Ursula Stephens (NSW, Australian Labor Party) Share this | Hansard source

I rise to make a contribution to this debate today on the Clean Energy Finance Corporation (Abolition) Bill 2013. I know that there have been many people on this side of the chamber engaged in the debate and not too many on that side of the chamber wanting to put their names and voices to this activity. There is probably a very good reason for that. For those who are watching this debate today: the abolition of the Clean Energy Finance Corporation is something that the opposition, Labor, is vehemently opposed to, and let me tell you why.

The Clean Energy Finance Corporation was conceived by the original multiparty climate change committee process and then had more scrutiny under the expert review panel, which was chaired by Ms Jillian Broadbent, who is the chair of the board of the Clean Energy Finance Corporation. Quite importantly, she said at the time of the review:

The establishment of a $10 billion fund dedicated to invest in clean energy will catalyse and leverage the flow of funds for commercialising and deploying renewable energy, low emissions and energy efficiency technologies. In this way we will be preparing and positioning the Australian economy and industry for a cleaner energy future.

It seems that there is no debate that we all want a cleaner energy future; it is just that the coalition government has decided that it is ideologically opposed to the notion of a Clean Energy Finance Corporation and what it represents.

Recently at the Senate inquiry into this bill the chair of the CEFC, Ms Broadbent, gave evidence about the performance of the Clean Energy Finance Corporation, and I think that it is very important that we place this on the record. The evidence that she provided supporting the Clean Energy Finance Corporation's establishment has been soundly reinforced by the experience and the results of their 15 months of operation. They have not had long to set their processes in place but have achieved an extraordinary amount in that time.

First of all, the Australian government of the day had used the medium of the investment mandate that the Clean Energy Finance Corporation was given to instruct the corporation to use commercial rigour and avoid excessive risk. We have heard through many of the contributions in the debate the extent to which the corporation was very diligent in exercising that responsibility of managing excessive risk. The board adopted a very conservative approach to building its investment portfolio, principally focused on debt investments on terms matched by private sector co-financiers and with a minimum of funds invested in equities. Again, it was using the investment mechanism of the corporation to partner with industry partners, private sector partners and co-financiers to ensure that commercial rigour was applied. It was a very conservative and, as you will hear, very successful approach to its investment portfolio.

We have heard many people focus on the fact that the Clean Energy Finance Corporation is actually making money for the Commonwealth over and above the cost of the funds, which means that the taxpayer is actually getting the lowest-cost abatement from Australia's investment in this fund. We have also heard that the board had put in place a very rigorous system of risk management, investment selection and corporate governance. The reason that we had those very key rigorous systems in place is that the Clean Energy Finance Corporation board members are very experienced private sector board directors. They are seriously engaged in industry. They do understand the financial systems and the issue of investment regulation in Australia. So the board has put in place a system which allows every Clean Energy Finance Corporation investment to provide positive externalities and demonstrate how it successfully addresses market barriers.

I think it is most important for us all to register that not one of the Clean Energy Finance Corporation's investments or, before the Clean Energy Finance Corporation, those of Low Carbon Australia has fallen into default after three years of collective experience. So we are not talking about high-risk experimental investments. We are not talking about venture capital into things that were experimental. We are talking about serious investment in a constructive portfolio of investment projects that are very seriously targeted at creating our clean energy future.

We also heard from the Clean Energy Finance Corporation that in the very short period of time that it has existed it has funded projects involving over 500 megawatts of clean energy generation capacity that have been installed or supported, covering renewables and low-emission technologies. So, right across the board, innovation has been the key in all of this. The CEFC has developed a portfolio of $536 million and, through the co-finance partners, has invested in projects with a value of over $2.2 billion. It is delivering abatement at a negative cost—that is, at a net benefit to the taxpayers—of $2.40 per tonne of CO2 abated. The CEFC is investing across a broad range of technologies, including wind, solar, bio-energy, energy efficiency and low-emission technologies. Many speakers in the debate have had the opportunity to showcase some of the really successful projects in their own states and territories that demonstrate the extent to which these investments have taken place. We only need to drive along Lake George to see the massive wind farm investment that is there. We had an announcement only last week of the Collector wind farm. We have seriously invested in wind technology in this capital region. It has been a priority of our regional development strategy, yet it is something that is just not being valued by the government today.

The CEFC is also investing in projects that are demonstrating the benefits of proven technologies in the Australian market and helping to maximise the commercialisation of our expertise and its export to the world in very significant ways. There have been active discussions with 37 proponents for $4.5 billion in projects and an initial assessment of 142 projects, representing 179 innovative projects in clean energy technology and $14.9 billion of opportunity. So the CEFC has 39 investments in the portfolio as of August which are estimated to deliver 3.8 million tonnes of CO2 abated annually. The investments are building Australia's clean energy supply chain capability, which is quite critical and fundamentally important when we think about things like the solar farm in Moree. The investment in regional and rural Australia supporting 21st-century jobs in local communities has also been a critical part of the planning and investment management strategy of the CEFC.

Last night we heard speaker after speaker talk about the many industries that are benefiting from CEFC financing including agribusiness. We heard about greenhouses, we heard about flowers, we heard about Asian vegetables, we heard about manufacturing utilities and about local government. I know Senator Urquhart was talking about the local council in Tasmania that has taken up an investment in clean energy technology in this way. Through matched private sector funds of $2.90 for each one dollar of CEFC investment, the CEFC has been able to capitalise over $1.55 billion in non-CEFC private capital investment in projects and programs to deploy renewables and improve energy efficiency.

