Abbott government thumbs its nose at ARENA board

The Abbott government has moved to re-absorb the Australian Renewable Energy Agency, appointing another government bureaucrat to the board despite a Senate motion that the $3 billion institution should remain independent.

The Australian government in the May budget broke an election promise and said it would repeal the ARENA Act, reabsorb the agency into its bureaucracy and deprive it of new funding.

However, its ability to do that has been questioned after Ricky Muir and the Palmer United Party (sounds like a band) said they would reject the legislation. The Greens and Labor want to keep ARENA too.

Despite this, and a motion of support for ARENA passed by the Senate this week, the government has allowed the contracts of all four directors with commercial experience to expire , leaving only Industry department secretary Glenys Beauchamp as the sole board member as of yesterday.

However, according to the Australian government boards website, another bureaucrat, Martin Hoffman, the deputy secretary of the department of Industry, has also been appointed to the board.

The office of Industry minister Ian Macfarlane refused to confirm the appointment until Renewconomy pointed out it was already on the government boards website.

His office then sent this statement, indicating that it was proceeding with winding up ARENA, despite the Senate vote:

“The Board consists of the Secretary of the Department of Industry, Glenys Beauchamp, in her statutory position, and Deputy Secretary of the Department of Industry Martin Hoffman will join the Board for a period of one year as part of the transition process.

“The Government is continuing to make transitional arrangements to ensure continuity for ARENA processes and assessments following the introduction of the ARENA Repeal Bill.”

This leaves ARENA with no chairman and no director that encompasses the qualities that are defined under the ARENA Act (see below) – namely that they have knowledge or experience in renewable energy, commercialisation and business investment. The current appointees may qualify on “corporate governance”.

RenewEconomy asked Macfarlane’s office if directors who met those qualifications would be appointed to the board to comply with the act. It did not receive a response to that question.

Greens moved a Senate motion this week expressing its wish that ARENA will continue and that a new board should be appointed. The motion passed without division, meaning that not even the Coalition opposed that one.

The idea that ARENA should be managed solely by departmental operatives has raised fears that some of the bad decisions made in the past could be repeated.

This week the US firm Ocean Power Technologies confirmed that its technology was not commercial and it could not go ahead with its 19MW, $232 million wave energy project dubbed “the world’s biggest.”

As we reported on Wednesday, no-one outside the department that made the decision ever seriously thought that the project was a “goer”, given OPT’s wretched reputation at delivering on projects. It was one of a series of decision to allocate large sums of government money to projects that had no hope of delivery.

It should be noted that the government did not lose the $66.5 million assigned, because it was never spent, apart from $5.5 million that OPT has promised to return. That is the case with $200 million of other funds that were assigned to large geothermal and solar projects that were and will likely not be built.

That is one of the reasons that Labor and the Greens insisted that ARENA be made an independent body with an independent and commercially qualified board. The organisation has taken a much more professional and astute approach to funding since that time, with more than $1 billion allocated to 180 projects.

The use of government bureaucrats to assess commercial proposals, however, will be the focus of the government’s emissions reduction fund, where businesses will file proposals to get government funding to reduce emissions. The industry anticipates another failure.

Important Update: Several hours after publication of this article, the government informed ARENA and announced that Bourne and Smith would be re-appointed for another year. It said this was still a “transitional” arrangement as it continued to seek repeal of the agency.