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Wednesday, 18 June 2014
Page: 3193


Senator STEPHENS (New South Wales) (09:51): We are here this morning debating a critical policy agenda, which is around climate change and the mechanisms that we can put in place to address those issues.

What we discovered on the return of the Prime Minister from his recent overseas travels is that we have a new 'axis of carbon' in the world, which is the real problem that we are all confronting. Senator Milne just highlighted what is happening in the rest of the world and the ways in which the rest of the world is seeking to address a reduction in carbon emissions and the issue of climate change. But what we witnessed on the television last week was Prime Minister Abbott journeying to Texas, where he gave a talk to oil men and was awarded a 10-gallon stetson hat. He put it on and said, 'Yee-ha!' just like the good old cowboys of the Texan era. But his international travels were about protecting Australia's coal industry, whose expansion plans are going to make it absolutely impossible to bring climate change under control. And that is denying the science that surrounds us, with more evidence being brought to the public domain every day about the critical impacts of climate change.

And so the Clean Energy Finance Corporation (Abolition) Bill 2013 (No. 2) which we are debating this morning is fundamental to what Australia has been trying to do. The 'abolition' bill actually describes very benignly that it contains arrangements to ensure the orderly administration of the investments and the transfer of the existing contractual assets and the liabilities of the CEFC to the Commonwealth to hold and manage.

Senator Milne just talked about what those assets and contractual arrangements actually represent: more than $700 million in investments in more than 50 projects, with 150 projects in the pipeline—all of them making significant impacts. There is no logical argument for closing the Clean Energy Finance Corporation. The argument is an ideological one; the argument is, as Senator Milne just said, sticking to the mantra of abolishing the carbon tax and all of the associated arrangements around that, without any concession to the logic and the economic value of organisations such as the Clean Energy Finance Corporation.

The financial impact statement for the bill identifies—and I will quote from the explanatory memorandum:

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.

So again we have a pretty dodgy economic argument that has been put up as a furphy to hide the fact that this is an ideological position of the government.

When the bill was first introduced late last year, CEFC chairperson, Jillian Broadbent, told Radio National Breakfast that the corporation, which was only established in 2012, had rapidly invested funds in 39 programs and delivered a 7.3 per cent return. She identified then that the CEFC could potentially deliver half of the coalition's targeted 2020 carbon cuts. At the same time, former Assistant Treasurer Arthur Sinodinos suggested that the CEFC's recent profits were evidence that it should be able to survive without government support. He said that scrapping the carbon tax and introducing the coalition's Direct Action Plan would deliver the promised 2020 targets. He said:

If this was commercially viable, it wouldn't need the government.

Senator Sinodinos missed the point. Ms Broadbent went on to say that ditching the corporation would be a huge economic mistake for the government, arguing that it is both making money and cutting emissions.

There has been plenty debate. We have had this debate several times here in the chamber already. The CEFC has already proved itself as a very cost-effective tool in the pursuit of emissions reductions. We all want to achieve emissions reductions—even the government acknowledges that—and we want Australian industry to be competitive in a lower carbon world. We have to engage in the marketplace, encouraging co-financiers to join us in pursuing those investments. Key to Ms Broadbent's pitch at the time was the argument that the CEFC could potentially save 64 million tonnes of carbon emissions every year. That is half of the five per cent abatement target for 2020.

We heard too from Senator Milne this morning about how the CEFC has been a catalyst for investment in the clean energy sector. As Ms Broadbent said, 'We've invested $536 million.' The most recent figure from the CEFC in May was $700 million, matched three to one from the private sector. That is a generation of almost $4 billion of private capital investment. That just does not happen by itself; it actually needs a mechanism, it needs an institution and it needs arrangements to enable that to happen.

When the bill was introduced last December without success, the government indicated that it was determined to pursue the abolition of yet one more independent organisation based purely on its ideological obsession to dismantle the achievements of previous Labor governments. There is no other logic to this. Of course, government senators are going to argue again that the government has a mandate for this. The problem is that the Prime Minister, having returned from his overseas travels—yee-ha—knows that the rest of the world wants to talk about climate change and wants to mobilise global action to reduce carbon emissions by investing in renewable energies and efficient technologies, and here in Australia we are moving backwards. The environment minister continues to promote the coalition's Direct Action Plan, although he was caught out with his million solar roofs announcement and swiftly swatted by the Treasurer, so he has retreated back to the shallow rhetoric of the Direct Action mantra.

