Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2]



Download PDFDownload PDF

ISSN 1328-8091

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest.

BILLS DIGEST NO. 54, 2013-14 24 MARCH 2014

Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2] Paula Pyburne Law and Bills Digest Section

Contents

History of the Bill ................................................................. 2

Purpose of the Bill ............................................................... 2

Structure of the Bill ............................................................. 2

Background ......................................................................... 2

Committee consideration .................................................... 3

Senate Selection of Bills Committee........................................ 3

Senate Environment and Communications Committee .......... 3

Senate Standing Committee for the Scrutiny of Bills .............. 3

Parliamentary Joint Committee on Human Rights .................. 3

Statement of Compatibility with Human Rights .................... 3

Financial implications .......................................................... 3

Double dissolution trigger ....................................................... 4

Key issues and provisions..................................................... 4

Part 1 ....................................................................................... 4

Part 2 ....................................................................................... 4

Part 3 ....................................................................................... 5

Part 4 ....................................................................................... 5

Date introduced: 20 March 2014

House: House of Representatives

Portfolio: Treasury

Commencement: Various dates as set out in the table in clause 2 of the Bill.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_ Legislation

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest. Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2] 2

History of the Bill The Clean Energy Finance Corporation (Abolition) Bill 2013 (the original Bill) was first introduced into the House of Representatives on 13 November 2013 as part of a larger package of legislation associated with the repeal of the carbon pricing mechanism.1 The original Bill was the subject of vigorous debate in both the House of Representatives and the Senate before being rejected in the Senate on 10 December 2013.

The Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2] (the current Bill) is in equivalent terms to the original Bill. That being the case, this is a shorter version of the Bills Digest for the original Bill with some additional information in relation to whether the current Bill could become a double dissolution trigger.2

Purpose of the Bill The purpose of current Bill is to repeal the Clean Energy Finance Corporation Act 2012 (CEFC Act)3 and thereby abolish the Clean Energy Finance Corporation. In addition, the Bill provides for the transfer of the Clean Energy Finance Corporation’s assets and liabilities to the Commonwealth.

Structure of the Bill The Bill contains four Parts:

• Part 1 repeals the CEFC Act to abolish the Clean Energy Finance Corporation (CEFC)

• Part 2 makes consequential amendments to the Australian Renewable Energy Agency Act 20114 and the Clean Energy Regulator Act 20115

• Part 3 contains relevant transitional provisions including the establishment of the CEFC Transitional Special Account and

• Part 4 amends the Clean Energy Finance Corporation (Abolition) Act 2013 (when enacted) to repeal those provisions which establish the CEFC Transitional Special Account.

Background The CEFC was established as a Commonwealth authority to which the Commonwealth Authorities and Companies Act 1997 applies.6 According to the Explanatory Memorandum for Clean Energy Finance Corporation Bill 2012:

The Corporation will be a $10 billion fund dedicated to investing in clean energy. The Corporation will supplement existing initiatives, such as the Renewable Energy Target and the carbon price, to catalyse and leverage the flow of funds for commercialisation and deployment of renewable energy, low-emission and energy efficiency technologies necessary for Australia’s transition to a lower carbon economy …

The Corporation is a mechanism to help mobilise investment in renewable energy, low-emission and energy efficiency projects and technologies in Australia. The Corporation will finance Australia’s clean energy sector using financial products and structures to address the barriers currently inhibiting investment.

The Corporation will apply capital through a commercial filter to facilitate increased flows of finance into the clean energy sector thus preparing and positioning the Australian economy and industry for a cleaner energy future. 7

1. Parliament of Australia, ‘Clean Energy Finance Corporation (Abolition) Bill 2013 homepage’, Australian Parliament website, accessed 21 March 2014. 2. J Chowns and P Pyburne, Clean Energy Finance Corporation (Abolition) Bill 2013, Bills digest, 30, 2013-14, Parliamentary Library, Canberra, 2013, accessed 21 March 2014. 3. Clean Energy Finance Corporation Act 2012, accessed 21 March 2014. 4. Australian Renewable Energy Agency Act 2011, accessed 21 March 2014. 5. Clean Energy Regulator Act 2011, accessed 21 March 2014. 6. Commonwealth Authorities and Companies Act 1997, accessed 21 March 2014. 7. Explanatory Memorandum, Clean Energy Finance Corporation Bill 2012, p. 7, accessed 21 March 2014.

