Mark Dreyfus

29 February 2012  –UPDATED 5.59 pm The Greens have called on the Federal Government to re-instate the Renewable Energy Bonus Scheme for solar hot water systems, which it said produced the cheapest forms of greenhouse emissions reductions but was suddenly axed on Tuesday.

  • See full transcript of doorstop interview with Mark Dreyfus below

The move was poorly judged, well ahead of a scheduled phase out in June this year, and announced at 5 pm, with a media release sent at 5.01 pm, the Greens said.

Australian Greens Deputy Leader, Senator Christine Milne, said “My office has taken calls from several businesses shocked that they would be treated in this way when car manufacturers, smelters and others in the old economy get handouts of hundreds of millions of dollars.”

The Sustainable Energy Association of Australia said the program closure would have “significant short-term negative impacts on solar hot water manufacturing, wholesale, retail and installation businesses across Australia as well as those businesses who supply goods and services to them.”

Parliamentary Secretary for Climate Change and Energy Efficiency, Mark Dreyfus denied the closure was ahead of schedule, and said the scheme has provided more than 250,000 households in Australia with $320 million in funding to help them convert to solar hot water systems from fossil fuel based systems.

“To be eligible for the rebate before the scheme closes, systems must be installed, ordered (and a deposit paid) or purchased on or before 28 February 2012,” Mr Dreyfus said in a media statement.”

“Applications lodged up to 30 June 2012 will continue to be processed. Applications received after 30 June 2012 will not be eligible.”

A spokeswoman for the minister said this meant that if a deposit had already been paid for a system and was with the retailer then the application would be honoured to 30 June.

The spokeswoman said the decision was not sudden.

“It’s not sudden. When it was announced in 2007 by Malcolm Turnbull it always had a closing in 2012 and we always said it would close on June 30 in the program guidelines.”

The spokeswoman said that to be able to close the scheme on the scheduled date the government needed to make sure all grants were processed and administration complete.

Mr Dreyfus said the government would continue to support households to install climate-friendly hot water systems through the Small-scale Renewable Energy Scheme.

“Under this scheme, solar and heat pump hot water systems are assigned a number of Small-scale Technology Certificates (STCs) and retailers usually offer an upfront discount on systems in exchange for the STCs.

Senator Milne: “This decision demonstrates that the government hasn’t learned the lessons of the stop-start rooftop solar schemes, the Green Loans debacle and so many other examples through the Gillard, Rudd and Howard years.

“While industry has been calling for the scheme to be extended, it was cancelled today [Tuesday] at 5pm, with a media release sent out at 5.01pm,” Ms Milne said.

“The solar hot water industry has invested quite reasonably in stock, parts and production schedules going forward. This decision treats all those investments with contempt.

“Just like manufacturers in other sectors, the solar hot water industry is struggling with the high dollar, as well as low renewable energy certificate prices and competition from cheap imported instantaneous gas water heaters.

“This scheme should have been extended, not cancelled early, particularly not at such ridiculously short notice and with no reasons given whatsoever.

“The government should immediately reconsider this wrong decision and extend support for this industry which is producing one of the cheapest emissions reducing technologies and exporting it to the world.”

Transcript of a doorstop interview provided by Mark Dreyfus today in Canberra following Tuesday night’s announcement

29 FEBRUARY 2012, 1.40 PM (AEDT)

MARK DREYFUS: Yesterday the Government announced that the solar hot water rebate program was to close. This is after providing some $320 million to the industry and providing a rebate to some 250,000. And, of course, this solar hot water service rebate program was always intended to close after five years. When it was announced by the then Liberal Minister for the Environment, Malcolm Turnbull, in July 2007 it was announced on terms that the then Liberal Government was providing $250 million and that the program would close after five years. And of course five years is up.

We, of course, extended the program to spend some $320 million and have provided the rebate to some 25,000 more households than had been intended by the Liberal Government when this program was announced. And I stress again, this solar hot water service rebate is a time-limited program; it was always intended to end at the end of five years and it’s now drawing to an end on 30 June this year.

QUESTION: So when the industry says it’s been blindsided by this, are they making that up?

MARK DREYFUS: Industry has known since the inception of this program that it was to close in 2012 and what we’ve done is to announce the precise closure date and, of course, as has been explained, provided you had a contract for the installation or had paid for the deposit before 28 February – that’s yesterday – and make an application for the rebate by 30 June this year, you’ll be paid that rebate. That will take up the amount that has been provided in the Budget for some five years and the program will end on 30 June.

[Overspeaking]

MARK DREYFUS: Look, just – can I have one at a time?

