, the CEFC helped to refinance a wind farm that was 50 per cent owned by Meridian Energy and, in the process, helped the New Zealand government get a better price when it sold the company in October—all paid for by the Australian taxpayer. How does that make sense?
The government's position is that the CEFC should not be using $10 billion of borrowed money underwritten by Australian taxpayers to invest in wind farms. Australian taxpayers do not want their government to act as a bank. This is the role of the private sector, not the Australian government. There used to be a time when the Australian Labor Party believed that banks should be private. In fact, it was the Australian Labor Party that privatised the Commonwealth Bank of Australia, but here they are going down this bad old path again.
This bill abolishes the Clean Energy Finance Corporation by repealing the Clean Energy Finance Corporation Act 2012. This bill also transfers the CEFC's existing assets and liabilities, including the CEFC's investments, to the Commonwealth. These assets and liabilities will be managed by the Treasury. Funding to manage the CEFC's existing assets and liabilities and meet contractually committed payments on investments will be met from the CEFC's existing funding, which will be transferred to a new CEFC transitional special account.
Future moneys that were due to be appropriated to the CEFC annually until 2017 will be returned to consolidated revenue. The bill also provides for excess funding to be returned to consolidated revenue at any stage if it is no longer needed for managing the CEFC's assets and liabilities. I commend this bill to the Senate.
I move a further amendment to Senator Pratt's amendment:
At the end of the motion, add: ", but the Senate notes the ability of the Clean Energy Finance Corporation to effectively drive investment in renewable energy projects and provide a return on its investment to the Commonwealth."
Question agreed to.
Madam Acting Deputy President, on a point of order: there is obviously some confusion. I do not want to dwell on the issue of some confusion but there was some confusion, and I really think the matter should be put again.