30.5.12 Clean Energy FInance Corporation Bill 2012, Clean Energy Legislation Amendment Bill 2012, Clean Energy (Customs Tariff Amendment) Bill 2012, Clean Energy (Excise Tariff Legislation Amendment) Bill 2012
Mr HAWKE (Mitchell) (17:44): It is a pleasure to follow the member for Cowper and that passionate rendition of why this bill, the Clean Energy Finance Corporation Bill 2012, will be such a failure for Australia. He is passionate about it because he understands that $10 billion is an expense that Australia simply cannot afford at the moment. When the government is doing everything it possibly can to produce a mythical $1.5 billion surplus, including the removal of $5 billion out of the Defence budget, it is incredible in the extreme that we are in this House today debating a bill off-budget to appropriate $10 billion to hand out to people on projects that may not be viable.
Nothing could underscore that point more than the member for Parramatta scurrying into this chamber before question time in an urgent rush to outline her committee's inquiry into a bill for $10 billion. I think it is very important this House highlights that that committee inquiry for $10 billion of Commonwealth money took just two hours of that committee's time. The member for Moncrieff absolutely demolished this committee inquiry, this so-called sham inquiry, that took two hours to investigate $10 billion of expenditure by the Commonwealth, and he made some excellent points about that. Questions have to be asked about what is going on with the Clean Energy Finance Corporation Bill and the associated bills before us here tonight.
It is the case that the government speakers we have heard on this bill were not persuasive in any way, shape or form. Their arguments do not make sense. They do not make economic sense and they do not make environmental sense. When you listen to the government, they say, 'We have got a carbon tax coming in, we have got a carbon price and we have got all these things happening but, all of a sudden, we also need to add money into the renewable sector because it is not viable.' Why then are we introducing a carbon price on electricity if not to make investment in renewable energy more attractive? That is one of the stated purposes for having a carbon tax in the first place—which you see if you look at all of the gobbledygook in the explanatory memorandum to this bill. I will quote from the explanatory memorandum. Under 'General outline and financial impact' it says:
Australia is a late starter in the transformation to clean technology due to its access to low cost fossil fuels.
What a terrible thing. It goes on:
This transformation will require substantial capital which the private sector alone may not be able to provide. Current global financial conditions, the complex nature of Australia’s electricity markets, the cost of renewable energy, and the preference of investing institutions for listed assets inhibit the financing of the clean energy sector.
A normal person would want to know what that meant. What that means essentially is this is a hideously expensive form of power that nobody in their right mind would invest in and that the government has to subsidise because nobody will look at this as an option in the real world of the private sector. That is the danger that this government is exposing taxpayers to—$10 billion of exposure risk—without any concern or regard for a return or any of this so-called commercial filter the government speakers have spoken about.
In estimates the Treasury has been very clear that 7.5 per cent of a loss has already been factored in. That is just a lazy $750 million—and there is another billion dollars we could have kept in Defence and kept our soldiers in the field in a stronger way. If this government honestly wants to put to this parliament that the loss rate out of this $10 billion will be 7.5 per cent then I would take that—because there is no doubt, when you read the provisions of this bill, about the lack of scrutiny, the lack of oversight and the lack of commercial know-how or nous into how this money will be administered. The actual proposition itself is that you can go around and hand out to these enterprises that are already identified as not viable or not worthy of financing money from the taxpayer and somehow they will become viable.
I think what you understand from all of that is that the Commonwealth does not intend to make a return from this bill. We are actually writing off $10 billion of Commonwealth money today. I am a little old fashioned but $10 billion to me is still a lot of money. I remember when $1 million was a lot of money. It still is today but now we throw around billions like it is going out of fashion. Ten billion dollars, to all those hardworking taxpayers in western Sydney, in my electorate, is too much money for us to be giving away for what is essentially a government commitment to a minor party.
