Crikey



The Power Index: carbon cutters, Oliver Yates at #4

Banking chief Oliver Yates seems horrified to be asked if he is a “greenie”.

What’s a greenie, he asks? An environmentalist, The Power Index replies; someone who wants to protect the environment. There’s a pause. “I consider myself to be a father with three kids,” he answers carefully, explaining he feels a responsibility to the next generation.

It’s a fair question. Why would someone who’s spent 20 years in the millionaires’ factory of Macquarie Bank leave all that to head up the government’s new, controversial green bank — which might be shut down before it gets going?

Yates is CEO of the Clean Energy Finance Corporation, which has $10 billion of taxpayers’ money to invest in renewable energy and energy efficiency. The money starts to flow with an initial $2 billion from July; the Coalition has already promised to close this “giant slush fund”.

There’s not so much as a dreadlock or a hemp garment to be seen on this suited banker, but one lesson soon becomes clear: if you strip away the emotional language of the climate wars, there are people who would like better environmental outcomes in unexpected places.

Yates started at Macquarie in 1988 and worked in Australia, Europe and the US, for both Macquarie Bank and Macquarie Capital. He shifted to the company’s green banking section relatively recently and was global head of utilities and climate change (including investments in wind, solar and carbon credits) from 2008-10. He worked on REDD, the UN’s forest carbon scheme.

Yates’ salary doesn’t appear in Macquarie’s annual reports; the firms’ top executives earned $1.4-5.2 million, including bonuses, in 2010. An expert on banking remuneration pointed out Yates was at Macquarie for the pre-GFC boom years, and estimated he may have been paid close to or over $1 million in some years, depending on the performance of his portfolio (Macquarie was known for paying highly variable salaries depending on the latter, while base pay could be relatively — and we’re talking about bankers here — low).

Yates left Macquarie in 2010, was involved in smaller firms — Driftwood Capital and Linc Energy — and unsuccessfully sought NSW Liberal preselection for the Senate in 2009. He started at the CEFC in November, lives in Melbourne and commutes to CEFC headquarters in Sydney.

The CEFC was a surprise announcement. Modelled on the UK’s green investment bank, it sits within Treasury and lends money to co-finance green projects. Reserve Bank stalwart Jillian Broadbent is the board chair (she’s seen as the safe pair of hands at the top, with Yates as the day-to-day driver), and there’s an ex-Macquarie power clique, with Michael Carapiet and Anna Skarbek on the board.

The CEFC can invest in manufacturing and transmission, but is aimed more at proven technologies than start-ups, and doesn’t give loan guarantees or grants. Its line of credit doesn’t appear in the budget; the money is lent out and the government expects a rate of return equivalent to the bond rate (about 3.5%). So Yates doesn’t just spend your money, he’s supposed to get it back.

Yates has a cool, brusque manner when interviewed over a coffee in Melbourne. He doesn’t bother with spin or try to persuade; he gives straight answers and behaves like someone used to being listened to. He seems used to letting his balance sheets do the talking. Crikey shouts Yates a coffee, which is probably what you want from the person in charge of $10 billion of your money.

Most industry insiders reckon Yates has the Macquarie touch (read: a banker’s ego). One senior figure said you either like him or you don’t.”

Climate industry analyst Rob Fowler welcomed the arrival of this mainstream banker: “I think it’s important people from the real world get more and more involved in this area.”

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Categories: Australia, Carbon Cutters, Companies, Economy, ENVIRONMENT, Markets, THE POWER INDEX

11 Responses

Comments page: 1 |
  1. Clean Energy Finance Corporation is “giant slush fund”? And what will Abbott’s Direct Action plan to give the polluters taxpayer money from the budget be called?

