Download full report

Legislative and Government Information

Download section

Responsible ministers

Under the CEFC Act, the CEFC has two responsible Ministers (see Figure 52). At the beginning of 2016-17, the CEFC was within the Environment portfolio. Following the 2016 federal election, the CEFC came within the Environment and Energy portfolio.

Operative dates Responsible Ministers
26 November 2015 – 19 July 2016 The Hon Greg Hunt MP, Minister for the Environment
Senator the Hon Mathias Cormann, Minister for Finance
From 19 July 2016

The Hon Josh Frydenburg MP, Minister for the Environment and Energy
Senator the Hon Mathias Cormann, Minister for Finance

Figure 52: CEFC Responsible Ministers

Nominated minister

The nominated Minister is one of the responsible Ministers and exercises additional powers and functions under the CEFC Act. The CEFC Act provides that the responsible Ministers must determine between them which is to be the nominated Minister.

Operative dates Nominated Ministers
26 November 2015 – 19 July 2016 The Hon Greg Hunt MP, Minister for the Environment
From 19 July 2016 The Hon Josh Frydenberg MP, Minster for the Environment and Energy

Figure 53: CEFC Nominated Ministers 

Ministerial powers of direction

The CEFC Act is structured in such a way as to maximise the CEFC’s operational independence, particularly with respect to investment decision-making. Ministerial powers to direct under the CEFC Act are limited, primarily to the Investment Mandate.

The CEFC can additionally be directed by Ministers to pay surplus funds to the CEFC Special Account, since the CEFC was not conceived as having a large cash management function. The CEFC had one Ministerial Direction in effect during 2016-17, in addition to the Investment Mandate.

Figure 54: Ministerial Directions  Nominated Ministers
1 July 2016 to
30 June 2017
Ministerial Direction to repay surplus monies to the CEFC Special Account, signed 5 May 2016 by the Hon Greg Hunt MP, Minister for the Environment, and Senator the Hon Mathias Cormann, Minister for Finance.

Figure 54: Ministerial Directions 

Government Policy Orders

The PGPA Act allows the Australian Government to issue directions to the CEFC by means of a Government Policy Order (GPO). No GPOs applied to the CEFC during 2016-17. The CEFC has received notice of the potential future application of the Australian Government Protective Security Policy Framework to the CEFC by means of a GPO.

Statement of compliance 

The CEFC had no instances of non-compliance with Ministerial Directions (including the Investment Mandate) or GPOs in the 2016-17 year.

Procurement

CEFC procurement occurs via the most efficient, effective, economical and ethical means possible, which can involve direct engagement of service providers based on quotes, select tenders, proposals from external advisors, and in some instances, joining Australian Government procurement arrangements. Under section 74 of the CEFC Act, the CEFC must specify in the Annual Report the details for each procurement contract within the financial year valued at above $80,000. See Figure 55.

Effective date Contract
Value $
Expensed $
in 2016-17
Contracting party Purpose
June 2013 590,665 73,783 Marsh Pty Ltd D&O Insurance for period 14 June 2013 to 14 June 2021
January 2015 204,000 41,393 Reval.com Inc 2-year license fees, maintenance, support and implementation costs for Loan Management System
June 2015 501,031 143,120 Technology One Ltd 5-year license fees, 3-year minimum maintenance, support and initial implementation costs for Finance One software
July 2015 723,377 492,299 The Uniting Church in Australia Property Trust (Q.) Extension of lease of premises at Level 8, 140 Ann Street, Brisbane from 15 July 2015 to 14 July 2018. Fully expensed during 2016-17, as the premises were exited in June 2017
March 2016 4,331,218 766,244 Dexus Property Group Lease of premises at Level 17, 1 Bligh Street, Sydney from 1 March 2016 to
28 February 2021
May 2016 155,100 132,396 PwC Internal Audit engagement for 1 July 2016 to 30 June 2017
July 2016 310,161 310,161 Herbert Smith Freehills Legal fees incurred for various investment projects for the period 1 July 2016 to 30 June 2017
July 2016 520,301 520,301 QBT Pty Ltd Work travel and incidental costs for period 1 July 2016 to 30 June 2017, under the whole of government travel procurement program
July 2016 196,944 196,944 Bloomberg Financial Bloomberg terminal and NEF All Insight Package Level III
July 2016 190,375 190,375 Datacom Systems Pty Ltd IT support, applications and hardware for the period 1 July 2016 to 30 June 2017
July 2016 129,715 129,715 National Australia Trustees Ltd Bond custody fees for the period 1 July 2016 to 30 June 2017
July 2016 124,673 124,673 Macquarie Telecom Pty Ltd Provision of telecommunications, data and hosting for the period 1 July 2016 to 30 June 2017
October 2016 151,525 151,525 Taylor Root Recruitment services
October 2016 101,200 101,200 Profusion PAC Pty Ltd Recruitment services
October 2016 237,666 237,666 Korn Ferry Recruitment services
May 2017 4,046,431 94,103 Riverside Development Pty Ltd Lease of premises at Level 25, 71 Eagle Street, Brisbane from 18 May 2017 to 30 September 2022
June 2017 203,500 170,500 Australian National Audit Office Audit of financial statements for year ended 30 June 2017
TOTAL 12,717,882 3,876,398   

