Removing retrospectivity is a step in the right direction, but the legislation still moves the goal posts
The Investor Group on Climate Change (IGCC) and the Clean Energy Investor Group (CEIG) have welcomed sensible amendments to limit the retrospective application of the proposed new 30% CGT rate for global investors on renewable energy asset sales but further changes are necessary to avoid higher energy prices for Australian households and businesses.
Legislation introduced to Parliament today would significantly impact the roll out of much-needed investment in new renewable energy projects, undermining the Government’s productivity agenda, decreasing economic growth and increasing power prices.
The IGCC and the CEIG have welcomed the sensible tightening up of the retrospective application of the tax. However, both groups warn that failure to provide grandfathering arrangements and an appropriate transition period in the application of the tax will hobble the development of new renewable energy during the period when Australia’s increasingly unreliable coal-fired power stations are due to shut down.
The bill’s proposed concessional transition period to 2030 does not reflect the critical contribution global investors have already made to getting new renewables projects built, nor the long-term nature of these investments (typically ~20 years).
To avoid jeopardising the viability of in-progress projects IGCC and CEIG recommend extending the transition period to more appropriately align with Australia’s clean energy targets, and retirement dates for coal-fired power stations.
Quotes attributable to Frankie Muskovic, Executive Director – Policy, Investor Group on Climate Change:
“Right now, Australia needs all the new renewable energy investment we can get – it should be ‘all taps on’.
“The increasing share of renewables in the grid is pushing down power prices for Australian households and businesses. It would be a bizarre act of self-sabotage for the Government to pursue changes that repel further investment in proven lower-cost renewable energy generation while we seek to replace ageing and increasingly unreliable coal power stations.
“The government has taken a big step in the right direction by removing the risks posed by retrospective tax application, but they’re still setting Australia up as a high-cost market instead of inviting all investors to fund our new energy supply.”
Quotes attributable to Richie Merzian, CEO, Clean Energy Investor Group:
“International investors make up a whopping 75% of clean energy capital in Australia. Pushing for an abrupt tax hike on past and future international investment will mean higher power prices – as that costs will get passed onto Australian households and businesses.
“One simple fix for Treasurer Chalmers is to extend the tax transition period, currently set to just 2030, to align Australia’s energy transition, aligned with 2050.”
