Failure of both government and coal companies must lead to lower compensation

The termination of the Contracts for Closure program represents a breach of trust on the part of the government and a short-sighted failure to negotiate in good faith on the part of both the government and the coal generators, the Australian Greens said today.

“Following this failure of good faith and good sense by both Minister Ferguson and the coal generators, the Greens will use every political and parliamentary lever we can to speed up the transition to a clean energy economy,” Australian Greens Leader, Christine Milne, said.

“Putting Martin Ferguson in charge of this process was always giving the fox control of the hen house and he is now responsible for the first serious breach of faith in the implementation of the Clean Energy Act.

“This is a breach of the commitment made to the public and to the planet to close down our dirtiest coal fired power stations and it shows once again that, with people like Martin Ferguson running the show, you simply can’t trust Labor to protect the environment.

“Since the coal generators clearly don’t think their asset value has been damaged by the price on pollution, they don’t need the compensation that has been allocated to them and we will immediately move to bring forward the Productivity Commission review of levels of compensation.

“This was the best chance coal generators were ever going to get to be helped with an orderly exit. Their failure to negotiate in good faith shows contempt for their investors as well as for the climate, since they will now have to close without the benefit of government assistance.

“It is hard to see that any serious negotiations could have taken place since the linkage to the EU ETS was announced, a decision that will substantially lift the price on pollution from 2018.

“If coal generators did not take the long term price into account in their negotiations, or if Minister Ferguson did not adequately negotiate with them in the last week, both of them have demonstrated a lack of good faith and good sense.

“The only logical step from here is to cut back the compensation for coal fired power stations and bring on the transition to clean, renewable energy faster.

• TRANSCRIPT

Doorstop
4 Treasury Place, Melbourne

5 September 2012

Topics: Government decision to scrap Contract for Closure

GREG HUNT:

Today we’ve seen the latest example of chaos and uncertainty with the collapse of the Contracts for Closure.

The Government’s Carbon Tax is in complete tatters. Last week, we saw the floor price ditched after pledges that it would never be ditched. This week we’ve seen the Contracts for Closure collapse in a smoking ruin and who knows what will happen next week.

But all the time, two things are occurring: electricity prices are going up and workers are facing uncertainty. The Prime Minister should go to the La Trobe Valley and apologise to workers for creating complete uncertainty. And the Prime Minister should try to explain to Australians why they should ever trust anything she says ever again.

These guys could not organise a sausage at a barbeque. Everything seems to collapse, the bigger the announcement, the bigger the failure, another day, another collapse and all that occurs is that electricity prices keep going up and as a consequence of this latest failure, the Carbon Tax and electricity prices are set to be higher again.

QUESTIONER:
Greg Hunt, just before this was officially announced, you offered in-principle support to the funded closure of some generated capacity. Is this a bad idea or a good idea done badly?

GREG HUNT:
What this is, is another example that they get things wrong. The right way to go is incentives to clean up, not closure. The Government went after a program which would close power stations, destroy jobs, destroy electricity capacity. But on the one hand they’ve got an energy security fund to bail out the largest brown coal power stations. On the other hand they’ve got a Contracts for Closure fund to close the very same power stations.

The right way to do it is incentives to clean up power stations, not contradictory funds, one of which is to keep the power stations open, one of which is to close them down.

QUESTIONER:
How do you clean up coal fired power stations, other than closing down some capacity or replace them with gas? What would you actually do?

GREG HUNT:
Well there are many ways of having efficiencies in power stations and we’ve spoken with the power stations and they are extremely interested in that approach. But this idea of two different funds, one to keep the power stations open, one to close them down, is an example of people who simply don’t know what they’re doing.

It’s perfectly possible to do practical things, to clean up power stations, but having two funds, one to keep the power stations open, one to close them down, is an example of people who simply have no idea what they’re doing.

QUESTIONER:
Wasn’t this program though, quite similar to what’s envisaged in Direct Action which was funded abatement?

GREG HUNT:
We’ll we said on the 2nd February 2010, we would not be closing down any power stations. This Government wanted to put workers out of jobs to close down power stations, to destroy energy security and because they knew there was confusion, they then created an energy security fund to keep the power stations open.

The right way to do it is incentives for practical action, not a Carbon Tax which is about driving up electricity prices and different funds which are on the one hand trying to close down power stations and on the other hand trying to keep them open.

QUESTIONER:
(inaudible)

GREG HUNT:
Well what we’ve said is that we have an Emissions Reduction Fund, which is all about finding the lowest cost emissions reduction. Whether it’s cleaning up, rather than closing down power stations, fostering energy efficiency, supporting the clean up of waste coal mine gas or waste landfill gas or capturing carbon in trees or soil – there are practical things, rather than a massive electricity tax.