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Wednesday, 30 May 2012
Page: 6253


Mr MATHESON (Macarthur) (12:22): I rise today to speak on the Clean Energy Finance Corporation Bill 2012 and the suite of bills to amend the Clean Energy Act 2011. This set of bills seeks to establish an incorporated entity under the Commonwealth Authorities and Companies Act 1997 to be known as the Clean Energy Finance Corporation, CEFC. These bills will give CEFC substantial powers to invest in financial assets for the development of Australian based renewable energy and low-emission technologies along with energy-efficiency projects. The bills will also provide the CEFC with the power to enter into investment agreements itself, provide commercial loans and, as well, make investments for its subsidiaries.

The Clean Energy Finance Corporation is the brainchild of the Greens members of the Multi-Party Climate Change Committee, of course. It is, however, nothing more than a slush fund for the Greens to grant funding to projects that fit within their green utopian view of the world. As the member for Mayo brought up earlier today, the CEO's salary is outside the Remuneration Tribunal's jurisdiction so what are we going to have? Are we going to have a union hack being the CEO, or are we going to have Mr Bob Brown himself coming back to head it up? If I were a betting man, I am sure that they know who it is going to be.

For the creation of the CEFC's special account, $10 billion will be appropriated over five years with the first instalment of $2 billion to be paid on 1 July 2013. The government intends the CEFC to be self-sustaining once it has matured. Any funds returned to the CEFC for its investments will be available for reinvestment. While this sounds wonderful and economically sound, the bill already predicts a loss to this monumental taxpayer investment. Indeed, Treasury officials have confirmed to a House of Representatives Economics Committee that around 7.5 per cent of the loans for investments made by the CEFC will not be recovered.

Mr Morrison interjecting

Ms King interjecting

The DEPUTY SPEAKER ( Mr Murphy ): Order! Would the member for Macarthur resume his seat. It is very difficult to hear what the member for Macarthur is saying while the member for Cook and the parliamentary secretary conduct an ongoing exchange in light of the recent point of order.

Mr MATHESON: Thank you, Mr Deputy Speaker. In yet another feat of tricky accounting, most of the lending is off-budget, yielding a deceptive budget surplus. This is risky business indeed. There will be operating costs and there will be write-offs, but the tell-tale signs that this scheme is yet another Greens inspired pipedream is the concessional component of the loans made by the CEFC to renewable energy projects. Only a Labor and Greens government would borrow money at one rate and then lend it out for incredibly risky projects at an even lower rate. This aspect of the CEFC will expose the belly of the beast to the world of heartache.

We have seen firsthand the problems created when a government backs a so-called winner. In Australia alone we have witnessed the monumental collapse of the Queensland government's ZeroGen project, costing taxpayers well over $100 million of losses. This was despite many warnings from the opposition as well as industry experts that this project was doomed to fail from the start. The government's $700 million Solar Flagships program in Moree and the Queensland Solar Dawn projects are struggling to gain industry support.

For international examples we only need to look at the United States with the monumental failure of their $700 million Solyndra project, a project that had been the President's shining example of a green-energy company. The failure of Beacon Power also occurred under a remarkably similar scheme to this one proposed by this government, as did Solar Trust of America which collapsed despite having a $2.1 billion loan guarantee from the US energy department. History does not bode well for the CEFC. If the finance sector is not convinced of a project's economic viability, why does the government think that it should then expose billions of taxpayers' funds to these exceptionally risky projects.

Indeed, the Greens believe, as announced by Senator Milne, that the CEFC will be able to access finance from the private sector on top of its own taxpayer funding for renewable energy projects. Judging from the interest that the private sector has shown in our nation's largest renewable energy projects, this may not be as easy as the senator thinks. The corporation has a lofty aim to overcome the market barriers to big renewable energy investments. However, one point that this government seems to miss time and time again is that the private sector knows that money does not grow on trees.

Private investors in general part with their hard earned money wisely. The private sector will not often expose itself to anything that it sees as too risky, whether this be actual investment risk, the perceived risks of a new type of investment, or pressure from the tightening of purse strings by banks looking towards Europe's pending financial disaster. So where the private sector dares not tread, this government is blindly barging ahead with billions of taxpayers' dollars hastily shoved into its pockets ready to be thrown at risky and commercially unviable projects.

