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Wednesday, 30 May 2012
Page: 6263

Mr CHRISTENSEN (Dawson) (13:07): Looking at these bills, in particular the Clean Energy Finance Corporation Bill 2012, I get this eerie, creepy feeling at the back of my neck, and I am not sure if it is deja vu or a premonition. I get a horrible feeling that this bill is going to be a horrible disaster, and I am sure I have seen this train wreck before. We have a big-taxing, big-spending Gillard Labor government which has managed to turn wasting taxpayer money into an Olympic event and a giant barrel of money—$10 billion worth of taxpayer funds—and I am sure there was a similar situation when Kevin Rudd, the member for Griffith, was Prime Minister. I would have thought that keeping these two things apart would be imperative for the sake of the country, because putting the Labor Party in charge of setting up and looking after such a barrel of money is like letting the wolf guard the flock—sure he is keen to do it, but you would be mad to trust him.

If I were a betting man I would go with the odds, and that means voting against this bill and keeping the wolf out of the lambing yard. Supporting this bill would be like backing a rank outsider—like having a three-legged donkey up against Black Caviar—because we know this nag of a bill is a loser before it even lines up in the barriers. Here is why: the bill itself tells us it is a loser. It sets out in the fiscal impacts the forecast of operating costs and write-downs. There will be failed projects, and this bill admits this before it even comes into effect. This bill is like the kind of horse that stands at the barrier and says, 'There are 13 hurdles out there, and I intend to trip over one; my plan is to trip over one.' This was pointed out very clearly in Senate estimates this week when Treasury confirmed that they expect that 7.5 per cent of loans for investments made in this barrel of money will not be recovered.

The plan is to take $2 billion of taxpayer funds ripped out of families' back pockets with the carbon tax and then to put the money into the Clean Energy Finance Corporation barrel, and Treasury is telling us that it expects to lose $150 million a year. That is even more than the Victorian Labor government lost in Victoria with the Cain-Kirner venture. They had their venture capital fund and they tried to pick winners, but they racked up losses estimated at $110 million. The Renewable Energy Venture Capital Fund already does the job proposed for the Clean Energy Finance Corporation, so this is already a two-horse race. There is also the Emerging Renewables Program, and both of those seasoned runners make their intended loss public. These are not the sorts of horses I want to put my money on either. I do not like to back horses that have no intention of winning.

Two weeks ago, possibly Australia's worst racehorse, a horse called Vote For Lust, attempted to break through for its maiden victory in Mildura after 87 starts and no wins. Even with champion jockey Glen Boss on board, Vote For Lust managed to beat just two runners home. It was a great story about a horse that has a cult following for being a champion loser; but his title is in danger. At least Vote For Lust had a chance and his form is no worse than the bill we have before us today, but the clean energy bank has form that reads something like this: a maiden for little or no talent; needs blinkers, as it loses focus and is easily distracted; prone to changing jockeys mid-race; has no sense of direction; and has a habit of running backwards. Horses that run backwards are very rare.

This bill has a specific aim: it is supposed to create a barrel of money to invest in clean energy so that Australians produce fewer carbon dioxide emissions. But it has been designed by the Labor Party and by the Greens, and they have obviously turned the design template upside down, because the result of the bill will be the opposite of the intended result. This is what the Australian Institute, a friend of the people on that side, said about this bill:

In theory, complementary policies such as the CEFC should do one of two things: (a) realise cheap abatement opportunities that won't be picked up by the carbon pricing scheme; or (b) accelerate the decline in the cost of low- and zero-emission technologies. If a complementary policy isn't achieving one of these two objectives, it is wasting money.

The CEFC doesn't appear to have been designed with these principles clearly in mind.

That comes from the Australia Institute, a left-wing supporter of all things warm and fuzzy and clearly a supporter of the Labor-Greens carbon tax. Even the Australia Institute admits that the proposal in this bill is a waste of time and a huge waste of money.

Business journalist Stephen Bartholomeusz summed things up in the Business Spectatoron 17 April when he talked about the self-defeating nature of the CEFC. He wrote:

The key problem with throwing $10 billion of taxpayer money at subsidies for clean energy while the mandatory renewables target scheme remains in place, however, is that the fund won't actually reduce carbon emissions or lead to more renewable energy capacity being added—it will simply displace what would otherwise have occurred without subsidy. We'll spend $10 billion for no material benefit.

As we speak, there are companies out there in the real world investing in technology—they are investing in clean energy and investing in innovation. When the drunken sailors opposite start throwing around $10 billion on the open market, we have to expect absolute chaos. The CEFC will undercut finance in existing projects and kill off real innovation. Instead of a vibrant market generating creative energy solutions and low-emissions technology there will be a raft of lumbering, inefficient public-purse spongers sucking at the taxpayers teat in innovating ways so as to make sure that the free money keeps coming. Highly experienced and respected economist Henry Ergas wrote in the Australian in October last year a very interesting and informative article entitled, 'Billions will be wasted painting pork barrel green'. He wrote:

Having enjoyed their international junkets, the suits on the CEFC will hardly reject every proposal put to them. Rather, to justify their existence, they will make some high-profile investments, no matter how dubious.

As for the politicians, they will crave the photo ops from contract signings and factory openings. Since the CEFC's mandate includes helping existing manufacturers convert to "green energy", every constituency can have one, presumably with a billboard advertising the government funding. Ever alert, the rent seekers won't take long to cotton on. And with the CEFC excluded from the Productivity Commission's periodic reviews of the government's package, there will be little to slow the gravy train.

