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Monday, 31 October 2011
Page: 12136


Mr FLETCHER (Bradfield) (21:49): Recently the government announced the creation of the Clean Energy Finance Corporation, but there is a certain inconsistency in the successive announcements as to what it is actually going to do. On 10 July we were told that it would:

… invest $10 billion in businesses seeking funds to get innovative clean energy proposals and technologies off the ground.

On 18 August, in a media release from the Minister for Innovation, Industry, Science and Research, we were told it would:

… drive innovation through commercial investments in clean energy through loans, loan guarantees and equity investments.

Then, on 12 October, in a media release from the Treasurer, we were told it would:

… overcome capital market barriers that hinder the financing, commercialisation and deployment of renewable energy, energy efficiency and low emissions technologies.

This lack of clarity as to what the $10 billion Clean Energy Finance Corporation is going to do should set alarm bells ringing, and so should the dismal record of these kinds of government directed funds investing in politically favoured areas of industry.

Indeed, when President Obama comes to Australia next month, the Prime Minister and her ministers might like to ask him about Solyndra, a US company which received a US$535 million loan guarantee in 2009 to finance a new photovoltaic solar panel manufacturing facility. When President Obama spoke at the plant in May 2009, he said it would create 1,000 jobs. Vice President Joe Biden said:

These are the jobs that are going to define the 21st Century and the jobs that are going to allow America to compete and to lead like we did in the 20th Century.

Rhetoric, Mr Deputy Speaker, you would agree, surprisingly similar to that which we have heard repeatedly from the Prime Minister and her ministers.

How did the story turn out? I am sorry to say that about six months after these soaring speeches, Solyndra postponed its expansion and US taxpayers ended up on the hook to the tune of US$390.5 million—75 per cent of the loan guarantee. The 1,000 workers never got hired and the company has filed for bankruptcy. This is an object lesson in the perils of politically directed investment. There are some serious warning signals in the materials this government has put out. We were told in the 12 October press release that it is not the intention to directly compete with the private sector; rather to 'act as a catalyst to private investment which is currently not available'. There may well be a very good reason why private investment is currently not available, because private investors have looked at the investments on offer and realised there is a very serious risk of losing their money. Unfortunately, this government does not seem at all troubled by the prospect of losing taxpayers' money if it can get a political win.

There are some very disturbing reminders here of the same sad story of the National Broadband Network, which you would recollect was announced without all of the details having been sorted out. What they then needed to do was to hire private-sector consultants to develop an implementation plan. It turns out that, with the Clean Energy Finance Corporation, this government are up to the same thing, because if you look at the press release of 12 October you learn that one of the things that they are presently working on is an implementation plan. The reality is that this government seem to think that it is not real money anyway. They have a fabulous accounting trick to keep the $10 billion off the budget bottom line. Earlier this month, Finance Minister Wong put out a media release in which she quoted the words of one Department of Finance and Deregulation official at Senate estimates who said:

To the extent to which the Clean Energy Finance Corporation is undertaking investments, and that is the government's policy, then the majority of its activities will not impact on the budget bottom line.

By 'budget bottom line' he meant the underlying cash balance—the headline number normally quoted. For example, when he promises a $3.5 billion surplus next year, the Treasurer is referring to the underlying cash balance.

There are two possible explanations for what is going on here. One is that this accounting treatment is well justified, because the $10 billion to be spent on the corporation is investment money designed to secure a financial return, which is the relevant accounting test. Of course, another explanation—and I would suggest this is the better one—is that the government was forced to agree to this by the Greens. It does not have the money to spend, it has bodgied up the accounting treatment so as to hide the true impact of this on the budget bottom line and the Clean Energy Finance Corporation shows every sign of being a substantial waste of taxpayers' money. Because the government knows that, it is desperate to try to keep the true impact off the budget. All Australian taxpayers should be very concerned. (Time expired)