I want to address that because I think it is important in the context of this legislation to understand why the government would hand out $10 billion off budget to a Clean Energy Finance Corporation when all the evidence from around the world tells us that these government corporations handing out cash, without expectations of return—or even when they try and pretend they are going to get a commercial return—do not work. There are so many good examples around the world. Names that come to mind are SpectraWatt from the US, Evergreen Solar, Solyndra and Beacon Power. They have all had huge losses and were completely unviable in their operations in the US. All of the taxpayers' money was totally wasted. The reason we are debating these bill and this legislation is because the government has made an off-budget commitment to the Greens.
We heard earlier today in this chamber, when the member for Melbourne was here, that there is a shortage of government speakers who want to speak on this bill when it is a $10 billion enterprise. I think the evidence here is quite damning. Whenever the government passes a bill of this nature and they have a much vaunted initiative of the Gillard government or the Rudd government, what we see is a procession of Labor speakers saying, 'This will benefit my electorate'; 'This group is going to benefit'; 'The planet is going to be saved'; 'The environment will be better off'; 'All of these companies will be able to make renewable energy so much cheaper and easier for all of us.' But, on this $10 billion expenditure, we have hardly had a government member speak in this chamber. It is their initiative. The shame they feel for this measure is apparent.
But there was one member here willing to defend this project, and that was the member for Melbourne. He came here in he and angrily asserted why this was good idea. I think that is a very telling and revealing situation. The member for Melbourne was passionately saying that this massive state-owned corporation that will be splashing around $10 billion of taxpayers' money to green corporations and green entities that are unviable and unprofitable is a worthy thing and a fantastic thing—but you cannot find a government speaker here today to come and do the same. We know why—it is because they know it is a dog. They know that this money will never be recovered by the Commonwealth. Indeed, we are looking down the barrel here, if we do not form a government, of a massive liability to the taxpayer.
When you continue through the provisions of this bill, you can see the fundamental flaws of this approach to policy and one reason that we must oppose this firmly as a parliament and as a coalition and one reason that we must always, when these things come up, have a very strong examination of why governments should not be behaving in this fashion. That is because, in my view, when a government appropriates or borrows money and then seeks to turn it into commercial money, it cannot function in the same way as the market or the private sector in assessing the risk accurately and taking the risk, because there is no risk to anybody—any person that is putting up the capital. Who is taking the risk in relation to the Clean Energy Finance Corporation? It is the taxpayer. It is 20 million taxpayers. It is the people out there that earn the money. They cannot make a decision about how this money is to be risked or taken.
When you look at the exact provisions here, of course the government does all of the things that it would usually do in relation to setting up a corporation. This corporation is exempt from the Income Tax Assessment Act, for example, so it will not pay any tax. What other corporation could enjoy that? When you look at all of the things that government does using its negation power—that is, by a negative, saying, 'It won't have to pay tax and it won't have to do anything, but we'll give it $10 billion, and here's hoping that something good will come out of this'—and when you go through the provisions of this bill further, there are lots of specifications about procedure, about functions and about what you would regard as a set of financial parameters. But, of course, there are no real explanations of how this will benefit the environment or the economy.
In fact, all through the explanatory memorandum and the provisions, you see that this will make power more expensive. This will actually deliberately make electricity generation more expensive in Australia today—so it becomes a double whammy. You read things like this particular part on page 11 of the section 'General outline and financial impact':
The fiscal and underlying cash balance impacts include a prudent recognition that some investments will not be recovered, and interest revenue. The fiscal balance impact also includes the concessional component of loans. This treatment reflects budget accounting standards and is consistent with the treatment of similar investments.
You just get the sense from this that what they are doing with this Clean Energy Finance Corporation is totally Orwellian and they know it. That is why they are not here in this chamber to defend it. There is no way that the government can behave as a corporation, and it is not the role of government to behave as a corporation. Government is for governing and doing the things that we ask it to use the right to use force to do, and that is not to behave like a commercial entity or corporation. Every time a government has attempted to behave like a corporation or a commercial entity, it has failed miserably, whether it be administering banks or running other kinds of commercial enterprises. It cannot be subject to the same rules of commercial operation, and indeed it is specifically exempted from the Income Tax Assessment Act and other acts that deal with commercial operations.
