PARLIAMENT HOUSE, CANBERRA: There is a long list of terrible programs introduced by this appalling government: pink batts, green loans, $700 set-top boxes, cash for clunkers—I could go on. But the program which underpins and is proposed by this Clean Energy Finance Corporation Bill 2012 in front of us today would have to be right up near the very top of the worst of all programs that this government will be introducing. Because what this bill involves is an appropriation of $10 billion from taxpayers to put into a government fund to invest in speculative projects that the commercial sector would not invest in. Hence, I predict that billions of dollars will simply be wasted. It is the sheer magnitude of this that is astounding—$10 billion! If you lined up $100 notes end to end that would go for 20,000 kilometres—from here to the other side of the world. That is the size of this program that we are talking about, and it is all on the government’s credit card—or, should I say, the taxpayers’ credit card. It is astounding.
I want to raise three core arguments against this bill before us. Firstly, that this proposal, despite the sheer magnitude of it, comes with no mandate, no detailed policy underpinning, but simply is a grubby deal done with the Greens. Secondly, it is entirely funded by government debt at a time when we can least afford to be adding to the government’s debt. Thirdly, that this bill will have no impact on the renewable energy sector, as the member for Melbourne would like us to believe, because the renewable energy sector is governed by the Mandatory Renewable Energy Target and not by this. What is worse, we will see billions of dollars wasted.
If I can go to the first point. The reason that we are discussing this bill at all is because the Greens have forced it upon the government. The member for Melbourne just before me was very clear in this regard. In fact, they raised this concept the first time back in July 2007 and of course had the opportunity to implement this through its negotiations with the government when they were discussing the carbon tax proposal—that tax that the Prime Minister said that she would not introduce. As you might recall, Deputy Speaker Grierson, after they had negotiated the carbon tax deal out popped this green energy fund—$10 billion worth—and Christine Milne, the deputy chair of the multi-party task force which was investigating this, proudly proclaimed that it was her idea, a great initiative and therefore it will occur, because what the Greens call for, the Labor government will introduce.
There was no mandate for this. It is a $10-billion appropriation, but the government did not take it to the last election to reach a mandate. There was actually no policy paper underpinning this proposal. There is no discussion paper to get community views on what they think about this. In fact, the government would not even allow a House of Representatives standing committee to investigate this proposal before we are forced to debate it and vote on it. No, it was just a grubby deal with the Greens. It is as simple as that, with no policy underpinning at all.
But we cannot just hold the Greens responsible for this fund. Yes, they were the catalyst for it, but Labor agreed in part to this $10-billion fund. In part, because the philosophy underpinning the fund perfectly aligns with modern Labor’s philosophy of having the government at the centre of the economy. Kevin Rudd talked about this, as you will recall, Deputy Speaker Grierson, very loudly and clearly in his essays. Prime Minister Gillard, of course, supports this proposition, and we can see it in their other policies, most particularly the National Broadband Network policy. We are the only country in the world that is renationalising its telecommunications network. We see it in the carbon tax policies, which re-regulates the economy. We see it in the 16,000 regulations which the government is proposing. So this bill is actually very much in keeping with modern Labor philosophy of having government right in the heart of our economy. It was not the philosophy of the Hawke-Keating era, where they knew that the private sector had to flourish. But it is the philosophy of modern Labor and this bill is in keeping with this philosophy.
The other reason that the Labor government is supporting this, despite it being advocated by the Greens, is because they have realised the politics of it. The first tranche of money—the first $2 billion—will start to be paid out merely weeks before the next federal election is due. What a coincidence! So this government has seized upon this and sees that, ‘Geez, we can put this towards our marginal seats, all underneath the budget radar.’ That is the reason. So, yes, it started as a deal driven by the Greens but is very much aligned with the Labor Party philosophy and the whatever-it-takes group that now drives the Labor Party.
My second point is that this bill and the financing that underpins it is all done on borrowed money. This concept of this green energy fund managed by the government and investing in speculative projects that the commercial sector would not touch would be a bad enough concept in and of itself and under fantastic economic circumstances. But it is particularly bad when the government has so categorically blown out our government finances. Of course, we all know the numbers. They started with a $20-billion budget surplus; they started with $70 million in the bank. But for five years later we have had the four biggest budget deficits in Australian political history and now we have net debt of $145 billion. We have interest payments on that debt of $8 billion per annum and we have had to increase the debt ceiling to $300 billion.
