For a treasurer who considers climate change to be one of the three key challenges of the budget he has failed miserably to rise to the challenge.
Penny Wong and Kevin Rudd failed to prioritise climate in the budget.
To begin, we must give credit where credit is due. The extra $652 million in funding for renewable energy that will boost the now $5.1 billion Clean Energy Initiative is a useful increase in funding to complement the legislative structure in place – the Renewable Energy Target. A RET of 20% by 2020 is far from adequate, but it’s a start.
The money comes from savings generated by shelving an emissions trading scheme heavily weighed down with compensation promises until the end of 2012. It is interesting to note that the budget papers point to savings from fiscal outlooks until July 2014 – does this mean Rudd intends to keep the ETS on hold until then? Let’s hope not.
Australia has climate policy requirements that we are not living up to, and that cannot possibly be fulfilled with spending structures like those put forward in the latest budget.
Penny Wong and Kevin Rudd promised at Copenhagen to contribute to a global carbon reduction corresponding to a 2°C limit on global warming. And Rudd still stands by his original promise of reducing Australia’s greenhouse gases by 5-25% on 2000 levels by 2020.
We will not reach these requirements without economy-wide structural reform aimed at reducing greenhouse gases. Handouts like the $652 million for renewables, while they are welcome, will not achieve structural change on the scale needed to respond to climate change. Measures like this are too small and ad hoc to achieve the change we need.
We commend the targeting of $335.4 million towards international climate aid, starting in 2011. This includes funding directed towards international climate change adaptation, forest carbon, and the Multilateral Climate Change Fund, agreed to as part of Australia’s Copenhagen commitments. All well and good, but notice that this aid comes out of Australia’s existing international aid budget and is not the new money that climate aid needs to be.
The budget continues perverse subsidies to industry that act to promote increased use of fossil fuels and decreased energy efficiency. These include fuel tax and infrastructure subsidies – new announcements include a massive handout to build rail infrastructure to support mining, paid for by the new Super Profits Resource Tax. This does not reallocate mining wealth across the economy, as argued by Wayne Swan, but directs the tax straight back to where it came from – big international mining companies.
There have also been significant cuts to Caring for Country and Landcare programs, as well as cuts to schemes aimed at incentivising efficient use of water in our cities.
If Australia really considers climate change a central challenge to our budget and to our economy, we will need to restructure our economy towards a low-carbon future. We need a more consistent, broadly applied, economic-based response to the challenge of climate change. This will need centrally include a carbon pricing mechanism, and subsidies will need to be transferred from activities promoting emissions-intensive behaviour to low carbon activity. We need legislation to provide the broad structure for the transition, and we need complementary funding and subsidies to support it. Every budget seems to put this economy-wide reform back one, two, three years. We need to get started. Now.
Jane Stabb is a policy analyst at the Australian Youth Climate Coalition
