How Green is Your Budget?


I’d like Kevin Rudd and Wayne Swan to spend today with a friend of mine, Fawzia, in Bangladesh. Fawzia is, like me, a young woman with her whole life in front of her. She’s a new mum and a successful environmental journalist. I’d like them to try to explain to her why, in light of the biggest environmental, social and economic crisis the world has ever faced, they did not prioritise moving Australia away from fossil fuels in their first budget, despite knowing that if the Earth were to warm by just one degree Celsius, 11 per cent of Bangladesh would be submerged, putting the lives of 55 million people in danger.

But Rudd and Swan don’t have to travel as far as Bangladesh to hear these concerns and these questions. They can hear them from me, and from the millions of other Australians, especially young Australians, who rate climate change as the top issue facing our country and our planet.

This should have been the world’s first climate change budget, following on from the world’s first "climate change election". In a democracy, the people’s priorities, rather than the fossil fuel lobby, should direct budgets.

Greens Leader Bob Brown has pointed out that 40 times as much is being spent on defence as climate change, yet our Prime Minister still hasn’t grasped the extent of the problem we’re facing. The Stern Review on the economic costs of climate change found that not taking action to combat climate change could result in an economic crash as big as both World Wars and the Great Depression combined. I’m not only talking about babies in Bangladesh – I’m also talking sound economic management.

The climate did receive one victory in last night’s budget: the removal of one of Howard’s many fossil fuel subsidies – for condensate fuels. Condensate is a crude oil extracted from natural gas. Up until now, oil companies could reduce the excise they paid by subtracting the condensate used in their own crude oil. Organisations including GetUp!, Greenpeace and the Australian Conservation Foundation campaigned to remove this subsidy. We will need to see much more of this in the next year if we are to defeat the powerful vested interests of the pollution lobby – coal, aluminium, cement, electricity generators, as well as their front groups like the Australian Industry Greenhouse Network.

Removing the condensate fuel subsidy will provide the Commonwealth Government with a windfall gain of $2.5 billion over four years. But how much of this windfall found its way into the climate change budget?

Tragically, very little. Overall, only $1856.3 million was allocated to climate change initiatives over the next four years, and $365.7 million of this will go to so-called "clean coal" (including carbon capture and storage). Only $227.5 million was allocated to the Renewable Energy Fund, and funding for this program will not even kick in until next year.

The climate can’t afford to wait another year for significant funding for renewable energy. And the fact that in the four-year forward estimates period there is more funding for the coal industry’s unproven Climate Capture and Storage technology than for renewable energy is extremely disappointing.

Speaking of coal subsidies, last night I found something very strange. An analysis of the Budget Paper fine print (Budget Paper 4, page 100) shows that there was a significant increase in fossil fuel subsidies – in a very intriguing form.

Each year, the Federal Government provides direct grants to coal companies to fund their long service leave commitments. Every other firm in Australia funds long service leave as a normal cost of business. And yet in 2007/08 the coal industry received $68 million for this purpose. This year, coal companies will receive direct grants of almost $75 million for long-service leave.

There was some funding to support developing countries to adapt to the impacts of climate change, with the Government delivering on its pre-election commitment of $150 million over three years. But as Oxfam and other aid agencies have pointed out, this level of funding hardly scratches the surface of what will be needed, as climate impacts begin to hit the Global South harder and more often. Oxfam Australia estimates that at least $300 million is needed in the current budget for adaptation, building to $1.75 billion over the next five years. Adaptation spending should be prioritised in the areas of capacity building, disaster preparedness, livelihoods programming and migration.

If you’re one of the many Australians wanting to green your home, there are some positive signs but nothing groundbreaking, and very few announcements of new funding.
Of the $500 million to help households become more energy efficient, the only new announcements were $14 million to change from a 6 star to a 10 star energy rating system for appliances, and $150 million to help landlords install insulation in rental properties.

The solar hot water rebate will almost double the number of Australian homes using
solar energy from 4.4 per cent to 7.4 per cent. But this is still not enough, in one of the sunniest countries on Earth. Similarly, the green loans scheme is a positive step that will eventually make 200,000 homes more energy efficient, but it needs to be scaled up to address the scale of the problem – with the money spread over six years, only about 11,600 homes will benefit this financial year. The ACF suggests we need dramatically accelerated expenditure on a major energy efficiency program to further cut greenhouse pollution and help households and businesses reduce their electricity bills. They argue at least $200 million is needed for this program, this year; and a total of $5 billion over 10 years.

The funding for water solutions is certainly a huge improvement on previous budgets. The "Water for the Future" initiative implements the Government’s election promise of returning water to the Murray-Darling, including $177 million for buying back water. However, much more is needed – probably at least $1.5 billion over the next three years to purchase water to put back into the Basin’s waterways.

Kevin Rudd and Wayne Swan had an opportunity to begin an historic shift in Australia’s economy last night. They missed that opportunity by not investing enough in climate solutions, by being distracted by the false solution of so-called "clean coal", and by continuing to subsidise the fossil fuel industry to the tune of billions of dollars.

Of course, we’re expecting an announcement of greater funding for climate later this year, after the release of new research such as the Garnuat Review and the Wilkins Review. Last night’s budget has a surplus of $23.6 billion for 2008-2009. There’s still time for the Government’s spending priorities to reflect the reality of our climate emergency, but we certainly can’t afford to wait until next year’s budget.

We’re running out of time.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.