Solar plan leaves $534m shortfall - Other energy-saving programs cut to cover shortfall

Age
Monday 21/12/2009 Page: 9

THE cancelled household solar rebate scheme has blown a $534 million hole in the Federal Environment Department's budget. The huge bill for the $8000 rebate scheme is the result of a high demand for the popular scheme and a last-minute rush to sign up after it was abruptly cancelled by Environment Minister Peter Garrett in June. The revelation is contained in an additional department budget report prepared for Senate estimates hearings, which start 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 now-cancelled rebate. A spokesman for Mr Garrett said yesterday the program 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," Mr Garrett's spokesman said. "Just three years ago this program had an annual budget of just $6 million. We have spent close to $1 billion."

On June 9, Mr Garrett closed the scheme with less than 24 hours' notice, causing mayhem at solar panel stores as home owners rushed to sign up. In the last 14 days of the scheme 55,000 people were granted rebates of up to $8000, up to 90% of all those who applied. The scheme has been replaced with the "solar credits" program, which grants households additional renewable energy certificates for their solar panels, which can be sold on the market.

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 that households are getting less and less rebate for buying solar panels. The Government has also noted the closure or scaling down of a number of energy efficiency and water-saving measures for schools, businesses and households as cost saving measures to offset the huge rebate bill.

That includes cuts to the $2.45 billion household insulation program, and the closure of the National Solar Schools Program, saving $53.1 million over two years. About $64.4 million has also been cut from programs designed to improve water efficiency. The blow-out to the Environment Department's budget comes as the Government seeks $2 billion on top of the 2009-10 federal budget in funding for departments.

The Environment Department has asked for the second most additional funding after the Department of Defence, which is seeking $690 million. The $2 billion in additional funding is the result of budget blow-outs, additional Government announcements, and the drop in value of Government assets due to the surging Australian dollar.