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Thursday, 22 March 2012
Page: 2538

Senator MILNE (TasmaniaDeputy Leader of the Australian Greens) (10:12): In responding to the Solar Hot Water Rebate Bill 2012, I remind the Senate we are facing accelerating global warming. The recent 2012 State of the Climate report produced by the Bureau of Meteorology together with the CSIRO confirms everything we have been saying for a considerable time—that is, we are facing a global catastrophe unless we respond to climate change by reducing our emissions as quickly as possible. That is confirmed even more by a report which came out yesterday from the Stockholm Environment Institute—I was listening to Senator Carr's first speech yesterday talking about the oceans—called Valuing the oceans, which points out that, with oceans warming at an incredible rate, they will be reduced in their capacity to absorb carbon dioxide, so they will slow as a sink. We are also seeing high levels of acidification, which has massive impacts for ocean food chains. We have to do everything we can as quickly as we can to reduce our emissions. That means we need a system-wide approach, a whole-of-economy approach, a whole-of-society approach. That is why the Greens entered into an arrangement with the Prime Minister at the change of government in 2010, to deliver a carbon price in Australia—a clean energy package. That package is now a system-wide approach to energy efficiency, renewable energy and to emissions trading and carbon pricing to start this process of the transformation of the Australian economy.

In that context we have a technology: solar hot water. Solar hot water is a fantastic technology not only to reduce greenhouse gas emissions but to assist households to reduce their costs for electricity. So it is an excellent technology. And what is better than that about it is that we have, in Australia, three manufacturers of solar hot-water systems. We have the Rheem Manufacturing Co. (Australia) Pty Ltd, Dux Hot Water and Siddons Solarstream. They make hot-water cylinders in Australia and they are beginning to export these systems. So the one thing that we would want to do in transitioning to a low-carbon economy is actually to support local manufacturing.

The whole debate here is taking place in the bigger context of the current situation that the Australian economy finds itself in. That is that we have a very high Australian dollar and we also have, in the case of solar hot water, a coming together of a number of circumstances which are quite overwhelming for the industry. Not only do we have the high dollar making imports cheaper but there is also an agreement through the COAG process that there will be the phase-out of electric hot-water cylinders. I will be interested to hear from the government where that is up to, because my under­standing and the industry's understanding is that that is to be on 30 June this year.

After that, the states have agreed, you will not be able to replace electric hot water cylinders with electric cylinders. The result of that is that as people's cylinders are now malfunctioning, blowing up or whatever, the plumber will come and tell people that they are not going to be able to replace it with another electric system, and that they are suggesting instantaneous gas. That is because the installation of instantaneous gas and the heater itself, which is likely to be imported from Japan, will be considerably cheaper than a solar hot-water system.

The result is that householders are looking at the immediate capital cost. Often, a hot-water cylinder blows up when you least expect it, and it is an expense that you suddenly have to meet because you have no option. Therefore, you take the advice of the plumber who comes and says, 'Well, look, you can't replace it like with like. These are your options: you've got solar hot water or you've got instantaneous gas, and instantan­eous gas is going to be a lot cheaper.' And so people tend to buy a cheaper system, not being aware that they are actually buying a much more expensive system over time because the cost of gas is going to increase, whereas once you buy your solar hot-water system you are not paying for the cost of the sun and over time you will end up with a system that costs you far less. But often people in that circumstance are faced with the immediate cash outlay and so they make those decisions. At the moment that is the situation we have. Because of that the industry is under enormous pressure at the moment, and I am sure it is in the interests of everybody in this Senate to support local manufacturers like Rheem, Dux and Siddons Solarstream to stay in business.

The issue here is: how do you keep the community's access to solar hot water, make their own power bills more manageable, bring down emissions and keep Australian manufacturers in business? It was in this context that on 28 February Parliamentary Secretary Dreyfus came out and said that the Renewable Energy Bonus Scheme would close for further applications at five o'clock that evening, and the announcement was at about five minutes to five. So it was an instant end to the scheme, meaning that you would have until 30 June to put in your rebate claim for anything you had bought up to that point but after 28 February you would not be able to order a new system under the scheme.