Instead of creating the settings or understanding that a government is there to create the environment for other commercial sectors and the private sector to flourish, and instead of saying, 'Yes, we could actually encourage renewable energy by relieving them from the Income Tax Assessment Act, for example'—which is a random example that they use for their own corporation but is not good enough for other corporations—'or relieving them from other provisions so as to allow them to be able to compete and do their business more effectively,' the government say, 'No, we're going to borrow or appropriate $10 billion of taxpayers' money and give it to people that are already assessed as not viable by the banks and other investors.' This is a highly, highly risky proposition—one that gives me grave concern. When you look around what all of the members of this place have had to say—I listened carefully to many of those in the debate—even the member for Longman, at the tender age of 22, understands that the government cannot operate this way. He remembers and has learnt that government cannot do this, and every time it has attempted to do this it ends in misery.
I guess this is a pitch from me to every Labor member of this place. We understand that you had to offer the Greens something to stay in government. We understand this was a $10 billion offer to the member for Melbourne and the Greens to keep your shabby government in power. But think about what will happen to this $10 billion of taxpayers' money down the track. Think about all of those people that you come in here and talk about every day. You say, 'We're handing money to families and other people. They need it. They're under pressure. Electricity prices are rising.' Think about what will happen to all of those people who have to pay off this debt for years and years to come—because there is no doubt that debt is going to be the only outcome of this bill.
When you look at some of the arguments that have come forward from the very few Labor members that have come into this place to speak, they say, 'Well, Britain is doing this. We should go ahead and do it. Britain is the model for this.' You look at their claim that the US is doing this. As I raised before, there are very many examples of failure in the renewable energy sector, including solar—the member for Cowper just outlined some—that explain exactly why it is an extremely risky proposition for us to be doing this as a government and with taxpayers' money.
The argument that this is somehow promoting clean energy over dirty energy is a complete and utter misnomer, demolished by the member for Dawson, who explained about the cost in materials, carbon emissions and time that comes with building these renewable energy projects. It is completely Orwellian to describe this as clean and that as dirty. We know that all human activity produces a change to the environment, and all human activity of production, whether it be renewable or fossil fuel based energy generation, produces emissions. We know that these particular wind turbines and other measures, which are often talked about in this House, are complete models of inefficiency in that regard. But there is not any suggestion or any real contention from the government that this will produce an environmental benefit. So, at the end of the day, we are going to be expending $10 billion of hard-earned production and taxpayers' money in a quest for clean energy that is really not going to produce any environmental benefit at the end of all of that.
So, again, why are we doing it? We know why we are doing it, but there comes a time in parliamentary systems and in the parliamentary world when you need to take a stand on a government putting $10 billion off the budget, basically to keep itself in office, to hand out to projects that are completely unviable, without any real thought for recovering the money. That really ought not to be allowed in our democratic system. We should have very tight rules and requirements, as we do on the budget, and scrutiny of government and parliamentary processes that prevent that from occurring.
The government say that they are venturing into the commercial world and are going to apply a commercial filter to this $10 billion, without paying any tax and without doing the things that they are supposed to be doing—
Mr Ewen Jones: Payroll tax.
Mr HAWKE: and without any of the different things, as is being pointed out to me here by the member for Herbert. I just believe this should not be allowed in this parliament. When you look at what the government have argued and the lack of willingness to come in here and put their case, I think we all know what is going on. This is actually a very serious issue. I know that with $37 billion NBNs and other things going around this is only in the top 10 of Labor waste expenditure disasters, but $10 billion is $10 billion, and I am going to stand here on behalf of my constituents and the people of Australia and definitely say no to this government going into any sort of commercial venture.