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Thursday, 25 September 2008
Page: 5695

Senator BIRMINGHAM (4:05 PM) —It is my pleasure to speak in favour of the Save Our Solar (Solar Rebate Protection) Bill 2008. This bill seeks to right one of many wrongs of the Rudd government—one that relates to the important issues of climate change, how that is tackled effectively in Australia and how we support a growing small business sector in this country. It is very timely indeed that this is listed for debate today because tomorrow week is a meeting of COAG—the Council of Australian Governments—at which future support for the solar industry is listed as an agenda item. I hope today the Senate will pass this bill and send a very clear message to the government that the Senate throws the gauntlet down to it as it goes into the week leading up to the COAG meeting that it needs to address the mess that it has created in the solar industry.

The government’s means testing of the solar rebate program this year was an act of deception, confusion and decimation. ‘Deception’ because the government was elected on its climate change record—on signing Kyoto and making a difference. The government lured the solar industry sector and many Australians into believing that electing a Labor government would see the type of action and support for the solar industry that those Australians and small businesses wanted to see. It was an act of deception because at the first available opportunity, in this year’s budget, the government said: ‘No, we’re actually not supporting your industry. We’re out to give it a whack instead.’ It was also an act of confusion because it confused public policy objectives. You had the Treasury razor gang out to find budget savings somewhere whilst ignoring the government’s stated environmental policy objectives. It confused environmental objectives with budgetary objectives. It was a clear act of confusion.

And it has proven to be an act of decimation. We have an industry struggling under the weight of uncertainty. The industry is dealing with an uncertain future in relation to the type of support that it faces. The industry is not sure whether this rebate program will even last and is now concerned how the government is going to manage future support for the solar sector. It is, therefore, hurting and impeding investment decisions and the uptake of solar power in this country. The decision really is one that is decimating the future security of this growing and important industry.

It is important to look at the history of this. The previous government, the Howard government, began support for the solar sector with the provision of rebates in 1999. That is right—in 1999. For all we hear from Senator Wong and many opposite that nothing had been done on climate change issues, practical support to encourage the uptake of solar panel installation was actually brought in by the Howard government in 1999. It operated at various levels and by 2003-04 it was operating with a rebate of $4 per watt, up to a maximum of $4,000. That rebate remained in place until 2007, when the Howard government made the decision that would dramatically increase that rebate. It wanted to ensure strong, urgent, fast growth in the solar industry, so it doubled the rebate. In 2007 it doubled it to $8 per watt, up to a maximum rebate of $8,000. This saw significant uptake of solar cells around Australia. It was a boon to the industry, and it was one that was widely welcomed.

According to the Clean Energy Council, the solar industry employs an estimated 3,000 to 3,500 people right around Australia. Approximately half of them are working in the off-grid market and the other half in the on-grid market, which is what this bill and the solar rebate program relate to. In 2007 some 12 megawatts of solar power were installed across Australia. This was up two megawatts from 2006. Growth was tracking quite strongly. That growth was all driven by the solar rebate program. This program was delivering for the industry, for consumers concerned about the environment and for the environment overall. This program supported the installation of this renewable energy product that helped reduce greenhouse gas emissions.

When the Howard government doubled the rebate the industry had certainty. They had certainty because the then Prime Minister, when asked how far the budget allocation would stretch, told the Sunrise program on 9 May it:

... is a demand-driven program. So as many households as want it, can have it. If it turns out to be more popular, well, more money will be made available.

They were the words of the then Prime Minister. Going into last year’s election the solar industry had in place a government that had made a clear commitment of support to the industry, that had doubled the rebate that was in place and said that it would not let the funds run out. Then we had the then Leader of the Opposition, Mr Rudd, going down the road in Canberra and visiting solar operators. He stood there championing their cause and said that his government would be their best friend. He said that his government, because of their so-called climate change credentials, would be best mates with the solar industry. They are the claims. They are the types of things that Mr Rudd said.

