Cuts To Solar Unjust and Unfair
by Jon Dee
The O’Farrell government’s proposal to slash the NSW solar scheme is not only a broken promise, it is unjust and unfair on the NSW people.
The decision by the NSW Government to cut the Solar Bonus Scheme tariff is a tale of broken contracts and failed promises. It’s a move that will cost many low-income families money they can ill afford to lose.
Last year, the NSW Labor Government rolled out a major campaign to increase the household generation of solar power. Customers who signed up to the Solar Bonus Scheme were promised a generous 60 cents for every kilowatt hour of electricity generated by the solar panels on their rooftops. That income was Government-guaranteed until the end of 2016.
It was the kind of breakthrough that many households had been hoping for. According to the solar industry, 120,000 households took advantage of the scheme and ordered solar photovoltaic (PV) systems.
Our family was one of many that decided to install a 1.5 kilowatt solar PV system. We signed the contract to proceed based on the fact we were guaranteed 60 cents per kilowatt hour until the end of 2016. The duration and size of the incentive meant that we could definitely recoup the cost of installation.
Like many other families, we wanted to ‘future-proof’ ourselves against rising electricity prices, while also doing our bit for the environment. But we also wanted to be part of a positive move to mainstream solar power in Australia.
Although the Labor Government was headed towards electoral defeat, we were satisfied that the scheme had bipartisan support. Indeed, the Liberal-National Coalition stated unequivocally that while they thought the scheme was overly generous, they would honour the agreements that underpinned the Solar Bonus Scheme.
On 27 October 2010 in the NSW Legislative Assembly, Pru Goward, then Shadow Minister for Community Services, said:“It is a shocking mismanagement, but we all accept and understand that the 60¢ feed-in tariff must be halted for new applicants. We also understand that all existing participants must have their existing agreements honoured. This side of politics particularly understands the importance of retrospectivity. I want to be very clear on this point: A future O’Farrell-Stoner Government, a Liberal-Nationals Government, will also honour those agreements. This fiasco is not the fault of the participants who looked at an unbelievably good thing, figured that it was too good to be true, and it was. But who can blame them for rushing in to join a scheme that was so generous that it would repay their investment in 2½ years? It is hard to find another investment in this post global financial crisis world that can do that. The fiasco is not their fault. They did what they were expected to do, which was respond to a price incentive. It is, in fact, the fault of the Keneally Labor Government, which should hang its head in shame. It is difficult to imagine a greater and more terrible mismanagement of other people’s money. We do not oppose the bill [to protect the scheme].”
As of 11am Tuesday 17 May, Premier Barry O’Farrell still stated on his personal website that the NSW Liberals-Nationals would introduce a renewable energy buy-back scheme and would honour “the State Government’s current commitments”. The page has since been taken down but is cached on Google.
Like many others in NSW I have admired Premier O’Farrell’s hands-on and friendly approach to dealing with the community. This move however could risk his positive relationship with the community.
To back away from such commitments is a major breach of trust. According to the solar industry, the average household with a 1.5 kW system stands to lose up to $2,000 as a result of the O’Farrell Government’s decision. I’ve personally met with people who have taken out loans to install solar panels on their rooftops. Along with the elderly and low-income earning families who signed up to the scheme, such people cannot afford this kind of hit on their household budget.
In defending the Government’s decision, some commentators have implied that only ‘well off’ Australians took part in the Solar Bonus Scheme. This is a falsehood. I have toured urban and rural communities across the state and have been pleasantly surprised by how many elderly and low-income households have signed up to the scheme. I was particularly impressed with the high level of solar panel uptake in regional towns.
Unfortunately, these people will be among the hardest hit by the Government’s decision.
At the end of the day, it’s all about fairness. People who have done the right thing should be given a fair go. Worried by rising electricity prices, 120,000 households effectively entered into a contract with the Government. The O’Farrell Government now wants to reach back and retrospectively tear up those contracts. The decision will have a massive impact on the households who are covered by the scheme. It is the opinion of many that the NSW Government has no right to walk away from contracts that people have entered into in good faith.
To go ahead and retrospectively change the tariff would destroy trust and undermine people’s faith in democracy and the word of law. Legislation that tears up agreements with no notice and no consultation is unjust and unfair.
One hopes that wiser counsel will prevail and that the O’Farrell Government will back down from this threat. If they don’t, they can expect a backlash. Many households will be hurt by this decision and some have already committed to joining a class action.
In a fair society, it should never have to come to this.
(Jon Dee is the founder and managing director of Do Something! and was the 2010 NSW Australian of the Year. He will be speaking at a rally to protest the government’s decision this morning).