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Thursday, 25 September 2008
Page: 5703


Senator WILLIAMS (4:44 PM) —My first job as a senator, in early July, was to be appointed to the Senate Standing Committee on Environment, Communications and the Arts. I went off to my first meeting, in Sydney, where I was privileged to meet senators such as Anne McEwen, the chair of the committee, Senator Pratt, Senator Birmingham and others. It was a great learning experience. They told us in our orientation that one good thing about being on these committees is that you learn about issues that you are not familiar with, and that was certainly the case with me.

I am a big fan of solar and have been for years. It is interesting to note that in Australia we receive more energy from the sun than any other country in the world. I believe that is why there is such a good future for this country in solar. We have targets that have been put out there now—MRET, the mandatory renewable energy target—that must be met by the year 2020; 20 per cent of the electricity we produce in this country must be from renewables. I believe we have a great future in solar energy. It comes free from the sun. It is interesting that just a couple of weeks ago the little town of Bingara—up near Inverell in northern New South Wales, where I live—had a two-day forum on the future of solar and what the potential is for country communities to get into this industry and look at the manufacture, distribution and establishment of photovoltaic systems throughout country areas of New South Wales and, of course, Australia, where we can produce this clean renewable energy to provide our electricity—and likewise, of course, with solar hot water systems, which have been successful for many years now; as technology improves they are becoming more and more efficient and successful.

As I said, it was a learning experience to be involved in this committee and to hear the many submissions on this bill. As Senator Birmingham said, it was the coalition, back in 1999, that first introduced the subsidy of $4 a watt up to a maximum of $4,000 as an incentive for people to enter this industry, to put the PV systems on their houses, their businesses or whatever and to start in Australia the process of doing our bit to reduce the greenhouse gases. I support it so much because it is renewable, ongoing and obviously a good way to save on electricity bills. It was, of course, the coalition that in 2007 raised that subsidy to $8 a watt, up to a maximum of $8,000. The industry had certainty; it was keen to get on with the job and to develop the businesses around Australia who were installing these PV systems. As you would be aware, Mr Acting Deputy President, I am a staunch campaigner for small business. The businesses had certainty, and that is what they needed—certainty and some security to invest wisely to go out and grow their businesses, to employ and train more people and to get on with the job. The increase to a maximum of $8,000 was introduced by the previous government, and it was there because the previous government had the money to do it. They were the ones who paid off the $96 billion debt that they inherited and they brought the surpluses, and so they could put taxpayers’ money out there as an incentive to increase the PV systems throughout our nation.

A friend of mine in Inverell did exactly this, and I went out to his place only a couple of months ago to inspect his PV system. He invested $32,000 in 16 panels and a larger inverter so that he can put more panels on at a later date, and he received the $8,000 rebate, so his actual cost was $24,000. When I said to him, ‘How much are you actually saving on your electricity bill?’ he said, ‘I saved about $400 a year.’ I said, ‘$24,000 invested to save $400, if you are in business, is not a very good return; it’s less than two per cent.’ He said: ‘Yes, it is; however, as the price of electricity goes up’—and there is no doubt that that is going to happen, because of the trebling of the price of coal and the doubling of the price of oil and gas—‘I’ll be in a secure position where I can provide most of my household’s electricity and it will not cost me anything. I’m prepared to spend the extra money to get that low return now, knowing that it’ll be a good investment as time goes by.’ He was very grateful for the $8,000 rebate, which took a large slice of the cost off his $32,000. As I said, the incentive and the stability were there for the industry. This PV system is there to grow. There is demand, and I am sure that Australians are keen to get on with the installation of such systems on their houses and businesses to do their bit and to say that they are contributing their bit to clean the air.

It was amazing prior to the election when we saw Phil May, who has a business by the name of Solartec Renewables. The cameras went down to Phillip May’s business with one Kevin Rudd, the then Leader of the Opposition, who stood there and said: ‘I will support your industry to the fullest. I am a great supporter. I will do this and I will do that.’ It was great publicity. People probably believed what they were seeing. It is a different Phillip May whom I talked to today. What happened? We know what happened at election time and, come budget time in May, we saw Minister Garrett pulling the plug on support for those with more than $100,000 in income. I find this $100,000 quite amazing. That is obviously the rich! If you earn $100,000 in a family, you are extremely wealthy—that is obviously the impression of the government, until it comes to Medicare rebates, when, of course, the definition of ‘wealthy’ alters by about 50 per cent, up to $150,000. So I fail to see where the consistency is when the government comes to a conclusion about who is wealthy and who is not.

What have we seen with Phillip May’s business, Solartec Renewables, now? There were five people employed; now there are two—just him and his wife, Sophia. He has had to lay three people off. Let me quote from his submission to the ECA committee:

(a) the impact of the means test threshold of $100 000 on the $8 000 solar rebate per household on the solar industry;

As a renewable energy designer, supplier, distributor and installer of primarily Photovoltaic systems we have experienced a large drop in orders for photovoltaic system installations. We have also noted a drop in system sizing resulting in a reduction in carbon offset that otherwise would have occurred. I estimate that our average customer was earning in the range of $100,000 to $150,000.

