Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

A market based instrument by definition is anything that influences the price of a good or service that is traded on a market.

Senator Cormann interjecting—

I have taught this at university, Senator Cormann, and I can tell you that a fixed price on carbon is by any definition a market based instrument. What are the impediments to finance? Clean energy finance quite simply helps de-risk investments in renewable energy, low-emissions technologies and energy efficiencies that are currently high risk, as was mentioned in the previous speech, by the nature of their development. These are young industries. As I mentioned when I first started, it is going to take a long time to reduce emissions and tackle climate change. Over a long period of time we have issues with financing.

There are other risks besides project risks to some of these technologies. We also have political risk. This is what is so ironic about the coalition and the Liberal Party's behaviour with repealing these bills. It creates more uncertainty for business. As Senator Cormann well knows, there is nothing businesses hate more than uncertainty. We can justify low-interest loans from the Clean Energy Finance Corporation because that is helping tackle an externality. By any definition we can justify governments taking action to help correct an externality.

Uncertainty cannot be justified. By repealing these bills and putting up phoney strategies to deal with climate change, we create more uncertainty that has worse impacts on business investment and on many thousands of jobs across this country that have been created by the revolution in our economy brought on by measures such as the clean energy package. We can see the transition to being 100 per cent renewable in this country; jobs for electricians and for renewable energy engineers; thousands of jobs for greater energy efficiency; investment in research and development and in innovation; and all the good things that we like to mention when we talk about jobs and wealth creation.

All these are under threat by repealing the package associated with the Clean Energy Finance Corporation, and more broadly when we look at repealing things such as the carbon price. At a recent Senate committee hearing, the Clean Energy Finance Corporation chair, Jillian Broadbent, who I point out is a former Reserve Bank board member, claimed the CEFC would be a significant contributor—if the full amount were spent over time—to emissions reductions in Australia. It would contribute net revenue to the Australian taxpayer. Her exact words were:

… this would contribute 60 per cent of the total abatement required to meet the bipartisan 2020 national abatement target, and at the same time deliver a net positive return to the taxpayer of over $200 million per annum.

If these types of structures are designed to de-risk investments that encourage co-investments and bring more research and development, innovation and jobs to Australia, why are we opposing an initiative such as the Clean Energy Finance Corporation by trying to repeal it? I will give you a couple of reasons that are talked about. Minister Hunt recently labelled the Clean Energy Finance Corporation a 'green hedge fund' borrowing in taxpayers' names to invest in speculative ventures. This shows a complete lack of understanding of the subject at hand and certainly the policy imperatives associated with the Clean Energy Finance Corporation.

The CEFC entails prudent application of capital, strict risk management frameworks and a commercially rigorous approach to investment and often co-investment. As was mentioned at that Senate hearing, it has brought significant private financial investment for our renewable energy sector. This is something that we have seen all around the world, not just in Australia.

It is also false because the Clean Energy Finance Corporation associates its investments with the developed end of renewable energy. The venture capital end, with higher risk investments and technology developments, is associated with ARENA. It was specifically structured to have that separation with risk premiums associated with the investments of this fund. So we are looking at well-established technologies feeding clean energy into our electricity grid. Another argument that is often used is that somehow government involvement will create what we economists call 'crowding out' an investment. Also at the recent Senate inquiry, Ms Broadbent said that in fact there had been a 'crowding in'. We have had three international institutions who have participated in the market for the first time, encouraged by the fact that there was a government-owned entity there at the table as a co-financer. So far so good, and there is absolutely no reason for us to imagine things will change if the CEFC sticks to its very strict investment mandates.

The real reason for opposing the CEFC with these repeal bills is purely political. It is purely ideological and it is bloody-minded: 'At all costs let's push through; never mind the casualties.' Or is it that the Abbott government are puppets of big business in this country—businesses who have an agenda of putting their own profits before the interests of the Australian people? Or is it big business interests who are directly trying to stifle competition from renewables in the energy sector? Certainly the most active public members of the Liberals' cheer squad on the subject of repealing the clean energy bills have been the Australian Chamber of Commerce and Industry, the Australian Industry Group, the Business Council of Australia and the Minerals Council of Australia.