At the time, the Parliamentary Secretary said that this was good budget practice. That certainly sent alarm bells through my office and my thoughts about this and, clearly, that is the context in which the coalition have moved this piece of legislation. Everybody knows that the government is trying to get back to a budget black bottom line and I certainly feared that what we were seeing here was a red line through solar hot water in order to deliver a black line in the budget. The reason I had that view was that I had been watching this scheme fairly closely. We had a situation where, in response to the global financial crisis, the government changed the date for the end of this scheme to be 30 June 2012 and their website said that the date applicable for the changes was 5 September 2009 until 30 June 2012 or until the date when program funds have been fully allocated, whichever occurred first.

That was actually up on the website for a long time, saying that that was what they would do. When in 2010 the scheme changed to the Renewable Energy Bonus Scheme there was a less specific piece on the website saying:

This booklet provides guidelines for the Renewable Energy Bonus Scheme - solar hot water rebate, from 20 February 2010 until a date to be notified on the Program’s website.

And that is effectively where the trail goes cold.

There are plenty of dealers and people working in the industry who believe that the date of 30 June 2012 was put up on the website, but anyway, at the end of last year, the date was taken away. So that is where we ended up, and that is why the industry itself thought the date was 30 June 2012. The government is now saying, 'Yes, it is still 30 June 2012,' and that the reason it announced the ending in February was to stop this—as Senator Urquhart described it—'last-drinks call' to have a rush on the scheme. However, if you look at the rationale here—'until the date when program funds have been fully allocated'—the issue for me is that the government took $160 million out of this fund to meet the flood levy requirements. The government believed it was essential to put money into Queensland and the eastern states at the height of the horrendous flooding, and this was one of the programs that lost $160 million, but what was allocated for the 2011-12 financial year was based on what was left in the program after the money came out for the flood levy, and it was based on the projected flow of solar hot water being put on people's roofs thereafter.

The upshot of that is to say that we knew that there was an underspend because the industry had been telling us that, with this competition from instantaneous gas, they had been selling fewer and fewer solar hot-water systems; therefore there was an underspend. So, when the parliamentary secretary came out and said this was good budget practice, for me it was code for recognising that there is an underspend in this financial year, bringing forward the allocation from next financial year into this year and then being able to put the $24½ million for the 2012-13 financial year into the budget black line. That is how it appeared to me.

However, I have been in constructive negotiations with the government since that time, and the parliamentary secretary has reassured me at length that there is to be no underspend in this financial year and, indeed, that the budget forecast is in place. In fact, he has provided me with a letter that says, 'The government never intended to make any savings from the closure of this program and remains committed to support the transition to a clean energy future, which includes the solar hot water industry,' and that the funding allocated for this program remains in the forward estimates. All this bill does is require that the current appropriation be spent. Then I have an undertaking not only that that appropriation will be spent but that the money allocated in the forward estimates is also there to meet the program. The parliamentary secretary continues to say, 'I am happy to work closely with you to look at potential ways the available funding continues to support the Australian solar and heat pump hot water industry, maintain jobs and competitiveness in the short term and particularly this year ahead of the strong support that will flow from the carbon price and other measures identified above.' So I am satisfied now that the money that was allocated in this financial year will be spent and, indeed, that the money is there in the forward estimates, and I will be working with the government to make sure that is the case.

I appreciate the manner in which the parliamentary secretary, Mr Dreyfus, has been prepared to talk about this, and I think he recognises that the statement that he made about good budget practice actually made people consider this in the context of the budget, whereas what he was referring to was practice in relation to stopping and changing schemes, which this government has a very bad reputation for over a long period of time. Certainty is what the industry needs, and unfortunately this episode has left it with uncertainty, and this has been one of the major problems. However, we must proceed with certainty.

