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Monday, 21 May 2012
Page: 4834


Ms OWENS (Parramatta) (20:40): The previous speaker is right: there is a Rheem factory in my electorate in Rydalmere. I have been down there any number of times. I have been down there when the program was running fully—when they were expanding and retooling and employing more—and I have been down more recently, before this decision was announced, when sales were down and they were struggling with the declining demand. And I have been down a since this decision was made.

I know from talking to them over quite a number of months that the sales of solar hot water systems have been in decline for some time, and that the issues they face include issues like the changing costs of their competing products, including the gas hot water systems which, as the member for Isaacs said, they also import. They actually import their own competition at Rheem. And I know they have concern about government policy in other areas, which they believe make it more difficult for solar to compete. But the idea that extending a program for four months and then shutting it down again would solve the ongoing pattern in the solar hot water system industry is folly. To tell workers that reinstating a program in a declining sector by four months would actually save their jobs in the long term is just misleading them in the most appalling way.

The previous speaker said that we should let business get on and operate as they planned. That is true. This program was known and planned way back in 2007—in fact it was 17 July 2007—by the Howard government. It was put together as a bridging program to take the then government up to 30 June 2012, when they intended to introduce their emissions trading scheme. So for the Howard government it was a bridging program which went from July 2007 up to the start of their emissions trading scheme: a bridging program. There is actually another bridging program that comes on the end of that, which is the renewable energy target—also a bridging program, which goes up until 2020. So it is also designed to provide some incentives in renewable energy while the price on carbon is starting to work fully through the economy. It is the second part of the bridging program, and it also provides support to the solar hot water industry.

Right from the beginning this program was a bridging program designed to close on 30 June 2012. It never applied to new properties; it only applied to retrofits and so, again, there is another sector of the industry out there to which this does not apply and which benefits greatly from regulations that gradually phase out electric hot water systems—at a state level in most cases. So manufacturers and installers have known for five years that this program would finish on 30 June 2012.

I want to talk about how this program actually operates, because it explains why the 28 February date for installations is the right one if you are closing the program on 30 June. It is a demand-driven program, and we all know what happens in a demand-driven program when the end becomes near: people come out of the woodwork and you get quite a spike in demand at the end. So it is actually quite a normal practice for a department, when they have these kinds of demand-driven programs, to stop them without warning. When they do not do that, you get an interesting result. For instance, when the solar photovoltaic rebate was closed and one day's notice was given, around $384 million in applications were received on or immediately after the closing date. So that announcement with a day's notice led to a spike of $384 million.

This solar hot water rebate scheme works in this way: you install it and then you have four months to apply for a rebate. So, if you installed before 28 February, you have until 30 June to apply for a rebate. One of the reasons the government did not know at the time that it announced the closure of the program what the overspend or underspend would be—it suspected it would be an underspend because sales had been in decline—is that you actually do not know at that point, because you have not received the applications for the rebate, how many of them there are out there. So it is normal practice to do exactly what the department did: to stop the program and allow that four months for the applications to flow through, closing on 30 June. That was always the intention, that is what was announced in July 2007 and that is exactly what happened.

It would be fiscally irresponsible to reopen the program. Can you imagine what would happen if tomorrow the government announced that the program was reopening and it was closing on 30 June? The government would not know, right up until 30 June, what its liability was going to be. It just would now know. It would not have any idea. You can bet it would be well and truly over the budget, by a large factor. It would be fiscally irresponsible to open the program, and the government has made it really clear that we will not. It would confuse households, it would increase uncertainty for business and it would expose the department to extraordinary budget risk.

Again, departments manage these demand-driven programs by slightly overestimating the demand so that shortfall can be met within the department's budget, but they also do exactly what they have done in this case, which is close the program on a day and announce it that day. To do otherwise—to give a day's notice—can result, as the photovoltaic rebate showed, in an overrun by $384 million in one day. That is a lot of dollars in one day. For an opposition that has a $70 billion black hole, I suspect it would be $71 billion very quickly if you gave people four weeks.

If you think about the ramifications of actually doing this, you would not suggest it, ever. This is a very silly thing to do. If the opposition have a real concern about the solar hot water industry—I am sceptical that they do given that this kind of motion comes forward and this is the best they can do—I do think there are a number of other areas that they could be discussing. I think that, if they go back to some of the manufacturers, they will find that they have things that they want to discuss. It is a real shame that in this parliament we do not get the real discussion; we do not get any really thought-through, constructive debate about what are incredibly complex issues for an Australian manufacturer. It is just a shame. I am going to call this a stunt as well, I am afraid, and I am sure someone will go back and tell the workers at Rheem. You simply cannot do this if you are fiscally responsible in any way.

We are also not leaving the solar industry out in the cold. There is a significant amount of support still available for people seeking to install solar hot water systems in their homes and their businesses. This government has provided more support to renewables than any government in Australian history, and we continue to do that. When the carbon price scheme starts on 1 July, the solar hot water industry will be receiving support in four ways. For a start, the carbon price itself will create a stable, long-term market. The Low Carbon Communities program will provide $330 million to councils, communities and low-income families to improve energy efficiency in homes and buildings. Solar hot water is very energy efficient, and I have spoken to Rheem about whether or not they could work with local organisations to be part of that program. The $800 million Clean Technology Investment Program will give the solar hot water industry an incentive to retool and modernise the manufacture of these units. Last but not least is the support for the industry to 2020 through the renewable energy target, which offers a $1,000 discount in small-scale technology certificates to consumers installing solar hot water systems in their homes. That is a $1,000 discount which will still be there for people seeking to put a solar hot water system on their home. We will not be supporting this bill. (Time expired)