The argument is so fundamentally flawed. If the coalition government believed in climate change then it would not be exposing the Australian economy to future costs and risks because we failed to take adequate action now. That action should include responding to the need to invest in renewable energy in this country and the need to be more efficient in our energy generation from fossil fuels. They, of course, are the core tasks. They are the key responsibility of the Clean Energy Finance Corporation. It is the most effective form of direct action. It is an important mechanism and has continued, despite the best efforts of the government, to play an important role in the market, facilitating investment in renewable energy and other efficient energy generation, cutting emissions, cutting energy consumption and those opportunities would otherwise be missed by normal commercial banks.

So the arguments do not stack up. They have never stacked up. The government argues that the CEFC is full of risky ventures. Nothing could be further from the truth. We have a $10 billion fund generating a return to the taxpayer and the government, a negative cost abatement of, at last estimate, $2.40 per tonne with legislated good governance mechanisms in tax. $2.40 is generated for each tonne of abatement, compared with the spurious Direct Action policy—dodgy costings and dodgy cost-benefit analysis, where the ultimate outcome is that the government is going to pay polluters to pollute. The clean energy investments reduce emissions, and we can do a lot more through this $10 billion fund. The Clean Energy Finance Corporation creates assets that are owned and leverages more funds as Senator Milne so rightly said this morning, but the government wants to abolish a $10 billion fund which is able to leverage well above that in other investments and replace it with what can only be described as a half-baked, muddled, $3 billion direct action plan.

There is plenty of evidence to the environment committee around the success of the CEFC and the capacity it has to make investments that would account for 50 per cent of the five per cent emissions reduction by 2020. There are 50 projects in partnership with major trading banks, which means that now we have private sector cofinanciers leveraging and multiplying the available funding. That is the tragedy of the abolition of the Clean Energy Finance Corporation. They are great projects, and I am wondering why we have heard nothing—we have no Nationals senators here in the chamber today. There are great energy projects, great projects like the Sundrop solar thermal greenhouse, 200 jobs and demonstrating sustainable food production and the re-use of desalinated—

Senator Fierravanti-Wells: Ursula, what do you think Bridget is?

Senator STEPHENS: Oh, we have one now. Desalinated water in South Australia. Or there is the Moree solar farm, which needed an investment to underwrite the senior debt and which, by the way, also benefited from an ARENA grant and the Australian Agricultural Company. There are 15 grid connected solar PV units across sites in Queensland. What are the nationals saying about these projects? Absolutely nothing.

The climate change deniers are arguing we can combat climate change by planting trees, which of course would work better if we were not battling constant drought and record heat. As we have heard in Senate estimates, there is a huge pipeline of projects—more than 150 projects under active assessment by the CEFC. The CEO of the Investor Group on Climate Change told the Senate committee that there are about 14 financing organisations around the world now playing a similar role. They are co-investing to finance low-carbon alternatives to meet the two-degree outcome. They are helping to build a robust low-carbon investment market. They are strengthening the capacity of the finance sector to understand and finance carbon-reducing investments. They are supporting investment opportunities in new markets, opening new markets and earning financial returns for governments delivering abatement at negative costs.

So why is it that this government is so determined to abolish the Clean Energy Finance Corporation? I think the budget explains exactly why. Not only did we have the election of the coalition government slamming the brakes on Australia's climate and clean energy progress; we are now going backwards. It is a budget that shifts the burden for pollution reduction from polluters to taxpayers. It is a budget that slashes renewable energy agencies and funding programs that are helping create the jobs and industries of the 21st century. It is a budget that rips hundreds of millions of dollars away from climate science, international climate finance and clean technology research programs. Climate and renewable energy did not even make it into the budget speech. That speaks volumes. Certainty about the future of coalition's Emissions Reduction Fund was not helped by the budget overview saying that the $2.55 billion thought to be for the first four years is all we get over 10 years. In Senate estimates, the minister said that was a misprint. Oops!

