The Morrison government’s stalled Underwriting New Generation Investments program has been included in a final hitlist for audit by the Commonwealth Auditor General, as questions grow around whether it will ever deliver any new projects.
The Underwriting New Generation Investments (UNGI) program was referred to the Auditor General for audit by independent MP for Warringah Zali Steggall, who cited the lack of transparency around funding may be allocated under the program and the lack of legislative authority to commit taxpayer funds.
Steggall pointed to research undertaken by The Australia Institute, which suggested that without legislation, any funding allocated by the UNGI program could be unconstitutional. Steggall welcomed the decision to include the UNGI program in the final audit workplan.
UNGI has been hailed by Taylor as a key mechanism to encourage new dispatchable generation. But energy experts, ranging from the ESB chair Kerry Schott, AGL and others say it is having the opposite effect, because uncertainty is stopping other projects from getting finance. It was rolled out in haste before the last election, but nearly two years down the track, nothing has happened.
“This is great news for accountable and transparent governance that the UNGI program has been included in final Annual Audit Work Program by the Auditor General,” Stegall said.
“It is imperative that we restore trust in our institutions by ensuring that all government programs are above board. I asked for the UNGI program to be included in the audit because taxpayers deserve to know their money is being spent wisely and in accordance with good governance, addressing the challenges of the future with appropriate legislation. This is doubly so in the current economic climate.”
“This audit will hopefully shine a light on a program that will direct significant funds that has been opaque and problematic from its inception,” Steggall added.
The Australia Institute commissioned legal advice on the operation of the UNGI program, which said that there was a concerning lack of transparency around how funding would be awarded under the UNGI program, including a lack of published funding guidelines, as well as questions over the legality of the program which currently has not gained authorisation from parliament to commit taxpayer funds.
The Auditor General, and the Australian National Audit Office, work independently to the federal government and are tasked with investigating government decisions around the use of taxpayer funding, and recently unearthed significant issues with pre-election sporting grants that led to the resignation of former sports minister Bridget McKenzie.
The auditor general confirmed that following an assessment of the risks relating to the UNGI scheme, and the interests of parliament, that it would include the UNGI in its annual audit work program for 2020-21.
It is understood that proposed legislative amendments have been prepared that would authorise the establishment of a Grid Reliability Fund to be administered by the Clean Energy Finance Corporation, but the legislation has been delayed due to the Covid-19 priorities dominating the parliamentary agenda.
Despite announcing commitments being made under the UNGI program, including funding support for two gas fired generators and a bilateral deal struct with the NSW government, no funding has exchanged hands.
A total of twelve projects have been shortlisted for support under the UNGI program, with the shortlist announced 15 months ago, including a number of new gas and pumped hydro energy storage projects, but none of the projects have since progressed.
The office of federal energy and emissions reduction minister Angus Taylor has been unable to confirm if or when support for projects may be decided, only that negotiations with the project proponents were ongoing.
Several prominent participants in Australia’s energy sector have complained of the effective market interference that the UNGI program has created, causing project developers to hold off from making final investment decisions on new power station projects until the outcomes of potential funding support provided under UNGI are known.
A decision by the Morrison government to award up to $4 million in funding towards the completion of a feasibility study into a new coal fired generator in North Queensland, a project that also appears to have stalled, has also been referred to the Auditor General for review.
Labor climate and energy spokesperson Mark Butler wrote to the Commonwealth Auditor General seeking review of the funding awarded to Shine Energy, after it emerged the company was asked to submit an application for the feasibility study funding, days after it had already been announced as the funding recipient.
The early governance of the Snowy 2.0 expansion will also be included in the audit workplan for 2020-21, as will a number of the government’s responses to the Covid-19 pandemic.