14 May 2014
Renewable Energy Target Review
Expert Panel
SUBMISSION TO THE RENEWABLE ENERGY TARGET REVIEW
RELATING TO
GRANVILLE HARBOUR WIND FARM
GRANVILLE HARBOUR TASMANIA
THE SOCIAL IMPACTS OF SOVEREIGN RISK AND MARKET UNCERTAINTY
Dear Expert Panel Members,
I welcome the opportunity to comment on the social effects relevant to the
Renewable Energy Target (RET) Review, specifically in the areas of sovereign risk and
market uncertainty and the potential impacts that could flow from major changes
and frequent reviews of the target.
This submission paper relates directly to the Granville Harbour Wind Farm project in
Tasmania, in order to provide some specific examples of the social effects that major
change and uncertainty with regard to the RET can have on initiative, hard work,
community spirit and self-reliance.
In order to do so effectively, it is important to look at history.
Located on a plateau of rich, red basalt soils, just north of the coastal community of
Granville Harbour, Granville Farm overlooks the Southern Ocean on Tasmania’s
rugged west coast.
It is potentially Tasmania’s most isolated farm, producing some of Australia’s highest
quality grass fed beef, from what is one of the cleanest farming environments on the
planet.
The 3000 acre farm has been a life long journey for the Smith family. After the turn
of the last century, Zeehan, (“The Silver City”) had a population of 10,000 with 27
pubs and a lot of hungry miners to feed. Cattle were driven down the west coast of
Tasmania, swum across the notorious Pieman River and rested and fattened at
Granville Farm before being driven to market in Zeehan.
In the 1960’s, the Smith’s and a friend leased the land which comprised of 30 soldier
settlement grant titles. Originally cleared by axe, much of the bush on the farm had
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regrown as Zeehan’s population had declined over the years and the demand for
local beef had all but disappeared.
The Smith’s purchase of the land, provided the opportunity for the farm to be
established in a way that both preserved native habitat and facilitated the
production of premium quality beef.
Today, the property sustains up to 1850 head of premium beef cattle on 2000 acres
of prime pasture with 1000 acres of native forest shelterbelts.
No external livestock have been introduced into the property for over 30 years to
help reduce pathogens and minimise drenching programs. Breeding is mainly
through artificial insemination. The farm is Cattle Care and European Union Export
Accredited and has achieved quality grading’s of over 98% from Meat Standards
Australia.
The Smith’s ultimate vision was twofold. Having created a world class beef cattle
property, the next part of the Smith’s vision was to produce renewable energy to
supplement the cattle operation, build self-reliance, provide employment and
business confidence to the local community and provide additional energy security
to Tasmania.
The 99MW (33 turbine) project received Local Government approval on 8 May 2014,
having secured State and Federal approval in the preceding 18 months.
The project due diligence and Local, State and Federal Government approvals
process spanning three years, was solely funded by the Smith family and the
operations of the farm. There were no third party investors or developers.
The support from the local community towards the project has been outstanding.
During State and Local Government project assessment, only one public submission
was received and it was in support of the project. It proves that wind farms can be
winners if they are well planned, well sited and present no significant environmental
impacts.
The Federal Government advised the project was not a controlled action (if
conducted in a particular manner) which exemplified the minimal environmental
impact of the project.
In essence, the initiative, perseverance and hard work of the Smith family are the
character traits that are often displayed in regional Australia and these traits deserve
to be recognised and encouraged for the social and economic benefits they create.
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Sovereign Risk
It is disheartening to see any worthwhile endeavour, particularly one that takes
considerable commitment, foresight and hard work, be negated by a change in
Government policy, regardless of the imperatives for change.
A significant reduction in the RET could potentially place the future of the Granville
Harbour Wind Farm project in jeopardy and send a clear message to the many
interested and supportive families and businesses in the region, that the initiative,
hard work and “can do” approach of one family to help build self-reliance and a
more prosperous community, can be destroyed at the stroke of a pen.
In a relatively depressed region with fluctuating employment opportunities in the
mining and tourism sectors, the effect of this reduction in confidence cannot be
underestimated.
To the close knit and conservative regional communities on the west coast of
Tasmania, the term sovereign risk is generally associated with the largely foreign
owned mining sector and proposed policy changes that could have an effect on
foreign investment. For it to be seen as a barrier to local business and future job
growth, it would create significant levels of distrust in Government decision making
and erode business confidence.
Given that the project has received approval from all layers of Government, it would
be seen by the community as a cynical move by the Government to change the
policy settings to the extent where the project was in jeopardy, regardless of the
economic drivers.
In the unforseen event that a significant change in the RET was implemented, that
effected or potentially jeopardised the project, it would be in the interests of both
Government and the communities involved to ensure that “grandfather clauses”
were in place to facilitate the delivery of the project, due largely to the considerable
social capital invested and the fact the project is approved across all levels of
Government. Without these clauses, trust in Government initiatives would be
derided and the community would view innovation and foresight as too risky.
It is requested the panel take into account the following issues in relation to
sovereign risk when determining any changes to the RET:
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Sovereign risk has a high social cost as well as an economic one in regional
communities where employment opportunities are often less than in urban
areas;
Changes in Government policy that create sovereign risk erode business
confidence and innovation; and
Governments’ intent on changing policy (regardless of the reason) that have
the potential to create sovereign risk should include “grandfather clauses” to
protect and reward the good faith and hard work of proponents and provide
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a “safety net” for communities who have often invested considerable social
capital in the project at stake.
Market Uncertainty
Constant Government indecision, review, ambiguity and policy change can reduce
business and community confidence to a level where investment stops,
unemployment jumps and health and wellbeing are jeopardised. The same principles
apply to the renewable energy sector with continual reviews of the RET.
The old saying “if it isn’t broken, why fix it” applies. Any business sector under
constant Government review finds investment difficult and confidence erodes.
The RET should be reviewed as and when the market circumstances dictate a review,
and not on a statutory timed basis.
In the context of the Granville Harbour Wind Farm, conducting RET reviews as and
when required builds investor and community confidence; it builds faith in
Government policy and helps facilitate a more stable platform for economic growth
in the local region as the Government is seen to be proactive to market forces and
not reactive.
It is requested the panel take into account the following issues in relation to market
uncertainty when determining any changes to the RET:


Conduct reviews of the RET based on market circumstances and not on a
statutory timed basis; and
Develop a policy framework that reviews the market circumstances
surrounding the RET to help identify trends, opportunities and threats.
Conclusion
This submission to the RET review has been written in regard to the social impacts of
changes to the RET that would apply to impacts on sovereign risk and market
uncertainty in the context of the proposed Granville Harbour Wind Farm.
The intent was to highlight the social impacts that significant negative changes to the
RET would have on a number of regional west coast Tasmanian communities.
It also highlights the impacts a negative change in policy can have on business
confidence and innovation.
The social effects of a major winding back of the RET in this Tasmanian context
cannot be underestimated at the local and regional level.
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A visit by the panel to Granville Farm and the local community would be most
welcomed and would provide the panel a first-hand opportunity to gain a better
understanding of the significance of the issues at stake.
For your consideration
Yours faithfully,
ALEX SIMPSON
Resident – Granville Harbour
Tasmania
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