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senate vote 2016-09-15#12

Edited by mackay

on 2016-10-01 00:39:09

Title

  • Bills — Budget Savings (Omnibus) Bill 2016; in Committee
  • Budget Savings (Omnibus) Bill 2016 - in Committee - ARENA

Description

  • <p class="speaker">Derryn Hinch</p>
  • <p>by leave&#8212;I move Derryn Hinch's Justice Party amendments (1) and (2) on sheet 7926 together:</p>
  • <p class="italic">(1) Page 2, clause 2 (table item 6), omit "Schedules 5 and 6", substitute "Schedule 6".</p>
  • The majority voted in favour of a [motion](http://www.openaustralia.org.au/senate/?gid=2016-09-15.282.1) to support [schedule 5](http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1617a/17bd007), which:
  • > *reduce[s] funding to the [Australian Renewable Energy Agency](https://en.wikipedia.org/wiki/Australian_Renewable_Energy_Agency), giving effect to the Government’s policy to discontinue providing grants for renewable energy research and development in favour of a limited new loans and equity investment scheme known as the [Clean Energy Innovation Fund](http://www.abc.net.au/news/2016-03-23/government-reverses-decision-to-dump-renewable-energy-agencies/7269568)*
  • This motion was put after Senator [Derryn Hinch](https://theyvoteforyou.org.au/people/senate/victoria/derryn_hinch) introduced a [motion](http://www.openaustralia.org.au/senate/?gid=2016-09-15.206.2) to oppose schedule 5.
  • <p class="italic"> <i>[Australian Renewable Energy Agency</i> <i>'</i> <i>s finances]</i></p>
  • <p class="italic">(2) Schedule 5, page 18 (lines 1 to 7), to be opposed.</p>
  • <p class="italic"> <i>[Australian Renewable Energy Agency</i> <i>'</i> <i>s finances]</i></p>
  • <p>I am moving these amendments to try to save ARENA in its entirety. I believe that what the government and the Labor Party opposition have decided to do has the potential to destroy ARENA in the future.</p>
  • <p>This afternoon, we had Senator Sinodinos boasting that the government was not a one-night stand. Well, let him and the government prove that it is not a one-night stand. Years ago they courted ARENA, they wooed ARENA, they formed ARENA, they got engaged to ARENA and now they are trying not to marry ARENA&#8212;or, if they do, to make it a very short relationship. Leave it alone. You boast about all the things you can do. You boast about research and development; you say how good it is going to be. You talk about the jobs it can save and you talk about the things that it is going to do for everybody. You have left some of the money in there, and we know the fix is in and that you are going to ignore us.</p>
  • <p>What you could do, if you were really sincere about it, is preserve jobs in the area of renewables and in research and development. You talk about those young graduate students who have great ideas about new products and the new things they can do&#8212;the way they can save the world&#8212;and now you are trying to put the handcuffs on them. All I am asking you to do is think about it. Leave ARENA alone. In areas like the automotive industry in Victoria, and especially in South Australia&#8212;I know Senator Xenophon agrees with this&#8212;in the next couple of years thousands of people are going to be out of work, including the subcontractors. If you believe in ARENA and in the things they can do, you could retrain those people. Thousands of people could have new jobs in areas we do not even know about yet. So all I am saying to you tonight&#8212;and it is getting late&#8212;is leave ARENA alone.</p>
  • <p class="speaker">Mathias Cormann</p>
  • <p>The government does not support these amendments. At the request of the Labor Party, and in the context of the agreement on this bill, the government has agreed to restore $800 million worth of funding for the purpose of providing direct grants to ARENA. This $800 million is funded through savings in other parts of the bill, in particular, the changes to family tax benefit A supplement arrangements.</p>
  • <p>For the benefit of the chamber and to deal with some of the issues that the Greens have also raised during the debate, separately and off budget, the Clean Energy Finance Corporation and the Clean Energy Innovation Fund receive a capital allocation of $10 billion. The overall allocation is unaffected by the agreement that has been reached on this bill, and, unlike ARENA grants, these investments need to be commercially viable. So the agreement between the opposition and the government on the omnibus savings bill has no impact on the overall capital allocation for the Clean Energy Finance Corporation and the Clean Energy Innovation Fund, which remains unchanged at $10 billion. In relation to the decision to restore $800 million in funding for ARENA, and to avoid an unintended increase in public resources available to ARENA beyond this $800 million allocation, a commensurate adjustment has been made to the Clean Energy Innovation Fund, but without impacting the overall capital allocation to both the CEFC and the CIF.</p>
  • <p class="speaker">Katy Gallagher</p>
  • <p>While Labor is sympathetic to the intention of Senator Hinch's amendments, we are not able to support them on this occasion. We certainly welcome both Senator Hinch's interest in safeguarding ARENA and his enthusiasm for contributing to how this parliament can achieve real progress in tackling climate change while further developing our domestic renewable sector. We look forward to working constructively with you, Senator Hinch, and all willing crossbench and government senators in the future on this vitally important issue.</p>
