Saturday, 12 November 2011

No cash for Bob’s mates

Australian Financial Review
9 Nov 2011

The chairwoman of Labor's $10 billion clean energy fund said it would not be handing out cash to "Bob Brown's friends", and warned that the money may not all be spent if p​roposed green projects did not meet strict commercial standards. Jillian Broadbent said it was important the economy developed a strong renewable energy industry to complement its resources sector and rejected claims by the opposition it would be a "Bob Brown slush fund" and put taxpayer funds at risk.

"It is not going to be day one - here is the money, come in and sign and take a whole pile of it", Ms Broadbent told The Australian Financial Review, "A lot of language of the opposition seems to suggest that type of approach - that you are going to be handing it out to Bob Brown's friends or something. It's weird", said Ms Broadbent, who is also a director of the Reserve Bank of Australia. "We are not printing money".

Announced as part of the carbon price package, the Clean Energy Finance Corporation will invest in clean technologies through loans, loan guarantees and equity investment to attract private investors such as super funds, which so far have been reluctant to invest because of the perceived risk. The fund - to be set up next year - has been the subject of heavy criticism from the opposition, which has vowed to scrap it if elected.

Ms Broadbent, along with fellow senior finance sector figures David Paradice and Ian Moore, has been appointed to consult with key stakeholders and report to the government by mid - March 2012 on an implementation plan for the CEFC and its investment mandate. Ms Broadbent said it was important to see the CEFC as a component of federal and state governments' attempts to position Australia in a worldwide, low - carbon economy.

"It is a global dynamic and the sooner we set up a fund which is an integral part of that spectrum of ​policies, the better", she said. "In Australia we are a large exporter of black energy. China is one of the biggest investors in renewable energy and a lot of that has to do with how they want to position themselves for the future world, not the past world. "We have to position ourselves for the future world because we have done very well out of exporting energy and we want to be there when the technology is changing. We want to make sure that our energy doesn't get rejected just because it is black".

Appointed chancellor of the ​University of Wollongong in 2009, Ms Broadbent started her career as an economist at the RBA before moving to Bankers Trust, where she was executive vice - president. Ms Broadbent was named Qantas businesswoman of the year in 1987 and went on to serve on the boards of Qantas, Westfield, Woodside Petroleum and Coca-Cola Amatil. She is now a director of ASX Ltd and Woolworths.

The CEFC is not intended to ​compete directly with the private sector but act as a catalyst to private investment, which is now un​available. In the United States, the provision of loan guarantees for renewable energy projects has been the subject of controversy after the collapse of a solar company, Solyndra. However, Ms Broadbent said she did not believe the CEFC would be putting taxpayers' funds at risk.

"It is what financiers do all the time - balancing risk, servicing their clients and yet holding on to their shareholders' money", she said. "There is certainly going to be rigorous requirements. My idea is that 'look, you have to reach certain goal posts before this is commercial'. You have to get up the supporters. Energy development and energy policy are a long journey".

But opposition environment spokesman Greg Hunt said the CEFC was a risky way to spend taxpayer funds. "The purpose of this fund is to invest in speculative ventures using borrowed money which the private sector would not fund", he said. "The experience in the United States as seen with Solyndra and a second collapse this week is this is an incredibly risky way to spend taxpayers' funds". Ms Broadbent said that despite the global economic environment, it was important to push ahead with the carbon price scheme and the CEFC.

"The problem is there is a hell of a lot going on in the world and it is incredibly unnerving", she said. "In the meantime, as far as the fundamentals - is energy important to Australia? Yes. Have we got a role to play in the transition to a low - carbon economy when we are exporting goods that have a very high carbon impact? That hasn't changed in 20 years, really".