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Monday, 25 June 2012
Page: 4331

Senator THISTLETHWAITE (New South Wales) (13:04): I am pleased to rise in support of the Clean Energy Finance Corporation Bill 2012. The establishment of the Clean Energy Finance Corporation will be an important aspect of building Australia's future economy. It is part of the suite of reforms that make up the Labor government's clean energy future package and is an important body which will support the transition our economy will make over future decades from a heavy-polluting industrial based economy into a clean energy future. This bill establishing the corporation will ensure that into the future Australia has a viable clean energy industry and an attractive destination for investment in research and development, manufacturing and clean energy production. With that will come growth in jobs and rising incomes for members of our economy, which are things that should be supported. It pleases me that the government is enacting this legislation. The Clean Energy Finance Corporation is an institution that will play a vital role in our nation's successful journey to becoming a more prosperous and environmentally responsible country.

The bill gives effect to the government's commitments made in respect of the clean energy future package to establish this corporation. The corporation will assist and commercialise clean energy projects in this country. The fund will be a $10 billion fund dedicated to an investment in a future in clean energy in Australia. On 17 April 2012 the Gillard government released the expert review panel's report on the design of the corporation. The government has accepted the recommendations of that report and is implementing them through this bill. Clean energy technologies unfortunately face a range of obstacles in attracting financing in Australia at the moment. Current global financial market conditions, the complex nature of Australia's electricity markets, the costs of renewable energy and the preference of investing institutions for liquid assets inhibit the financing of the clean energy sector. This bill will ensure that Australia has a corporation dedicated to the support of investment and the commercialisation of clean energy projects in this country. The corporation will invest in financial assets for the development of Australian based renewable energy technologies, low-emission technologies, energy efficiency projects, and businesses that supply the required inputs.

The bill requires the corporation to have at least half of the corporation's investments in renewable energy technologies by 30 June 2018 and then on an ongoing basis. It is expected that the corporation will apply a commercial filter when making its investment decisions, focusing on projects and technologies that are in the later stages of development. The filter will not be as stringent as some private-sector equivalent, as the corporation does have a public policy purpose and values any positive externalities that are generated through this process, but, by using a commercial filter, it is expected that the corporation will invest responsibly and manage risk so that it is financially self-sufficient and achieves a targeted rate of return. The responsible minister will issue an investment mandate to the board, setting out the government's broad expectations of how the corporation invests and is managed by the board, but the corporation's investment decisions will be made independent of the government.

The corporation will be a central pillar of this country's successful clean energy future and play a major role in the development of the renewables sector. It will ensure that Australia, with its abundant natural resources, is a viable country for investment in clean energy projects and technology into the future. The bill and the suite of reforms in the clean energy future package are conscious of the fact that the world is moving to a regime of limiting carbon emissions in not only our economy but other developed economies throughout the world. In doing so, the world is moving to a renewable energy future. But at the moment, unfortunately, in Australia, a lot of these projects are not commercially viable.

That is the purpose of the carbon-pricing legislation. Under our regime, a price will be established for the externality that is created by corporations and individuals that pump carbon pollution into our economy. Initially under the scheme it will be $23 per tonne, before it moves to a market based price, pricing that externality in our economy. That will send a price signal to the market and over time will change behaviour because, in market based economies, the price allocates the capital. So gradually, as dirty, coal fired pollution becomes more expensive, the capital will move into more economically viable renewable energy projects, which will of course ensure that Australia has a cleaner environment and, importantly, is able to meet its international commitments to reduce carbon emissions in its economy. In doing so, we will ensure that we have a viable clean energy sector in this economy.

I have often said that the change that our economy is undergoing at the moment is the equivalent of the change that the economy undertook 100 years ago when we moved from an agricultural basis into an industrial era. During that change, capital was reallocated from farmlands and farming projects into an industrial economy, and we saw the benefits that flowed to our economy from that change that occurred over the last 100 years. Similarly, the next phase of our economic development is in a clean energy future. If we make that transition, then, over the course of the following decades, investment will follow—investment in research and development and investment in manufacturing and ultimately the production of cleaner energy in this country. With the investment will flow jobs growth and incomes growth for our economy and those who live within it.

Unfortunately, this seems to be an argument that the conservative side of politics in this country have not yet grasped. Despite the fact that they are advocates for free-market economics, they fail to grasp this important distinction and characteristic of the government's clean energy future package: the fact that the price will allocate the capital as we move forward into the future on this issue. You need look no further than the opposition's direct action policy on reducing emissions to see that they fail to grasp the notion of the market setting the price for carbon emissions, the capital flowing and the jobs, the investment and the growth in our economy over the future. Unfortunately, the direct action policy is akin to the opposition throwing money in the air and hoping that Mother Nature takes the bribe.

Australia's clean energy market is, of course, at an early stage of development categorised by incomplete knowledge and limited experience of risk. This means that there are barriers inhibiting the effective allocation of capital. The expert review chaired by Jillian Broadbent identified a number of common barriers that inhibit financing in the clean energy sector. The key issues are availability, cost and tenor of finance.

This corporation will leverage private-sector financing for renewable energy, low-emissions and energy efficiency technologies, investments critical to the transformation of the Australian economy. The corporation will act as a catalyst to private investment which is currently not available and thereby contribute to carbon reduction and cleaner energy. It is not the intention that the corporation will directly compete with the private sector but rather that it will seek to leverage more private-sector investment through more support for the development of cleaner energy in this country. The corporation is just one of a raft of this government's initiatives designed to take us on what will be the next stage of our nation's economic development. Whilst those opposite continue their irresponsible campaign to drive fear and to scare Australians away from doing what is right, the Gillard government will continue to strive to achieve these reforms. Not only does this bill mean jobs for Australians; it also means a promising future in which Australia will take its place in the new economy, in an economy where in 20 to 30 years time investment and capital will flow to those countries that have made the transition to a clean energy future, that have a viable research and development capacity for clean energy and that have a domestic manufacturing base for clean energy.

We have all heard the figures in the international market at the moment and the massive investment that is occurring in China in wind power, in solar power and in the electrification of cars. Economies that invest in these areas, that support the establishment of a domestic renewable energy sector, will be the ones in the future that benefit, where investment and jobs will flow, where incomes will flow.

Australia must act now. The suite of reforms in this bill will ensure that we are on our path to a clean energy future with the commensurate benefits for our economy. I commend this bill to the Senate.