  • <p>Our approach to budget savings is one guided by fairness but also an acute appreciation of the important work that programs like ARENA do. This agreement, we believe, represents that balance in action. We can achieve a significant budget saving while we maintain ARENA as a pillar of our support for a growing renewable energy industry. Labor is understandably protective of ARENA. Its establishment is a proud achievement of our previous term in government, and we will always support it. We have, over the course of the Abbott-Turnbull government, fought against its abolition, and now, through this bill, contrary to the initial intentions of this government, we have managed to obtain ongoing certainty of funding and purpose.</p>
  • <p>This bill secures additional funding of $800 million for ARENA over five years. This is in addition to the more than 200 existing projects that ARENA is already auspicing and in addition to the 12 large PV solar projects that were announced by ARENA last week but are not yet contracted. ARENA has stated that this sum&#8212;$800 million over five years&#8212;will provide it with a budget that allows it to continue a strong work program into the future. This agreement places ARENA's funding on a sound footing. Importantly, it provides researchers, entrepreneurs and industry with the certainty they need to continue turning renewable energy opportunities into new technologies, new projects and new jobs.</p>
  • <p>As part of the agreement underlying this bill, the government has also agreed to sit down with the opposition to ensure that our priorities are satisfied. These priorities are, first of all, to ensure that ARENA's budget preserves Australia's world-class leading research and innovation capability, particularly seen in our universities and CSIRO, and also to ensure that there is a budget for demonstrational, proof-of-concept stage developments in the industry.</p>
  • <p>In addition to securing our research capability, the agreement between the opposition and the government will also allow ARENA to support demonstration and proof-of-concept stage developments in the industry that ensure that the findings by those universities and by CSIRO scientists are able to be shown to be commercially viable and then able to be presented to lending and equity investors and become a reality across the Australian landscape. It is important to point out that there is no change and no reduction at all to the $10 billion Clean Energy Finance Corporation fund that is overseen by the expert board at the CEFC.</p>
  • <p>The final matter I quickly want to allude to is: there was also a commitment made by the government, as part of this agreement, to sit down with the opposition and explore opportunities for bipartisan agreement around policies that would accelerate the transition for Australia to a modern clean energy system and to ensure that this transition is, to use the words of the Paris agreement, a just transition for workers and impacted communities. So, whilst the opposition will not be supporting this amendment, I thank Senator Hinch for his concern and for the contribution. We do welcome the considered contributions to this vital policy area, and I am sure we will have cause and opportunity to work together on this issue going forward.</p>
  • <p class="speaker">Nick Xenophon</p>
  • <p>I can indicate that I and my colleagues Senators Griff and Kakoschke-Moore will be supporting this amendment. Even though the cut is still happening&#8212;we acknowledge that there will still be a fund but cut significantly&#8212;we are still very concerned that the solar thermal plant at Port Augusta, essential for that community, in one of the sunniest places in the world, ought to still proceed. I hope against hope there will still be enough funds for that solar thermal baseload power plant to continue.</p>
  • <p>I have a question of the minister in respect of this, and it follows from the second reading amendment that I moved that was defeated recently. Can the minister advise whether there are any plans on the part of the government to allow&#8212;by regulatory amendment, for instance&#8212;ARENA to make investments or to have a grant convert, in the event that it is a highly successful project, to be either repaid or get an equity in it? Is that something that has been discussed with the board of ARENA with a view to replenishing the fund in the event that there has an investment in a technology that takes off commercially?</p>
  • <p class="speaker">Mathias Cormann</p>
  • <p>I thank Senator Xenophon for that question. The short answer in relation to ARENA on its own is no, but of course that is precisely why the government, within the Clean Energy Finance Corporation, set up the Clean Energy Innovation Fund, which is jointly managed by the CEFC and ARENA. That is a fund that provides debt and equity financing for projects that need to be commercially viable. The difference between ARENA and CEFC&#8212;and that is the way it was set up by the previous government, not by us&#8212;is that ARENA provides grants, whereas the CEFC is the vehicle which provides debt and equity financing. As part of this agreement between the government and the opposition, we have restored $800 million out of the initial $1.26 billion save to ARENA for the purposes of ARENA providing direct grants, consistent with their modus operandi up until this point. We also have guaranteed that the overall capital allocation to the CEFC will remain at $10 billion. The way this is funded is by other savings in the bill, as I have indicated to the chamber.</p>
