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'Climate change' gets the heave-ho in the Budget

By Don Aitkin - posted Friday, 17 May 2013

As has become usual, much of the news in the Budget had already been offered up as teasers and stories over the weekend and Monday, but I hadn't found anything much there about 'climate change'. And the Treasurer didn't say a lot about it. No longer are we hearing glowing accounts of how investing in new technologies will lead to a 'green-jobs' revolution. President Obama isn't saying that any more, either, and in Europe the current worries seem to be about the escalating cost of energy, and what to do about it. Spain's experiment with the green-jobs strategy has turned out to be disastrous, and it has done its best to slash subsidies for solar energy. Germany could afford the experiment more than Spain could, but Germany too seems to be moving away from renewables.

It seems to me that the green-jobs dream is something you indulge in when everything is going well. When money is tight, however, it is not the first thing on your mind. So what did the Treasurer do? I could find three large items, and all of them look to me like the dumping of 'climate change' as a major interest of the Government. Of course, you could argue, and some have indeed argued, that neither Treasurer Swan nor Secretary Parkinson (formerly Secretary of the Department of Climate Change, and responsible, if anyone is, for the Treasury miscalculations) will be there to implement any of this anyway. The important question is what Treasurer Hockey and his new Secretary would do with it all. My guess is that they will approve.

It was already known that carbon-tax receipts, like mining tax receipts, weren't going to deliver their expected revenue, but what was not known was the amount. It seems that receipts over the next four years are going to be $3.7 billion lighter than expected. Why? Because people actually purchased carbon permits in advance of the 'cap and trade' scheme that is expected to come into effect in mid 2015, when the carbon price is expected to be $12 a tonne. I don't know why it is that Treasury has these expectations. The carbon price in Europe is at about $4 a tonne at the moment. Who knows where that will go by mid 2015? The Chicago stock exchange trading in carbon permits has closed.


That's not a 'measure' so much as a gulp, another contribution to the deficit. But it has consequences, and one is the deferral of the forecast carbon-compensation tax cuts. Those hanging out for the $1.49 billion will now need to wait until the carbon price rises above $25.40. That does seem a long way off, so I wouldn't be borrowing now on the strength of what was coming to me. What else is there? A year ago the Government set up up the Australian Renewable Energy Agency, which was given the job of getting us further into renewables. It will have less money to play with, which the Treasurer has called 'rephasing', a term I must remember to use in household budget discussions ('let's rephase that overseas trip' etc). In the ARENA case the rephasing has been put into the 2020s, which is quite a long way off. An even earlier program in the same domain was about 'Connecting Renewables', where nothing much seems to have happened, but funding was not touched.

One I'd never heard of, called the Carbon Farming Initiative non-Kyoto Fund, has been wound up, saving a quarter of a billion, or thereabouts. Those who want money that way can apparently get it through the carbon trading scheme. The low-carbon communities program (I don't think I'd heard of that one, either) has been trimmed by $46 million. Carbon capture and storage, which I had heard of, and seems not to have captured or stored anything just yet, has reached its use-by date, and that has saved three-quarters of a billion.

Those who see the coal industry as an enemy will be pleased that carbon-pricing adjustment to the coal-miners has been reduced (by a bit more than $300 million), but they probably will wonder why steel has been given a little more assistance. Oh, and remember the hoo-haa about the 'green car' and how Australia was going to lead the way? Well, the Green Car Innovation Fund has lost $61.3 million. That seems to be about it, since there were no cuts to the fund that subsidises industry energy efficiency improvements.

All in all, and without saying so, the Government has pushed 'climate change' off its agenda, and saved a forthcoming Abbott Government a good deal of trouble. Governments don't like to actually abolish programs that they have set up, because to do suggests that one made a mistake in the beginning. The preferred process is first to reduce funding, and then to merge the program into another, with the suggestion that the work will be carried out even more efficiently there.

I remarked the other day that someone had suggested that Labor campaign on 'climate change'. I didn't think this was a very bright idea, and with this Budget the Government would have no weapons with which to enter such a battle. The question now is: where do the climate-change activists go? I still see the Greens' vote going down in September.

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About the Author

Don Aitkin has been an academic and vice-chancellor. His latest book, Hugh Flavus, Knight was published in 2020.

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