Figure 55: Procurement contracts 2016-17

Requirements under the CEFC Act 

The CEFC Act sets out the organisation’s purpose and functions, establishes arrangements for the Board, CEO and staff, and creates a system of delegations to ensure that the CEFC has sufficient resources and appropriate controls on their use. 

The objective of the CEFC under the CEFC Act is “to facilitate increased flows of finance into the clean energy sector”. The main function of the CEFC is to invest, directly and indirectly, in clean energy technologies. The CEFC Act also specifies a number of support functions, including:

  • Liaising with relevant individuals, businesses, agencies and State and Territory governments to facilitate the CEFC investment function
  • Performance of any other functions conferred by the CEFC Act or any other Commonwealth law
  • Anything incidental or conducive to the performance of the investment function or the other functions. 

Clean energy technology is broadly defined in the CEFC Act to be energy efficiency, renewable energy and low emissions technologies. The Act expressly excludes CEFC investment in carbon capture and storage, nuclear technology and nuclear power.

During 2016-17 there were no amendments to the CEFC’s enabling legislation. However, on 31 May 2017 the Australian Government introduced a Bill into the Parliament to amend the CEFC Act to remove the prohibition on investing in carbon capture and storage. At the time of writing, the Bill was waiting to proceed through the House of Representatives and had not been introduced into the Senate. 

CEFC Investment Mandate

The responsible Ministers may issue one or more directions to the Board under sub-section 64(1) of the CEFC Act, known as the Investment Mandate. This is the means by which the Government of the day provides instruction as to policies to be pursued by the CEFC in performing its investment function, provided this:

  • Does not have a purpose of directing the Corporation to make or not make a particular investment
  • Is not inconsistent with the CEFC Act (including the object of the CEFC Act).

Under the CEFC Act, the Board must be consulted on the draft of a proposed new Investment Mandate, and any submission made by the Board must be tabled in each House of the Parliament. 

The Clean Energy Finance Corporation Investment Mandate Direction 2016 (No.2) (the ‘2016 Mandate No.2’) was issued on 13 December 2016 and replaced the Clean Energy Finance Corporation Investment Mandate 2016. The primary change was to provide direction in relation to the new Sustainable Cities Investment Program and the Reef Funding Program. It also directed the Corporation to reduce the funding allocation for the Clean Energy Innovation Fund. The changes in the Corporation’s Investment Mandate are detailed in Figure 56.

The 2016 Mandate No.2 is available at www.comlaw.gov.au.

Name Date Issued Date registered Date of effect
Clean Energy Finance Corporation (Investment Mandate) Direction 2016 5 May 2016 9 May 2016 10 May 2016
Clean Energy Finance Corporation Investment Mandate Direction 2016 (No.2) 13 December 2016 10 January 2017 11 January 2017

Figure 56: Investment Mandates in effect 2016-17

CEFC Investment Policies 

The CEFC Investment Policies are available on the CEFC website: www.cefc.com.au . They include: 

  • The governance framework for CEFC investment activities 
  • The investment strategy, including the 2018 Portfolio Vision, investment approach and guidelines
  • Links to Board-approved Guidelines 
  • Benchmarks and standards for assessing the CEFC performance 
  • Risk management.