The investments originated by the CEFC to date exceed the five-year Australian government bond rate, so the yield that we are actually receiving from this investment is greater than the government's own bond rate. The five-year bond rate across the portfolio is 3.11 per cent and the average yield of these portfolios is 7.33 per cent. So it is difficult to understand why the government would want to abolish something as successful as the CEFC. There is no rationale except that the government is absolutely ideologically driven in this regard.

What is the result of actually doing this? First of all, there is no evidence of any plan for provision to another scheme or program so we do not know what is going to happen to the staff except that they are going to lose their jobs within four weeks of the bill being passed. What do we lose? We lose a very highly skilled pool of commercially savvy investment team advisers from the government. The government cannot afford to lose that expertise either but it is being lost in a way that no-one seems to have registered. People who can understand the investment market and the investment processes on the government side is such an important skill set. If we do not have those people with us then we will lose them to the commercial market. Without the CEFC as a focus fund to work with the sector to address market caps, the economy is very likely to start seeing a pullback of emissions-reducing project investment. The market barriers will persist and the positive budget outcomes from the emissions abatement will be foregone.

What the government is seeking to do in abolishing the Clean Energy Finance Corporation is take a tool, a very important potent policy tool, out of its own toolkit. It is a nonsense that we would be going down this path. The government is taking from itself a tool that can help it to galvanise and catalyse its own direct action plan—if we actually understood or had some detail about what direct action might mean. It is taking money out of its own coffers, a net return to taxpayers of over $200 million per annum, despite the fact that it would also contribute 60 per cent of the total abatement required to meet the bipartisan 2020 national abatement target. There is no logic to this abolition. The government does not believe that Australians should be innovative, responsive, or participate in national debate on the international effort to reduce emissions. The government believes that we should not be promoting energy efficiency, that we should not be stimulating the economy and that we should not be generating revenue for the government that is actually helping to grow and stabilise regional economies. It is irresponsible what the government is doing. What it does do is send to the market major confusing signals about how we are going to invest in these clean energy technologies.

There is a range of technologies. Those 129 projects that are in the investment pipeline at the moment that the CEFC has been asked not to continue discussions with are doing some amazing things we heard about, not just the wind farms but also the solar farms at Moree. There is a major solar farm planned for just outside of Canberra. Where that will go now, we do not know. I am sure ACTEW is quite concerned about that. We are starting to see renewable technologies used for food production in hydroponics, in the greenhouses that we heard about last night, and in technologies to manage drip irrigation and target irrigation in our wineries and agricultural industries. All of these projects provide export potential to the government. There are massive projects around the growing of Asian vegetables, addressing the bigger picture issue of food security in the world. We have got cherries from Young going to China. We have amazing investments in things like low-energy lighting, batteries and storage for solar generated electricity. We have clean grids and green grids—those kinds of opportunities that allow rural and remote communities to have access if not to baseload power then certainly enough power to manage if they are not on the grid.

These are the kinds of projects that are going to go down the gurgler because of the Clean Energy Finance Corporation being abolished. They are the projects that require a little bit of skin in the game from the government to promote and support investment by our banks, by our industry partners and by those who are looking to invest in our clean energy future. All of those are international organisations and international banks who are looking to Australia and saying that Australia has been leading the way in providing this kind of capital. It is patient capital, but it has been very productive capital.

We have provided for the world some models of investment instruments that are very different and very innovative. We have encouraged others to take up these models, yet we are about to throw the baby out with the bathwater. What's that all about? It is simply about the fact that this government does not believe in climate change, does not believe in reducing our emissions, does not believe that we should invest in a clean energy sector and does not believe in local solutions for our industry. The shame of it all is that we are all going to have to live with the legacy of this.

At least 100 of the 139 projects in the pipeline are there because of the challenge of putting together an investment portfolio. Without the investment and support of the Clean Energy Finance Corporation—guess what—they are going to really struggle to pull together the risk matrix that will enable overseas investors, many of whom are interested in being here. Without the key investment from the Clean Energy Finance Corporation, it is going to make it so difficult for those investors to get past their own prudential regulations and their own risk management approach. That is basically going to mean that these projects will struggle to get up.

Of all of the innovation that we have been hearing about in this debate, be mindful of what we are going to lose here and what the reason for that is. The consequences of closing down the Clean Energy Finance Corporation are going to be lost jobs, lost opportunities, lost futures, lost businesses—small businesses that were developing this innovation and working collaboratively—lost opportunities for research, lost opportunities for Australia and, of course, lost opportunities for the planet because we are leading in many of the innovation projects that are being supported by the Clean Energy Finance Corporation. The day that the Clean Energy Finance Corporation is abolished is a day of shame for Australia.

It has been very clear that there is nobody on the Nationals' side of the parliament prepared to stand up and support this because they know the projects in their communities that are going to be impacted very significantly by the abolition of the Clean Energy Finance Corporation. It is up to them. They are the ones who are going to have to go back to their communities and justify why they did not stand up in this parliament to support the Clean Energy Finance Corporation, which is continuing to do a great job and lead in innovation and investment in our regions.