Climate change


Budget Review 2011-12 Index

Budget 2011–12: Climate change

Anita Talberg

That this Budget is thin on climate change policy details comes as no great surprise. The development of such policy has been entrusted to a Multi-Party Climate Change Committee (MPCCC) that is not expected to announce details of any proposed scheme until later in the year. To date, the MPCCC—created by the Prime Minister in September 2010 to win the support from the Greens and Independents in securing government—has released only the broad architecture of a carbon price mechanism.[1] In its third communiqué it advised that it intends the carbon price ‘package’ to be budget neutral.[2]

Climate change funding announced in this Budget is therefore restricted to programs and measures that can be considered additional to a carbon price mechanism, and thus it is, for the most part, uncontroversial. Again, renewable energy forms a large component of the Government’s climate change strategy, with a special focus on promoting new and emerging technologies, but this is covered in detail in the separate brief ‘Renewable Energy.’

Climate change advertising

In the 2009-10 and 2010–11 Budgets, $30 million was allocated to an advertising campaign known as the Climate Change Foundation Campaign.[3] The program was subsequently paused pending the outcome of the 2010 election. [4] Although apparently less than $1 million of the total allocation has thus far been spent, this latest Budget sees only $13.7 reallocated to the program over two years, with $5.5 million earmarked for 2010–11 and $8.2 million for 2011–12. [5]

Carbon Farming initiative

One important new program that is considered either separate or complementary to a carbon price mechanism is the Carbon Farming Initiative (CFI), which was a Government election commitment.[6] By creating incentives to reduce emissions and maximise carbon absorption from farming and forestry activities, the CFI attempts to engage regional Australia in the national challenge of mitigating emissions of greenhouse gases. First announced in the Mid-Year Economic and Fiscal Outlook (MYEFO) 2010–11, the program is costed at $45.6 million over four years, of which $39.6 million is provided to the Department of Climate Change and Energy Efficiency (DCCEE) and $6 million to the Department of Agriculture, Fisheries and Forestry (DAFF).[7] Of the $6 million, $4 million is to provide landholder education and training on the CFI through Landcare. The other $2 million will see the creation of a Biochar Capacity Building Program to further research into biochar opportunities.[8]

Policy data, analysis and modelling

To help inform the decision-making process of the MPCCC, the Government has commissioned analysis and modelling tasks from various agencies. On 15 November 2010, the Government announced that the Productivity Commission (PC) would undertake ‘a study of emission and energy-reduction policies in key international economies’. [9] The PC was provided $2.6 million for this measure, which was a ‘decision taken but not yet announced’ at the MYEFO 2010–11.[10] Another $6.6 million over two years is provided to the Treasury to ‘maintain its existing capacity to model and analyse the aggregate economic, sectoral and distributional impacts of different emission reduction goals and trajectories.’[11] In addition, $5.9 million over two years is being provided to the Australian Bureau of Statistics to produce the data for analysis.[12] Finally, an additional $20.2 million is provided over four years to the DCCEE to continue collecting and policing national greenhouse gas and energy reports from Australian businesses.[13]

Emissions from coal power

There have been some changes to funding measures aimed at reducing emissions from Australian coal power stations. A new National CO2 Infrastructure Plan is to be established with $60.9 million over four years. The plan will fund investigation into the exploration, data acquisition, drilling, storage and transport of carbon dioxide. However, the funding is from existing money redirected from the Carbon Capture and Storage (CCS) Flagship.[14] Overall, funding for the CCS Flagships Program—originally funded in 2009–10 as a $2 billion initiative—is being reduced by $670.9 million over five years (although $420 million is expected to be returned after 2015).[15] Another $100 million is being cut from the Global Carbon Capture and Storage Institute over the forward estimates, with $5 million to be returned afterwards. [16] More than $300 million is being redirected to the Natural Disaster Recovery and Rebuilding package.[17] The National Low Emissions Coal Initiative has also had funding reduced by $12.8 million over five years.[18]

Energy efficiency measures

There is some new money in this Budget for energy efficiency measures. The DCCEE is being provided $28.1 million over five years specifically for energy efficiency programs, and some of this money is intended to fund delivery of the ongoing COAG National Strategy on Energy Efficiency.[19] There has also been a change to the car fringe benefit rules, in line with a recommendation from the Australia’s Future Tax System Review (Henry Review). This will remove the situation whereby a greater mileage increases the fringe benefits tax concession, and should encourage greater frugality in the use of vehicles that come under fringe benefits.[20] Details of the Budget impact of this measure are provided in the brief ‘Reform of the car fringe benefit rules’. The Government has also decided to defer the commencement of Tax Breaks for Green Buildings until July 2012, for a saving of $295 million over the forward estimates.[21] Aside from these three initiatives, this Budget’s energy efficiency actions are more focussed on the final stages of fixing problems arising from the previous Budget in areas such as the Green Loans and Home Insulation Program.

