Labor\u2019s major reform to its $5 billion Net Zero Fund has been labelled \u201creckless (and) inflationary spending\u201d as the government concedes it may cop losses on publicly-funded green energy projects.<\/p>\n
Energy Minister Chris Bowen and Industry Minister Tim Ayres said Labor\u2019s Net Zero Fund will no longer maintain an investment return mandate of 2-3 per cent above the five-year government bond rate.<\/p>\n
Labor has dropped this to one per cent below the bond rate \u2013 or about 3.3 per cent.<\/p>\n
\u201cThat means the fund can take on more risk than commercial finance and help Australian industry adopt the technologies that cut industrial emissions, and crowd in private capital,\u201d Mr Bowen and Mr Ayres said in a statement.<\/p>\n
The Net Zero Fund is financed by government bonds, meaning Labor will be content with losing money on these projects.<\/p>\n
Shadow industry and innovation minister Alex Hawke said Labor lowering this target showed the poor returns on renewables projects.<\/p>\n
\u201cBy setting a return target below the bond rate, they are admitting these green projects cannot stand on their own two feet,\u201d Mr Hawke said in a statement.<\/p>\n
\u201cLabor is borrowing money at roughly 4.3 per cent interest to invest in projects targeting a return of just 3.3 per cent. That is a guaranteed, structural loss on every dollar spent.\u201d<\/p>\n
Labor created the Net Zero Fund last year with a third of the money from the $15b National Reconstruction Fund (NRF) – a government arm which has recently invested in the companies behind Tim Tams and Four\u2019N Twenty meat pies.<\/p>\n
Mr Ayres stressed the NRF was crucial for bolstering Australia\u2019s \u201ceconomic resilience\u201d, but Mr Hawke tore into this claim.<\/p>\n
\u201cThe claim that the NRF would make a profit for taxpayers was based on a false premise from day one. Now that the spin has collided with reality, Labor is rewriting the rules to hide their failure,\u201d Mr Hawke said.<\/p>\n
\u201cThis is reckless, inflationary spending. Instead of driving productivity, this decision by Labor is using money we don\u2019t have to gamble on investments that won\u2019t make a return.<\/p>\n
\u201cYou don\u2019t fix a productivity crisis by subsidising failure. You fix it by getting the fundamentals right\u2014something this government has proven they are unable to do.\u201d<\/p>\n