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Wednesday, 30 May 2012
Page: 6333


Mr HARTSUYKER (Cowper) (17:29): I welcome the opportunity to speak on the Clean Energy Finance Corporation Bill 2012 and cognate bills because this legislation before the House tonight epitomises why Australians have lost faith in this government. Since its election to government at the end of 2007 the federal Labor government has presided over one program debacle after another as they have recklessly mismanaged billions upon billions of taxpayers' dollars. We have seen billions wasted and lives lost over the Home Insulation Program. We have seen billions wasted on school halls as infrastructure was priced at up to three times the commercial rate and it was thrust on to schools whether it met their needs or not. We have seen the government commit $50 billion to the National Broadband Network without a cost-benefit analysis, only after their first attempt at a $4.7 billion broadband plan failed to secure a tenderer. Indeed there are a number of similarities between the content of these bills and the legislation relating to the National Broadband Network, but I will return to those matters later in my contribution. But the bottom line is that this legislation has all the hallmarks of what is wrong and dysfunctional with this out-of-touch government.

One would have thought after all of these funding debacles the government would have taken a step back and questioned the way they draft policies and the way they implement programs. But not this government. If you believe the BER program was pink batts on steroids, and if you believe the National Broadband Network is the BER on steroids, then I am sad to say that the Clean Energy Finance Corporation bills are the NBN on steroids when it comes to losing money. The reality is that by tabling these clean energy bills the government has shown it is intent on arrogantly pursuing poor public policy that will leave the long-suffering Australian taxpayer with a multi-billion-dollar debt.

It is also clear that the government is willing to trash democracy and not give the Australian people a chance to vote on a major public policy issue that Labor did not take to the election. The Prime Minister told the Australian people, 'There will be no carbon tax under a government I lead'. Yet on 1 July the world's biggest carbon tax will be introduced and a $10 billion free-for-all will be created without the Australian people having the ability to cast their judgment on it through an election.

It is extremely amazing that the alarm bells are not ringing loud within the government, based on their atrocious record of financial recklessness and mismanagement. It is also negligent for any of the Independents who sit on the crossbenches to embrace the merits of these bills when the legislation has been drafted in a way that repeats all the mistakes that this government has made over the past 4½ years. Under this legislation the Clean Energy Finance Corporation will be established with the power to invest in renewable technologies, low emission technologies and energy efficient projects. It will have the power to enter into investment agreements itself or make investments through subsidiaries. And how much funding is to be set aside for the Clean Energy Finance Corporation? Two billion dollars. Yes, $2 billion will be set aside every year for five years. That is a total of $10 billion. While the government spouts that the Clean Energy Finance Corporation will have to deliver a return on this $10 billion investment, the reality is quite different. In fact, Treasury have officially confirmed to a parliamentary committee that they expect to lose up 7½ per cent of their capital each year. That equates to $150 million per year or up to $750 million in loans and investments over five years being written off, literally thrown out the window. It is beyond belief that this government—in agreement with the Independents and the Greens—could try to push through legislation where the Treasury believes up to $750 million of taxpayers' money could be literally written off. Imagine what this $750 million in waste and mismanagement could be spent on. It could be invested in infrastructure. It could upgrade the Pacific Highway. It could improve health services. It could be used to assist people with disabilities.

There is plenty of evidence, both in Australia and abroad, that government funding for large-scale renewable energy projects is no guarantee of success. For example, in December 2009 the government announced with much fanfare the Solar Flagships Program. In June 2011 the Prime Minister and the Minister for Resources and Energy announced the Moree Solar Farm and Solar Dawn projects, which would receive a total of $770 million in funding for solar flagships. The Moree Solar Farm was to receive $306 million to build a 150 megawatt photovoltaic power plant near Moree. The Solar Dawn consortium received $464 million for a planned 250 megawatt solar thermal gas hybrid power plant near Chinchilla. And what happened to these two projects? Well, it is not a good look. Earlier this year the Moree Solar Farm advised the government that it had failed to secure a power purchase agreement with an electricity retailer—a necessary step for gaining a source of revenue. This forced the energy minister to re-open bidding for the $306 million in government funds. Today the project remains in limbo. The other so-called flagship project—Solar Dawn—although the sun seems to have set before we could have a 'solar dawn'—also struggled to make the numbers add up. The project has received a six-month extension to try to secure industry support and justify the investment.

This highlights two key points. Firstly, it is extremely difficult for renewable energy projects to secure a commercial return. Secondly, because of the high degree of risk associated with these projects, the government is placing $10 billion of taxpayers' money at great risk. But this should come as no surprise. It seems that every time the government tries to subsidise clean energy or carbon emission reduction technology the taxpayer gets burnt, and in a big way. Take the collapse of ZeroGen in Queensland, which was meant to deliver clean coal power. After an investment of $106 million from the Queensland government and $46 million from the Australian government, ZeroGen collapsed in a heap and taxpayers' money went up in smoke. It went up in CO2 probably.

Mr McCormack: A lot of hot air.

