Julie Owens (Parramatta, Australian Labor Party) Share this | Hansard source

Grid reliability is a big issue. We know that. In fact, Labor went to the last election with a $5 billion energy security and modernisation fund, based on the CEFC model, to support network investment and to complement the continued growth of renewable energy, including investing in transmission, storage, firming and reliability assets, such as synchronous condensers. Labor has known it for a while. The industry has known it for a while. The government is now acting, in part—in part, they're acting. Some parts of this bill, the extra billion dollars for grid reliability, are not a bad thing in its pure form. But, as usual with this government, it's the detail. It's what they sneak in behind the announcement that you have to worry about.

Labor's concern—and my concern—is the way this bill changes the nature of one of our incredibly successful institutions and the way the government have inserted their ideological fixation with gas into a Renewable Energy Agency. Secondly, it's the way they've managed to take away the independence of the Clean Energy Finance Corporation and give far more power to the minister to decide how the money is spent. We know what happens when ministers in this government make decisions. We've been seeing it for months, the rorting, when ministers get control of how money is spent.

The third part of it is the basic change to the Clean Energy Finance Corporation from a government institution that invests and generates a return for the Australian taxpayer to one that will effectively be allowed, with ministerial intervention, to fund projects that run at a loss. This is a profound change for the organisation—and a change in its skill base as well. This is an organisation built, designed, to invest for a return. It is not an expert at all in the provision of grants. And they are two completely separate things. I have actually worked in both fields, and they are completely different. The expertise that you have around you to make the decisions are different in both those kinds of organisations.

Let's start with a bit of background about the Clean Energy Finance Corporation in the first place, because it is an extraordinary achievement. It was set up by the Gillard government, many years ago now. The corporation seeks to mobilise capital investment in renewable energy, energy efficiency and low emissions technologies, where low emissions are defined by the independent board guidelines. The Gillard government did not define what the guidelines were; an expert board did, because this is an incredibly complex area that is changing every day. There are a small number of people in the world who can actually project where the future of this industry will go. Ministers do not have that expertise. Ministerial departments do not necessarily have that expertise. So we set up an expert board, independent of government, and they set the guidelines. They made contract investments of $900 million in the CEFC's first year. It's a very significant success. It is viewed around the world as the world's best practice green bank. Even Prime Minister Morrison called it, in 2019, 'the world's most successful green bank'. It is very successful. It has leveraged $27.3 billion in private investment. It has deployed $6 billion of CEFC funds to achieve that. It has helped finance around 18,000 small-scale projects and is responsible for around one million tonnes of CO2 abatement annually. This is a success story.

You don't see a lot of ministers or local members running around announcing CEFC grants, but, when you actually look at what's funded—everything from electric scooters to low emissions fertiliser production—it's incredibly broad and it's scattered all around the country. But it happens the way grants should happen: expert people set the guidelines; expert people make the decisions; expert people announce them. Politics is essentially not in this institution at the moment. And this bill will change that.

The member for Moncrieff belled the cat on that, by the way, when she said that the CEFC, through this new fund, will drive investment in the government's priorities in the new technology road map—'in the government's priorities'. The government, not the experts, will set the priorities for this fund. The government—the minister, for that matter—will set the priorities. And I guess those will change from one minister to the next.

Again, one of the greatest advantages of the Clean Energy Finance Corporation for Australia is that it has consistent guidelines that can drive investment. Consistency and certainty matter if you are talking about investment. We've all read the stories and we've all heard the economists talk about—we have heard even the Reserve Bank of Australia talk about—the lack of certainty in energy policy in Australia which has driven investment out the door. Major investments do not take place when policy certainty does not exist. Yet once again we've got a government taking something that does provide certainty and applying to it all of its strange ideas about climate change and its focus on the past. Now here we are again, having all of that uncertainty inserted into one of our great institutions which has been a real success story. It's really quite worrying.

The government has history in this. If you listen to both sides here—if anyone out there is actually listening, and you're listening to both sides, to the government position and the opposition position—we're saying: 'Don't trust the government on this,' and the government are saying: 'No, no; this is really great; we're going to do a great job,' I just want you to focus for a minute on what the government has tried to do to this institution over the years. If the government had been supporting this institution, working with it, really trying to grow it and talking about how fabulous it is for the last seven years, maybe we'd listen with a more open mind. But consider what they've done.