The one thing I will absolutely say here is that we have delivered a carbon price. There is the Low Carbon Communities program, and that is one way in which we will be helping low-income communities—through local councils—and low-income families to improve energy efficiency in homes and buildings by installing energy-efficient appliances, including solar and heat pump hot-water systems. I have to say that we are also, as part of the clean energy package, pushing for the national energy efficiency scheme. The renewable energy target, of course, is still in place, and there is the Clean Technology Innovation Program, which will allow local manufacturers to invest in upgrading their plant so that they can become more efficient operators. So the issue for me here is that I wanted to make sure not only that the money was spent but that there is transition and support for the industry in the light of the current circumstances in which it finds itself. I am working with the government to do that and to roll out the carbon price.

The real question here for the coalition is: how are you going to be supporting all of these technologies in the low-carbon economy—the whole raft of energy efficien­cy and renewable energy technologies—without carbon pricing? You simply cannot do it unless you develop a systemic way of going about it. I know that you have a 'one million roofs' program. I am assuming that is predominantly for photovoltaics. There is no clarity, for anybody talking of certainty, as to when the coalition says it would actually budget for that program. There is an assumption out there that that program, in the event that the coalition won government, would be in its first budget, but nobody has actually confirmed that. The industry is now beginning to wonder whether in fact this would be something that was delayed, under any change of government, until one of the last years of a budget forecast period. Of course, there is a need to clarify whether the 'one million roofs' is just for photovoltaics and where solar hot water ends up in that particular mix.

I am confident that the only way we are going to get the transformation in the Australian economy that we need is to go with the kind of integrated, whole-of-government approach that the Greens have been able to work with the Labor Party to deliver in Australia. This is going to be a major transformation, because people are going to sit at home and say to themselves, 'How can I reduce my emissions and reduce my prices?' People will be looking at everything from simply draught-proofing their houses through to things like installing solar hot water, looking at the design of their homes or extensions, considering ways in which they move to more efficient vehicles and, in their workplaces, building much more efficient and better workplaces.

I have to say that the building in which the new Commonwealth offices in Sydney, in Bligh Street, are going to be located is a fantastic example of a green building. The driver for investment in green buildings is carbon pricing. It is a recognition that, if you are going to be competitive, you will have to give tenants in the city buildings that are wonderful to work in in terms of the amenity of the environment. Those buildings will also be cheaper in the long term because they are highly efficient, not only in electricity but in water. That office in Sydney is a very good example of it.

The way you drive this, through green buildings, through changes to city design, through changes to manufacturing processes and through new technologies, is to price fossil fuels and to actually charge the real cost of climate change on the emitters of fossil fuels. By doing so you bring on the competitiveness of these technologies in the low-carbon economy. That is the real key here. That is why I am so keen to see the change that is going to come about on 1 July this year.

The coalition cannot have it both ways. You cannot sit there and oppose carbon pricing and then say, 'We are interested in supporting low-carbon technologies.' How are you going to do that in the absence of a systemic rollout of market based mechanisms? The coalition's bill simply says that the appropriation for the 2011-12 financial year is to be spent effectively. That is exactly what they are doing. My view is that we have to ensure not only that that money is spent but that the forward estimates are still there—the $24.5 million into next financial year—and work out ways of assisting the industry. As I said, I am currently working with Mr Dreyfus to work out ways of doing that.

I am particularly proud of the Low Carbon Communities Program in the clean energy package because it is one way we can assist low-income earners around the country to reduce their power bills, enabling them to take part in reducing emissions and be part of this new economy, this new society, where everybody needs to play their part in reducing emissions. I am delighted that we already have some quarter of a million Australian households assisted through this program to reduce their emissions. I want to make sure that we do everything we can to continue that happening, particularly for low-income earners, and that we continue to support Australian manufacturing in the low-carbon economy.

We have money going to car manufacturers. That should be going to electric vehicles and should be tied to green design. If we have money to protect the steel industry and the car industry in the face of the high dollar, then in my view we need to be supporting Australian manufacturing. I am going to be working with Mr Dreyfus to make sure that we get a good outcome.