Why use tax-payers' money to pay for something when you can get it for free?
"Green fund in the black, says Jillian Broadbent
PUBLISHED: 27 Nov 2013 00:29:00 | UPDATED: 27 Nov 2013 10:04:39
Phillip Coorey Chief political correspondent
Clean Energy Finance Corporation chairman Jillian Broadbent has urged the Abbott government to spare her organisation, saying it is making money for taxpayers and, if allowed to continue, will account for 50 per cent of Australia’s 2020 emissions reduction target at no cost.
Ms Broadbent, a former Reserve Bank board member, and CEFC chief executive Oliver Yates told a Senate inquiry into the abolition of the carbon tax on Tuesday that the CEFC, a $10 billion loan facility, was exceeding all expectations.
It was “delivering substantial abatement while making a return to the taxpayer’’. Its abolition would cost taxpayers up to $200 million a year in lost revenue.
“It will cost the taxpayer more to shut down the CEFC than it will save,’’ Ms Broadbent said.
Asked why the CEFC was still being slated for abolition, she said: “you’ll have to ask the government that’’.
Her testimony and that of Mr Yates was at odds with the Abbott government’s predictions that the CEFC, which it derided as the “Bob Brown Bank”, would be an expensive failure on the basis it would make bad loans and cost the budget interest on the its contribution to debt.
It is set to be abolished along with the carbon tax and the government has budgeted a saving of $760 million over four years from its demise. But because the CEFC is making money, the combined blow to the budget from its abolition could be as high as $1.5 billion.
The CEFC was set up as part of Labor’s carbon tax. To be funded with $10 billion in carbon tax revenue, its role is to provide loans for clean energy technology aimed at increasing energy efficiency for business and industry, reducing carbon emissions and developing renewable energy.
Ms Broadbent and Mr Yates told the inquiry that so far, the CEFC had lent $536 million which, in turn has been matched by more than $1.5 billion in private investment for a combined $2.2 billion invested in projects.
These projects already account for an annual reduction in carbon emissions of 3.9 million tonnes and the net benefit to taxpayers is $2.40 a tonne. It was delivering abatement at a negative cost, Mr Yates said and if the CEFC were allowed to continue,it would contribute significantly to the greenhouse gas reduction target. “That is probably the lowest cost action you are going to get,’’ he said.
South Australian Liberal senator Anne Ruston asked the officials why the CEFC’s role could not be replicated by a private bank with no taxpayer exposure.
Ms Broadbent said: “I would have asked myself the same question before I embarked on this journey’.’ She said it soon became apparent having a dedicated loan facility focused on clean energy technology and run by people with commercial banking expertise had led to a much larger than expected response from the energy sector.
“The commercial approach taken by the CEFC has meant that the presumed negatives of such a fund have not been realised,’’ she said.
Not one of the CEFC’s investments had fallen into default.
Mr Yates said there were “numerous transactions’’ which would not have happened without the CEFC because the banks would have considered them too small, too novel, too complex or just shied away because they had not been tried in Australia before.
Ms Broadbent said the CEFC could operate in conjunction with the Coalition’s proposed direct action policy but the government is unlikely to countenance this given it is abolishing the funding mechanism, the carbon tax.
Direct action will provide grants from the federal budget to pay polluters to reduce emissions. Mr Yates said loans such as those provided by the CEFC were more effective because debt created discipline whereas with grants, people were “less likely to be cautious’’.
Loans also provided a monetary return to taxpayers. The $2.40 the CEFC has made per tonne of carbon came from the spread between the government cost of funding and the rates at which the money was lent. The CEFC could issue concessional loans but these were capped at $300 million a year. Out of the $536 million invested so far, $40 million had been lent at a commissional rate."