QUESTION: We understand from Rheem that they have personally asked you for assistance in some form because they say they have tens of millions of dollars of stock and stuff there. They weren’t expecting it. Is there going to be any assistance for any of these companies?

MARK DREYFUS: Well, I’ve had discussions with Rheem, as of course is appropriate, just as I’ve had discussions with the other manufacturer Dux. Rheem and Dux have always known, since the inception of this rebate program, that it was going to end in 2012 and they are well aware, as indeed Australians should be well aware, that the Government is going to continue to provide assistance in the form of renewable energy certificates under the renewable energy target, which is worth approximately one thousand dollars for an average one of these systems. And that assistance, of course, is on a continuing basis.

[Overspeaking]

MARK DREYFUS: Could we have one at a time.

QUESTION: No special assistance for what is, you know – they seem sincere in saying they weren’t expecting it to be happening as of five o’clock yesterday…

MARK DREYFUS: I’m not sure why they would say that because this program, since it was announced by the Liberal Government, since it was announced by Malcolm Turnbull as Minister for the Environment in July 2007, was always described by the Liberal Government and described by us, at all times described by us, when we expanded the program in 2009, as a program that was coming to an end in 2012. And that’s what’s occurred now.

QUESTION: But did the businesses know though that the deadline to claim was going to be yesterday, before yesterday?

MARK DREYFUS: No. And it would not have been appropriate to tell individual businesses, because to do so would give a competitive advantage to an individual business. This is good budget practice to shut a program of this nature in this way. Because what it does is to avoid a sudden spike in demand, it avoids budget overruns, it’s responsible economic management to do this. We’ve got to be fiscally responsible here. We’re dealing with taxpayers dollars, it’s a budgeted program, that has a set amount of money over a five-year period and we will be within that set amount of money as a result of this good budget practice…

QUESTION: So it’s great for your budget though, but what about these…

MARK DREYFUS: It’s not about – no, no, no – just don’t get me wrong. It’s not about the Budget. This is a…

QUESTION: But it’s about the budget practices…

MARK DREYFUS: … this – it is about…

QUESTION: … what about [unclear] businesses?

MARK DREYFUS: … it is about the budget practices. This is a set budgeted amount for a defined-length program. It was always going to be over five years and what’s occurred here is that we’ve announced that people who have entered into a contract, or paid a deposit before 28 February, and who apply for the rebate before 30 June, will be paid that rebate. It’s entirely in accordance with sound budget practice.

QUESTION: Sure, but do you think that that practice of not giving them notice – the businesses selling these appliances – is fair?

MARK DREYFUS: Well, I don’t accept the premise of your question. They’ve had notice…

QUESTION: You did just say that they didn’t have notice…

MARK DREYFUS: … they didn’t have notice…

QUESTION: … that it was going to end yesterday, until yesterday.

MARK DREYFUS: They did not have notice of the precise date…

QUESTION: Exactly. Do you think that’s fair?

MARK DREYFUS: …and that – yes, I do. I do. It is entirely in accordance with sound budget practice to do it in this way and that’s because they’ve set up and know that there’s a rebate program that runs for five years.

They’ve made business decisions on the basis of a rebate program that runs for five years and they know that at some point in 2012, in the budget year because, of course, the financial year ends on 30 June 2012, there will be a precise date of closure announced.

If you don’t do it this way – if, for example, we had said that we are going to allow rebate applications to be made up to the end of March, or the end of May, or whatever other date you care to name – then there would have been a spike in demand. That’s been the experience of state, territory and federal governments with this kind of demand-driven program and what we’ve done is sound budget practice. You can – absolute sense. I’d add that the program guidelines for this rebate program provided that you needed to make, and you still need to make your application for a rebate within four months of entering into the contract – and what we’ve done in specifying 28 February is to allow that four-month period through to 30 June.

QUESTION: Rheem says the sales are already declining, so that even if you did announce in a month that they’re closing that there was a spike, that it still wouldn’t go over the money allocated.

MARK DREYFUS: Well, I’m glad that they’re feeling able to estimate the likely outcome of the number of applications that are going to be made. We actually don’t know how many are out there, nor do Rheem, nor do Dux, nor does the industry. It’s responsible economic management to do what we’ve done, which is to close the program in this way. And it needs to be stressed that there is continuing support for this industry. Of course we are concerned about jobs and of course we will continue to talk to Rheem, to Dux, to installers, as we have done now for many months.

There is continuing support for this industry in the form of the renewal energy certificates under the renewable energy target and, on a longer-term basis, there’s continuing support for the solar hot water industry through the carbon price, which of course provides an incentive to move to clean energy.

QUESTION: You said you’re concerned about jobs, but what about the manufacturing jobs that will go as a result of this?

