Clean Energy Finance Corporation (Abolition) Bill 2013
A couple of months ago the Clean Energy Finance Corporation brought down its first annual report. Normally, as you know, Mr Acting Deputy President, when we work in the Senate, particularly through the Senate estimates processes, we actually get hold of such annual reports and we look through them and we see what the background to them is and we read the contents. I think this report is the first time I have read an annual report with a proviso. The report was introduced by the chair, with that statement followed up by various members of the board and it welcomed the opportunity to give the annual report and it talked about the background and it clearly stated the CEFC's mission:
Our mission is 'to accelerate Australia's transformation towards a more competitive economy in a carbon constrained world, by acting as a catalyst to increase private sector investment in emissions reduction'.
The Board- as stated - has pursued this mission with the goal of minimising the cost to Government.
The chair went on to talk about the structure of the report, how they were going to set out the process, their background and their goals and then, at the back, they had the whole list of their financial statements. But, unlike a lot of the other annual reports I was reading, this one actually had the proviso in it. At the end of the introductory chair's report, Ms Broadbent states:
At the time of writing, the future of the CEFC is in doubt, with the Australian Government preparing legislation for the repeal of the CEFC Act, making this possibly my first and last report as Chair.
It is fairly unusual when you actually have something being brought down where all the people involved in putting forward a report about their actions and talking about their financial processes and talking about the areas that they have funded-also with a whole section of the report talking about future plans and building on the work that they have done in their initial year-is actually overshadowed by a statement that says they know, and they know that their audience knows and they know that their shareholding ministers know, that immediately there will be a debate in this place which is going to talk about the fact that they will no longer be required. It gives a special poignancy to the whole process. But, given that, I thought it was important that we saw what the work of the CEFC had done in that 12 months. It talked about the fact the body itself had come out of an expert review panel which had looked at the merits of a CEFC model. This model is not peculiar to Australia and it was not out of some thought bubble where someone said, 'Hey, this might be a good idea.' There was actually an acknowledgement of the idea of a professional financing body that would work to operate to educate the community and investors and organisations on the options that they could have to look at effective financing for alternative energies in our country as well as to provide, as clearly documented in the annual report, professional financing services. This model is not peculiar to Australia: one of the core issues is the fact that there are international networks that talk about this kind of process and they have a proven record.
The CEFC model in Australia was looking at how it could be an effective tool to develop the sector, its financing skills and technologies, and thus enhancing Australia's industry preparedness for a lower-carbon world. And as Senator Gallagher has just pointed out, the whole impetus for this organisation was a commitment by the Australian government and also by the Australian community to share in a low-carbon world. Again, nothing that is peculiar to Australia. In fact what we have, through this debate, is an acknowledgement that we are part of something much larger than decisions that are impacting on just Australia. We are part of the desperate need for an international response so that we, together, can work at coming up with ways to have a low carbon world. All of the debate, all of the energy-good and bad energy-in this debate should be focused on that; that is, how best we can achieve a low-carbon world.
Amid that, the role of the CEFC was clearly defined. It was there to ensure there would be appropriate financing to allow businesses, people in the community and industries-all of whom needed to share in the commitment to a low-carbon way of operating-to have effective options to finance their businesses. Senators would remember that throughout the series of debates we had in this place, one of the clear concerns raised by industry and by community members generally was at what cost would people have to make the decisions to make change. What we all knew was that we had to make change. The reason for having the quite painful debates that we have had, which have been damaging-people have engaged in these debates in a very personal way and there has been a lot of worry, a lot of concern and a lot of passion. But what all of that focused on was the fact that we needed to change.
We have heard in part of the debate that has been going on over the past couple of days on the CEFC, which is really one element of the wider debate, the acceptance that the arguments and the debates about science have been had. That is real progress because we all remember that, in previous debates in this place when we were talking about why we needed to make a change in Australia, the science was actually in dispute-and not just in this place, but also in the wider community. I know, having attended many community meetings, there are a number of people in our communities who genuinely reject the science, who create their own science to say there is no need for any change. But one of the positive aspects of the past couple of days is that across this chamber, no matter what part of the debate it was, people have agreed that there is a need to look at having a low-carbon world. The thing that is at doubt is how we do it and who is going to be responsible for the pain that it causes to make the change.
When we moved through the range of legislation that came up previously to put a cost on carbon, and then working through the range of things that had to happen in our community, one of the immediate responses was to ensure that there would be a professional finance knowledge in the whole discussion. This meant we would be able to have the appropriate education for all levels: for people who are in the investment market, for people in finance and for people who are looking at developing their own businesses and developing their own community responses. One of the needs was to have this kind of professional model, which operated not in opposition but in cooperation with existing finance organisations.
Ms Broadbent, in her report that came out only quite recently, was at pains to point out that this was not an organisation that was there to steal or dominate the market. One of the core aspects, which is part of the international model of energy finance, was to see that they worked alongside and in cooperation with existing finance organisations. The mark of their success, which has been brought out in a number of the contributions we have heard in this debate as well as in the annual report, is that there has been that acceptance, that there is the ability for people to work effectively together to come up with cooperative ways of funding.