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest. Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2] 3

Committee consideration Senate Selection of Bills Committee At its meeting of 19 March 2014, the Selection of Bills Committee deferred consideration of the Bill until its next meeting.8

Senate Environment and Communications Committee The original Bill was one of a package of carbon tax repeal Bills which was referred to the Senate Environment and Communications Committee (the Committee) for inquiry and report by 2 December 2013.9 The majority report of the Committee recommends that all of the Bills in the package be passed. In support of the Clean Energy Finance Corporation (Abolition) Bill 2013, the majority view of the Committee was that it ‘agrees with the Bill's intention to abolish the CEFC … The use of $10 billion in taxpayer money to fund what essentially amounts to a private bank is not justified’.10

The views of the Senators who made dissenting comments are canvassed in full in the Bills Digest which was written in respect of the original Bill.11

Senate Standing Committee for the Scrutiny of Bills At the time of writing this Bills Digest the Standing Committee for the Scrutiny of Bills had not commented on the current Bill. The Committee had no comment on the original Bill.12

Parliamentary Joint Committee on Human Rights At the time of writing this Bills Digest the Parliamentary Joint Committee on Human Rights had not commented on the current Bill. The Committee considered that the original Bill did not raise human rights issues.13

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act.14 The Government considers that the Bill is compatible.

Financial implications According to the Explanatory Memorandum, abolishing the CEFC has the following fiscal balance and underlying cash balance implications over the forward estimates ($millions):

2013-14 2014-15 2015-16 2016-17 Total 2013-14

to 2016-17

Underlying Cash Balance

$9.6m -$5.2m -$27.2m -$59.4m -$82.1m

Fiscal Balance $177.4m $276.9m $191.4m $60.3m $706.1m

These estimates do not make any allowance for the costs of shutting down the CEFC, such as employee redundancies and contract termination costs, nor do they make any allowance for the lower public debt interest costs of ceasing further CEFC investment.

8. Selection of Bills Committee, Report No. 3 of 2014, The Senate, Canberra, 20 March 2014, accessed 21 March 2014. 9. Details of the terms of reference, submissions to the Senate Environment and Communications Committee and the final report are on the inquiry homepage, accessed 21 March 2014. 10. Senate Environment and Communications Legislation Committee, Clean Energy Legislation (Carbon Tax Repeal) Bill 2013 [Provisions] and

related Bills, The Senate, Canberra, December 2013, p. 32, accessed 21 March 2014. 11. J Chowns and P Pyburne, op. cit. 12. Senate Standing Committee for the Scrutiny of Bills, Alert Digest No. 8 of 2013, The Senate, Canberra, 4 December 2013, p. 4, accessed

24 March 2014. 13. Parliamentary Joint Committee on Human Rights, First report of the 44th Parliament, The Senate, Canberra, 10 December 2013, p. 11, accessed 24 March 2014. 14. The Statement of Compatibility with Human Rights can be found at page 17 of the Explanatory Memorandum to the Bill.

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest. Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2] 4

Underlying cash balance

The overall impact on the underlying cash balance is negative, reflecting that no further CEFC investments will be made and therefore interest inflows will be lower.

Fiscal Balance

The net impact on the fiscal balance is positive, despite reduced interest inflows due to the smaller CEFC investment portfolio. This primarily reflects the cessation of new concessional loan issuances (which have large negative upfront fiscal impacts). 15

Double dissolution trigger Section 57 of the Constitution16 provides that each of the following steps must be satisfied for a Bill to be a double dissolution trigger:

• step 1: the House of Representatives passes a proposed law

• step 2: the Senate rejects or fails to pass it, or passes it with amendments to which the House of Representatives will not agree

• step 3: after an interval of three months the House of Representatives, in the same or the next session, again passes the proposed law with or without any amendments which have been made, suggested, or agreed to by the Senate

• step 4: the Senate rejects or fails to pass the law, or passes it with amendments to which the House of Representatives will not agree and

• step 5: the Governor-General may dissolve the Senate and the House of Representatives simultaneously.

A Bill must fail twice in the Senate to become a 'trigger' for a possible double dissolution election. It may be re-introduced at any time within a Parliamentary term, but there must be a minimum interval of three months between the first failure in the Senate and the passage of the Bill in the House of Representatives the second time.

Steps 1 and 2 occurred in relation to the original Bill. That Bill was rejected by the Senate on 10 December 2013 and has been reintroduced in the House of Representatives in equivalent form as the current Bill. The terms of step 3 of the process will be satisfied if the current Bill is passed by the House of Representatives after 11 March 2014. That being the case, if the Bill is rejected by or fails to pass the Senate, the Bill may be a double dissolution trigger.

Key issues and provisions Part 1 The provisions in Part 1 of the current Bill commence on the 28th day after Royal Assent.

