Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

There has been some concern amongst government members that the coalition is supporting the establishment of the agency ARENA. I cannot imagine why. We will always support good policy. The reason that we are constantly not supporting policy around here is that there is very little good policy to support. Before I discuss the Australian Renewable Energy Agency Bill 2011 and the related bill further, I would like to reflect a little on some of the comments from the government's partner in their coalition, the Greens. I noticed with interest that Senator Milne, when this bill was first being debated in the very short debate that has been allowed today, said, 'I announced the Australian Renewable Energy Agency earlier this year.' Because of some of the behaviour yesterday by Senator Milne—who, as I understood it, was the Deputy Leader of the Greens but who spent more time, it would seem, in answering questions and queries relating to the package of clean energy bills than the responsible government minister—you would be forgiven for thinking that Senator Milne is no longer just a member of the Greens but is also a member of the government that is pushing through this legislation.

I was somewhat amused to read in today's press that one of the Labor senators made the point that the Labor government senators had quietly accepted the result of the clean energy package yesterday because they had learnt their lesson from what happened with kisses and hugs in the government benches in the House of Representatives. This Labor senator went on to say, 'We didn't want to look like we were married to the Greens.'

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Too late!

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

As Senator Williams points out, it is too late.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

Like a shotgun!

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

Senator Boswell says it looks like a shotgun, and that is my point: if it is not a marriage already, they are living in very serious sin, according to any context that my grandmother would have put around the relationship that they have. I do not think there would be a Federal Magistrates Court or a Family Court in the country that would not think that the Greens were entitled to their pound of flesh should the relationship break up. But they do not even have to get out of the relationship to get their pound of flesh; they have got their pound of flesh inside the relationship. And it is amusing to note that yet again Senator Milne is taking the lead on what is theoretically some government legislation.

As I pointed out, the opposition is not going to oppose this legislation. When we become the government it will be a useful piece of legislation to put some good governance structures around renewable energy. Renewable energy has been a hallmark of the coalition government. Development and encouragement for innovation and research in the area of renewable energy has been a hallmark of the coalition government for many years. It was a coalition government that introduced the first renewable energy targets, having recognised that there must be action on climate change but that the way to do it was through efficient, sensible, practical and commercially viable action—not through a plethora of dreams and schemes such as we have seen from the current government. So I am very pleased that this legislation has been proposed. I have less hope, as does the coalition in general, that it will actually achieve its aims. But we shall see.

The Australian Centre for Renewable Energy and the Australian Solar Institute are being brought together under the regulatory framework of the Australian Renewable Energy Agency, ARENA. The money currently held by the Australian Solar Institute will become available to ARENA from 2012-13. The amount of money involved is not chickenfeed. ARENA's first maximum yearly payment, made in 2012-13, will be $292.5 million. The amounts vary over time. In 2014-15, it will be $436.6 million and in 2019-20, the last year for which this budget has been worked out, it will be $368 million. We are told this is to be paid out of consolidated revenue. The bill is designed to curtail how ARENA spends that money. So we can have some hope that with good governance this could work.

We do not have the same faith in the workings of the Clean Energy Finance Corporation, which was set up under the legislation passed yesterday. That involves scarier numbers and has been referred to as 'Bob Brown's $40 million slush fund'. We will have to wait and see whether Senator Milne can control that one as well. Senator Milne, I note that one of the directors of the fund who is also a Reserve Bank governor suggests that there will be due diligence done on Clean Energy Finance Corporation projects. Let us hope that that is the case because we still have the very fresh memory of ZeroGen—allegedly one of the Labor government's blue-chip investments. The ZeroGen clean coal project in Queensland came to absolutely nothing.

Senator Milne interjecting—

The company fell over, Senator Milne, with $40 million of taxpayers' money having been invested by the Labor government. I think Senator Milne would have to agree that $40 million of taxpayers' money down the drain is a serious problem. One hopes that we will not see the same situation that has bedevilled Labor governments over and over in Western Australia, in South Australia and in Victoria. Every time a Labor government tries to pick winners, all they manage to do is create a great gaping hole and a bonanza for administrators. Let us hope that this will develop far better than what we have seen in the past.

Of course there is very little reason for the coalition to think that under a Labor government ARENA will actually be able to implement good policy. We only have to look at some of their attempts in the area of energy efficiency. Pink batts was a debacle which not only cost a fortune but cost lives. It was a situation where the government refused to listen to warnings given to them over and over again and claimed: 'There is nothing we can do. Industry should be fixing it. We've had reports but it is all okay.'