The Clean Energy Finance Corporation Bill also establishes a board of the CEFC. The board will be tasked with the statutory responsibilities for decision making and managing the corporation's investments. The government has gone to lengths to claim that the CEFC will be an independent body—indeed, the legislation stipulates that the CEFC will make investment decisions independently of the government. However, this independence is skin deep. The bill requires ministers to issue an investment mandate for the corporation. Indeed, the explanatory memorandum of the bill states:

The investment mandate may include, but not be limited to, directions on matters of risk and return, eligibility criteria of investments in renewable energy technologies, low-emission technologies and energy efficiency projects, allocation of investments, limits on concessional investment, types of financial instruments in which the Corporation may invest and broad operational matters.

It seems to me that this is one hell of a mandate for a minister to give an independent corporation. It is apparently clear that the government is happy to allow the CEFC to independently select the individual investments and projects for funding, but the criteria for investment selection as well as the suitability of a project will be tightly controlled by the minister and the government of the day. To further the government's grip on the CEFC's so-called independence, the investment mandate will take the form of a written non-disallowable legislative instrument. This is consistent with ministerial directions issued to statutory bodies such as the Future Fund. The bill also states that the CEFC will apply a commercial filter when making investment decisions. Business hopes to ensure that the CEFC will invest responsibly and manage risk so that it is financially self-sufficient and able to achieve a targeted rate of return. One of the objectives for the CEFC, as agreed by the CEFC expert review panel, is to apply capital through a commercial filter to facilitate increased flows of finance into the clean energy sector, thus preparing and positioning the Australian economy and industry for a clean energy future. Nobody would question the need for increased flows of finances into the renewable energy and low emission energy technology sector. However, this raises at least one very serious concern about the potential for the CEFC to have disproportionate impacts on the market and at the same time not stimulate tangible results for progress in renewable energy projects.

The board of the CEFC will have to be assiduous in their decision making to avoid creating chaos in the renewable energy sector. This concern has largely been ignored by the government in their eagerness to pick a winner and pull the renewable rabbit out of their clean energy hat. The renewable energy target is the best way to ensure that the private sector continues to invest in affordable and sustainable renewable energy. The coalition has offered bipartisan support to a commitment to ensure that 20 per cent of Australia's electricity supply will come from renewable sources by 2020. It is highly unlikely that the government's $10 billion slush fund will be invested successfully and even less likely that any new renewable energy above the 20 per cent target would ever be realised as there is no incentive for energy companies to purchase higher cost renewable power above their mandatory target.

The renewable energy target has been the driving force behind private sector investment in the renewable energy sector. The renewable energy schemes that have been able to show their viability and return on investment have, of course, secured finance. The private sector has identified the most cost-effective and efficient means to produce renewable energy. Through thorough risk assessments and extensive analysis of project viability, the market has supported renewable energy projects that will be financially sustainable. This outcome, which is undeniably a win for consumers and the environment, is in direct contrast to the objectives of the CEFC, which are to provide finance for technologies which the market considers to be unproven, too speculative or too risky for commercial financing.

Origin Energy hit the nail on the head in their submission to the Clean Energy Finance Corporation expert review. They assert that the CEFC could aid in the operation of effective markets 'if it is able to identify and address financial market failures to investment'. However, Origin Energy is very careful to point out the risks of the CEFC to the renewable energy sector if it only serves as another source of unsustainable subsidy or high cost technologies. For the government to now introduce this $10 billion slush fund will throw a spanner into the works for large-scale renewable energy projects that have already sought out and obtained commercial financing.

New projects that are fortunate enough to secure the concessional loans and finance from the CEFC will have the benefit of receiving direct subsidies and could, in turn, jeopardise the viability of current investments financed through far more expensive commercial lending. If the CEFC merely adds its $10 billion to the mix of high-cost technologies that are economically unviable in the long term, then all that will eventuate are higher electricity prices paying for unsustainably expensive technology. Programs very similar to the CEFC have experienced massive failure and controversy in the United States. Billions of taxpayers' money in loan guarantees have been lost because the United States government tried to pick a winner.

This bill is economically irresponsible and unlikely to achieve its stated aims. There is little doubt that the CEFC will end up as nothing more than a $10 billion slush fund to be spent on the whimsical dreams of the Greens, a waste of taxpayers' money and a waste of an opportunity to truly help the Australian environment in an innovative and practical way. That is the price you pay to stay in government.