This goes to the heart of this bill—it is about where it is going to be financed from. It is not getting financed from some magical budget surplus that the government would like to think they will have, but rather this is just getting added to the government debt—$145 billion in net debt already, and this just adds another $10 billion. I can see why the member for Throsby is very sensitive about this topic. He is supposed to be one of the smarter members on the other side of this chamber, so he does not want this discussed. But this is $10 billion.
This goes straight to the heart of how this is financed. The other side of this chamber will say, ‘This actually isn’t borrowed money because it doesn’t appear on the budget papers’. No, this is the accounting trickery that also goes to the heart of this particular proposal, because the government would like to proclaim this as being a commercial venture and therefore it does not have to appear on the budget papers. It does not have to appear on the underlying cash balance of the government finances. We all know from a few weeks ago, the Treasurer proudly proclaimed that the government was going to be delivering a $1.5 billion surplus in 2012-13, but if you just took this fund alone and you added it to next year’s budget it would rapidly turn that tiny budget surplus into a deficit. That is the accounting trickery that also underpins this particular proposal. Ten billion dollars, whether it is on the budget or off the budget, is still $10 billion of taxpayers’ cash that will be added to government debt. That is the bottom line. More debt means more upward pressure on interest rates and it means mortgaging future generations.
My final point is that this bill will not actually grow the renewable energy sector, but worse it will probably end up with literally billions of dollars wasted. It may seem incredible that there is a $10 billion fund that is going to invest in renewable energy projects and that it will not expand the renewable energy market in Australia. The reason this is the case is that the size of the renewable energy market in Australia is entirely driven by the mandatory renewable energy target, which yesterday, before this bill was introduced, was set at 20 per cent. Today and tomorrow it will still be 20 per cent. So all that $10 billion of investment into renewable energy will do, is simply replace projects that otherwise would have got up on a commercial basis, with more expensive renewable energy that will be funded through this particular fund. That is what will occur. It will not change the amount of renewable energy that we will actually consume in this country.
Most egregiously though, this bill will result in the waste of billions of dollars—that is my prediction. I say that for two simple reasons. First, by definition, and as outlined in this bill and the explanatory memorandum, the $10 billion will be invested into projects that the private sector would not invest in because there would not be a sufficient return and because they would be too speculative. This is where this $10 billion will be invested—into speculative projects. Second, governments have a terrible record at investing into projects generally. It is astounding that we have to repeat the arguments as to why this is the case. It is astounding that we have to repeat the arguments that it is better for the private sector rather than the government sector to invest in commercial projects. The reason is that the government sector (a) does not have the expertise and (b) does not have the same skin in the game that the commercial sector has. The commercial sector has the expertise, has the financing, has the skin in the game, can analyse projects properly and can take the risk.
This will be invested into projects that will be highly speculative and it will result in billions of dollars of taxpayers’ money simply wasted. You do not have to believe me, but you can look at some of the evidence abroad and you can look at some of the evidence back home when governments tried to invest in speculative projects. Abroad, of course, most recently we have had the Solyndra projects: the United States set up a similar type of fund and put $700 million into the Solyndra project and, of course, that has all disappeared—$700 million. We have also seen the Solar Trust of America project, which had a $2.1 billion loan guarantee from the US Department of Energy, again under a similar program to what the Labor government is proposing here, and that $2.1 billion just disappeared because it was in a speculative investment which the private sector, quite rightly, did not want to touch. And of course, for the Victorians in this parliament or in the gallery, we only need to look back a decade or two to when Joan Kirner and John Cain were running our state and we had the Victorian Economic Development Corporation, which was investing in all sorts of speculative commercial projects, which quite rightly should not have been invested in with taxpayers’ money. That almost bankrupted the state.
We thought that we had moved on from this style of economics from the Labor Party, but clearly we have not. I say in conclusion that if the member for Throsby, who will be speaking next, and the other members on the other side of this House honestly believe that this is such a great idea—to appropriate taxpayers’ money to invest in speculative projects—then I suggest this weekend, before they vote on this bill, they go out to their community and speak to constituents and say, ‘We’re going to put $1,250 against your household’s credit card to invest in speculative projects’ and see what they will have to say. (Time expired)