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Monday, 25 June 2012
Page: 4316


Senator CORMANN (Western Australia) (11:51): The Clean Energy Finance Corporation Bill 2012 is part of the Labor-Greens carbon tax—the carbon tax we were promised before the last election that we would not get; about which the Prime Minister said five days before the last election there would not be a carbon tax under the government she led. Of course, now we have a massive carbon tax which will push up the cost of everything—electricity, the cost of living and the cost of doing business in Australia—which will make us less competitive internationally, which will shift jobs and emissions overseas, which will lead to lower real wages and which will have a $1 trillion impact on our economy between now and 2050. On top of that, as a price the Prime Minister had to pay for the support of the Greens political party, we have a $10 billion slush fund. And, in order to give it a cloak of respectability, the government have dressed it up as the Clean Energy Finance Corporation. Labor may be in government, but it is very clear that the Greens are in power. We know that Senator Milne, the new Leader of the Australian Greens, very much enjoys the use of the word 'power'. She likes to talk about power-sharing arrangements and so on. But we know that it is the Greens who have really been the power behind all of these bad initiatives that have come out of the government around carbon pricing and the clean energy slush fund and the like.

This is effectively another $10 billion in expenditure from a government that have already delivered $174 billion worth of accumulated deficits and $145 billion worth of government net debts, and this is a government which in part because of this bill before the Senate today will have to seek the approval of the parliament to yet again lift the debt ceiling—on this occasion to $300 billion. This so-called Clean Energy Finance Corporation involves a commitment of $2 billion per annum over five years, with the first instalment due to be paid on 1 July 2012—$10 billion in total. Will we find that $10 billion reflected in the budget papers? No, we will not. Will that $10 billion hit the budget bottom line, the underlying cash balance of the government? No, it will not.

The government have taken into account $57.3 million in operating and set-up costs over the forward estimates and they have also taken into account $750 million or thereabouts in money that they think is not going to be recovered after it is invested, so-called, by the Clean Energy Finance Corporation. This is because this Clean Energy Finance Corporation will supposedly make investments but it will make investments in highly risky projects. It will make investments in projects that are unlikely to survive and thrive. If the projects that the Clean Energy Finance Corporation was putting taxpayers' dollars behind were sensible, commercially viable projects, they would of course be able to attract private investments and they would be able to attract investment from the markets. But no. The government are recklessly wasteful with taxpayers' money. They are setting up a slush fund to pick winners that are so risky and so speculative that no private investor will put their own money behind them, but the government are quite happy to put taxpayers' money behind them. That is why the government are in the fiscal mess that they are in.

The coalition have been very clear that we oppose the carbon tax. We are opposed to it because it is bad policy, it is bad for families, it is bad for business and it is bad for Australia. We are also opposed to this Clean Energy Finance Corporation because it is a complete waste of taxpayers' money. There are precedents around Australia, example after example around Australia, which demonstrate very clearly why this sort of approach of governments picking winners—putting billions and billions of dollars taxpayers' money on the line, pursuing ventures that essentially only have a very small likelihood of success—is a very bad idea. But the government have never come across a bad idea that they did not want to fully embrace. When the government come across a bad idea which is likely to cause the loss of taxpayers' dollars, they fully embrace it and try to make it law.

This Clean Energy Finance Corporation is bad policy which came out of a bad process. It eventually came out of a dodgy deal between the Labor Party and the Greens. It demonstrates yet again that Labor just cannot be trusted with money. If the investments, so-called, that the Clean Energy Finance Corporation will get involved in were sensible investments, they would attract private investment. We can only assume that the Clean Energy Finance Corporation will invest in inferior projects which are not good enough to attract private finance on commercial terms, where the risk-reward equation is properly balanced.

This is again about the government and the Greens picking winners at the expense of taxpayers. The mandate that the government is giving to the Clean Energy Finance Corporation explicitly is to invest in risky renewable energy projects. In all likelihood this will be a complete waste of $10 billion of taxpayers' money. If the projects were truly likely to be winners, as the government want us to believe, the government would not have to throw taxpayers' money at them. Given that they probably will not be, the government should not be throwing money at them.

Minister Combet and the Treasurer have been trying to make it look as if this is a commercial venture. They have been trying to give the Clean Energy Finance Corporation a cloak of commercial venture that is all pretence, asserting that the Clean Energy Finance Corporation will 'apply a commercial filter when making its investment decisions'. It will not do that. We need look no further than the government's own explanatory memorandum, which makes the point that this so-called filter will:

… not be as stringent as the private sector equivalent … and

…   …   …

… may accept a lower rate of financial return.

So the Clean Energy Finance Corporation will offer concessional loans and absorb additional risk. The government have already written off 7.5 per cent of the money that it is going to invest, and they hasten to add that the 7.5 per cent is a conservative estimate. So there is $750 million already out the door which we know is going down the drain. But, of course, there will be more. There is no way that that $10 billion will ever achieve a commercial return for taxpayers, because investments will be highly risky, highly speculative, and chances are that none of the $10 billion will ever be recovered. The accounting treatment, similar to what is happening with the NBN, hides the true impact on the budget of this reckless fiscal decision by the government. The reason they hide it is that the government do not want the Australian people to know the full extent of the debt burden that they are imposing on future generations of Australians. Future generations of Australians will have to pay the price for this fiscally reckless and wasteful era of government spending that we are currently going through. The period 2007 to 2013, when Labor and the Greens were running the show, will go down as one of the most reckless fiscal periods in our history.