So Ergas is saying that no good can come of it—at least, no public good. Then he goes on to talk about cost, and this is really important. He said:

But none of this will come cheaply. Rather, analyses consistently conclude that each dollar spent on this type of government venture simply crowds out one dollar of private investment elsewhere in the economy. But that government dollar both achieves less than the dollar it displaces and costs more, because distorting taxes are needed to raise it. It therefore ends up costing two or more dollars in lost income.

So make that $20bn wasted on painting the pork barrel green.

He means $20 billion will be wasted rather than the $10 billion that Labor is initially putting into it. If the Labor Party is in charge of handing out money we would get a better result by sealing up the barrel and hiding it under the stairs.

Getting back to my metaphor of the form guide, this nag of a government has prior form. At this distance and on this track it is a loser. I refer the House to the Green Loans scheme, which allowed householders a free environmental assessment and interest-free loans of up to $10,000 to purchase energy-saving devices. The Green Loans scheme became a haven for rorting and shoddy service, a monument to bureaucracy and inefficiency.

In Queensland, a state with the misfortune of having a Labor government waste its money for 20 of the last 22 years, the Bligh government presided over the ZeroGen project. Despite clear warnings from the Liberal National Party—and from people on this side of the House—and industry experts, the then Queensland Labor government oversaw losses of $100 million on this project. No wonder the state racked up $85 billion in debt under Labor!

But there is more than just domestic form to go by. We can look at the overseas campaigns of similar nags. The United States, under a program similar to that of the Clean Energy Finance Corporation, backed such spectacular failures as the $700 million Solyndra project, the Beacon Power Corporation project, and Enerl. All of them were spectacular failures.

More recently, we saw the collapse of Solar Trust of America, which had a $2.1 billion loan guarantee from the United States Department of Energy to build a 1,000 megawatt power plant in the Mojave Desert. It was called the Solar Trust of America but what happened to the trust that America put into such a scheme?—collapse and waste.

While I criticise the 'horse' here—that is, the barrel of money that is the Clean Energy Finance Corporation—we really need to look at the jockey and the trainer. There are elements of this bill that would have us believe that the ones who will hold the reins will be the board of the Clean Energy Finance Corporation. But the board will be a puppet of the Gillard Labor Party. That is enshrined in this legislation. This bill stipulates that ministers will issue an investment mandate for the corporation. It says:

The investment mandate may include, but not be limited to, directions on matters of risk and return, eligibility criteria of investments in renewable energy technologies, low-emission technologies and energy efficiency projects, allocation of investment, limits on concessional investments, types of financial instruments in which the Corporation may invest and broad operational matters.

Does it leave anything out? Is there any point in having a board? If this bill sets up a board on the basis of, 'Do whatever you want as long as it is what I tell you to do,' then the lunatics are still in charge of the asylum.

One parameter that is a glaring omission from this bill is a guideline for efficiency. The Clean Energy Finance Corporation would not be required to invest in the lowest-cost technologies to produce the cheapest emissions reduction. It is as if the Labor Party accepts that it has a problem—the first step to recovery for any waste addict—and has written the rules to redefine it as no longer being a problem.

What is truly worrying about this dud of a horse, though, is the trainer, because even the Labor Party could not dream up anything so poorly constructed as this. The whole idea of a Clean Energy Finance Corporation comes from the Greens. We know it and they know it. The corporation comes as a result of lobbying from the Greens MPs and senators on the Multi-Party Climate Change Committee, of which the now Greens leader Senator Milne was co-deputy chair. That alone should be enough to set off warning bells. With the Greens having their two cent's worth—actually, $10 billion worth—we are no doubt locking taxpayer money into technologies that are proven to be hugely inefficient and wasteful.

It is beyond me why the Greens cling so desperately to windmills and inefficient solar technology when they know, deep down in their hearts, that these are extremely costly ways to produce energy. The Productivity Commissioner said so. And what they will not tell you is how much energy is used and how many emissions are produced to generate the materials and to build, install and maintain these monstrosities. If you build your windmill really well and find a really windy spot it might produce just enough energy to build another windmill—perhaps a slightly smaller one—which you could use to produce another one. And on and on it goes. If backing this bill is backing a guaranteed loser, then backing windmills is backing a guaranteed waste of money, time, and effort.

What pains me the most, when I look at how much taxpayer money is going to be poured down this clean-energy drain, is what the Australian families who earned this money will be missing out on. What could we, as a nation, do with $10 billion over five years, instead of putting it all this nag of a horse? We are putting it all on the nose when we know is going to run a dismal last. We could use that $10 billion to pay for—well, a quarter of the funding needed for the NDIS, the National Disability Insurance Scheme, over the next five years. We could use it on flood-proofing all of the Bruce Highway in North Queensland to mitigate extreme weather events. The Mackay ring road could be built with one-twentieth of it. We could supplement local roads funding for every local government in this country over the next decade through a boost to the Roads to Recovery program to $1 billion. But we do not have the chance to debate those lost opportunities here today. Instead we are debating a bill that is not even worthy of a glue factory.

I cannot support this bill because it is a licence to waste money. It is a bill that should never have been brought to the starting gate. It is a bill that is not worth the hay and oats that Australian families will have to feed it. Frankly, if this bill were a horse, I would have to shoot it.