Direct Action under review before it gets started

On Monday’s ABC Q&A program Malcolm Turnbull explained that while he wasn’t all that keen on the Coalition’s Direct Action policy, it would be up for review in 2015.

For those that share Turnbull’s belief that an emissions trading scheme would be vastly more effective and reliable than an abatement purchasing auction, this would have provided a reason for joy and a glimmer of hope.

But there is a real downside for businesses and investors trying to make a business out of doing good for the climate.

I was contacted yesterday by a person who, for around 15 years, has been running a business focussed on helping the environment (and the economy) by saving energy.  Gavin Gilchrist, managing director of Big Switch projects, has been on the business end of a saga of Australian government greenhouse abatement programs, and it is not a pretty experience.

He was involved in the Howard government’s Greenhouse Gas Abatement Program, a $400 million fund which sought to purchase lowest cost abatement. It took six years to undertake just three bidding rounds to spend only a quarter of its money.

He was also part of a winning consortium under Solar Cities, which also involved a horribly drawn out process. In his particular case it took a year for the department to provide a funding agreement after announcing his bid as the winner. And that was only concluded after the minister at the time, Malcolm Turnbull, specifically intervened.

Here’s what Gavin said:

Could I just say that the review of Direct Action in 2015 – the year after next – yet again highlights the impossibility of running a business reliant on government climate programs. Think about it:

-- October, 2013. Coalition wins.

-- November 2013. Minister Hunt gets feet under desk.

-- December – January 2014. Bureaucracy away on the NSW South Coast till end of January. Government unlikely to be pushing for quick wins.

-- February - April 14. Direct Action designed.

-- May 2014. Round one launched.

-- July 2014. Round one closes.

-- August – October 2014. Applicants reviewed, recipients informed, contracts signed.

-- February 2015 – Projects begin.

And then soon after, the government starts this review! We have one round underway, barely. No results yet.

I’m afraid to tell you Gavin, but it’s actually even worse than that. According to Greg Hunt the earliest that round one will be launched is July 1, 2014. He said in a recent speech about the implementation of their abatement fund:  

“We will call for submissions within 30 days of being elected, consult between days 60 and 100, release the White Paper and draft legislation by day 100, receive further feedback and release final legislation by day 150. Our goal is to commence the system on July 1, 2014.”

Now I don’t know about you, but I can already see some gaps.

Firstly, where’s the Green Paper that comes before the White Paper? Does he expect people to make detailed and informed submissions on his current policy documents of a few speeches and a glossy brochure from 2010? 

I’ve directed numerous questions to Hunt’s office asking about things like how the baselines will be set, what will be penalties for exceeding baselines, how he will handle the prospect of winning bidders not delivering promised abatement, and a range of other rather fundamental items. I know others in the business community who have also posed a range of questions. His response is along the lines of ‘policy detail is not the responsibility of the opposition’.

And what happens if the Senate decides it’d like to delay and review his legislation much like the Coalition did with the ETS? That could also add several months onto the timeline.

How about the timeline for development of the regulations that will accompany the legislation and govern conduct of the auction and how winning bids are managed?

Also where in this timeline is the development of the IT systems that will run the auction? It’s probably not a good idea to do IT system development while you’re still yet to work out the rules.

So Gavin, it may be that Direct Action is under review before abatement projects have even got started.