MARK DREYFUS: We are a government that is concerned about jobs in every industry and our concern for jobs is demonstrated by the fact that we have, at all times, and will continue, to talk to the particular manufacturers in this industry. We have got continuing support in the form of renewable energy certificates for the solar hot water industry. And I think that there’s been an extraordinary outbreak of hysteria from some of our political opponents, who seem to have forgotten that their minister, Malcolm Turnbull, when he announced this program, said several things.

It was actually at the time of announcing the Liberal Party’s embarking on an emissions trading scheme. And as a small part of the announcement he said that in the interim the Liberal Government were going to fund, through these rebates, solar hot water services, and said that it was a five-year program. Indeed, Malcolm Turnbull, I could say, has more recently said, in July last year, that the introduction of a carbon price means that you will not need these kinds of special-assistance programs.

So, there’s a massive inconsistency in our opponents’ position and then the hysteria that they’ve shown today. I’d add that in their so-called direct action plan, they expressly referred to the closure of this rebate program in June. So, not only did the industry know, but our Liberal opponents are very, very well aware of the time-limited basis of this program.

QUESTION: Mr Dreyfus, the Department of Climate Change, up until two months ago, had 30 June as the end date for this scheme. Aren’t businesses entitled to plan on the basis of what was the published end date for the scheme…

MARK DREYFUS: I think this program…

QUESTION: … Isn’t it unreasonable to close a program at five minutes’ notice?

MARK DREYFUS: Not at all. It’s – I’ll repeat it again. It’s entirely good budget practice. It’s entirely…

QUESTION: Haven’t you jeopardised seven-thousand-two-hundred jobs by doing this?

MARK DREYFUS: Indeed we haven’t. The industry has known at all times that this program was going to close – and I mean close in the sense of no more rebate applications…

QUESTION: On 30 June…

MARK DREYFUS: … on 30 June and they have…

QUESTION: [Unclear].

MARK DREYFUS: …and – just let me finish – and they have known that this is a program, which in its guidelines, says that there needs to be four months – there’s a four-month period within which you need to make an application for rebates – it’s entirely appropriate to close this program on arrival, to announce its closure, because it’s not being closed early, it is not being shut down. It is simply coming to an end, as was always envisaged, at the end of the financial year in 2012. And I don’t accept the premise of your question, or the premise of the attacks that have been made by our political opponents, which are to the effect that there’s been some kind of early closure.

QUESTION: Thanks Minister. What your political opponents [will say is] it’s the actual industry and it’s all sides of the industry.

MARK DREYFUS: No, what the industry is saying is that they would prefer – and we were aware of this – they would prefer…

QUESTION: [Unclear].

MARK DREYFUS: What the industry is saying is that they would prefer if this program could be extended, and it’s not our policy to extend it.  We’ve said at all times that this program, this rebate program, is coming to an end in 2012 and that’s where it is.

QUESTION: But you just said…

QUESTION: Let’s be honest.  Let’s be honest. You were running out of money and you knew that this scheme was going to cost you more money if you let it run till 30 June isn’t that right?

MARK DREYFUS: No, it’s not at all right.  No, that’s not right.  We’ve provided some funds in the next financial year for the complete and orderly ending of this program and there’s some $24.5 million in the next financial year – that’s 2012/2013.  We don’t know down to the last dollar exactly how much of that is going to be needed but in appropriate budgetary practice we’ve provided, over each of the last four years in our budgets, for the continuation of this program.

We’ve provided for an amount in the next financial year which is runoff, the completion, if you like, of rebate applications that can be received right up to 30 June 2012.  And we will be paying those rebates and completing the program.  So it’s not about running out of money at all.  It is simply sound government administration, responsible economic management to bring this kind of – it’s called a demand driven program – to an end in this way.

QUESTION: There are small businesses all over this country now shedding staff.  Family owned businesses who are budgeting for an end date on 30 June.  That’s come four months early.  How can you say that’s an orderly closure [when people all of this country lose their jobs in this industry].

MARK DREYFUS: I don’t accept your notion of when this program is ending.

QUESTION: But why didn’t you warn people until today?  Why didn’t you tell them…

MARK DREYFUS: I’ve answered that question already.  To warn some businesses would lead to, first of all, potentially giving a competitive advantage to some businesses against others and would almost certainly lead to a potentially unmanageable budget overrun.  Instead we have brought the program to an end, we’ve said that if you have got a contract or paid a deposit by 28 February and you make an application for a rebate by 30 June you will be paid.

And in our estimation that will take up the funds that have been allowed for this program over the last five years which comes to an end on 30 June with some amount allowed in the next financial year for the complete orderly runoff of this program.

