Budget Review October 2022–23 Index
Tessa Satherley and Lizzie Smith
Days after the October 2022–23 Budget was handed down, the
United Nations Environment Programme reported that there is currently
‘no credible pathway’
to limit global warming to 1.5°C, due to the global failure to reduce emissions
– implying that catastrophic climate change is currently the default scenario.
Despite that bleak global outlook, Australia’s climate and
environment peak bodies have welcomed the October Budget for its emphasis on
climate action and disaster mitigation. The Climate Council said the Budget was
the
first in a decade ‘to take climate seriously as both an opportunity and a threat’, with similar support
expressed by the Climate
Market Institute, Investor
Group on Climate Change and Clean
Energy Council. However, other Budget reactions bear out warnings made
earlier this year, in response to optimism that ‘the
climate wars are nearly over’ – some cautioning that ‘The
political divide ... is just evolving. It’s not dead’. The Opposition
has decried what it describes as Labor’s ‘spin’ about a ‘wasted decade’ for
climate policy, while the Australian
Greens protested that ‘Labor is giving $42.7 billion in handouts to coal
and gas corporations, who are … accelerating the climate crisis’ – a criticism echoed
by the Australian
Conservation Foundation.
This article summarises some of the key spending and savings
measures on climate action and natural disaster mitigation in Budget
measures: budget paper no. 2: October 2022–23.
Reducing Australia’s carbon
emissions
Budget
strategy and outlook: budget paper no. 1: October 2022–23 outlines
$24.9 billion in spending on climate action to June 2030, including balance
sheet measures such as concessional finance and equity injections (but
excluding standing disaster relief funding and tax subsidies for electric
vehicles; see p. 111). The funding is split over 4 policy areas (outlined
in detail on pp. 112–113):
- $23,478.7 million towards supporting the transformation to net
zero
- $948.3 million towards adapting to climate change and improving
climate resilience
- $295.8 million towards re-establishing Australia’s international
climate leadership
- $194.6 million towards building Australian Government climate
capability
The majority of this spending implements Labor’s pre-election
Powering
Australia plan – see the energy
Budget Review article.
Low-emissions technologies were slated as priority
investment areas for Labor’s promised
$15 billion National Reconstruction Fund (Budget
paper no. 2, p. 153); this appears to be in addition to the above
totals. From the Fund, up
to $3 billion has been committed to investments in ‘clean energy component
manufacturing; hydrogen electrolysers and fuel switching; agricultural methane
and waste reduction; and green metals’.
The Budget also redirects uncommitted funding from
the Emissions Reduction Fund, the Climate Solutions Fund and Safeguard Mechanism
Crediting
to create a $1.9 billion Powering the Regions (PTR) Fund (Budget
paper no. 2, p. 71). This will initially pay for reforms
to the Safeguard Mechanism, an independent
review of the Australian carbon market, and further
development of the PTR Fund. Longer term, the PTR Fund is intended to ‘assist
industries, regional Australia and communities with the transition to net zero
emissions’ (p. 71).
The Budget also promotes carbon farming through the minor
spending measures Powering Australia – Development of Australia’s Seaweed Farming
(Budget
paper no. 2, p. 46) and the Carbon Farming Outreach Program (p.
57). Under the measure Support for Energy Security and Reliability, there is
also some funding for ‘modernising’ the Greenhouse Energy Minimum Standards program and the
Nationwide House Energy Rating Scheme (p. 7).
Other notable changes include cuts to Coalition programs supporting
fossil fuels – though less than hoped for by the Australian
Conservation Foundation and Australian
Greens. In Budget paper no. 2, $746.9 million
has been redirected from the Climate Change, Energy, the Environment and Water
(CCEEW) portfolio (p. 62), including from Coalition gas and carbon capture
and storage (CCS) investments.
However, CCS research has not been entirely defunded. Under the
Carbon Capture Technologies for Net Zero and Negative Emissions – establishment
measure, the Budget ‘re‑aligns’ $141.1 million worth of Coalition CCS
commitments over 10 years to prioritise hard‑to‑abate sectors (such
as cement manufacturing), carbon dioxide removal and negative emissions
technologies (Budget paper no. 2, p. 57). Most
of this funding is beyond the forward estimates, which show a net ~$0.1 million
funding cut.
