Dissenting Report by Labor Senators
1.1
Labor Senators note that the Chair's report contains flawed logic, false
comparisons and actively ignores that the large majority of submissions support
the retention of ARENA. The conclusions drawn by the government's report are
disingenuous, misleading, and were clearly made before any submissions were
received to this inquiry.
1.2
The vast majority of the 131 public
submissions to the inquiry support maintaining ARENA and its funding; yet most
of the report is devoted to a small number of submissions in favour of abolishing
ARENA.
1.3
Many refute Minister Macfarlane's claim that transferring
responsibility for the administration of ARENA's commitments, assets and
liabilities to the Department of Industry would deliver efficiencies and allow
for greater oversight of expenditure by the Minister.
1.4
Labor Senators note that Minister
Macfarlane had advised that the Government's primary rationale for abolishing ARENA
was to return $1.3 billion
in uncommitted funds to consolidated revenues. The government has admitted
many times that the budget is not in crisis. There is no budget emergency.
1.5
The previous Labor Government established ARENA
in 2012, as an independent agency to improve the competitiveness of renewable
energy technologies in Australia and to increase the supply of renewable energy
to Australia's electricity market.
1.6
ARENA has been successful in providing
financial assistance for the research, development, demonstration and
commercialisation of renewable energy and related technologies; developing
skills in the renewable energy industry; and promoting renewable energy
projects and innovation both nationally and internationally.
1.7
ARENA currently supports more than 190
renewable energy projects that have drawn more than $1.5 billion in private
sector investment. There are currently
a further 190 renewable energy projects in the pipeline, which have the
potential
to draw more than $5 billion in private sector funding.
1.8
70 per cent of ARENA funding has gone to
projects in rural and regional Australia, creating jobs for the future in these
areas.
1.9
ARENA is part of a suite of policies that the
previous government put
in place, many of which were building upon Howard government policies to ensure
that Australia was able to take the enormous opportunities in this area and
become
a world leader.
1.10
ARENA consolidated a range of programs
including, notably, the Solar Flagships program of the then Department of
Resources, Energy and Tourism (now the Department of Industry). In time, it
also became responsible for the work of
the Australian Centre for Renewable Energy and the Australian Solar Institute.
The proposed termination of ARENA will see advice channelled from the
department through the minister's political advisers, as Minister McFarlane
desires.
1.11
As noted in the report, many submitters maintained that ARENA's
independence was in fact central to its transparency and efficiency. In varying
degrees, these submitters also pointed to ARENA's ability to draw on a range of
different skills and expertise, including staff and board members with
research, technical and managerial skills and experience in the academic,
public and private sectors.
1.12
SMA Australia, FRV, RayGen, the Sustainable Energy Association of
Australia and the CPSU all argued that ARENA's independent structure and
ability
to leverage both public and private sector expertise had been critical in
driving its success to date.[1]
As FRV explained:
ARENA has in large part been successful due to its
independent structure and this ability to blend private and public investment
and expertise, much of which will be lost if the initiative is repealed and
existing projects returned to the Department of Industry.[2]
1.13
Tenax Energy took this point further still, arguing that ARENA's
independence provided a safeguard against the risk of political intervention in
the funding process:
The
design of ARENA as an independent government agency alleviates the risk of
possible intervention in the decision making and the proponent funding process.
Additionally, the independence of ARENA decision making through its Board
structure encourages confidence in the administration of the programs and has
ensured that the only avenue for political intervention in the determination of
priorities or the awarding of funds is to demolish the Agency.[3]
1.14
Mr Alan Pears AM, meanwhile, argued that the Department of Industry
was not well placed to manage the complexity of ARENA's existing funding
commitments:
The
suggestion [in the Explanatory Memorandum] that shifting management of existing
ARENA projects into the Department of Industry will reduce costs is not
supported by any evidence, either. ARENA has built an expert team that
understands its target sector and can respond efficiently and effectively. It
also draws upon external expert advice, often at zero or low cost. Much of the
benefit of such capacity for efficient ongoing project management risks being
lost if no new projects are pursued, and if generalist departmental staff are
tasked with management of these complex projects.[4]
1.15
Bioenergy Australia argued that the complex, cross-portfolio nature of
bioenergy, made a stand-alone body like ARENA necessary to the development
of bioenergy technologies:
Bioenergy
in particular requires a special purpose agency such as ARENA to support its
development. Bioenergy spans numerous portfolio areas such as energy,
infrastructure, waste management, wild fire mitigation, water, agriculture,
forestry, trade, employment and regional development, and its assessment and
support requires consideration by an agency that is geared up for such a task,
rather than being relegated to within a government department with a narrower single
portfolio responsibility.[5]
1.16
In making the case that ARENA was playing a 'vital role in Australia's
transformation to a cleaner, and less carbon intensive future', Infigen Energy
drew
a comparison between ARENA's independence from government and the placement of
predecessor programs and bodies within government departments:
Infigen
Energy considers that ARENA will continue to be more successful in its current
form rather than being incorporated into the Department of Industry. One of the
predecessors of ARENA was the Renewable Energy Development Program (REDP) which
was run by the previous Government’s Department of Energy. While this program
was successful in making announcements of grant ‘winners’, it was not
successful progressing these projects to financial close and construction. Most
of the projects awarded grants by the REDP were never built amongst these the
Ocean Power Technologies project abandoned this week. On the other hand, ARENA
has been much more successful selecting and progressing development projects to
a successful outcome and construction of new plants including Carnegie Wave
Energy’s innovative Perth wave energy project and AGL’s 155MW solar PV project
in NSW.[6]
1.17
The BCA wrote that ARENA had a proven track record in undertaking
effective due diligence in the projects it invested in, and in its subsequent
monitoring and management and the contracts it had entered into:
The BCA supports the government’s
imperative to get the budget back into surplus, but not at the expense of
closing an institution that has commercial expertise, that is not readily
available in a government department and which has been operating effectively,
with so much potential ahead.[7]
1.18
Instead, the government’s report has chosen to highlight arguments claim
that work being done by ARENA could be done by other agencies and mechanisms
such as the CEFC and RET, while the government is actively seeking to also
terminate these.
1.19
The rationale presented in this report to justify the abolition of ARENA
lacks logic, is disingenuous, and misleading. The government is abolishing an
agency that has been very effective in creating clean energy jobs and
attracting private investment.
Recommendation
1.20
Labor Senators recommend that the Bill not proceed.
Senator Sam Dastyari
Deputy Chair
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