Coalition pledges to scrap $10bn green tech fund
Tuesday, July 19, 2011/
The Coalition has vowed to block Labor’s $10 billion green energy fund if it is elected to government, saying it refuses to take on government debt to fund the program.
According to the Government, the Clean Energy Finance Corporation, created as part of the carbon pricing plan, will invest in businesses “seeking funds to get innovative clean energy proposals and technologies off the ground”.
It will also help existing manufacturers re-focus their activities towards renewable energy.
The carbon tax policy documents state that the CEFC will invest $10 billion over five years from 2012-14. An independent chair, yet to be named, will report to the Government by early 2012 on the company’s investment mandate and governance.
But the Opposition has attempted to undermine the fund before it is even established, declaring that a Coalition Government would refuse to guarantee the corporation’s debt or take on government debt to fund the program.
It was revealed earlier this month the corporation will be funded by issuing debt; an approach that will keep the venture off the Federal Budget.
The corporation is expected to rely on a government guarantee to encourage investors to buy bonds or other securities that offer stable returns, taking advantage of the Government’s low borrowing costs.
An Opposition spokesperson said a Coalition Government would not support government guaranteed borrowings or equity injections from borrowed money to finance a “slush fund”.
“It will lead to market distortions and billions more in waste on risky projects that the conventional banks would not touch,” the spokesperson said.
The CEFC, devised by Labor in conjunction with the Greens, is crucial to the Greens’ plans to invest heavily in renewable technologies in order to curb greenhouse gas emissions.
The corporation will be established by legislation. If the Coalition wins government, Labor and the Greens could join forces in the Senate to block attempts to scrap it.
But a government decision to refuse to guarantee the corporation’s debt would undermine the venture even if the legislation was unchanged.
Tim Buckley, managing director of green investment firm Arkx, described the Coalition’s stance as a “stock standard” response on the part of its leader Tony Abbott.
“Abbott has a habit of just going against any policy the Government proposes, so it comes as no surprise,” Buckley says.
“It constantly reinforces the fact that Abbott is not showing he has a plan of his own. He’s just showing he can say no to everything and anything.”
“Some of the aspects of the carbon policy, once they become enshrined, will be a lot harder for him to undermine.”
Buckley says while the Coalition’s announcement could undermine the effectiveness of the corporation, it is too early to say how it will play out for start-ups looking to take advantage of the fund.
“It won’t be lending until at least a year from now and hopefully by then the tax on carbon and pollution will be better understood,” he says.