Maybe Mr Al Gore was right in his recent comments concerning the Abbott government's repeal of our climate package. He said our democracy had been hijacked by special interests. It certainly appears the Liberal Party has been. What is the alternative proposed by the Liberals to the years of hard work and policy put in place to take real, strong and effective action on climate change at a low cost to the Australian taxpayer? It is a Liberal Party grants program, at straight expense and a net cost to the taxpayer. Direct Action will cost $3.2 billion whereas the existing legislation creates $7.3 billion. That is a total deterioration of $10 billion in the budget position.

Direct Action will run for only a few years, after which we will inevitably have to implement a carbon price again. One thing I understand from teaching this at university is that a price on carbon creates what we call 'secondary objectives', such as the planting of trees and soil carbon initiatives, all of which I wholeheartedly agree with. But they are much more effective and likely to happen if we can value those initiatives by having a price on carbon. The markets need the certainty that is brought on by a price on carbon. They are complementary measures. The idea that somehow they are not, or that they will work without a price on carbon, is plainly stupid.

Of 35 economists surveyed, only two thought that governments picking winners was better than a market based scheme. One of those two, Mr Danny Price of Frontier Economics, helped the coalition design their Direct Action policy. It consists of an Emissions Reduction Fund which will pay taxpayers' money to those firms—the big polluters—who think it is worthwhile spending the time bidding for a small pool of money.

In reality, doing nothing will be an easier option for them because they can pollute as much as they like with the cost borne by the rest of society, just as they did before. There is $1.5 billion set aside for the Emissions Reduction Fund, but with most of the money in the final year so they can claw it back when they no longer have to pretend the policy was ever going to work. I note $300 million will also be spent on a green army to plant trees. With absolutely no detail on the policy developed, with a green and white paper process still to go and with a depleted and demoralised departmental staff, the Emissions Reduction Fund is highly unlikely to be ready to start auctions by June next year. In other words, it is a phony.

Compare this to the achievements of the Clean Energy Finance Corporation and it looks like more of a joke. Every $1 it has contributed so far in financing has generated $3 of private sector investment. It has spent $536 million and so far has generated over $2 billion of new capital investment. As I mentioned earlier, it will make a net return to taxpayers. Within its first year of operation, the CEFC has generated investments responsible for 3.9 million tonnes of CO2 equivalent abatement annually, which has been generated at a negative cost of approximately $2.42 per tonne. A hundred and seventy-nine proposals for projects are in the pipeline, with an estimated value of $14.9 billion of investment in clean energy technologies. So much for the Greens being anti-jobs. This will be lost to the government's irrational distaste for low-carbon businesses, purely to keep an election promise.

We have a vision. The Greens are the only ones who have a vision for transforming the economy in this country to be 100 per cent renewable. We have a vision that will create new jobs, innovation, new research and development—and it is already working. The only reason we are seeing it repealed is an election promise that the coalition hides amongst hundreds of other things that voters went to the election with, saying it was the reason they were voted into power.

I would like to finish with a quote that is often used by my predecessor, former Senator Bob Brown. He quite simply says, 'A good policy is a policy that is good for your grandchildren'—not, in this case, what is good for your electricity bill, if in fact it even impacts your electricity bill, which I thoroughly dispute. To someone who cares about our children and future generations and taking real action on climate change, nothing is more frustrating or infuriating than this constant grind that somehow a questionable argument on cost of living is more important than looking after our kids and the future generations of this country in a way that is positive, that creates new jobs, new industries and hope, and that moves us away from traditional industries which we cannot always rely on and which in some cases are highly vulnerable. The clean energy package is a win-win for this country, producing more jobs, emissions reductions, and real, effective action on reducing global warming, the biggest threat to my future and the future of everyone in this chamber.