What concerns me is that we have had yet another example of this in Queensland recently with regard to a company called Cleaner Energy, which has gone into administration owing millions, we suspect, to companies that had installed solar systems and were due to receive renewable energy certificates for having done so. Cleaner Energy was allegedly buying and selling renewable energy certificates. They were a trader. When they fell over, they owed one small Queensland business $1.2 million. We still do not have the full details of how this happened. Queries were made by the shadow minister for climate action, Mr Greg Hunt, and others, including the member for Brisbane, Ms Teresa Gambaro, and we got the typical story from the minister, Mr Combet: 'It really had nothing to do with me. I am just there overseeing the installation program and the administration program, not the certificates program. It is way outside my field of interest.' In fact, Mr Hunt had to write to the Auditor-General to try to get some sense out of this. In my view, what the Auditor-General told us was that once again we have a very poorly structured system and no serious idea of how the real world operates or how to implement commercially acceptable proposals. The Auditor-General pointed out that the regulatory powers relating to the renewable energy certificates under the Solar Credits initiative primarily relate to the creation, transfer and surrender of certificates. The Auditor-General's information indicated that the regulator 'has no power to intervene in the commercial arrangements between buyers and sellers of certificates'.

The Minister for Climate Change and Energy Efficiency had in fact publicly stated—and isn't this a lovely easy out—that issues regarding the marketing of or payment for certificates are referred to the relevant authority in each state and territory. Thank God for the states and territories, because otherwise the government might have to take some responsibility. Does it remind you in any way, Madam Acting Deputy President, of the debacle with the pink batts when initially the then minister, Mr Garrett, tried to suggest that it was somehow the states' fault when buildings were burning down because of poor installation?

Not only do we have the problem where solar systems have been installed and the installers have been left with no money—in fact, in danger of going broke themselves—but we have the dangers that have been created by the importation of hundreds and hundreds of systems from China that do not meet the Australian standard and have broken down in a very short time, leaving Australian taxpayers out of pocket and less than favourably disposed towards solar energy, which was not the point of the exercise. Let us hope that we will get somewhere with the establishment of this agency in terms of real due diligence.

I would like to put on the record at this stage the coalition's intentions regarding solar energy. We have a target of 20 per cent renewable energy by 2020, and this is in keeping with the work we have been doing in the area of renewable energy, the impetus we have been trying to build in the area, since we were elected to government in 1996. A coalition government will invest $100 million every year so that we can have an extra one million solar energy homes by 2020. We will be setting up a $75 million solar cities program and we will have five solar cities projects. They will be in Adelaide, Townsville, Blacktown, Alice Springs and central Victoria. They will use well-established technology; they will not suffer the fate of Cloncurry, which the Bligh government in Queensland trumpeted and then went very quiet about when they realised their cutting edge technology actually did not work.

There will be practical benefits for all these solar city communities. There will be over 3½ thousand photovoltaic panel installations on private and public housing and commercial buildings, over 4,000 solar hot water installations in private and public housing and over 15,000 smart meters—and I would counsel this government to have another look at the way they are handling that issue right now—to give customers real-time information. We will also be funding 125 midscale solar projects in schools and communities and we will be working with the Productivity Commission on how to genuinely and effectively introduce proper feed-in tariffs for solar power. Energex, in my home town of Brisbane and throughout South-East Queensland, are currently at the stage where they are having to say: 'Sorry, we can't take your solar energy. We've got too much solar energy feeding into the system now. The current system will only take 30 per cent. We need an upgrade. Would you like to pay for the upgrade of your grid so you can feed in your solar power to the sector of Australia with the fastest growing population?'

The other point on which we need to be very careful is that we back sensible and efficient programs. Unlike the record of this government so far in so many areas related to energy efficiency and renewable energy, we need to look at programs that actually work. I was interested to see a report produced by KPMG in Britain this week which says that the cheapest, most effective way for Britain to reach their 2020 target is to use new gas powered stations and nuclear reactors. They could save more than £34 billion if they cut back on their use of wind energy and others and just do what is possible by using gas powered stations and nuclear reactors. Neither of these would suit the Greens and, in the case of nuclear, would not suit this government. I personally do not know why we do not have another look at the most reliable form of energy in the world.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Does Fukushima mean anything to you?

