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Thursday, 13 October 2011
Page: 7365

Clean Energy Finance Corporation

Senator McKENZIE (Victoria) (14:39): My question is to the minister representing the Minister for Climate Change and Energy Efficiency, Senator Wong. Will the minister guarantee that not one taxpayer dollar will be lost in the investment the government makes under its $10 billion Clean Energy Finance Corporation?

Senator WONG (South Australia—Minister for Finance and Deregulation) (14:40): I thank the senator for her question. The Clean Energy Finance Corporation is obviously an important aspect of the clean energy package that the government has put forward. I was pleased yesterday to see the announcement that the inaugural chair of the corporation is Ms Jillian Broadbent, who would be known to senators as a member of the board of the Reserve Bank, a director on the boards of Woolworths and the Australian Stock Exchange and previously a director of Woodside, Coca-Cola and Qantas.

The government, through the Treasurer, has asked Ms Broadbent to conduct a review of the investment mandate of the corporation and its governance structures, because we are of the view that it is important that these structures meet the highest standards of corporate governance practice. We have also appointed Mr David Paradice and Mr Ian Moore to assist Ms Broadbent in establishing the new body. Mr Paradice has over 20 years experience in funds management and manages a $6.6 billion investment fund. Mr Moore is an actuary with some 20 years of actuarial experience and an expert in risk and return profiles and debt and equity financing.

This is an extremely impressive team and one that reflects the priority the government assigns to ensuring that the Clean Energy Finance Corporation structures and processes are robust. We propose to pass legislation for the corporation in the first half of 2012. I indicate very clearly to the senator that we are working very closely with experts and people of significant standing in the private sector to ensure this corporation works effectively and manages taxpayers' funds most effectively.

Senator McKENZIE (Victoria) (14:42): Mr President, I ask a supplementary question. I refer the minister to the US House of Representatives Committee on Energy and Commerce memorandum which noted that the Department of Energy and the Office of Management and Budget did not take adequate steps to protect the taxpayer dollar. What changes has the government made to its Clean Energy Finance Corporation legislation or supporting regulations to better protect taxpayers' money?

Senator WONG (South Australia—Minister for Finance and Deregulation) (14:42): The key here is getting the personnel, the investment mandate and the governance structures right. I have referred to the process associated with the governance structures. The investment mandate will set out criteria that the board should apply in choosing which investments to make and which projects to support. This will obviously need to strike a balance between encouraging investment in riskier projects and ensuring there is a return to taxpayers at the end of the day. That is why it is important that the chair, Ms Broadbent, be given the time and the resources to conduct extensive consultations and report to government.

In relation to the US experience, I am sure that members of the board will have regard to that. I again make the point that the corporation is independent of government. (Time expired)

Senator McKENZIE (Victoria) (14:43): Mr President, I ask a further supplementary question. I refer the minister to a question on notice that Treasury has provided to the Senate Select Committee on Scrutiny of New Taxes. The Treasury confirmed that a portion of the $944 million budget expense of the Clean Energy Finance Corporation relates to the allowance that is made for defaults. As such, can the minister now inform the Senate precisely how much the government has allowed for defaults under its Clean Energy Finance Corporation plan?

Senator WONG (South Australia—Minister for Finance and Deregulation) (14:44): First, I would make the point that the government is establishing this corporation as a body independent of government, to be run by a board of private sector experts. I think that imperative is demonstrated by the personnel whom we have appointed to this point. Investment decisions will be based on a case-by-case analysis of candidate projects, at arm's length from government. The government will obviously be informed by its experience with bodies such as EFIC, which is the Export Finance and Insurance Corporation. The fiscal balance cost reflects the accounting approach associated with such bodies, and I think that is the figure to which you refer. It takes account of administrative costs, expenses associated with concessional loans as well as a conservative allowance made for defaults. Treasury does expect that taxpayers will recoup their funds— (Time expired)