There are a whole series of other very serious and significant concerns about this bill. The Clean Energy Finance Corporation will have distortionary impacts on the market and at the same time will not stimulate tangible results for progress in renewable energy projects. Nobody expects that the $10 billion that is to be provided to the Clean Energy Finance Corporation will be successfully invested. Even if it were—which, of course, is highly unlikely—there would be no new renewable energy generated, as the renewable energy target has already been set at 20 per cent, and this legislation does not change that. We have a renewable energy target which is currently driving investment in the renewable energy sector, and instead of letting it play out we have the government throwing $10 billion of taxpayers' dollars into the mix, distorting the market—making it harder for viable investments to thrive and survive. It is widely accepted in renewable energy markets that the introduction of the government's Clean Energy Finance Corporation will actually have an adverse impact on existing renewable energy projects and on new renewable energy projects into the future. It is widely accepted that the insertion of the government's Clean Energy Finance Corporation into the renewable energy market could effectively undercut finance on existing large-scale renewable energy projects that have sought and obtained commercial financing.

What that means is that newcomers to the sector who are lucky enough to be hand-picked by the government's so-called Clean Energy Finance Corporation will have the benefit of a direct subsidy through the government's slush fund, in turn compromising the viability of existing commercial investors. The Clean Energy Finance Corporation—or the Labor-Greens slush fund—is also not charged with investing in the lowest-cost technologies to produce the cheapest emissions reduction. Its remit is to find the technologies which the market considers to be unproven, too speculative or too risky for commercial financing. This has got bad news for the taxpayer written all over it. Why is the government pressing ahead with it? There would be some sensible people on the Labor side of the parliament, I am sure, when it comes to fiscal discipline and sensible fiscal policy. How can anyone in the Labor Party let the Greens get away with this? How can anyone in the Labor Party let the Greens set up a slush fund like this, which essentially is throwing $10 billion of taxpayers' money out the door?

It is very clear—and even the government concedes—that not all investments by the Clean Energy Finance Corporation will provide a commercial return. The explanatory memorandum notes:

The fiscal and underlying cash balance impacts include a prudent recognition that some investments will not be recovered, and interest revenue. The fiscal balance impact also includes the concessional component of loans.

All up, just under $1 billion out of $10 billion has already been written off. I ask: how is that a sensible use of taxpayers' money? And people across Australia are asking: how is that a sensible use of taxpayers' dollars?

Why do people have to pay more for their private health insurance? Why do people have to pay higher tax when they are trying to save to achieve self-funded retirement? Why do people have to pay more as they travel overseas, when the government has got so much money to burn? Why do we need to have 20 or so Labor Party increased taxes and charges when the government has got so much money to burn that it can throw $10 billion at this sort of waste? Why is the Australian Labor Party happy to impose additional cost-of-living pressures on the families of Australia, when it has $10 billion to throw out the window? Why do we have to have $174 billion worth of accumulated deficits and $145 billion worth of government net debt? Why do we need to increase the government's debt ceiling to $300 billion to fund something like this? I hope that the government has had a close look at the experiences in various state governments in the 1980s, when they sought to pick winners through government finance corporations. It all ended in tears.

This is an absolute recipe for disaster. This government has a very bad track record when it comes to investing in these sorts of energy projects. The government's $700 million Solar Flagships program in Moree and the Queensland Solar Dawn project struggled to gain industry support. Along with the Bligh government, this government presided over more than $100 million of losses in the ZeroGen project, despite clear warnings from both the opposition and experts. In fact, when our shadow minister, Mr Ian Macfarlane, the member for Groom, warned the government that the ZeroGen project was at serious risk of failure, the former Queensland Labor Premier, Mr Beattie, said that Mr Macfarlane was on drugs. It turns out that Mr Macfarlane was 100 per cent correct. The Clean Energy Finance Corporation has many of the hallmarks of Labor's Victorian Economic Development Corporation, which left Victoria in a disastrous state only two decades ago. Programs of this nature have similarly experienced massive failure and controversy in the United States. The failure of the $700 million Solyndra project, as well as those of Beacon Power and Enerl, occurred under a similar program to the Clean Energy Finance Corporation. These instances were recently joined by the collapse of Solar Trust of America, which had a $2.1 billion loan guarantee from the US energy department.

Wherever you look, whatever you read, whatever consideration you give to this proposal, this has got bad news written all over it. This is going to be the next pink batts; this is going to be the next overpriced school halls disaster; this is going to be the next hallmark of a terrible, incompetent, dysfunctional government yet again wasting taxpayers' money to such an extent that it has to call up all these new ad hoc taxes. If this legislation comes into effect and if this Clean Energy Finance Corporation is able to spend money on projects which are clearly inferior, projects which are by the government's intent not exactly where they would attract commercial investment, you wait—if Labor is to have the opportunity of providing another budget—for the next series of tax increases from this high-spending, high-taxing Labor government. This is a government which over the last 4½ years has spent too much, has taxed too much and has prosecuted and pursued and attacked Australians who are successful. It is anti success, it is anti those people who make commercial investments in order to achieve a commercial return, and now it is throwing money at ventures that are not commercially viable and that are competing with those projects that are trying to make a success of things. That is the reason this bad Labor government is in the fiscal mess it is in.

As I mentioned in my introduction, this bill is part of the government's carbon tax package. The coalition have not only committed to vote against the carbon tax in opposition; we have also made a clear commitment that we will rescind the carbon tax package in government. I would not be surprised if the Australian Labor Party voted with the coalition after the next election, whenever that is, to rescind the carbon tax and bad budget measures like this. After the next election—should we be successful, should the Australian people express the sort of judgment about the carbon tax and bills like this that we hope and expect they will—I would not be surprised if, rather than remaining attached to the Greens, the Labor Party finally see sense, finally start focusing on the national interest, finally start focusing on what is in the interests of families and businesses across Australia and vote with the coalition to rescind the carbon tax.