One of the things I most enjoy about any of these debates is having the case studies put before us, where we move beyond the theory, we move beyond the rhetoric and we see how the goals are achieved on the ground. Remember the mission was:
Accelerate Australia's transformation towards a more competitive economy in a carbon constrained world…
I have picked just two of the case studies that were put in the CEFC annual report, and they are two case studies that I particularly like because they relate to areas that I know. The first one was an area in retail. Again, senators would remember that when we went through the debates about whether we needed to have a carbon reduced or carbon constrained world, one of the areas that was put forward as where there could be great problems was in the area of retail. We heard information that already there were great pressures in the retail environment: competition, the impact of the Australian dollar-all of those things. I was particularly interested to see this kind of work-using the CEFC, working with other finances-and how that could be marketed effectively in the retail environment, what kinds of tasks could be put in place and what the results were.
In the annual report, on page 49, it states:
Retailers face competitive market pressures due to changes to consumer habits and online commerce, as well as rising energy costs.
The example that is given is:
The CEFC is working with co-finance partners and strategic alliance partners to encourage retailers to access the benefits of clean technology sooner and has found that bundled expertise and finance is proving attractive to small business owners.
That meets the goal of encouraging people in industry to seek finance to make changes in their workplace. The example they put forward is the IGA at Milton. Mr Acting Deputy President Furner, I know both you and I have shopped there at different times. I must go back. I have to admit that I have not checked out their lighting system, but now I will. Milton is in Brisbane's inner west and is an interesting suburb because it is close to a range of universities where people are moving forward.
The IGA at Milton used Origin on-bill finance for a $28,000 lighting upgrade. They replaced old fluorescents with LED lighting in a project that was cash flow positive from day one and reduced the store's annual electricity bill by more than 22 per cent. That is what the whole focus of the legislation was. This small but strong business used the CEFC model and expertise and worked with Origin on-bill finance. It took out finance for an important but not overwhelming amount of money-$28,000 is a big investment for a small business. It invested in changing the lighting system and moved to a more environmentally-friendly lighting system. It met their needs immediately-and also people like me will go in to see how it works, whilst hopefully buying something from the store-and in the future they will have an annual electricity bill reduction of more than 22 per cent. So that fits the model perfectly.
So that is a retail investor. The other one I have to include is Darling Downs Fresh Eggs. This is one I particularly enjoy. We all know of the high energy costs in the poultry industry. Only today upstairs we had the people who do special innovation and study into areas of change. They have a stream that looks at poultry. I was discussing with them the issues in poultry farming and development in our country. Darling Downs Fresh Eggs is based at Pittsworth, which is quite close to where I come from. It is also an area that is known for the development of agricultural businesses. I know this is particularly important. You will remember when debating changing to a carbon constrained future how we were strongly lectured by representatives of the National Party about the special imposts on and importance of the agricultural sector that must be noted and understood.
Here we have a local agricultural business at Pittsworth that has significant investment in what it was doing. In this case the CEFC and the National Australia Bank are co-financing an innovative waste to energy project. The $2.86 million project cost is met with CEFC finance of $950,000, NAB finance for nearly half of the project costs and an Australian government grant of $333,823 through the Clean Technology Food and Foundries Investment Program. That is another incredibly important element of the package of information and services that was wrapped around the series of bills that were put together to ensure that we had a community that was moving towards a carbon constrained future.
That is a huge investment for Darling Downs Fresh Eggs. What they have done is identify an immediate need in their business-and it is a significant business. Their aim is to achieve a cost saving of more than $250,000 a year and eliminate about half of the labour and transport costs associated with the disposal of poultry farm waste products. That will also reduce grid electricity usage by 60 per cent in the first year and will produce 100 per cent of the company's energy requirements in non-peak periods. Darling Downs Fresh Eggs, one country business, will reduce carbon emissions of up to 1,000 tonnes per annum and reduce methane emissions by over 6,000 tonnes of CO2 a year.
That is the reality in the business world. We have debates in this place that are important, because we need to set up the policy parameters effectively, but the reality is in these two local business cases. They have been able to use the CEFC model and work with that organisation to find appropriate financing to personally develop energy efficient programs in their own businesses to look at exactly what we are all after-clean energy.
This model is effective. It is not competition to existing financing models. It provides innovation and hope for people who have accepted the need to reduce carbon, which we have debated here for so long. The CEFC model makes that happen and allows businesses and organisations to develop their own plans-not have to rely on someone from outside telling them what they must do but to be able to respond to their own economic needs to be successful. There are not just one-off savings. In both of those cases there will be future savings that will make their businesses more effective.
Ms Broadbent, signing off on her first-and, if the government succeeds with this legislation, only-report as Chair of the CEFC, said:
The CEFC has been an effective catalyst for the public and private sector to overcome current market failures in financing carbon reducing investment at scale.
She states that she and her board are proud of the work they have done. They have a future plan which they have incorporated in their annual report about what more they can do to work both locally and internationally to develop effective models of financing so that people will not be fearful of the change. They will acknowledge that there needs to be a change but they will not be fearful. They will know that there are people and organisations available to provide support. They will be able to be strong economically whilst being strong environmentally, and that is the aim of the work that so many people have been involved in over the last few years.
The commercial approach of the CEFC means that we assess investments on a case-by-case basis, looking to provide funds on generous terms for a project to proceed-that is, as close to market terms as possible-not forcing one model to fit all but ensuring that people will be able to work at their own pace and develop their own knowledge and confidence while seeing things that work.
A core path of moving to a carbon constrained world is to ensure that there is an effective business model and effective financing available. The CEFC in their annual report can prove that they have a basis on which to work for the future. To slice this opportunity from the businesses and communities of Australia would be to show little commitment to what we all know we must have, which is a carbon restrained world.