The Board is responsible for formulating the Investment Policies and for ensuring they are consistent with the Investment Mandate. The Investment Policies are reviewed at least once annually and also upon issue of a new Investment Mandate. The Investment Policies were updated on 10 July 2017. 

CEFC funding 

Under the CEFC Act, $2 billion is credited to the CEFC Special Account maintained by the Department of the Environment and Energy each 1 July, for five years from 1 July 2013. 

The funds credited to the Special Account give rise to a drawing right of the CEFC against the Special Account, rather than an actual transfer to the CEFC. The funds are only drawn down by the CEFC when the CEFC has a need for them.

The CEFC funds its own operating costs through investment-related revenue. Repayments and revenue from the CEFC’s investments are paid directly to the CEFC operational account and are available for re-investment. Where the Board has identified funds that it considers surplus, these funds can be returned to the CEFC Special Account via the Department of the Environment and Energy.

Under the CEFC Act, and subject to ministerial authorisation by the Minister for the Environment and Energy, the CEFC may also make payments to ARENA. There were no payments made to ARENA during the 2016-17 reporting period.

A summary of movements in and out of the CEFC Special Account is set out in Figure 57.

Transaction Credits ($m) Debits ($m) Balance ($m)
Opening balance of the Special Account – 1 July 2016     4,979
Section 46 Credit – 1 July 2016 2,000   6,979
Section 48 Drawdown of Funds – 6 September 2016   100 6,879
Section 48 Drawdown of Funds – 21 October 2016   250 6,629
Section 48 Drawdown of Funds – 20 January 2017   300 6,329
Section 48 Drawdown of Funds – 21 April 2017   350 5,979
TOTAL 2,000 1,000 5,979

Figure 57: Special Account credits and debits under CEFC Act 2016-17

Other legislation, Australian Government policies, and key governance events

PGPA Act 2013 and compliance with finance law 

As a corporate Commonwealth entity the CEFC’s activities are also governed by the PGPA Act and its subordinate instruments. The PGPA Act imposes various duties, responsibilities and accountabilities on the CEFC Board (both as a collective and as individuals) and on CEFC employees. 

There were no significant issues of non-compliance with finance law identified and reported to the responsible Ministers in 2016-17. 

Note 1 to the Financial Statements contains more information about how the PGPA Act as the main finance law impacts the financial governance of the organisation and the preparation of the accounts. 

Australian Government energy and environmental policies

Significant changes to Australian Government policy relating to the CEFC in 2016-17 were the creation of the Sustainable Cities Investment Program and the Reef Funding Program, through changes to the Investment Mandate. These policy developments were foreshadowed by the Australian Government before it was returned to office at the July 2016 federal election. Post-election, the Australian Government also determined to lower the amount of notional funding allocated to the Clean Energy Innovation Fund to $200 million over two years. 

Through changes to Administrative Arrangements Orders, energy, energy efficiency, climate and environment policy were brought together into one portfolio under the Minister for the Environment and Energy. The CEFC welcomes this development and has been working effectively across the Department and relevant agencies and national energy sector regulators.

More broadly, the intersection of energy and environment policy took centre stage in national policy development and debate in 2016-17, reflecting Australia’s commitments to the Paris Agreement, the impacts of rising gas and electricity prices, the entry of new technologies and several unforeseen weather and system events. These included:

  • Fallout from the Basslink outage and drought affecting hydro generation in Tasmania  
  • The ‘system black’ event in South Australia on 28 September 2016
  • The unanticipated closure of Hazelwood power station in Victoria in May 2017.

