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Monday, 25 June 2012
Page: 4342

Senator FIERRAVANTI-WELLS (New South Wales) (13:49): I rise to also speak on the Clean Energy Finance Corporation Bill 2012 and what is really a complete and utter folly. The clean energy fund is absolute and utter folly and it simply will end up being another slush fund exposed as a complete waste of taxpayers' money. When you look at this fund you see all the hallmarks of the Victorian Economic Development Corporation, which left Victoria in such a disastrous state only two decades ago. I want to take the Senate through some observations that the shadow minister for climate action, environment and heritage, Mr Hunt, has made in relation to this fund. He has outlined that there are four basic things that we need to know about the structure of this fund which are very important. Firstly, this $10 billion fund will create absolutely no new renewable energy. Incredible—it may seem impossible—but this is the fundamental flaw which is at the very heart of this fund. Prior to the creation of the clean energy fund, the Renewable Energy Target was 20 per cent by 2020. And guess what? After the $10 billion will have been spent it is intended that the target will still be 20 per cent.

So then what is the nature and purpose of this fund? And is it, then, merely to displace existing technologies and go to much higher risk technologies that are more likely than not to fail? Therefore it is not surprising that there is some disquiet, even within green stakeholders, in relation to this operation, most importantly because of the distortions in the market that it will create. Here is the thing that surprises me most. What are the terms of reference that ultimately define for us today, before the creation of this fund, what actual benefit, if any, will result as a consequence of this fund?

Is the fund charged with investing in the lowest cost technologies to produce the cheapest emission reductions? No. It is basically there to fund technologies that are uneconomic, unproven and too speculative for the private sector to finance.

What will happen is that we will see $10 billion borrowed on behalf of the taxpayers of Australia so that that money can be given to speculative ventures with absolutely no prospect that they will deliver some environmental benefit at the end of the process. Let us not forget that these will be technologies that the market itself will not be financing because they are high risk. One can make all sorts of assertions about the board of this fund and all sorts of assertions about the skills that the board could have, but no amount of skills of the board is going to insulate the Australian public against what is likely to be a series of untested, untried and likely high-risk technologies, which have all the hallmarks of being complete and utter failures. Of course, all of this will be off-budget and inevitably it will be a lot of money lost.

Cynically, like many of the things this government does, the fund is due to start paying out public moneys only weeks before the next federal election is anticipated.

Senator Cormann: I wonder why that is.

Senator FIERRAVANTI-WELLS: I wonder why that is, Senator Cormann. Absolutely. One does not want to be too cynical, of course. Unfortunately for the taxpayers and unfortunately for the voters of Australia, who would really like an election today but will very likely have to wait until next year, the three-year mark for this very, very bad government will be 21 August next year. If there is an election then, the caretaker period starts in July. Therefore we will start seeing payments of moneys and potentially $2 billion rolling out in the weeks just before the election and during the caretaker period.

Of course, we have seen massive failures on this front before and I will point to a number of these. There was the government's $700 million Solar Flagships program in Moree and Queensland's Solar Dawn project's struggle to gain industry support. Along with the Bligh government, this government also presided over more than $100 million of losses in the ZeroGen project despite clear warnings from both the opposition and experts in the field. I remind the Senate of comments by former Premier Beattie when he described Mr Macfarlane as 'on drugs' for his warning that ZeroGen would fail. Clearly Mr Macfarlane has been proven to be very correct. As I indicated, this had all the bad hallmarks of the Victoria Economic Development Corporation, which left Victoria in a disastrous state. Programs of this nature have had massive failures and there has been considerable controversy in the United States. There were the failures of the $700 million Solyndra project as well as those of Beacon Power and Ener1, which occurred under a similar program as that proposed under this fund. These companies were recently joined by the collapse of Solar Trust of America, which had a $2.1 billion loan guarantee from the US energy department.

I now turn to some work which has been undertaken by the Centre for Independent Studies Research Fellow, Dr Oliver Marc Hartwich, who released a report entitled, A waste of energy: why the Clean Energy Finance Corporation is redundant, in relation to this fund. It has been exposed well and truly by Dr Hartwich as inherently wasteful, and will achieve precisely zero in terms of real CO2 savings under the carbon tax. These were the damning conclusions reached by Dr Hartwich in his report. He said:

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.

Of course, all this is a futile waste of taxpayers' money. This is yet another example of this government bowing to the demands of its green alliance partners. In this case it is $10 billion to pump into what is nothing more than a giant slush fund.

I will now turn to some specific comments that were made by Dr Hartwich. He states in his report:

The establishment of the CEFC is a questionable political venture for a number of reasons. The very nature of the corporation is unclear: Is it a grant-giving institution or a commercially operating capital provider or both? This inconclusive dual nature, which is implicit in the government’s plans, will make it virtually impossible to evaluate the success or failure of the CEFC.

Further, Dr Hartwich comments:

… investment risks, which ought to be borne by private entrepreneurs, are relegated to taxpayers. Private capital providers are outcompeted by cheaper finance made available through the CEFC. The distortions for capital markets are plain to see.

…    …   …

The billions of dollars that are set to flow into this most dubious political entity ...

Debate interrupted.