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

We do not have to accept that older style installations in other countries are somehow the big problem they are made out to be, as though something which happened 30 or 40 years ago, or even 12 months ago, is somehow going to affect us now. Let us look also at the number of people who die in car accidents every year. The number is 1,000 times the number of people who are affected by nuclear accidents. Of course nuclear accidents are a problem but not having any energy to run our world would be a bigger problem and we cannot afford to join some of the airy-fairy ideas of Europe and others. We must remain practical and focused on efficient, sensible solutions.

The coalition supports the development of this agency, which I am proud and pleased that the Greens could announce for as. We will certainly be using it to best effect when we resume government.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

by leave—When I was speaking before, I was talking about the disaster of rooftop photovoltaic cells, how the scheme had gone wrong and how the government had botched the whole program. Before I get into that, we need to go back a bit.

In the last Howard government budget $150 million was allocated over five years for cash subsidies for rooftop solar. It blew out by over half a billion in 18 months before Garrett finally pulled the pin. The $150 million allocation over five years under the coalition became $700 million of spending in 18 months under Labor. However, having belatedly pulled the pin on the subsidy they had a political problem. They had created a monster; they had created demand. They had to replace that subsidy but they did not want to pay for it.

What they came up with is one of the most tortured bits of algebra you could possibly imagine. They would provide a renewable energy certificate for every megawatt of power a rooftop system would generate over a life of 15 years and then multiply that by five. This was to get the subsidy somewhere near the $8,000 value of the cash subsidy they were replacing and they got a fair way towards that goal.

The price of RECs at the time was close to $50. That meant that householders would pick up over $7,000—not what they had been getting but still pretty generous and it was stimulatory. These RECs would then go on the open market where the big electricity suppliers and consumers—the so-called liable entities who had to meet the 2020 target of 20 per cent renewables through acquittal of RECs—would buy them. But so many were produced, as the gold rush for rebates continued to gather momentum, that the market was swamped. There were so many RECs being created—albeit 'phantom' RECs—that the price collapsed.

That points to one crucial aspect of the huge policy snafu in renewables. The only way the government was ever going to get wind farms going—and wind farms are or were the government's only hope of meeting its target—was with a very high REC price of $60 plus. Only a REC at that price would enable would-be wind farmers to raise the funds they needed to get their turbines up. Instead, the government, chasing the popular vote via rooftops, put in place a policy which totally undermined the REC price. Working that out was not rocket science. It was pretty much an inevitable outcome but, clearly, they could not see it coming.

Meanwhile, the states were not helping by instituting ridiculously high feed-in tariff arrangements for the power generated on rooftops, and, in some cases, direct subsidies. The New South Wales Labor government put in place a 60c per kilowatt hour gross feed-in tariff. They gave people 60c for every kilowatt hour of power their system produced, even if it was consumed in their own house. The ACT did the same. Victoria had a 60c feed-in, but only for power in excess of what was used in the house. These tariffs were more than four times the average price of mains power.

All states except Tasmania ultimately ended up with some sort of feed-in tariff, and this was despite the fact that since 1997 there had been discussion at COAG to try to get a uniform approach. Despite the fact that at the time every state except WA was a Labor state, they could not get that agreement. We had a free-for-all to see who could be the silliest in terms of subsidies, with taxpayers footing the bill through increased power prices. The effect of the combination of subsidies—state and federal—sent the whole thing into overdrive. Demand for systems went crazy, which collapsed the REC price even further and led to a decision to again fundamentally change the system.

The new idea, to operate from the beginning of this year but announced in mid-2010, was that the liable entities, the people responsible for meeting the 20 per cent target, would no longer be able to use the RECs created on rooftops to set against their target. From the beginning of this year they would only be able to use RECs from the likes of wind farms—large scale renewables projects—but they would also have to buy all the small stuff. They would not be able to use them to meet their targets, but they had to buy them.

Again, the totally predictable result was that, in the second half of 2010 especially, the liable entities bought up every cheap rooftop REC they could before the boom dropped. Most were able to bank enough RECs in that time to get them through to 2014 without going back onto the market. The result is that the government, by mismanaging the rooftop issue, has totally sabotaged its target. Wind farm projects have, for the most part, stalled. Rooftops may be a source of votes but they are also a source of only miniscule abatement.