  • <p class="speaker">Larissa Waters</p>
  • <p>Minister, just to clarify: you have confirmed that the CEFC's budget of $10 billion will not be altered, but am I correct in that you have also confirmed that you will move $800 million out of the $1 billion Clean Energy Investment Fund back into the Clean Energy Finance Corporation and that you have somehow linked that with the so-called savings from ARENA? Can you please clarify that you are in fact cutting $800 million out of Prime Minister Turnbull's signature pre-election clean energy announcement?</p>
  • <p class="speaker">Mathias Cormann</p>
  • <p>I certainly have not indicated that a saving to fund the $800 million contribution to ARENA would come from what you have just described. I actually answered that in my initial contribution in response to Senator Hinch's amendments. The funding for the restoration of $800 million to ARENA for ARENA grants comes from savings in other parts of the bill, principally the changes to family tax benefit supplement arrangements. However, given the decision to restore $800 million in funding for ARENA, for ARENA grants, and to avoid an unintended increase in overall public resources available to ARENA beyond that $800 million restoration of grants funding for ARENA, a commensurate adjustment in the Clean Energy Innovation Fund, which is a capital fund jointly managed by CEFC and ARENA to provide debt and equity funding, is necessary. However, for the avoidance of any doubt, the agreement between the government and the opposition has no impact on the overall capital allocation for the Clean Energy Innovation Fund and the CEFC, which remains at $10 billion as before.</p>
  • <p class="speaker">Larissa Waters</p>
  • <p>So, Minister, am I correct in interpreting that you are cutting money out of CEIF and putting it back in CEFC and you claim that that was not part of the Labor Party deal? Did you raise this with the Labor Party before you reached an agreement with them? Are they aware that this so-called savings of $800 million from ARENA will now sacrifice $800 million from the CEIF?</p>
  • <p class="speaker">Mathias Cormann</p>
  • <p>Your characterisation is wrong.</p>
  • <p class="italic">Senator Waters interjecting&#8212;</p>
  • <p>If I may answer the question, no aspect of the agreement between the government and the opposition in relation to the omnibus savings bill has got any impact whatsoever on the overall capital allocation to CEFC and CEIF. You are mixing up off-budget-balance-sheet equity and debt financing instruments with actual cash grants which hit the underlying cash balance. You are mixing these up. If we were to do what the Greens are suggesting, instead of restoring $800 million to ARENA we would actually be making available to ARENA about $1.6 billion worth of resources for the purposes of providing grants as well as debt and equity financing. But that was never the intention of the arrangement reached between the government and the opposition. The intention, and in good faith what we have agreed to do, at the request of the Labor Party, is to restore $800 million worth of funding for the purpose of ARENA grants, which was previously supposed to be saved. But, obviously, when it comes to the capital allocation of the jointly administered capital fund between the CEFC and ARENA, within the CEFC, well, yes: the capital allocation for CEFC increases does take into account adjustment to the jointly administered CEIF.</p>
  • <p class="speaker">Larissa Waters</p>
  • <p>So how much will be left in the CEIF?</p>
  • <p class="speaker">Mathias Cormann</p>
  • <p>The overall allocation of the Clean Energy Finance Corporation and the CEIF will be&#8212;</p>
  • <p class="speaker">Honourable Senators</p>
  • <p>Honourable senators interjecting&#8212;</p>
  • <p class="speaker">Mathias Cormann</p>
  • <p>If I may answer&#8212;</p>
  • <p>Honourable senators interjecting&#8212;</p>
  • <p>There is nothing tricky about it whatsoever&#8212;I take that interjection. The overall allocation&#8212;</p>
  • <p>Honourable senators interjecting&#8212;</p>
  • <p>If I may answer, the overall allocation remains, at $10 billion, unchanged, but obviously the funds that are available for ARENA to co-administer are now adjusted accordingly, given that there is an $800 million increase in terms of grants funding. What that means is that the capital funding for debt and equity financing for renewables remains precisely as it was. But we are not proposing to double the contribution to ARENA to $1.6 billion; that is not something that we are proposing to do.</p>
  • <p class="speaker">Richard Di Natale</p>
  • <p>Just following up on that question: it was a very straightforward question, Minister. The Clean Energy Innovation Fund, which was the centrepiece of the Prime Minister's announcement leading into the federal election, was funded to the tune of $1 billion&#8212;the Clean Energy Innovation Fund. How much will now be available within that fund?</p>
  • <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>