Mr HARTSUYKER: Yes, a lot of hot air, Member for Riverina. But the failure of renewable energy projects is not unique to Australia. In the United States we have seen the $700 million Solyndra project and the Beacon Power and Enerl projects collapse, despite receiving funding from a US program very similar to the clean energy finance corporation concept we are debating here in this House this evening. Then we saw the collapse of the Solar Trust of America, which had a $2.1 billion guarantee from the US energy department. I am sure the US taxpayers are looking forward to paying that back over the next years—as if they have not got enough debt. These overseas failures plus the collapse of ZeroGen and the experiences with the solar farm and Solar Dawn should have sent, you would think, a message to the Gillard government. But so beholden are they to the Greens, so beholden are they to the Independents, that they are keen to push on and play Russian roulette with $10 billion of taxpayers' money.

There are concerns about the impact of this huge amount of money on the existing renewable energy marketplace. Current investment in renewable energy is being driven by a bipartisan commitment to a 20 per cent renewable energy target. It is this target which is driving investment in renewable energy at the moment. Many of these investments have secured finance on a commercial basis with little or no government financial assistance. The fear is that the establishment of the Clean Energy Finance Corporation and the creation of a $10 billion funding slush bucket will distort the market and undermine existing renewable energy projects. Technologies which are not commercially viable without a substantial government handout will all of sudden be competing with projects which are currently receiving investment using existing technologies. So the government will not only be rolling the dice on speculative new renewable energy projects but could in fact be discriminating against the viability of current projects. The end result will be a lose-lose for all involved, including major renewable energy projects.

I am also concerned at the way the government have appropriated the $10 billion in funding for the Clean Energy Finance Corporation. Because of the massive debt that this government have racked up in the past four years, they decided to treat the $10 billion in funding as an 'equity investment' in the government's financial statements. By calling it an 'equity investment' the government have been able to remove the funding from the budget bottom line. Given the government's track record, it is indeed a leap of faith to call these projects an 'equity investment'. In an accounting sense, we know that equity is defined as asset minus liabilities, but we all know that based on past performance these projects are likely to be big on liabilities and small on assets. This essentially means they can claim to be delivering a small surplus when really they are spending taxpayers' money like a drunken sailor and that, if you include projects like the NBN and like this one, they will have a huge deficit indeed.

What they are doing here mirrors what the government have done with the National Broadband Network. They are providing funding off-budget so that they can distort a bit of a fiddle, they can distort the financial figures and they can make it look like we have a surplus. It is so small it is not even really a clayton's surplus; it is a mirage.

Mrs Griggs: A figment of their imagination.

Mr HARTSUYKER: A figment of their imagination; an illusion—that is correct. Everyone in the House knows that this legislation is only being debated because of a deal between the Prime Minister, the Greens and the Independents. The $10 billion is nothing more than a pay-off to the Greens for their one vote in the House—$10 billion for one vote; that is a very expensive vote indeed. The fact is that I am surprised that the Independents would ignore the wishes of their electorates, ignore common sense and vote with the government on this farce. It is indeed very regrettable.

What is also extremely disappointing is the cold hard reality that this $10 billion in funding will do absolutely nothing for the environment and reducing carbon emissions. As my colleague the member for Flinders has consistently noted, the $10 billion fund will create no new renewable energy. Prior to the creation of the fund the target was 20 per cent. Now that the fund has been created the target is still 20 per cent. There will be no additional renewable energy because of this expenditure. So all that this taxpayers' money will do is sideline existing renewable technologies, which are currently more expensive technologies, but the renewable energy pie will not grow.

Questions over the environmental benefits of such a huge government spend have also been raised by the Centre for Independent Research Studies. Research fellow of the centre Dr Oliver Marc Hartwich has released a report titled A waste of energy: why the Clean Energy Finance Corporation is redundant. He is a very wise man. Dr Hartwich notes in his report:

The physical effect of energy subsidies is precisely zero in an environment where the total emissions are pre-determined by a trading scheme. Not a single gram of carbon dioxide is saved by pumping money into renewables.

We all know that under the carbon tax the government's own figures forecast that emissions will rise. We all know that while we are introducing the planet's biggest carbon tax some of our biggest trading partners are either walking away from carbon pricing or embarking on a major increase in their use of fossil fuels. It is absolute folly for Australia to be risking $10 billion of government money on a Greens slush fund when there is no evidence that it will cool the planet, change the climate or deliver any meaningful environmental outcome. The only thing we do know is that this government has no mandate to appropriate these funds and the Greens will use this as platform in the lead-up to the next election.

What a disgrace it is that the government can use creative accounting to waste so much money and leave such a massive legacy of debt for future generations. The next federal election will be not only a referendum on the carbon tax but also an opportunity for Australians to decide on what they believe should be the priorities for the next government. Australians can decide whether they wish for $10 billion of their hard-earned money to be spent on a speculative pie-in-the-sky renewable technology program which is likely to lead to massive capital losses or whether they want to return to sensible economic management.

This government should be condemned for introducing this legislation and it should be ashamed for placing so much taxpayers' money at risk. It is not only undemocratic; it uses questionable accounting techniques and it gambles tens of billions of dollars on speculative projects. That is why the coalition opposes this legislation and it is why the Independents should vote against this legislation. That is why they should move away from their support of the government and support good old common sense, which is that you do not waste $10 billion and you do not invest money when you know you are going to lose it. It is about time the government came to its senses and abandoned this crazy plan.