Labor’s indignation that Coalition will not honour commitments of Clean Energy Finance Corporation is deeply hypocritical

Last week the Labor Party was indignant that the Coalition had called on the Clean Energy Finance Corporation (CEFC) not to advance any funds prior to the forthcoming election. 

The CEFC is a body set up by the Gillard Government, largely at the insistence of the Greens Party, to which $10 billion of taxpayers’ funds has been allocated.  Its stated purpose is to provide venture capital to ‘green energy’ and ‘clean energy’ businesses.  In the Coalition’s view the likelihood of securing a commercial return on this taxpayers’ money is very low; we do not see it as a prudent expenditure, particularly when the government has had to borrow to raise this money.

The Coalition has been clear that we are opposed to the CEFC, and should we come to government we will abolish it.  We were alarmed by recent reports that the CEFC plans to spend $800 million before the election, and Opposition Leader Tony Abbott wrote to the Prime Minister calling for the CEFC to desist from these plans.

In his letter Mr Abbott said:                        

We have clearly stated that we will neither allocate funds nor accept any agreements struck in the event that the Coalition forms government. We believe that any rush to spend taxpayers' funds would be totally inappropriate. As the CEFC only has the authority to issue such funds from July 1, 2013, the Coalition believes such expenditure is inappropriate as the CEFC is effectively in a caretaker period. I seek to reiterate that position and urge the government to await the outcome of the election.

Labor’s response has been to argue indignantly that this creates sovereign risk, and that it is outrageous for the Coalition to state that it would not uphold agreements entered into by the CEFC.

In an answer to a ‘Dorothy Dixer’ question from a Labor backbencher, Labor Minister Anthony Albanese had this to say in Parliament last Thursday:

Yet now we have the opposition leader standing over the corporation, asking it to breach its statutory obligations. That is without precedent in our parliamentary democracy….In saying that they will repudiate contracts they are going to the heart of sovereign risk. This is the epitome of sovereign risk—legal obligations entered into under legislation carried by this parliament—and those opposite say that they should just ignore it. It is seriously undermining confidence in investment in this country.

Mr Albanese’s confected indignation ignores the reality that an incoming government is free to determine whether to maintain or to terminate the programs of an outgoing government.  What is more, the approach the Coalition has taken is entirely transparent and ethical.  Every company considering seeking funds from the CEFC is on notice of the Coalition’s intention, should we win the election, not to proceed with the CEFC or funding commitments it has made.

By contrast, when Labor faced a similar issue upon coming to power in 2007, it behaved in a much less ethical fashion.  In mid 2007, the Howard Government awarded a contract to OPEL, a joint venture between Optus and Elders, to build a rural and remote broadband network.  This was to be a national wireless broadband network, initially offering 6 Mbps peak speed but rising to 12 Mbps peak speed.

Stephen Conroy repeatedly said, throughout the 2007 election campaign, that he would honour the OPEL contract.  Once he got to power, he cancelled the contract, using a highly artificial contractual argument. 

It is the height of hypocrisy for Labor to fulminate about the prospect of an incoming Coalition government shutting down the CEFC and not proceeding with the funding commitments it has made.  As the OPEL episode demonstrates, incoming governments regularly abandon policies of a previous government which they disagree with.  As the OPEL episode also demonstrates, Labor’s approach was a great deal less transparent and ethical than the clear, straightforward position which the Coalition has taken in relation to the CEFC.