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Wednesday, 30 May 2012
Page: 6326


Mr BUCHHOLZ (Wright) (16:59): I rise to speak today in relation to the Clean Energy Finance Corporation Bill 2012, the Clean Energy Legislation Amendment Bill 2012, the Clean Energy (Customs Tariff Amendment) Bill 2012, and the Clean Energy (Excise Tariff Legislation Amendment) Bill 2012. Once again the government has sought to mislead the Australian people. I speak on behalf of the people of my electorate of Wright, whom I represent, because I aim to make every effort to ensure that they are made aware of the inherent deception that is the perpetual action of this Gillard government.

The carbon tax was legislated in 2010 in a package of 13 bills—a $23 a tonne tax, rising at 2.5 per cent per year in real terms to be replaced by an emission trading scheme from July 2015. With reference to the trading price, the floor price will come in at $15 and that will take us through to the year 2018. Treasury's own modelling tells us that by the year 2020 the carbon price will be at $37. I bring to the House's attention that I believe that the global price for carbon today is around $4.50. However, may I remind you that the Clean Energy Finance Corporation Bill was not part of this package and has been introduced as a stand-alone piece of legislation. The bill establishes the board of the Clean Energy Finance Corporation, giving it a statutory responsibility for decision making and management of the corporation's investments.

As a parliament we have a duty of care to appropriate funds diligently. The vertical integration of funds—how they will travel through this organisation—will mean that the government will go to the market and raise money from the bond market. That, in turn, will be given to the CEFC. From there it will go on and fund projects. The government tell us that the returns from those investments will then be reinvested back into the CEFC.

I want to bring the parliament's attention to the potential make-up of the CEFC, the board and the directors, and draw an analogy. Because the finance corporation is an off-the-government-books investment, not that dissimilar to the NBN, it is not beyond the realms of possibility that the remuneration packages that are potentially available to the directors of this organisation could be similar to the NBN. For those of you who may not be aware of what those packages are, the No. 1 bloke in the NBN is on a salary package of about $2 million a year, which I think is outrageous. There are eight—

Mr Ripoll: They should be paid the same as politicians.

Mr Turnbull: You've persuaded Bernie already.

Mr BUCHHOLZ: I would be a starter too, if I could get the gig! There are another eight non-executives on an average of $818,000. When we start looking at remuneration packages of $2 million and an average of $818,000, I take real offence at what we pay the office of Prime Minister. Irrespective of whether we believe she is doing a good job, it makes a mockery of that process when we have an organisation running a budget of $10 million as opposed to the economy of the nation.

I draw to the parliament's attention a situation that happened in Queensland, which also troubles me, which we could draw an analogy from to this organisation. About five months before the recent state election the Queensland racing board took it upon themselves to renew their contracts for five years. They wrote into the terms of the contract that in the event that they were disbanded as a board they would be given a golden handshake and the five-year term would be fully remunerated.

I have concerns that when we are going to the market looking for potential directors or people to head up this CEFC, the income coming into that organisation will be over a five-year period with lots of $2 billion per year. So you will get $2 billion in the first year and $2 billion in the second, through to the fifth year—a total of $10 billion. I would be absolutely horrified if we were signing up directors with the intent that they would do the full five years on potential salary packages of $2 million, or at the minimum $818,000 if we use the comparison of the NBN remuneration package.

We are on the public record as a coalition stating that we will rescind the carbon tax . So this organisation will then be disbanded. The revenue streams that will come in in the first year are $2 billion. I would encourage the government, when they are going to the market for these players, not to embarrass themselves and not embarrass the directors by locking them into five-year contracts, because we will shut this show down. And I do not want to be putting my hand into the coffers of hard-taxpaying men and women of Australia to pay out a director's fee of $2 million per year over five years—$10 million—for one year's work.

That is something that may have been overlooked in consideration. How could that have been overlooked? Maybe it was overlooked because we were given 2½ hours consideration at the Economics Committee, when witnesses were called to give evidence. I just make the point that there was not enough time to complete the due diligence that this process deserved.

During the inquiry we were told overwhelmingly that there was extensive consultation. I put it to this House that in the extensive consultation that was supposedly undertaken by expert panels they forgot to ask one group of people whether they wanted the carbon tax. That group was the Australian people. The Australian people were not asked if they wanted to sign up to the carbon tax.

Go back to a couple of days before the last election—it is the Achilles' heel of this government—when the Prime Minister stood in front of the camera, looked down the barrel and said, 'There will be no carbon tax under a government I lead.' Why was that statement made? We all watched the polls. We all know how the polling was going. The polling was heading on a downward trajectory. It was a very close election. That single comment turned the election phase around. Do you know why? It was because the people of Australia trusted this Prime Minister. History has now shown that you cannot trust this Prime Minister.