Major climate and energy policy reviews were commissioned at the Commonwealth level in response to these events, including: 

  • The Department of the Environment and Energy 2017 Review of Australia’s Climate Change Policies, to recommend an approach to meeting Australia’s emissions target commitments under the Paris Agreement (ongoing)
  • The Ministerial Forum on Vehicle Emissions (ongoing)
  • The Independent Review into the Future Security of the National Electricity Market (Finkel Review) which reported on 9 June 2017. This review will also feed into the 2017 Review of Australia’s Climate Change Policies, above.
  • The CSIRO Low Emissions Road Map – part of the CSIRO’s system-wide approach to mapping Australia’s future markets using science, which reported in June 2017. The Road Map is also intended to help inform the 2017 Review of Australia’s Climate Change Policies by providing an independent, science-based analysis of the technology options in the energy sector that can help Australia meet its 2030 emissions reduction target. 
  • The Climate Change Authority (CCA) report Towards a Climate Policy Tool Kit: Special Review on Australia’s Climate Goals and Policies – published in August 2016 after almost two years of research, analysis and policy consideration, the CCA recommended a comprehensive policy toolkit across Australia’s sources of emissions, including an Emissions Intensity Scheme for the electricity sector.
  • The joint Australian Energy Market Commission and CCA report Towards the Next Generation: Delivering Affordable, Secure and Lower Emissions Power – which was commissioned to provide advice on policies to enhance power system security and to reduce electricity prices consistent with achieving Australia’s emissions reduction targets under the Paris Agreement. The bodies reported in June 2017 and agreed on three recommendations: (i) an Emissions Intensity Scheme for the electricity generation sector (ii) establishing a national framework for the gas market and (iii) the development of a competitive energy services market and associated demand management opportunities.
  • A Feasibility Study of a Second Interconnector (Tamblyn Review). The Australian and Tasmanian Governments commissioned this study into whether a second electricity interconnector would help to address long-term energy security issues and facilitate investment in renewable energy. The study reported in April 2017 and found a second interconnector would “generate material benefits for the NEM under all plausible scenarios analysed and that those benefits would be sufficient to outweigh the cost…in some scenarios but not in others.” The CEFC contributed to this study and notes the scenarios in which the costs do not outweigh the benefit are based on a higher cost of capital than is observed in present market conditions. 

The Australian Government and COAG’s determination of national responses to these reviews is critical to the investment climate for the entire electricity sector, consumers and the national economy. The CEFC has contributed to many of these processes, both informally and formally. Relevant CEFC submissions are available on the CEFC website: cefc.com.au 

During the year, ARENA received more certainty as to its future funding arrangements. The amount of grant funding available for deployment to the sector generally impacts those investments that are incapable of supporting CEFC debt or equity investments without a grant. Certainty around ARENA’s future budget position is therefore a welcome development for the sector.

Other statutory requirements affecting the CEFC

As a corporate Commonwealth entity which participates actively and commercially in the finance sector, the CEFC complies with a range of other statutory reporting requirements. These are outlined below. An index to reporting requirements can be found in Appendix A.

Equal Employment Opportunity (Commonwealth Authorities) Act 1987

The CEFC is required to report annually under the Equal Employment Opportunity (Commonwealth Authorities) Act 1987 (EEO Act). A full report can be found in Appendix B.

Environment Protection and Biodiversity Conservation Act 1999

The CEFC is required to report annually under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act). A full report can be found in Appendix C. 

Work Health and Safety Act 2011

The CEFC is required to report annually under the Work Health and Safety Act 2011 (WHS Act). A full report can be found in Appendix D. 

Judicial decisions and parliamentary committees

The CEFC is not aware of any judicial decisions or decisions of administrative tribunals in
2016-17 that have had, or may have, a significant effect on the operations of the CEFC. There were also no reports about the CEFC made by the Commonwealth Ombudsman or the Office of the Australian Information Commissioner. There were also no reports about the CEFC from the Auditor-General other than the 2015-16 annual audit report accompanying the financial statements (as reproduced in the CEFC 2015-16 Annual Report).

As far as the CEFC is aware, the only Parliamentary Committee reports which substantially involved the CEFC during 2016-2017 were as follows:

  • The Senate Environment and Communications References Committee report of the Inquiry into Retirement of Coal Fired Power Stations (29 March 2017)
  • Senate Environment and Communications Legislation Committee, which reported on Additional Estimates 2016–17 (February 2017) and (29 May 2017)
  • Select Committee into the Resilience of Electricity Infrastructure in a Warming World report, entitled Stability and Affordability: Forging a path to Australia’s renewable energy future (7 April 2017).
Share