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Thursday, 27 March 2014
Page: 3374


Mr CONROY (Charlton) (12:31): I rise to oppose the abolition of the Clean Energy Finance Corporation because it is a vital piece in this nation's armoury to combat climate change. I am going to go back to some facts that seem to have passed the previous speaker by. The consensus in science now is that man-made climate change is as certain as the fact that tobacco causes cancer. They are that certain now, but that fact is rejected by those on the other side. Another fact is international action. Over a billion people now live in nations or provinces where there is a carbon price of some form. By 2016 there will be three billion people. Those on the other side are condemning us to trade retaliation if we do not put an effective carbon price on to combat climate change. The third fact is that every decent economist—none on that side—has concluded that a market based system, principally either an emissions trading scheme or a fixed price, is the most effective way of combating climate change—a market price complemented by adequate industry and innovation policy measures to support this transition. If we go back to the basis of all this, we are living in a carbon-constrained world. The nations that succeed in the future will be the ones that decarbonise their economies—countries like China, where 200 million people now already live in provinces where there is an emissions trading scheme. By 2016 the entire nation is to have an emissions trading scheme driving their economy.

Economic history shows that the countries that take advantage and move first are the ones that benefit from industrial revolutions, whether it was the English during the first industrial revolution based on steam and textiles; the second industrial revolution based on chemicals and electricity, being the United States and Germany; or the third industrial revolution based on electronics and the transistor in particular, driven by Japan and the United States. The next one will be about decarbonising our economy. I want my daughter to grow up in an economy where we have invested to make that transition so that our industries have a chance to compete globally, our industries are not horse and cart industries in the era of the automotive car.

This is a great debate to have because it shows how the other side just don't get it. We had a previous speaker, someone on the front bench, talk about risk. They wilfully misunderstood the innovation cycle—that the first-of-type projects often do not get a full commercial rate of return. They can still get a decent rate of return, but they do not often overcome the barriers to reach the 10 or 15 per cent that the private sector demands to take a risk. It is entirely appropriate that the Commonwealth support innovation and industry policy, support the first-of-type projects, for example large-scale solar thermal, very revolutionary energy efficiency projects. Not only are they important for being the first-mover types that demonstrate to the private sector that they can take action; they also can have a rate of return.

The Clean Energy Finance Corporation has already invested in $2.2 billion worth of projects, where the average yield is projected to be 7.33 per cent on average. That is well above the long-term bond rate. Yes, it is below the internal rate of return that some in the private sector demand, but it is return which is well and truly paying back the debt that is being taken on to fund these important projects. This covers 39 projects already in play. A further 170 proposals with a cumulative investment of $15 billion are approaching the Clean Energy Finance Corporation for investment.

I return to the substance of this, which is: how best do we combat climate change? We have the command and control over there by Comrade Abbott, a return to central planning that Lenin and Stalin would be proud of. This is what the Liberal Party has degenerated into: state directed investment of the worst sort that we have not seen since the 1930s in Russia. This is versus a market based system that every economist worth their salt—Ross Garnaut, Lord Stern, people supported by both sides of politics—supports. The member for Wentworth supported it in a previous life. Market based systems are the most efficient way of tackling climate change—backed up by sound industry policy that makes the Commonwealth money and that has first-of-type demonstration effects for the rest of the economy. This is the sensible way. This is what those on the other side are voting against, because they are economic philistines. As former Treasurer Peter Costello said of Tony Abbott, 'He just doesn't get economics.' He just doesn't get economics and with his knighthoods he just wants to return to the past, condemning our future. (Time expired)