It is little wonder that the solar industry thought it was in safe hands. It thought that, whatever happened in last year’s election, the rebate program was secure, the future for the industry was secure and that they could plan with confidence for the future and make investment decisions. And make investment decisions they did. They employed more people. More electricians and other tradespeople sought the qualifications to become solar installers. More people branched out and started their own businesses to install solar panels. And investment decisions were taken because they were confident that, whoever was elected, they would have a supportive government.

So it is of little surprise that the industry was, to say the least, shocked on budget night this year. It was shocked when the government came out with its means test. The industry was shocked because the bulk of their business to date had been from people who were going to be knocked out by the means test for eligibility for the rebate. The government decided to set the arbitrary figure of $100,000 in gross household income as an eligibility criterion for the rebate. This meant that two people earning $50,000 a year would be ineligible for the rebate.

I was quoted in the chamber today as saying that $50,000 a year is not a high income. That is right. I have been quoted on that. I was quoted by one of the ministers during question time and, indeed, by Senator Carol Brown during the taking note of answers debate. The government was taking great delight in saying that $50,000 was indeed not a high income. But, apparently, in this instance of a family in which two people are earning $50,000 it is a high income. This shows the inconsistency of the government. When it comes to a Medicare rebate, no, it is not a high income, but when it comes to the solar rebate, yes, it is a high income. We see gross hypocrisy and inconsistency in this matter coming from those opposite.

As I said, industry, environmental groups and others believed that they were in safe hands going into this year’s budget. Was there any warning? Was there any consultation with industry or others about the imposition of this means testing? The answer quite clearly is no. During the conduct of the Senate inquiry into this bill, we asked many industry groups and many large businesses in this sector whether they were consulted. Each and every one of them said no. A number of state governments have been looking to implement their own measures, in particular feed-in tariffs of various types, to encourage the uptake of solar to complement the rebate system. Indeed, here in the ACT the government has implemented a gross feed-in tariff. In a submission to the Senate inquiry, the Labor ACT Chief Minister, Mr Jon Stanhope, said:

No consultation occurred with the ACT Government prior to the announcement to the budget decision ...

He was no orphan there because no consultation occurred with anybody. It was quite clearly and transparently a figure that was plucked out of thin air, because it had no consistency with any other type of threshold that the government was considering. Mr Stanhope went on in his submission to say:

The sudden nature of the introduction of the means test sends a poor signal to our emerging solar industry, an industry that should in fact be receiving long-term security for investment in our clean energy future.

It sent a very poor signal indeed—and it was a signal that concerned people right across the solar industry. Not one of the solar operators, consumers, or environmental groups who came in and sat before the Senate committee, which received more than 100 submissions and held hearings in most capital cities on the mainland, said that this was good public policy. They all said that this was an erroneous decision. They said it was a flawed decision made by a government that had betrayed them. That is how they felt—betrayed.

Self Sufficiency Supplies told the Senate inquiry that they spoke for many small business owners in the industry who feel that:

... whilst the signing of the Kyoto Protocol was a nice symbolic gesture, when it came to doing something that really made a difference, the Government not only failed to do something that kept the status quo, but have gutted a scheme that made a positive difference to “working families”, to our solar industry and to climate change.

It is not surprising of course that people did feel very let down by this decision. They were not the only ones. Dr Shi Zhengrong, the Australian entrepreneur dubbed the ‘solar king’, has been quoted as saying:

... we are concerned that the means test has the potential to undermine the success of the rebate program and the growth of Australia’s solar industry.

And it did undermine it, because many Australians who prior to this decision, which was implemented at the stroke of midnight on budget night with zero consultation, would otherwise have considered installing solar panels decided not to.

Mr Tony Hansen told the committee:

I was prepared to spend $15,000 to install the PV cells on my house but without the rebate this will blow out to $23,000, which when added to a mortgage with an interest rate of nearly 10% ( who would ever had thought that was possible again) it is now not feasible.

