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Tuesday, 29 May 2012
Page: 6058

Mr ROBB (Goldstein) (19:28): I rise to speak on the Clean Energy Finance Corporation Bill 2012 and related bills. Well, I had to go and look at the running order a few minutes ago because I was confused. The member for Moreton did not seem to talk to the bills in any sense. It surprised me because, as the lead speaker for the government on supposedly one of their most significant initiatives, all we heard was 15 minutes of negativity and an avoidance of the big issues in this. There was no attempt to justify this carbon tax and all the related regulations and difficulties and costs that are going to be incurred by businesses and households, by the whole community. All we heard was a whole lot of platitudes intermingled with endless negative abuse of this side of politics.

This Clean Energy Finance Corporation is the product, unfortunately, of grubby politics. It is the product of a desperate last-minute deal, a $10 billion political bribe to win the support of the Greens for a carbon tax—pure and simple. That is what it is. Once again the Prime Minister caved in to the demands of the Greens and once again Australians will pay very heavily for this weakness and this lack of principle in dealing with major policy issues.

Setting up a government bank with borrowed billions, underwritten by taxpayers, to invest in high-risk ventures should be a thing of the past in this country. Hasn't this government learnt anything from past debacles such as Tricontinental, Western Australia Inc. and the State Bank of South Australia? These were the investments and the types of organisations which helped create the brand image of those on the other side of politics of being unable to manage money—and it was a well-earned reputation. You would think people would learn from their mistakes, but here we go again, just because the Prime Minister sought to save her political skin at any cost to the taxpayer. Has this government not learnt from the US government's costly attempts to pick winners in renewable energy? Names like solar panel manufacturer Solyndra come to mind: it went bankrupt after receiving $500 million in loan guarantees and it cost 1,100 jobs. Others to go under in the US include Evergreen Solar, SpectraWatt and Beacon Power.

This Clean Energy Finance Corporation is the price Labor is happy to pay for Greens backing. It is the Bob Brown bank—the Bob Brown who has dictated so many of the stupid, irresponsible and dangerous decisions that this government has subsequently sought to introduce since the first weeks of this government when it caved in on so many things, and has since proceeded to cave in, in order to placate the Greens. The nation will pay heavily in all sorts of ways, and this Clean Energy Finance Corporation is another one.

Tricontinental was a merchant bank arm of the State of Bank of Victoria, and the State Bank collapsed under the weight of the $3.5 billion in bad loans made to the corporate cowboys of the 1980s by Tricon. The Review Panel of the Clean Energy Finance Corporation says of the CEFC initially that 'it is anticipated that the majority of its investment will be loans'. That reminds us very much of the State Bank and Tricontinental. For the CEFC, the $10 billion of borrowed money will be over five years starting in 2013-14, with the first $2 billion instalment to be paid into a special account in July 2013—in all likelihood, just prior to the election. It is to be invested in projects the banks would not touch with a barge pole. This is the stupidity of this proposal. It is money that will be mostly hidden from the budget bottom line, covering up their mistakes. If you did include this money you would see it eating into the forecast surplus. Over the forward estimates, $6 billion will be pumped into the CEFC. Just $320 million shows up in the underlying cash balance. This supposedly includes a 'prudent recognition that some investments will not be recovered'. Taxpayers will carry both the hidden debt exposure and the interest rate exposure. In Senate estimates, Treasury conceded it had factored in that 7.5 per cent of invested capital would not be recovered. On $10 billion, that is $750 million that is expected to be lost—just a lazy $750 million of borrowed money. This is a government with no sense of the value of money. It sees its value only in what it can deliver in a political sense to the government. It would be the most Pollyanna assumption that it will only lose $750 million. The way this government manages money, it will be billions.

The CEFC along with the National Broadband Network white elephant are reasons debt continues to rise despite Labor claiming to be returning to surplus. They have a $300 billion debt ceiling included in the budget legislation, an increase of $50 billion, and yet they claim they are going to surplus. It is an absolute joke. It is a deliberate deception. It is tens of billions of dollars that should be on the budget bottom line. It should be, but it is not. This is a government which is into deception and spin and irresponsible investment of taxpayers' money. Now they are borrowing billions and billions more, and the taxpayer will have to pay this back at some stage.