The CO2CRC
and Global
CCS Institute condemned the cuts, claiming that they ‘deny Australian
industry its greatest chance to achieve significant emissions reduction this
decade’.
A full breakdown of program cuts in the CCEEW portfolio has
been tabled
by the Department.
Reducing the Australian Government’s carbon emissions
The Budget also targets the Australian Government’s own
carbon footprint. It has been over 10 years since the
last official data on consolidated government agency emissions was released
or the policy
responsible for directing this reporting was updated. While agencies must
include information concerning ‘environmental matters’ in annual reports (under
section 516A of the Environmental
Protection and Biodiversity Conservation Act 1999), the scope and
detail vary widely, and some agencies do not include emissions
information. To rectify this, the Budget provides $7.1 million for an ‘interim
policy’ and emissions reporting framework for the Australian Public Service
(APS) (excluding security agencies), and to help transition the APS to net zero
emissions by 2030 (Budget
paper no. 1, p. 17; Budget
paper no. 2, p. 169) – a Labor Powering
Australia commitment (p. 2). Given that a large share of emissions
is probably due to the Department
of Defence’s energy requirements, this exclusion is significant.
In addition, the Budget provides $42.6 million over 4
years (and $12.3 million per year ongoing) to support the Climate Change
Authority (CCA) to perform new advisory functions under Part 4 of the Climate Change Act
2022 (Budget paper no. 2, p. 75). Initially
established under the Gillard Labor Government in 2012, the CCA
has survived funding cuts and, in 2013–14, two attempts to have it abolished
(p. 107). The extra funding in the October Budget will more than triple
the CCA’s resourcing (from $3.2 million to $10.2 million) and is expected to raise
its Average Staffing Level from 11 to an estimated 38 (Agency
resourcing: budget paper no. 4: October 2022–23, p. 44, 151).
Separately, the Budget funds the DCCEEW to deliver an Annual
Climate Change Statement to Parliament (Budget paper no. 2, p. 75). The
statement will detail Australia’s progress on its climate change commitments
and include the effectiveness and impact of Australian Government policies (see
Part 3 of the Climate
Change Act 2022).
Disclosing and managing climate
risk
Budget
paper no. 1 outlines plans to improve the visibility of climate risks
in the Budget and APS reporting (pp. 108–109), and prominently discusses
climate risks in the introduction to ‘Statement 9: Statement of Risks’ (p. 254).
In Budget
paper no. 2, $9.3 million is provided over 4 years for a Commonwealth
Climate Risk and Opportunity Management Program (Budget
paper no. 2, p. 58), and
$36.1 million over 4 years (and $6.9 million per year ongoing) for Restoring
Treasury’s Capability on Climate Risks and Opportunities (p. 190).
Restoring Treasury’s Capability also includes $6.2
million to develop climate reporting standards for large businesses and financial
institutions (p. 190). The Australian Accounting Standards Board has
already prepared the way with stakeholder
consultations, during which 20 of Australia’s business peak body groups announced
support for adopting the International Sustainability Standards Board’s
draft sustainability standard.
It is unclear if the Australian Government plans to make the
climate reporting standards mandatory. According to media
reporting shortly after the Budget, Assistant Treasurer Stephen Jones
confirmed to one industry group that ‘the government had started talks with
industry “at an informal level” over the potential for mandatory disclosure
standards and what form they might take’.
Disaster mitigation and climate adaptation
October’s Budget provides $7.4 billion over the forward
estimates for natural disaster relief – mostly due to estimates variations for
‘disaster recovery assistance’ to the states and individuals (Budget
paper no. 1, pp. 79–80). The balance of the $7.4 billion ($86.3 million)
is for ‘new policy decisions, including support for the 2019–20 bushfire
recovery and floods that occurred before the election’ (p. 79).