So, with reference to the remuneration for directors of the new CEFC, I send a very blunt message to the government and to those people who will be sourcing the directors: do not sign up anyone on five-year contracts, because we have made it perfectly clear that when in government we will be dismantling this. The bill gives the Clean Energy Finance Corporation the power to invest in projects for the development of Australian based renewable energy technologies, low-emissions technologies and energy efficiency projects; the power to enter into investment agreements itself and make investments through subsidiaries; and a duty to ensure that, as of 1 July 2018, half of the funds invested at that time for the purposes of its investment function are invested in renewable energy technologies. On the back of that comment, what this organisation will potentially be funding is sub-economic projects. Those are projects that the commercial market has not found to have a suitable risk rating to invest shareholder, bank or merchant funds in. The risk ratings on these are just too high. I understand that the whole concept of this body of funds is to try to attract those higher-risk organisations—but with that comes a risk factor.

When we had the opportunity to question Treasury and the Climate Change Authority on the risk factor, they were rather oblivious. Whilst they had some provision for risk, I think, coming from a commercial background and having seen the number of businesses that have exited this market since 2007, it is timely that as an opposition we put under the microscope what the return on the investment will be.

The bill also establishes the Clean Energy Finance Corporation Special Account and appropriates funds which total $10 billion over five years, with the first instalment of $2 billion due to be paid on 1 July 2013. The account has the purpose of making payments to the Clean Energy Finance Corporation and to the Australian Renewable Energy Agency. The Clean Energy Finance Corporation is intended to be self-sustaining once it matures and therefore any funds returned to the Clean Energy Finance Corporation from its investments will be available for reinvestment. If money is being borrowed from the bond market at, say, three to four per cent, and the government then hands that on to the CEFC, who then invest in the projects, I would suggest that R&D will not give an enormous return on investment. Due to the vertical integration and how this is being set up, I do not see a lot of return on investment coming out of that market. I may be proven wrong.

Mr Ripoll: History may have already done that.

Mr BUCHHOLZ: Go your hardest. What we have been told with reference to this is that there will be a return on investment. My point here in the House is that that will be limited. The government's own bill already envisages a loss to this taxpayer through this investment due to operating costs and write-downs—or, what we would call, failed projects—as set out in the fiscal impacts. With reference to return on investment, I think they are looking to write off forecasted amounts of up to $600 million. In the electorate of Wright, where we were devastated with the recent floods, I could do a lot with $600 million. That amount would take a lot of the pressure off the Toowoomba Range crossing. It would go a long way towards rebuilding the communities of Lockyer Valley, Murphy's Creek, Grantham and surrounding communities. It would help in Mt Sylvia, where the telecommunications network was destroyed, just to get back to where we were. So $600 million seems a big gamble, a big punt.

It would seem that spending $10 billion on renewable energy would get you something. What is proposed here is that the government will spend $10 billion and that that will generate some form of new renewable energy. The problem, however, is that, before this bill, there was a 20 per cent renewable energy target and now, after the $10 billion included in this bill is spent, there will still only be a 20 per cent renewable energy target. We believe that, if we had worked cooperatively and co-invested with the market, with those who were already at commercial stage, we could have met our objectives far more successfully than through pursuing high-risk, low-return programs.

This bill is economically irresponsible and unlikely to achieve its stated aims. I hope for the government's sake that it does reach its aims—I genuinely do. It is an enormous amount of money. But I suggest, coming from the commercial background that I do, that not many of the ducks are lining up on this project. I say that with all sincerity. Not only is the carbon tax a bad piece of policy; it is the product of an unprecedented deceit and it is an impost on the Australian people. This is money that comes from the teachers, carpenters, farmers and nurses from my electorate of Wright—people who work each and every day to pay their taxes. Their money will be wasted on this.

I want to bring to the attention of the House comments from Twiggy Forrest in his recent address at the National Press Club. He likened the government's handling of the carbon tax to a couple of blokes buying a Melbourne Cup racehorse that had the potential to make them millions and millions of dollars and then, rather than racing the horse for the second time to get their dividend, celebrating after the first race by eating the horse. Those words came from Twiggy. Yes, he has a vested interest in the mining resources sector, but it was an interesting analogy for the government's handling of funds.

The government are going to talk about how successful they are and how successful this tax is going to be. But let me remind you, Madam Deputy Speaker, that it was the coalition that created, developed and implemented the mandatory renewable energy target—successfully; it was the coalition which created, developed and implemented the then equivalent of the solar PV rebate—successfully; and it was the coalition which created, developed and implemented the solar hot water rebate—successfully. We have proven ourselves when it comes to handling the commercial and financial decisions of government. The majority of us on this side come from business backgrounds. We come from places where balance sheets are a basic factor in making decisions on a daily basis. When we make a wrong decision, it hurts us in the hip pocket. So we are a lot more diligent when it comes to making decisions on behalf of the nation and spending other people's money. I would suggest that the other side of politics, the Labor government, do not have the same skill set.

In closing, I draw on the words of the previous leader of the Liberal Party, who said one of the problems with the Australian Labor Party is that they have a very shallow gene pool.