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Monday, 21 June 2010
Page: 3738


Senator FISHER (1:06 PM) —I rise to speak in support of the intention of the Renewable Energy (Electricity) Amendment Bill 2010 and cognate bills, although I am very concerned to see that some amendments that may be being contemplated are seriously considered by the government. After all the government has a track record of programs that sound good but, where not well implemented, do no good. Exhibit A is the Home Insulation Program. and exhibit B is the so-called Building the Education Revelation.

With the renewable energy target and the regime of aiming at 20 per cent of renewable energy generation within a certain time period, that is of course a goal that the coalition supports. But the lessons of the Home Insulation Program, where the goal was to stimulate the economy, create and protect jobs and help the environment, are that none of those goals has been achieved. Indeed, to the contrary, it is arguable that the Home Insulation Program has backed money out of the economy, cost jobs and sent the environment backwards in terms of, in particular, removing insulation that has been installed and the carbon miles that go into that.

Unfortunately, in terms of the renewable energy scheme, the opposition was raising concerns with the government as early as the end of last year. The evidence before the Senate committee inquiring into this bill included concerns from witnesses about the renewable energy scheme becoming another Home Insulation Program. Essentially what the government was doing with the Home Insulation Program was picking winners, mucking around with the market. The renewable energy scheme arguably sees the same thing. The government is picking winners and mucking around with the market. When you are doing that, you want to be very confident that you have the right checks and balances. In the case of the Home Insulation Program, where it is clear that you do not have the right checks and balances, you need to show that you know what you are doing when you move in to mop up the mess and that you have learnt the lessons of the past.

We heard from witnesses at the inquiry into this bill that they were concerned that he mucking around with the market skews demand and leads to increased demand. My colleagues have already spoken about the pressure placed on the large-scale renewable sector from an unpredicted upswing in the small-scale renewable sector, which of course is why the bill finally proposes a splitting of the regime into two. But we have unsatisfied concerns in terms of evidence provided by witnesses to the committee that there can still be demand pressures on the small end of the system, that there can still be incentives for householders to install photovoltaic cells for a subsidy and, once installed, they then have an income incentive, which is not something that was assisting to skew the market in a demand sense with the Home Insulation Program. Witness Fiona O’Hehir from Greenbank Environmental said to the committee:

When things are for nothing and when margins are completely squeezed for the installers, people start taking shortcuts. Photovoltaics is actually electricity. It is electricity generation. You actually have generation on your roof, and if people start putting in cheap panels that are made with just plain glass, not tempered glass, it is dangerous. … A flood of cheap imports into Australia could mean that we have significant risk.

I am sure that the government will be doing everything it can to learn from the lessons of the Home Insulation Program to ensure that that does not happen with renewable energy and with photovoltaic cells. Fiona O’Hehir went on to say:

Currently, in New South Wales … there are companies giving away 1.5 kilowatt systems for free. If it continues at this rate, we will soon end up with a situation along the lines of the insulation program, which would be a disaster for the renewable energy industry, as it has been for the insulation industry.

I want to say two things about that evidence. Firstly, admittedly the committee was not necessarily able to find comprehensive evidence of photovoltaic cells being installed for free, although there was some limited anecdotal evidence about that. Secondly, on the reputation of this industry, the stakeholders in the industry are reinforcing the concerns that the coalition raised last year. The industry deserves reassurance from this government that it does not face the same fate as the insulation industry, which now has an unjustifiably tarnished reputation. You may think that it is beyond the pale in some respects to suggest that the government owes this industry that reassurance, but some of us would have thought that it was beyond the pale for the government to so mismanage the Home Insulation Program that the reputation of that industry would end up being as unjustifiably tarnished as it has been. We have an understandable ‘let’s get this legislation through this week’, but why are we left with that? Why didn’t the government bring on this legislation for debate earlier, particularly when the concerns had been spoken loudly about by the industry and reinforced by the opposition last year? Why weren’t we debating it in February and March?

The committee heard some evidence about analogies with the environment department implementing the Home Insulation Program. The government was warned that the environment department was underresourced and ill-equipped to do a job of that scale in the time frame within which it was tasked to do it. This department now is contemplating a new regime under the bill with a clearing house. The department has no experience running a clearing house, yet it is reassuring us that it is going to be able to establish the clearing house from scratch. There have been concerns expressed to the Senate committee about the length of time it will take for value to be redeemed through the clearing house. Mike Sexton, from Rheem, told the committee:

The situation is that when we have sold a water heater we have given the value of the certificate to the householder. We then have taken that certificate and … need to redeem those certificates as soon as possible. If I would go into a clearing house which is clearing them on a first-in, first-out basis—and under the proposal I understand that they would not pay out any certificates if their target had already been satisfied—

and he is talking there about the overall target—

I might have to wait until the following year and hold that whole amount of money until the following year. That is the issue, so how would a company like ours, or any other company, or a distributor, be able to fund that within their business?

Surely we are not going to get to a situation—and we have heard claims again today—where installers in the home insulation industry are owed several hundreds of thousands of dollars. These are small businesses; these are mums and dads. They cannot afford to be the bank in lieu of the government, yet that is what is happening with the Home Insulation Program. With the renewable energy scheme the proposition is essentially that the clearing house be ‘kind of like a bank’. Well, let us make sure that it is but also that it pays out on time and in a way that ensures the stakeholders in the industry can do what they are in business to do, consistent with the goals of the legislation.

I placed on notice a question about whether the government was doing a risk assessment of this program as it did for the Home Insulation Program yet failed to make public—and, I would argue, failed to take adequate heed of. Happily, in answer to the question the department has indicated that a risk assessment will be done. I look forward to the government releasing that risk assessment and making public the risk register as soon as it is done. I look forward to the government, through the department, indicating each and every measure that is being taken in the implementation of this amended program to address each and every one of those risks and to appropriately mitigate them. We in the opposition want to make sure that the renewable energy scheme achieves its goals and, in attempting to do so, does not harm the reputation of an industry and lead to interference with market forces which has consequences that a government has not contemplated and then finds itself ill-equipped to deal with. I look forward to further debate of this bill and its consideration in the committee stages.