    Renewable energy target was first set by Howard in 2001. Aust is now around the 30% mark, in comparison Norway is around 60%.

    by Achmed on Mar 18, 2013 at 11:52 am

  2. Thanks Cathy A for this series.
    One would have thought that doing ‘some good’ whilst being any leader in what ever sphere should be an imperative or basic modus operandi rather than an optional extra that offers a ‘bonus’.

    by Mike Flanagan on Mar 18, 2013 at 11:56 am

  3. lives in Melbourne and commutes to CEFC headquarters in Sydney”

    Say what?

    I don’t care how many billions of winner-picking taxpayer dollars he controls, there’s no way anyone with such a carbon-profligate modus operandi deserves to be on any list of carbon cutters, let alone no. 4.

    by Mark Duffett on Mar 18, 2013 at 1:51 pm

  4. Interesting point Achmed, but not sure where you got your numbers from. Renewables generated 4.3% of Australia’s energy last year (http://www.bree.gov.au/documents/publications/aes/BRE0133EnergyUpdate2012.pdf), or 10% of Australia’s electricity generation. The RET will see 20-25% of electricity from renewable sources in 2020. Does Norway have lots of hydro?

    by Cathy Alexander on Mar 18, 2013 at 2:27 pm

  5. That was meant to 3%. and yes, Norway have lots of hydro

    by Achmed on Mar 18, 2013 at 3:19 pm

  6. Climate industry analyst Rob Fowler welcomed the arrival of this mainstream banker: “I think it’s important people from the real world get more and more involved in this area.”

    - and why would that person be any more competent than someone from the public service. It’s nonsense to suggest that someone with ‘real world’ experience would be any better than one of the many, many highly skilled people in the senior ranks of the public service. Indeed, what is an ex-Macquarie banker likely to be best at ? The whole culture of merchant banking is to maximise one’s own personal position. I would guess that Mr Yates and his ilk spent rather less time thinking out the return the shareholders of Mac Bank were getting as a result of his efforts, than he though about his own remuneration. In fact, probably the only thing worse than an ex high flying banker to be in charge would be an ex politician.

    by bjb on Mar 18, 2013 at 3:34 pm

  7. It ain’t easy being green if you’ve been tarred with the Linc Energy brush, but it seems like he’s on a tunnel to Damascus which won’t have much light at the end of it.

    by Coaltopia on Mar 18, 2013 at 3:57 pm

  8. Mark, for what it’s worth, apparently the CEFC board adopted a formal policy of tele and video conferencing last week. I’m not sure if this will assuage your concerns …

    by Cathy Alexander on Mar 18, 2013 at 4:46 pm

  9. Considering its the bankers who are to blame for GFC, manipulating the markets, interest rate derivatives, Libor scandal, Collusion between wall street and Capitol hill in US! Bank of England admits loss of income caused by banks is as bad as World War II, fraudulent and criminal activities with south American drug money etc.
    These are the people still in charge of the system and were suppose to trust them? However, I take my hat of to him for realising it was the perfect time to get out.

    by dazza on Mar 18, 2013 at 8:12 pm

  10. Depends whether the ‘formal policy’ actually applies to the CEO’s lifestyle - he wouldn’t be the first CEO to be practically exempt from such things. And even if it does, I’m not sure how ideal it is to have a Charlie-like boss who only ever appears to his employees as a disembodied voice or head on a screen.

    I still find the arrangement incongruous in the extreme, and bemusing that more hasn’t been made of it.

    by Mark Duffett on Mar 19, 2013 at 9:31 am

  11. Keeping that $10 Billion in perspective; this is just eight weeks worth of John Howard’s annual $60 Billion mortgage interest bill.
    Now labor has been busy trying to defuse Howard’s $1Trillion GFC housing debt time bomb for the last five years.
    This work includes the reduction of expenses by empbracing renewables and overcoming waste using “our” $ten billion slush fund.
    All set to collapse into chaos with the coming Abbott fiscal Anarchy.
    Are bankers unaware of this risk?
    The GFC comes to OZ?

    by Hamis Hill on Mar 19, 2013 at 9:59 am

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