Item 1 of Part 1 of the Bill repeals the CEFC Act.

Part 2 The provisions in Part 2 of the Bill commence on the 28th day after Royal Assent.

The Australian Renewable Energy Agency Act establishes the Australian Renewable Energy Agency (ARENA), amongst other things, to provide financial assistance for research into renewable energy technologies; or the development, demonstration, commercialisation or deployment of renewable energy technologies; or the storage and sharing of information and knowledge about renewable energy technologies and to enter into agreements for that purpose.17

15. Explanatory Memorandum, Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2], pp. 3-4, accessed 21 March 2014. 16. Commonwealth of Australia Constitution Act, accessed 21 March 2014. 17. Australian Renewable Energy Agency Act 2011, paragraphs 8(a) and (b), accessed 21 March 2014.

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest. Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2] 5

Under section 73A of the Australian Renewable Energy Agency Act, ARENA may disclose information to the Clean Energy Finance Corporation if the disclosure will enable or assist the Clean Energy Finance Corporation to perform or exercise any of its functions or powers. Item 2 of Part 2 of the Bill repeals section 73A as it will no longer be necessary when the Clean Energy Finance Corporation ceases to exist.

The Clean Energy Regulator Act establishes the Clean Energy Regulator who carries out those functions which are imposed on him or her by any climate change law.18 Subsection 49(1) of the Clean Energy Regulator Act allows the Clean Energy Regulator to disclose protected information to specified agencies, bodies and persons. Item 3 of Part 2 of the Bill removes the reference to the Clean Energy Finance Corporation in paragraph 49(1)(sa) of the Clean Energy Regulator Act.

Part 3 Item 4 of Part 3 of the Bill (relevant definitions) commences on Royal Assent.

The provisions in items 5-20 of Part 3 of the Bill commence on the 28th day after Royal Assent. Items 5-9 of Part 3 provide that the assets (including land) and the liabilities of the Clean Energy Finance Corporation are transferred to the Commonwealth. In addition existing records will be transferred to the Treasury19 as will ongoing Ombudsman investigations.20

Section 45 of the CEFC Act establishes the Clean Energy Finance Corporation Special Account. For the purposes of this Bill that account is called the old special account. Item 16 of Part 3 of the Bill establishes the CEFC Transitional Special Account which is a special account21 for the purposes of the Financial Management and Accountability Act 1997.22 Into that account must be credited the equivalent of the following:

• the amount by which the old Special Account is in credit immediately before the commencement time

• the amount by which the Clean Energy Finance Corporation’s bank account or bank accounts is in credit immediately before the commencement time and

• the value, immediately before the commencement time, of any securities in which the Clean Energy Finance Corporation has invested surplus money.23

Once that has occurred, item 19 authorises the Finance Minister to debit specified amounts from the CEFC Transitional Special Account. Once the balance is reduced to nil, the CEFC Transitional Special Account must be closed.

Item 21 of Part 3 of the Bill commences on Royal Assent. The item sets out the requirement for the Clean Energy Finance Corporation to publish its final quarterly investment report.

The provisions in items 22-27 of Part 3 of the Bill commence on the 28th day after Royal Assent. Item 22 of Part 3 of the Bill operates so that no member of the Board, employee of the CEFC or consultant engaged by the CEFC is taken to be appointed, engaged or employed by the Commonwealth.

Part 4 The provisions in Part 4 of the Bill commence on the day (called the repeal day) after the day on which the amount standing to the credit of the CEFC Transitional Special Account (established under Part 3 of this Bill) is reduced to nil.

Item 28 in Part 4 of the Bill repeals Division 4 of Part 3 of the Clean Energy Finance Corporation (Abolition) Act 2013 (when enacted). This has the effect of closing down the CEFC Transitional Special Account.

The Minister must announce the repeal day by notice in the Gazette.

18. Clean Energy Regulator Act 2011, sections 11-12, accessed 21 March 2014. 19. Item 12 of Part 3 of the Bill. 20. Item 14 of Part 3 of the Bill. 21. Under section 5 of the Financial Management and Accountability Act, a Special Account may be established by the Finance Minister under

section 20 of that Act or by another Act. 22. Financial Management and Accountability Act 1997, accessed 21 March 2014. 23. Item 17 of Part 3 of the Bill.

Warning: All viewers of this digest are advised to visit the disclaimer appearing at the end of this document. The disclaimer sets out the status and purpose of the digest. Clean Energy Finance Corporation (Abolition) Bill 2013 [No. 2] 6

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.