The former Secretary to the Department of Climate Change and Energy Efficiency, Dr Martin Parkinson, once famously projected that if you spent the $200 billion or so that it would cost to put a solar panel array on every rooftop in Australia, you would save about 13 million tonnes of greenhouse gas—that is, the abatement would cost about $7,000 a tonne. And that is just the absolute bare bones of the renewables disaster, which is unfolding still and has more problems ahead. What it boils down to is the same sort of decision making we have become accustomed to from this government. It has all the classic hallmarks. It is as though, before this government embarks on any major policy initiative, it asks itself: how do we completely stuff this one up? They follow a pretty typical, standard issue, stuff-up route on renewables. First, blindly overspend—massively: they have achieved that. Flag big changes months ahead of making them to create maximum negative outcomes: achieved. Outsource the problem, and the cost: achieved. Use extremely bad, misleading modelling: achieved in spades. Be blind to all and any warnings, especially if they are from industry: diligently achieved. And then, of course, declare it a brilliant, blinding, top-to-bottom success that will save the Great Barrier Reef, the Murray-Darling, and, in due course and the fullness of time, humankind and the planet: achieved. Typical.

These are the people who are about to engage in the most complex policy implementation process in the history of the country. I confidently predict it will be like everything else they touch—a disaster. The problem is that, this time, it could be a disaster that fundamentally undermines the long-term future of this country.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

I am very pleased to participate in this debate on the Australian Renewable Energy Agency Bill 2011 and a related bill. It is indeed an honour to follow two of my distinguished colleagues—Senator Boyce and Senator Boswell—both Queenslanders and both of whom have a very good understanding not only of clean energy but of the impact that the Labor government's administration of any energy portfolio has on our home state of Queensland.

Senator Boyce mentioned ZeroGen as an example of how the Labor Party simply cannot manage anything at all. Whilst the examples of the inability of Labor to manage any program are fairly obvious, ZeroGen is a classic example. Over $100 million of taxpayers' money was put into this company, set up by the former Queensland Labor Premier, Mr Peter Beattie, and enthusiastically carried on by the current Queensland Labor Premier, Anna Bligh, with all sorts of promises. They even included as its chairman, as I understand it, a former Labor state government minister to be a chief of corporate Australia. Of course, we all know that it has gone into liquidation—another testament to Labor's inability to manage anything related to renewable energy.

The coalition are supporting these bills because we certainly hope that this agency may able to administer all commercial and other operations around renewable energy in a better way than we have seen Labor manage anything at all since the advent of the Rudd and Gillard governments. The agency, to be known as ARENA when this bill is passed, is designed to centralise the administration of $3.2 billion in existing federal government support to the renewable energy industry, currently managed by the Australian government and by Australian government funded bodies such as the Australian Centre for Renewable Energy and the Australian Solar Institute. ARENA will also assume the work of the Australian Centre for Renewable Energy in establishing and maintaining links with state and territory governments in fostering and developing collaborative research partnerships, both domestically and internationally. As I said, if this were being done by the government, by the minister, by cabinet, I would be worried; but let us hope the agency, when it is set up, will have a much better record of administering millions and millions of dollars of taxpayers' money than the Gillard government has shown itself to be capable of.

I do hope, and I urge the minister to ensure, that the board members of ARENA are appropriate, that they have real commercial experience, not like the case with ZeroGen—you just put in a Labor hack, a former Labor minister who had lost his job—making it another avenue for jobs for the boys.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

You supported ZeroGen.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

And we support ARENA, Senator Milne, but I am saying let us hope that when it is set up the Labor government minister will appoint appropriate people, people with commercial experience and not just some Labor hacks or some former state or federal Labor ministers who need a job paying a couple of hundred thousand dollars a year. Let us hope that when the board is appointed it will be an appropriate board with the required experience.

The coalition is a great supporter, as I think Senator Milne has just acknowledged, of renewable energies. I remind the Senate that the Mandatory Renewable Energy Target—the first such proposal, scheme, project anywhere in the world—was established by a Liberal and National Party federal government. It was also a federal coalition government that established photovoltaic industries in Australia. The first wind projects in Australia were established by a coalition government. It was also a coalition government that funded the first large-scale photovoltaic generation programs. Indeed, it was a coalition government that put money into the first solar thermal projects. It was a coalition government that continued to ensure that we had projects that actually worked, and I am proud of that.

I think we do have to move, hand in hand with the coal industry, into clean energy options. I do think that the time will come when Australia will be required to take the cheapest and the cleanest form of energy—that is, nuclear energy. If we are worried about carbon emissions, we know that you do not get any carbon emissions out of nuclear. Why the Greens continue to oppose it, I cannot— (Time expired)

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

The time allotted for consideration of the remaining stages of these bills has expired.

Question agreed to.

Bills read a second time.