A Climate-free Budget - opportunity lost
As could be expected this week’s federal budget does very little for the climate. It doesn’t even mention it!
And by paying out billions in energy relief to low income households at the same time as fossil fuel companies are reaping large windfall profits, our government is effectively adding to the $60 billion implicit subsidy to fossil fuels that the IMF estimated for Australia in 2020.
In some ways the budget works against the climate by boosting emissions-intensive activity in the economy and leaving the task of decarbonisation to the inadequate safeguard mechanism, EV policy and Rewiring the Nation. These three policies will struggle to counter the still growing emissions from most sectors of Australia's strong economy.
Incentives for householders and businesses to buy energy-efficient equipment, funding for a Net Zero Authority and a boost to the hydrogen industry are the only climate-friendly measure in the budget. The increased revenue from the Petroleum Resource Rent Tax (PRRT) may, at best, have a tiny effect on carbon emissions - but that is not its intent; its purpose is to get a fair return for resources that belong to all Australian citizens.
This situation is not surprising given the political economy we are living in - neoliberalism requires governments of any kind to maintain a “trickle-up” economy that delivers wealth to the already-wealthy and keeps the primary fuel for that wealth creation gushing.
Climate dividend advocates, Holden and Dixon have published a new book that critiques neoliberalism and gives a powerful argument for a return to ‘democratic liberalism’. They devote a whole chapter to climate dividends as a form of democratic liberalism.(CCL is donating the book to key MPs around the country as part of our 2023 lobbying strategy.)
The cost-of-living measures in this budget will make a minor reversal of this ‘trickle-up’ trend by passing on a fraction of the unexpected revenue bonanza from iron coal and gas exports to low-income households; but for a short time only. The small increase in the rate of the PRRT is dwarfed by the windfall gas profits that remain largely untaxed.
This budget missed a big opportunity to assist low income households with cost of living and energy pressures and at the same time provide a clear price signal to guide the economy smoothly towards zero emissions. Climate Dividends would achieve all these purposes simultaneously, transforming current subsidies and emissions into climate income for households. It would also relieve governments of the enormous amount of complex work that will have to be done to design and implement the many smaller, piecemeal and less effective policies and regulations that will be required to decarbonise our economy. The EnRoads simulation tool demonstrates how much more effective a carbon price is compared to all other policies.
Australia is taking an each way bet on clean energy and fossil fuels in a vain effort to please two competing sets of interests, at the expense of the public interest. We are backing both horses knowing that only one can ultimately win, that only a zero-emissions economy will be remotely liveable. We are wasting time and tax dollars while giving fossil fuels false hope that they can continue to "play an important role in the energy mix for some time to come" without ever stating the obvious - that it needs to be a fast decreasing role.
By not having a climate focus in the budget our government is ignoring the biggest issue facing our economy, an issue that should underpin every other item in the budget with the question, “how does this help us to restore a liveable climate?” Its omission has the effect of supporting a high-emissions economy by default and undermines the value of its own climate policies.
All future budgets must have the restoration of a liveable climate at their core.