So what was the effect on his business? The number of deposits taken had dropped from an average of five per week to just two per week. Solartec Renewables were installing 14 kilowatts of PV panels each week. In the months leading up to the rebate changes, that is what they were installing—14 kilowatts per week. In the previous 12 months, the average installation per week was 10 kilowatts of photovoltaic modules. So he had grown his business to average weekly installations from 10 kilowatts to 14 kilowatts. He says:

Our average installation, since the introduction of the means test, is 2.8 kilowatts per week.

So his business has reduced from 14 kilowatts per week to 2.8 kilowatts per week. Where are we going with this? The committee heard many submissions about the instability which has been introduced to their industry as a direct result of the government’s introduction of the means test in their May budget.

What happened at budget time? As I said, the means test was brought in and those who could most afford to install PV systems were the ones who simply pulled the plug on the industry. Susan Grant said in her submission: ‘We’re not wealthy people. Yes, we both work hard, my husband and I, and we have an income slightly over $100,000.’ She had entered into a contract with BBE to install solar panels as part of Samford solar neighbourhood initiative. She said she wanted ‘to do our bit for the environment and to save on our longer term electricity costs’. So what did they do? They withdrew their order. This has been the effect of the rebate change. We have heard in parliament in the last couple of weeks about incomes of $50,000 not being excessive but when it comes to installing PV systems a combined income of $100,000 is far too much according to the government.

I want to make a point about taxpayer value in all this. Senator Pratt was referring to some 790 applications a week—with some weeks averaging at 500—and she is correct. What has happened is that people with a combined income of under $100,000 have said, ‘We can apply for a one-kilowatt system.’ A one-kilowatt system is about $8,500 to install. So they make an application to the government for the $8,000 subsidy and they are getting it installed virtually for free. People are not installing the big 2½- or three-kilowatt system because the people who wanted to do that earn over $100,000 and they said: ‘No, there’s no incentive for us. We’ll walk away from it. We’ll cancel our order. We’re not going to be part of this.’ People who earn under $100,000 are ordering a one-kilowatt system and getting it virtually for free. As I said to my children, it does not come any cheaper than free. This is why there is so much demand on the government purse—up to 790 applications a week—for the $8,000.

The budget was to provide $56.8 billion for the 12 months in PV systems subsidies. Without a calculator and without using the intelligent brain of Senator Bernardi in front of me, I will work it out myself: 700 per week at $8,000 is $5.6 million a week. Multiply that by 50 and we have $280 million, with a budget of just $56.8 million for the year. So where are we going? I will tell you. People are jumping on the bandwagon to get free installation of PV systems. That is why the budget has blown to bits. That is why it is looking like going from a $56.8 million budget to somewhere between $250 million and $300 million—that is, if the government continues to support this system. At the same time, we have seen the average size of installations reducing. In other words, the taxpayer dollar, where we want the best value for each dollar invested, is simply not working. The size of the system is reducing but the cost to the government—that is, the taxpayer—is blown totally out of proportion. Here is the serious problem: what are we going to do about it? I hope it will not be long before Minister Garrett confirms that he is going to continue the up to $8,000 subsidy but we get some level-headedness put back into the debate where if people earn more than $100,000 they do have access to that $8,000.

If you want people to do things such as plant trees on prime farming land, you offer an MIS, an incentive—and what do we do? We see prime agricultural land being planted with trees. I do not know what we are going to do in the future. I hope we can get used to digesting trees as human beings because the supply of food will certainly be reduced. Here the dangling of the carrot to people who can most afford to install a large PV system is being removed. It is wrong. We are now seeing a waste of taxpayers’ dollars and, with the $250 million or $300 million that will be spent this year, how much volume in total kilowatts are we going to get? What will be the return on taxpayers’ dollars? It is going to be markedly reduced and we have seen that everywhere.

People working in the industry who wish to grow their businesses want stability. They want to buy in bulk because a lot of these PV systems are imported from Germany. Having been involved in international trade myself and having purchased things from overseas I know well that the bigger the order the cheaper the price. So if people in the industry who want to compete want to get the best value for those installing the PV systems, what are they doing? LCL, less than container load, orders? They are not getting the bulk purchases. They do not know whether they are going to get more orders next week. Certainly there will be plenty of small one-kilowatt systems, but not the large ones and that is what it is all about. It is about the best return for the taxpayers’ dollar.

In summary, the means test introduced in May has been a disaster as far as a return on taxpayers’ dollars goes. It has been a disaster for those involved in the industry—those in the business of installing PV systems. They want stability and security and they want to know what their future holds before they invest any more. It has been a disaster for people who work in the industry, as we have heard from Phillip May and Solartec Renewables. They had five people employed and now there are two. So the whole thing has been one big mess. I encourage the government to see that the means test is removed, at least until we get to something like a feed-in tariff—which will bring stability as well to the industry. Fairness should be reinstalled and people who earn over $100,000 should have the right to get a subsidy as well.