In 2013, Prime Minister Abbott introduced legislation to abolish the carbon pricing mechanism, the Climate Change Authority and the Clean Energy Finance Corporation—abolish them. That was in November 2013. They didn't get it done, by the way. In 2014, the Liberal government made two more attempts to abolish it as part of the package to abolish the carbon pricing mechanism. Both were blocked by the Senate. So in 2013 and 2014 they tried three times. In 2015, the next year, Prime Minister Abbott tried to limit the CEFC's remit to support renewable energy by issuing a draft directive to prevent them from investing in wind and rooftop solar. So, despite all this bragging we've heard today from the government backbenchers about how great Australia's performance in rooftop solar is, Prime Minister Abbott tried to remove it from the investment stream. Treasurer Joe Hockey and finance minister Mathias Cormann wrote to the CEFC stating that, in addition to wind farms, household and small-scale solar should be excluded from the fund in future. An updated investment mandate added four to five per cent to the required yearly average bond rate. In other words, they required at that stage that the CEFC increase its return. Now they're saying it doesn't have to have a return and that it can actually invest in projects which they don't believe will generate a return at all. They've changed their minds on that, but back then that's where they were. In 2016, they decreased the required portfolio benchmark return to the five-year average bond rate, where it has remained since, so there's been a bit of backwards and forwards. Between February 2017 and 2020, they sought to amend the legislation to enable the corporation to invest in carbon capture and storage, and that legislation lapsed. Other federal government announcements have had the effect of reallocating large sections of the total $10 billion funding to specific technology focused funds.

So they have a history of interfering—first attempting to abolish it altogether and then interfering. This is not a government that has been behind this great institution since the beginning. When you look at what they're trying to do today—to move its focus to include gas, which is not a renewable; to change its focus from renewables altogether; and to take away the certainty that investors have by allowing the minister to decide that certain things should be funded or not and by no longer requiring that projects actually make a profit—you can see that they are substantially acting to reduce the effectiveness of this extraordinary institution.

The Clean Energy Council shows that, because of the lack of certainty for renewables in the investment market, just three new projects reached financial closure in the last quarter. That's the lowest quarterly investment in dollar terms since the index started in 2017. Investment is down more than 50 per cent below the quarterly average for the 2019 calendar year. So again we're hearing members of the government talk about how fabulously everything is going but, when you look at the actual figures, investment is down more than 50 per cent below the quarterly average for the 2019 calendar year. That is entirely about a lack of certainty.

I'm going to say it again, and I've said it a couple of times now already: you will not get commercial investment in renewables while the government keeps changing its policy from one thing to another. We know how many policies they've had: direct action in 2013, the EIS in 2016, the CET in 2017—they all have acronyms—the NEG on 15 August 2018, NEG version 2 on 17 August 2018 and NEG version 3 on 20 August 2018. Then there was no policy, as the minister said it wasn't the government's job, a few days later. Then there was a default price and then a big stick version 1, big stick version 2, coal underwriting et cetera. Every month it seems there's another policy. Without that certainty, you do not get investment, and once again they are taking the certainty in this great institution away with this bill. So we cannot support that.

Let's look at some of the detail here. If this bill goes through, it will expand the remit of the Clean Energy Finance Corporation to support the implementation of the government's Underwriting New Generation Investments fund, known as the UNGI program. So it's going to expand the remit to include the UNGI. Let's look at what was funded under the UNGI. So far: Alinta Energy, gas; Australian Industrial Energy, gas; Sunset Power, pumped hydro; Rise Renewables, pumped hydro; UPC Renewables, pumped hydro; BE Power, pumped hydro; Hydro Tasmania, pumped hydro; ZEN Energy, pumped hydro; and Delta, coal. Pumped hydro—good—gas and coal are what have been funded under UNGI. Now, if this bill goes through, the remit of the Clean Energy Finance Corporation will expand to support the government's Underwriting New Generation Investments program, which has been gas and coal up until now. Again, it reflects the member for Moncrieff's statement that the CEFC will drive investment in the priorities in the government's new technology road map. The government's priorities—not the board of experts' priorities but the government's priorities. It creates a new category of investment which is funded from the GRF account, and it will include the kinds of things that are currently funded by UNGI. This is causing quite a bit of concern out there.

Another thing that's causing a lot of concern is the ministerial power. The bill includes a provision which will allow the minister to directly determine an investment is eligible for CEFC support through a non-disallowable regulation—really quite unusual. The new power will allow the minister unprecedented powers in shaping CEFC investments, including on an ad hoc basis. You can imagine the extra workload for an organisation that says, 'No, that's not in our guidelines.' It will be if the minister says it can be. Just imagine that. Just imagine the chaos that will come. Imagine people walking into the minister's office for their investment rather than going directly to the CEFC. That's what will happen. I come from business, and I can tell you right now that, if there's a loophole that says the minister can do whatever he damn well wants, businesses will go to the minister. They won't go to the CEFC; they will go to the minister. We will have a person with no real expertise in the future—he seems to have some expertise in past methods of generating power, but not the future ones—as the person that people go to.

It's quite extraordinary. We have this extraordinary institution, the world's best practice green bank, and in a minute it's going to be the minister's bank. It's going to be exactly the same story as with the sports rorts and what we heard today about the Minister for Foreign Affairs. It will be the minister with this massive fund at his discretion, with all of his mates wandering into his office and asking, 'Can we have some money for this?' Just watch it. The history of this government, when you give a minister the authority to actually spend money, is appalling. That's what we're going to see. There's some good stuff in this bill—more money for grid reliability is good—but the detail is a disaster.

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