I move on to the three bills which seek to amend the Clean Energy Legislation Amendment Bill, which seeks to amend the Clean Energy Act, the Australian National Registry of Emissions Units Act , the Carbon Credits (Carbon Farming Initiative) Act, the Fuel Tax Act and the National Greenhouse and Energy Reporting—NGER—Act. Amendments proposed in the Clean Energy Legislation Amendment Bill aim to extend the reach of the carbon tax to include fuels which are eligible for the opt-in scheme and the definition of carbon dioxide equivalence. This bill will effectively bring LPG, LNG and CNG directly under the carbon tax. There have been some reasonable technical amendments to the way the Carbon Farming Initiative, or CFI, is administered. These include the backdating of a methodology to enable greater access to the scheme for projects that were underway before the CFI came about. This will allow existing projects to benefit from the scheme.

The Clean Energy Legislation Amendment Bill also amends provisions in the NGER Act to allow people to nominate who has the operational control of a facility where it is not already clear. This amendment is necessary for organisations where there is no majority owner or where the entity may be controlled by a trust. Other elements of this bill seek to amend the Clean Energy Act and the Fuel Tax Act to apply the carbon tax to LPG and LNG rather than through fuel tax arrangements.

The Clean Energy (Customs Tariff Amendment) Bill and Clean Energy (Excise Tariff Legislation Amendment) Bill 2012 amend the Excise Act and the Customs Tariff Act to provide that, from 1 July 2012, CNG used for non-transport purposes can be covered by the carbon tax because they are no longer subject to the effective carbon price through the fuel tax system. This system will be similar to the structure provided for the aviation industry to administer their carbon tax liabilities. This is yet another tax grab by the government and I cannot support it.

When I look at the amount of money that is being spent here and I try to explain this bill to people in my community, they say, 'We're a growth centre in south-western Sydney and under 16 years of a state Labor government we received very limited support for infrastructure in a growth centre.' There is nothing in this budget for the people of Macarthur. I look at the roads round my area like Narellan Road, Spring Farm Parkway, Camden Valley Road, Bagdally Road, Raby Road. These are all connectors to the growth centre, to Campbelltown city. There is also St Andrews Road, Denham Court and Campbelltown Road. There is not even a reasonable sports centre for Narellan or a PCYC for Gregory Hills.

When I explain these types of bills, which are slush funds for the Greens for investment in projects that are never going to get off the ground, my community say, 'What is going on with this government?' You go doorknocking and people say, 'This is the worst government I have seen in my lifetime.' I am talking to people who are 50 or 60 or 70 years of age who saw the Whitlam government and how bad that was. All of a sudden they are saying to me they have never, in their whole lives, seen a government that has wasted money like this government. The government allow growth centres to occur in north-western and south-western Sydney. The government does not give any funding towards these sorts of projects. They cannot build sustainable communities. There is a distinct lack of infrastructure. Then we give $10 billion away to a bunch of whackos and the Greens that are going to run these programs. The people of my community just go: 'What is going on here? How come they're getting $10 billion and we're getting nothing?' There is nothing in the budget for the people of Macarthur. They walk up to me day in and day out—

The DEPUTY SPEAKER: The member for Macarthur will address the bill before the House.

Mr MATHESON: Mr Deputy Speaker, when you talk about poor policy and poor political parties and when you have a government that is a hung parliament, take a look at the deal that has been struck between the Independents, the Greens and the Labor Party. My community are becoming so frustrated at the lack of funds that are going into building sustainable communities and the lack of infrastructure. When they ask me what is going on I say to them, 'Go along and watch question time. When we ask questions the questions are never answered. When we ask for money, the money is never delivered.'

The south-west growth centre was released for urban development all of a sudden, and then no infrastructure. Nothing in the budget for my community, nothing in the budget for Macarthur. They ask me, 'How does all this occur? There is all the pork-barrelling that occurs with the government and the Independents. All of a sudden there are billions and billions of dollars being given away because of a hung parliament and because people have the balance of power.' Other communities miss out because the Independents and the Greens are reaping all the money that was sown. It is put into their pockets and given to their communities and it is not being equally shared amongst the broader Australian community.