Consistent with Labor’s pre‑election disaster
readiness election
commitments, the Budget provides for disaster mitigation and
resilience measures across several portfolios. Most relevant measures fall
under Home Affairs, home of the new
National Emergency Management Agency (NEMA), including:
- $630.4 million over 4 years for the flagship Disaster Ready Fund to
fund mitigation projects, comprising $30.4 million in 2022–23 for resilience
initiatives across 30 local government areas (Budget
paper no. 2, p. 147; Home Affairs
Portfolio Budget Statement, p. 103), then $200 million annually on
disaster mitigation projects over the forward estimates. This signals the
Government intends to spend the maximum
amount allowed per annum under the fund’s proposed governing legislation, at least over its first term, implementing an election
commitment (p. 9). The Insurance
Council of Australia welcomed the measure and said it ‘strongly supports
the Federal Government’s intent that this fund is matched by the states and
territories’.
-
$38.3 million over 4 years to support capability building by the
veteran‑led volunteer organisation Disaster Relief Australia (Budget paper no. 2, p. 147), also
implementing an election
commitment (p. 9).
- $51.5 million in 2022–23 on additional Disaster Support,
including support for recovery from the May 2022 floods in Queensland and
2019–20 Black Summer bushfires in Victoria, and to rebuild
Lismore’s Norco ice cream factory (historically one of the Lismore area’s
‘anchor’ large employers, destroyed in the February–March floods).
- $25.3 million to NEMA over 5 years for a Plan for Disaster
Readiness – rising insurance premiums (Budget paper no. 2, p. 151), as
detailed in a 26
October press release. The Insurance
Council has welcomed the measure.
- $15.9 million for Engaging with First Nations Peoples on Climate
Change, to establish the Torres Strait Climate Change Centre of Excellence (Budget paper no. 2, p. 60); and
various measures supporting Great Barrier Reef and Murray–Darling ecosystems.
New environment and water programs also received significant
spending to support climate adaptation and ecological resilience, funded by re‑directing
some Coalition projects in the same areas – see the environment
and water
Budget review articles.
There are further small Budget measures across other
portfolios, including Improving Drought Readiness, Resilience and Preparedness
(Budget paper no. 2, p. 46),
Funding for Community Legal Centres in Flood and Bushfire Affected Areas (p. 50;
implementing an election
commitment, p. 9) and a ‘Pacific Climate Infrastructure Financing
Partnership stream ... to support climate related elements of infrastructure
and energy projects in Pacific countries and Timor‑Leste’ (p. 110).
Since the Budget, the Government
has also announced it will contribute to the Northern Rivers home buy‑back
scheme (first
announced by the NSW Government in August) – ‘almost
nine months after residents used dinghies to save each other from roofs’. The scheme was announced
by the Prime Minister and the NSW Premier days
after the Budget:
Around 2,000 homeowners in flood-prone areas of the Northern
Rivers of New South Wales will now be eligible to raise, repair, retrofit or
have their home voluntarily bought back, as part of a new $800 million program.
The Commonwealth and New South Wales Government joint funding will support
residential homeowners … in the seven Local Government Areas of Ballina, Byron,
Clarence Valley, Kyogle, Lismore, Richmond Valley and Tweed ... in the most
vulnerable areas where major flooding would pose a catastrophic risk to life.
The Australian Government’s
contribution is likely to be $350 million, assuming 50/50 cost sharing with NSW
of the ‘$700
million joint funding’ described in the press release. This was presumably budgeted in the Contingency Reserve
as a ‘Decision Taken But Not Yet Announced’ (Budget
paper no. 1, p. 204).
The media is reporting that
Northern Rivers residents have cautiously welcomed the scheme, despite nearly
a year of frustration with the slow progress. The
ABC reported that, at Budget time, ‘Almost
1,000 people from the Northern Rivers … remain in emergency housing.’
The Australian Government is
also funding
buy‑backs in southeast Queensland as part of a joint program with the
Queensland Government, including in Brisbane,
Ipswich, Logan and Moreton Bay, announced
by the former Coalition Government in April.
All online articles accessed October 2022
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