There are precedents in the budget papers as to why the CEFC should be on budget. There is an existing program which was announced as a budget measure only 12 months before the last one, in the 2011-12 in budget. At page 304 of Budget Paper No. 2 it is there in black and white:

The Government will provide $108.7 million over 14 years to support the development and commercialisation of renewable energy technologies by making early-stage equity investments that leveraged private funds.

Doesn't it sound very familiar? It sounds exactly like the description of the Clean Energy Finance Corporation. I would like the next speaker to explain to the parliament what the difference is. There is no difference, we all know that. This is a cheap political stunt to get money off the bottom line and to try to save the skin of this Prime Minister. The only difference is the scale of the investment. It is an identical fund—one is on the budget; one is off.

The government says that this corporation will be independent. The Leader of the Greens, Christine Milne, states:

It is an independent authority, it isn't something that's going to have political interference.

These bills make it clear that this will not be independent. The board members—the chair and up to six others—will be appointed and removed by the government. Of course, there is no political interference or political direction! The government's board will appoint the CEO after consulting key ministers, but there is no political interference! There is independence, of course, but they must consult key ministers before they make a decision. The government will inevitably also consult the Greens. These bills also give the responsible ministers 'powers of direction over the broad mandate of the Corporation'. It puts a lie to what Senator Milne had to say. They will say anything in order to justify the unjustifiable.

The most absurd thing is that the renewable energy target was 20 per cent before this was announced and it is 20 per cent after it was announced. This is the reason this finance corporation should never exist. There is no justification. $10 billion will not increase the level of renewable energy in the grid because the target remains the same. What an absurdity! They bring in a carbon tax which morphs into an emissions trading scheme and they set a target of 20 per cent, and the credits that are issued each year will relate to how well the economy is achieving against that target. All we are seeing with this corporation is that the sale of carbon permits will be adjusted to meet the target and all the CEFC will do is see what would otherwise be cheaper emission reductions replaced by more expensive emission reductions. That is a fact confirmed by so many and yet this government has gone ahead with the scheme. All it will do is increase the cost of achieving an emissions reduction. And this is the government that talks about implementing a market based scheme!

The expert advisory panel, in its report, highlights these inherent risks. It says that a commercial investment filter will be applied to potential projects. The panel says:

The filter will not be as stringent as the private sector equivalent, as the CEFC has a public policy purpose.

Consequently, it has different risk/return requirements. For a given return, the CEFC may take on higher risk and, for a given level of risk, due to positive externalities, may accept a lower financial return.

What all that gobbledegook is saying is that this is a recipe to waste money we do not have. It is a recipe to waste borrowed money which taxpayers will have to repay. It is another symbol of Labor not been able to manage money.

The bill's explanatory material states:

The investment mandate will be in the form of a written legislative instrument. Because the investment mandate represents the policy direction of the Government and has the potential to impact on the Commonwealth Budget, it will be a non-disallowable instrument.

It has just smashed through this parliament and it is indefensible. It will increase dramatically the cost of achieving emissions and it will do nothing to increase the emissions in the country because of the cap.

There is an inexplicable omission. The fund is barred from supporting carbon capture and storage initiatives. The review panel observed:

With the abundance of coal in Australia, our cost of electricity is one of the lowest in the world.

Under a section titled 'Exclusions' it states: The government has announced the CEFC will not invest in Carbon Capture and Storage projects or technology.

Again, this is the Greens lording it over the government and lording it over the community. It is blind ideology. To the Greens, fossil fuels are the devil incarnate. They cannot be used. Irrespective of whether we could make the coal cleaner in order to maintain comparative advantage and our cheap electricity that we have enjoyed for 100-plus years, the CEFC deliberately sets out to erode this. It just shows the extent to which this government and this Prime Minister have so tugged their forelocks to the Greens party, which has been at the centre of so many of the cost increases that have been incurred over the last 18 months to two years, and it is demonstrably and rapidly making many areas of Australian business uncompetitive. When this carbon tax comes in we will see a real manifestation of how our competitive position can be eroded so dramatically on so many fronts.

So who will benefit from this slush fund? We will see the white shoe salesman and the dodgy operators that give the many reputable renewable energy businesses a bad name. This is exactly what happened with the pink batts. We have union funds, of course. It is no coincidence that the super funds are heavily invested in renewable energy projects. It will be a great temptation for the CEFC to give support to many of the investments on a non-commercial basis.

This piece of legislation is extremely dangerous and unnecessary and it should be stopped in its tracks. We should return to managing government money in a sensible and proper fashion.