Home Insulation Program corrections

The 2011–12 Budget sees the tail-end of funding which had been redirected to correct safety concerns of the Home Insulation Program (HIP). Three such programs had been announced in the 2010–11 Budget: the Home Insulation Safety Program (HISP), established to perform safety inspections of ‘at least 150,000 homes that had non-foil insulation installed’; the Foil Insulation Safety Program (FISP), established to ‘inspect approximately 50,000 homes that had foil insulation installed’; and the Insulation Industry Assistance Package, established to support firms that participated in the HIP.[22] In addition to the HISP, the Government has been undertaking household-initiated inspections, and in this Budget has announced that it will continue to do so until July 2012.[23] This will be funded from existing resourcing for the HISP and FISP with any residual funding being returned to the Budget.[24]

Green Loans and Green Start wrap up

The Government announced in July 2010 that the Green Loans program would be terminated and replaced by the Green Start program. Like the Green Loans program, the Green Start program aimed to improve household energy efficiency, but it was specifically targeted at low-income homes. However, in September 2010 an Auditor General’s report concluded that the Green Start program should not go ahead. Instead, the Green Loans program was extended to 28 February 2011.[25] The 2011–12 Budget reflects these decisions, providing savings of $209.5 million over three years from the cancelled Green Start program. Of this, $10 million goes towards extending the Green Loans program and $36.5 million to financial and training assistance schemes for those contractors unfairly affected. [26]

Adapting to climate change

There is no new money in this Budget for climate change adaptation initiatives in Australia. However, $251 million, or six per cent of Australia’s total overseas development assistance in 2011–12, is dedicated to climate change and environmental activities in other countries.[27]



[1].       Australian Government, ‘Carbon Price Framework, Department of Climate Change and Energy Efficiency (DCCEE) website, viewed 12 May 2011, http://www.climatechange.gov.au/government/initiatives/multi-party-committee/carbon-price-framework.aspx.

[2].       Australian Government, ‘Communiqué 21 December 2010’, DCCEE website, viewed 12 May 2011, http://www.climatechange.gov.au/government/initiatives/multi-party-committee/meetings/third-meeting/communique.aspx

[3].       Australian Government, Budget measures: budget paper no. 2: 2010–11, Commonwealth of Australia, Canberra, 2010, p. 119, viewed 18 May 2011, http://cache.treasury.gov.au/budget/2010-11/content/bp2/download/bp2_v2.pdf

[4].       DCCEE, ‘Answers to questions on notice: Climate Change and Energy Efficiency portfolio’, [Questioner: S Birmingham], Senate Standing Committee on Environment and Communications, Legislation Committee, Supplementary Budget Estimates 2010–2011, October 2010, question 76, viewed 12 May 2011, http://www.aph.gov.au/senate/committee/ec_ctte/estimates/supp_1011/ccee/corporate_61-78.pdf

[5].       DCCEE, ‘Answers to questions on notice: Climate Change and Energy Efficiency portfolio’, loc cit, question 78; Australian Government, Portfolio budget statements 2011–12: budget related paper no. 1.4: Climate Change and Energy Efficiency Portfolio, Commonwealth of Australia, Canberra, 2011, p. 23.

[6].       J Gillard, Carbon farming initiative, Australian Labor Party policy document, Election 2010, viewed 12 May 2011, http://parlinfo.aph.gov.au/parlInfo/download/library/partypol/PCPX6/upload_binary/pcpx60.pdf.

[7].       Australian Government, Mid-Year Economic and Fiscal Outlook 2010–11, Commonwealth of Australia, Canberra, 2010, p. 148, viewed 19 May 2011, http://cache.treasury.gov.au/budget/2010-11/content/myefo/download/MYEFO_2010-11.pdf

[8].       Australian Government, ‘Carbon Farming Initiative’, Department of Agriculture, Fisheries and Forestry (DAFF) website, viewed 12 May 2011, http://www.daff.gov.au/climatechange/cfi

[9].       G Combet (Minister for Climate Change and Energy Efficiency), Study into emission reduction policies in key economies, media release, 15 November 2010, viewed 12 May 2011, http://www.climatechange.gov.au/minister/greg-combet/2010/media-releases/November/mr20101015.aspx

[10].     Budget measures: budget paper no. 2: 2011–12, op. cit., p. 321.

[11].     Ibid., p. 326.

[12].     Ibid.

[13].     Ibid., p. 122.

[14].     Ibid., pp. 301–2; 303.

[15].     Australian Government, Budget measures: budget paper no. 2: 2009–10, Commonwealth of Australia, Canberra, 2009, p. 374, viewed 18 May 2011, http://cache.treasury.gov.au/budget/2009-10/content/bp2/download/bp2_Consolidated.pdf; Budget measures: budget paper no. 2: 2011–12, op. cit., pp. 299 and 303.

[16].     Budget measures: budget paper no. 2: 2011–12, op. cit., pp. 301 and 303.

[17].     Ibid., p. 303.

[18].     Ibid., p. 302.

[19].     Ibid., p. 121

[20].     Ibid., p. 23.

[21].     Ibid., p. 45.

[22].     Ibid., pp. 119–20.

[23].     G Combet (Minister for Climate Change and Energy Efficiency), Home Insulation Safety Plan update, media release, 20 April 2011, viewed 12 May 2011, http://www.climatechange.gov.au/minister/greg-combet/2011/media-releases/April/mr20110420.aspx

[24].     Budget measures: budget paper no. 2: 2011–12, op. cit., p. 123.

[25].     G Combet (Minister for Climate Change and Energy Efficiency), Cancellation of Green Start program, media release, 21 December 2010, viewed 12 May 2011, http://www.climatechange.gov.au/minister/greg-combet/2010/media-releases/December/mr20101221.aspx

[26].     Budget measures: budget paper no. 2: 2011–12, op. cit., p. 122.

[27].     K Rudd (Minister for Foreign Affairs), Australia's International Development Assistance Program 2011–12, Statement, 10 May 2012, p. 104, viewed 18 May 2011, http://cache.treasury.gov.au/budget/2011-12/content/download/ms_ausaid.pdf?v=1


Facebook LinkedIn Twitter Add | Email Print
Back to top