The federal government of Australia announced on Tuesday night the sudden end to the $320-million solar hot water programme. The decision was part of the Gillard government's major revamp of its subsidy programmes.

Parliamentary Secretary for Climate Change Mark Dreyfus said beginning Tuesday night the Renewable Bonus Energy Scheme would no longer accept applications for solar hot water rebates. The scheme offered rebates of up to $1,000 for Australian households that installed solar hot water systems.

Experts said the sudden stop could be part of the government's review of its clean energy subsidy ahead of the introduction of the carbon tax. It is expected to help meet the government's target to return to a budget surplus by 2012-13.

Due to the sudden move, the Construction, Forestry, Mining and Energy Union warned that up to 1,500 could be lost because of the new policy. It may worsen the threat of the loss of 10,000 jobs due to the cashflow problems experienced by Reed Construction and the recent closure of the 102-year-old Kell and Rigby construction firm.

Prior to this development, the pink batts scheme was removed due to poor installations, training and accountability and the surge of demands for green loans. The government had also ended subsidies for rooftop solar panel installations which led to a glut in renewable energy certificate.

Kane Thornton, acting chief executive of Clean Energy Council, said the end of the programme would place 1,200 manufacturing and another 6,000 installation jobs at risk.

Solar manufacturing companies, such as Rheem Australia, said the move may kill the market and leave it holding millions of dollars in stock. It would be another hit for Rheem which has been affected by the high Australian dollar and competition from cheaper, imported gas-fire units and solar photovoltaic cells that continue to enjoy subsidies.

Mr Dreyfus pointed out that the scheme, introduced by the Howard government in 2007, was due to end in 2012 anyway. He said the programme had subsidised 250,000 installations and would suffer from cost overruns if it would be allowed to go on further.

Prior to the announcement, the industry has been lobbying with the government to extend the programme. Although since it was introduced, between 80,000 and 100,000 solar hot water systems had been sold yearly in Australia, 60,000 people would miss out the chance to bring down their cost, said Rheem Government Relations Manager Gareth Jennings.

Prime Minister Julia Gillard said the introduction of the carbon tax in July would increase the incentives for Australians to shift to clean energy technology. However, home owners who have already made deposits for the systems would still qualify for the rebate.