The government has reinforced concerns that any climate action is set to be hostage to the vagaries of the annual budget process. How much confidence can anybody—industry, investors, ordinary Australians—have in the now four-year-old promise that, once the ERF is up and running, it will spend an average of $1.2 billion a year? John Connor, writing for ABC Environment, belled the cat:

What's most tragic is that Australia was just starting to get on track. Our greenhouse gas emissions, which had been growing steadily for decades, have begun to decline. Emissions from electricity, the single most polluting sector, fell an impressive 8.7 per cent since 2012. Solar and wind energy tripled in the last five years, while solar and wind jobs nearly quadrupled.

We have laws that price and limit carbon emissions from 60 per cent of the economy; laws that require companies to take responsibility for their pollution. We have independent, non-partisan institutions investing in research and development for the next wave of clean energy technologies. All these steps are necessary to ensure low-carbon competitiveness and sustainable economic prosperity. Ironically, on the same day as the budget, all these forward steps were included in the conservative International Energy Agency's recommended toolkit for energy policies to help avoid two degrees of global warming.

Now the government is intent on winding back those achievements by repealing the carbon laws. Not only will this will give polluters a free pass on their pollution, but it comes, as many speakers will continue to emphasise, at a great cost to the economy: over $12.5 billion in forgone carbon revenue over the forward estimates. As well, taxpayers will be forking out $2.55 billion for the Emissions Reduction Fund, all while the government works out how it is going to ensure reductions from big polluters. Taxpayers are being asked to buy a half-baked carbon pollution policy from government and bin the credible alternative that the Labor government put in place. This is about putting lipstick on a pig.

And, in an effort to silence the dissenters, the government wants to take down the independent agencies. The coalition supported ARENA before the election and promised to keep it going, and what have we got? Another broken promise. ARENA now joins the Climate Change Authority and the Clean Energy Finance Corporation on the chopping block.

Why should motorists be paying, while miners' fuel subsidies remain? The fuel excise indexation is effectively a price on carbon and it should encourage greater efficiency, but why is it that ordinary consumers will be paying, while miners' fuel subsidies, worth more than $3 billion a year, stay in place? And why cut investment in public transport? Why ditch the logistics and corridor acquisition for the Very Fast Train route, which would have been such a sensible and catalytic infrastructure project?

The coalition promised hundreds of millions of dollars for homeowners, schools and towns for solar power—another broken promise. We have got $2.1 million in the budget for seven solar towns over four years. So make no mistake, colleagues: the government's retreat from climate action and clean energy is going to cost Australia dearly. Australia's prosperity this century depends on the world avoiding dangerous climate change, and that means we have to play our part and be ready for the transition to a low-carbon, ultimately carbon-removing, economy in the future.

With very few exceptions, the budget dodges all of those issues and asks Australians to gamble on a half-formed carbon pollution policy. We know that the government senators are going to argue in this debate that Australia should not have to go it alone. This budget shows that if there is anywhere we are at risk of going alone it is backwards.

Today in TheSydney Morning Herald Bill McKibben wrote a fascinating article:

Prime Minister Abbott's only real concern is protecting Australia's world topping coal industry …

Germany is what the future looks like. The leaders of Canada and Australia—highly educated, sophisticated, and wealthy nations, not to mention some of the most spectacularly beautiful places on earth—are clinging to the past, on behalf of the fossil fuel industries that dominate their governments. Eventually (and hopefully before the planet’s physics are completely out of control) voters in these countries will realise they’re being driven off a cliff.

We are all being driven off a cliff by the fact that this government—in seeking to abolish the Clean Energy Finance Corporation, in seeking to repeal the carbon reduction bills that have been before the Senate, and in seeking to undermine the co-investment and the opportunities that are developing across Australia in these new renewable energy technologies and the unimagined potential of new clean energy technologies—is denying Australia's future and is denying our students, our universities, our economies and our communities. That is the folly of the government's position.