Household solar rebates burn through extra $500m

Sydney Morning Herald
Monday 21/12/2009 Page: 6

THE household solar rebate scheme has blown a $500 million hole in the federal Environment Department's budget. The massive bill for the scheme is the result of a high demand for rebates and a last-minute rush to sign tip after the Environment Minister, Peter Garrett, announced its cancellation, with just 24 hours notice, on June 9.

The revelation is contained in department budget estimates prepared for Senate estimates hearings, which begin in the first week of Parliament next year. The document states that an additional $534 million over two years has been provided to pay for the short gap in funding for the rebate. A spokesman for Mr Garrett said yesterday that the scheme was on track to deliver 120,000 solar panels to homes since November 2007.

"This program will deliver the installation of eight times the number of systems in our original election commitment," the spokesman said. "Just three years ago this program had an annual budget of just $6 million. We have spent close to $1 billion." In the last 14 days of the scheme, 55,000 people - up to 90% of all those who applied - were granted rebates of up to $8000. The scheme has been replaced with a "solar credits" program that grants households additional renewable energy credits for their solar panels, which can be sold on the market.

The Climate Change Minister, Penny Wong, has since announced a Council of Australian Governments investigation into the renewable energy market after the price of credits crashed earlier this year - meaning households are getting less rebate for buying solar panels. The Government has also closed or scaled down a number of renewable-energy and water saving measures for schools, businesses and households as cost-saving measures to offset the massive rebate bill.

The blowout to the Environment Department's budget comes as the Government seeks $2 billion in funding for departments on top of the money allocated in the 2009-10 federal budget, the result of budget blowouts, additional government announcements, and the drop in value of government assets due to the surging Australian dollar. The Environment Department's request for additional funding is the second highest after the Defence Department, which is requesting $690 million.