Mr Hansen is an Australian who was prepared to dip into his pocket and spend $15,000 to put solar panels on his house. He was prepared to do his bit for the environment, for climate change and for the reduction of carbon emissions in Australia, and he was prepared to do so to the tune of $15,000. But because he has a gross household income of $100,000 the government said ‘No, zero help for you buddy,’ and they said the same thing to thousands of other households around Australia. So for people like that to do their bit for the environment the cost blew out by another $8,000 to $23,000. Not surprisingly he decided that that was too much to bear and that he could not afford to contribute that much. That is the concern surrounding the decision made by this government. That is the effect that it is having on the solar industry.

This bill seeks to turn that around. This bill seeks to give certainty to the industry, and that is the important thing. This program is at present administered purely by executive order, so the decision was announced in the budget and undertaken by executive order. With the snap of a finger, that was it. The government had introduced a means test and turned the tap off for thousands of Australian households and told them that if they wanted solar panels there would be no more help for them from the Australian government. The industry is crying out for certainty.

Beyond Building Energy told the Senate inquiry into this bill:

... for an industry to grow it needs certainty and the current rebate scheme provides anything but certainty.

…            …            …

however we do not know - from one month to the next - whether the rebates are still going to be there ...

And they do not know because the government has shown that it will make policy on the run and policy without any consultation.

This bill requires that, rather than the decision being a matter of an executive order, the minister will have to produce some guidelines that would be disallowable instruments. There would be something that actually had to come before this parliament so that the parliament could exercise its will on it and say ‘Well, that is not good enough because it provides no certainty to the long-term future of the solar industry. It is not good enough because it does not actually assist the growth of this important sector.’

We look to the future; clearly the government has outlined no plans. I know that other speakers are going to stand up here this afternoon and quote figures about the growth in applications for the solar rebate.

Senator Pratt —Absolutely.

Senator BIRMINGHAM —‘Absolutely’, Senator Pratt said. I guess that is where you might go when it comes your turn to speak.

Senator McEwen —It’s true.

Senator BIRMINGHAM —Senator McEwen said that it is true and, from the data presented by the department, it is true that application numbers have gone up. We will see how many of them translate into installations, but what is most concerning is that we are getting much less bang for our government buck now. Application numbers have gone up but, because they are applications from a small group of households on smaller incomes, they are applications for smaller size systems. So every system that is getting installed today is 20 per cent smaller than those over the life of the program leading up to the budget. The government is still doling out $8,000 a pop to install a solar system, but we are getting 20 per cent less energy back. How is that good public policy, you might ask. How on earth is that good public policy?

Senator Bernardi —It is not.

Senator BIRMINGHAM —Senator Bernardi and Senator Williams are right to say that it is not. It is far from good public policy if your goal is to actually increase the supply of renewable energy, to decrease the output of carbon emissions and to have a system where the government is spending the same amount of money to get less renewable energy and more carbon emissions. Conergy were right when they told the inquiry of the Senate Standing Committee on Environment, Communications and the Arts into the Renewable Energy (Electricity) Amendment (Feed-in-Tariff) Bill 2008 that the reduction in PV panels distributed around the country means that the emissions reductions occur at a greatly reduced rate. They asked:

Isn’t the idea to have as many solar panels on rooves in order to reduce our emissions? Emissions are not means tested so why should the rebate be means tested?

That is the position of the coalition. The position of the coalition is that there is no logical or sustainable reason for the government to create incentives for the uptake of solar panels for a small and narrow group of the community.

This is meant to be an environmental policy. An environmental policy should be available to the whole community. It should be focused on environmental outcomes not budgetary outcomes. That is what we seek and that is why this bill is so important for the Senate to support today—because it will throw down the gauntlet; it will send a message to the Rudd government and the other governments at COAG next week that they need to reconsider this decision and provide some long-term certainty to the solar industry. They need to deliver for an industry that can deliver for Australia economic benefits, small business growth, environmental outcomes and reduced carbon emissions. There is much to be had from supporting this industry and there is much to be had in supporting this bill. I commend the bill to the Senate.