QUESTION: But don’t you think that your claims to sound budget management are cold comfort to these family businesses that are now in trouble?

MARK DREYFUS: Well I understand that people who have been reliant in their businesses on some form of government subsidy – which of course is what the rebate scheme is – would like such a subsidy, such a rebate scheme to continue indefinitely.  But they should not have made any planning on the basis that it was going to continue indefinitely when we have made clear very publicly at all times that this rebate scheme was going to come to an end in 2012.

And I’d point to the fact that there is continuing government support in the form of renewable energy certificates under the renewal energy target.  And I don’t think that they should be wound up by members of the Greens Party, or members of the Liberal Party who also ought to understand the nature of this program which was not an indefinite program where the rebate was to continue indefinitely into the future, but rather a five year program announced in 2007 by the former Liberal Government and now being brought to an end, as planned, as it has always been planned, in 2012.

QUESTION: So what do you make of Rheem’s claim about the imported solar panels which get twenty-seven-hundred dollars worth of support from the Government.  Whereas under the [RET] what they’re putting up only gets to nine-hundred dollars of support.

QUESTION: That’s taxpayers’ money going to imported goods that they say are less efficient.

MARK DREYFUS: Those are the present policies.  The settings under the renewable energy target, they are going to be kept under review and I’ve understood the point that Rheem’s made and indeed they’ve made it with me in discussions today.

QUESTION: [Unclear] that some industry representatives were actually here yesterday speaking to you about extending the scheme.  Why didn’t consult them about closing this?

MARK DREYFUS: They didn’t in fact come to me consulting.  They came to consult with – I now know that they came to consult with other members of the Parliament, putting their case for an extension of the scheme.  We notified them, as was appropriate, just before the announcement was made yesterday and I’ve spoken to them today.

QUESTION: Do you really believe that businesses are making responsible decisions for themselves about their transition planning which they were planning for the middle of the year should be expecting the Government to pull a date in the hat earlier? [Unclear].

MARK DREYFUS: Well I don’t accept that we’ve pulled it out of a hat.  I don’t accept that this is early closure, in the context of a rebate scheme that was always announced to run for five years, and I don’t accept what you’ve suggested about the internal decisions being made by various hypothetical businesses.

What I’m very clear about – and I’ve confirmed this with the two manufacturers to whom I’ve spoken today – is that they did not have any expectation created by Government, whatever might have been their hopes for an extension.  They’ve confirmed to me in clearest terms they did not have any expectation created by Government that this scheme would go longer than 30 June 2012.

And the announcement yesterday confirms that it will be ending in the form of any rebate applications made after 30 June this year will not be paid.  Rebate applications made before 30 June will be.

QUESTION: Is this another sort of example of demand driven Government schemes just not working?

MARK DREYFUS: Absolutely not.  This is a scheme – that’s, in fact, I’m sorry to say, with respect, it’s a foolish question.  This is a scheme which has provided, at a cost of $320 million in a budgeted way over five years, assistance to some 250,000 Australian households to install solar hot water.

And in no sense are there problems with this scheme.  In no sense can it be suggested that there was any problem.

QUESTION: There’s a problem with [unclear].

MARK DREYFUS: Well I understand and we’ve been over this.  But some manufacturers and some installers would have preferred if the scheme had not ended as planned at the end of five years but had rather gone on indefinitely.  Now that’s not the Government’s decision.  What we’ve done here is to bring to an end a budgeted five year program and have done so entirely in accordance with good budget practice.

QUESTION: Why not say there was a cap on it then from the start?  Why not say we were going to get to three-hundred-and-twenty million and cut it off?  Is that effectively what you think you did say [unclear]?

MARK DREYFUS: This is a budgeted program.  It’s been in the Federal Budget of the Commonwealth of Australia since the 2008/2009 Budget announced by the former Liberal Government in July 2007 and continued by us.  It’s not capped in the sense that you’ve suggested.  It’s a budgeted amount that’s been in budget papers and has been planned as a five year program.

Industry has known that it was planned as a five year program.  So that’s the difference.

QUESTION: Four-and-a-half year program…

MARK DREYFUS: It’s not a four-and-a-half…

QUESTION: Four-and-a-half years.

MARK DREYFUS: Indeed not.  It is a program that – yes, I’ve got to go to Question Time I’m sorry.  It’s a program that was announced to run for five years.  It was announced by Malcolm Turnbull on 17 July 2007.  In [terms] this is a program for five years.  It was going to provide solar hot water to around, it was predicted, 225,000 homes.  We put a bit more money into it. It’s provided solar hot water to around 250,000 households and it’s been brought to an end as planned.  Thanks very much.  Thank you.