Climate action and natural disaster mitigation

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:

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.


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