The Coalition government says it will seek more cuts to clean energy programs, and may even slash prime minister Malcolm Turnbull’s signature Clean Energy Innovation Fund to make up for the compromise it was forced to strike on the Australian Renewable Energy Agency.
Within hours of announcing it would strip $500 million of funds from ARENA in a deal struck with Labor – rather than the $1.3 billion it originally sought – finance minister Mathias Cormann and innovation minister Greg Hunt were flagging cuts to the $1 billion CEIF, unveiled by Turnbull in a blaze of publicity in March.
Cormann told Sky News: “Labor has asked for us to restore $800m of that for grants funding. So we will do that, but the capital available to the Clean Energy Innovation Fund will be reduced accordingly.”
Hunt followed up with in a separate interview on Sky News: “The net result here is that there’ll be some balancing between the Clean Energy Innovation Fund, which was debt and equity, in other words, loans and investment by the Commonwealth.”
The comments prompted Greens climate change spokesman Adam Bandt to say that Labor had “been played for fools,” in agreeing to cut half a billion dollars from ARENA. “Far from saving clean energy, Labor just did a dirty deal with the Liberals to gut renewables,” he said.
Cormann was forced to row back on his reflex response later, presumably when it was pointed out to him that the Coalition could not simply dip its hand into the CEIF kitty, and stripping money from Turnbull’s pet innovation project might not be such a good look. Nor was it part of the deal with Labor, as he had suggested.
For avoidance of any doubt, the agreement with Labor on Omnibus Savings Bill has no impact on capital for CEFC. It remains at $10bn. #auspol
— Mathias Cormann (@MathiasCormann) September 13, 2016
It is important to note here that Cormann was the Coalition’s chief negotiator with Labor on the detail of the agreement, yet his comments to parliament and to Sky News were wrong on several counts.
The original ARENA cuts were not – as he suggested – to be the source of funds for the CEIF, which will make equity investment and offer cheap finance rather than make grants. This money was simply appropriated from the $10 billion set aside for the Clean Energy Finance Corporation.
And the CEIF could not be easily stripped of funds. That would require another bill to go through parliament, and would be subject to another deal with Labor.
Environment and energy minister Josh Frydenberg on Wednesday morning said the $10 billion Clean Energy Finance Corporation funding, which includes the CEIF, will stand. At least for the moment.
The key for ARENA and its ongoing activities will be when the $500 million take place, if it is pushed to the outer years, it won’t make much difference, but if it impacts coming years, then its activities could be significantly curtailed.
Apart from revealing a staggering ignorance about his own portfolio and the structure of the government’s finance, Cormann’s reflex comments – along with Hunt’s – provide an insight into exactly how the Coalition views clean energy initiatives and spending. The war is not over yet.