The incoming Liberal National Party coalition government has praised the board of the $10 billion Clean Energy Finance Corporation for being “serious, professional people”, but has promised there will be no new loans made to what it calls a “giant green hedge fund.“
The Coalition has long promised to dismantle the CEFC, which has already made around $500 million of commitments to a variety of projects, including wind energy, solar and energy efficiency.
However, at one stage during the election campaign, Tony Abbott said the CEFC would be stopped from making “non commercial” loans. Given that the Coalition requires the support of a hostile Senate to dismantle the CEFC, there was some hope that could signal that a compromise position that could be pursued in negotiations. As we wrote last week, as the legislation now stands, it is more of a question of “how” the CEFC will invest its money, not “if”.
But climate spokesman Greg Hunt on Tuesday signalled that the Coalition would stand firm on its promise – presuming of course that it can get legislation through the Senate. Hunt insisted that no new loans would be made by the CEFC, although it is hard to work out whether the criticism of the CEFC is focused on making “hedge fund” type loans or joining with other banks – such as the NAB and the Commonwealth Bank – in making finance available on commercial terms.
Here is the full exchange with radio 2GB’s Ross Greenwood (provided by Hunt’s office): The first bit is in response to Greenwood’s questions about the actions and quality of the CEFC board.
Yeah, very serious, very professional people and to (chair Jillian) Broadbent’s deep and underlying credit we wrote at the commencement of the election campaign requesting that they cease and desist from any loans during what’s called the caretaker period. They responded saying they would adopt that position and they look forward to working with an incoming Government on its priorities.
There was no games, they were very professional and I think that’s a very heartening response. We will work with the board, they know what the mandate of the new Government is, they know what the intention of the new Government is. I don’t anticipate there will be any difficulties.
So in other words, just for spelling it out for people, the intention is to close it down?
Absolutely, we’re not going to be proceeding with new loans and we’re not going to be maintaining the organisation for the simple reason, it was going to borrow $10 billion of taxpayers money to invest in speculative ventures which the taxpayer would have to fund and which the private sector would not fund.
In the end it was a giant green hedge fund. Not the problem of the board, they didn’t set it up, it is the problem expressly of the Gillard and Rudd Governments. Their baby and it was in the tradition of pink batts and green loans and cash for clunkers.
So for example I see on their site, anybody can go and have a look at this, there’s an egg producer that’s turning chicken manure into energy, that was one of them. They thought that they could do that.
There’s a beef producer cutting their costs using solar energy, there was a for example an Adelaide lighting upgrade using on bill finance whatever that means and an ice cream maker saves on energy costs.
The question here was if those ideas were so good in terms of saving costs then why wouldn’t they go and borrow the money from their bank at commercial rates?
Exactly and perhaps the most significant one is there was a multi-million dollar figure which was borrowed by the taxpayer without the taxpayer having a say advanced to a New Zealand state owned enterprise to finance a wind farm which had already been built in Victoria.
The whole thing was meant to create new amounts of renewable energy, well that was for a wind farm that had already been built and it doesn’t matter where you stand on the renewable energy question they spend $10 billion and there’s exactly the same amount of renewable energy at the end as at the start. It just replaces lower cost forms of renewable energy with higher costs of forms.