Overall the 2022/23 budget looks to be pragmatic, consistent and aligned with the pre-budget government commitments and direction of policy discussions when it comes to decarbonisation of our energy systems and economy.
However, it is undermined by the pre-election commitment of no new taxes. This means that multinational fossil fuel exporters who are enjoying superprofits off the back of Russia’s invasion of Ukraine get off scot-free, whilst every Australian pays the price of their exploitation of our public resources, and we continue to be gouged with skyrocketing power prices, a key driver of inflation.
This is particularly devastating for those who can least afford it, such as people on low and fixed incomes. AS CEF has written, reform of the fossil fuel tax regime could add $322 billion over 10 years to federal revenues, and enable energy rebates and support for households to transition to clean energy.
On the positive side, we do see some very strong decarbonisation commitments in the budget, a focus on training, on equity and resilience with long overdue commitments on the regions and First Nations, and on rebuilding the decimated public service.
There is $39 million for the Australian Public Service to analyse climate impacts, including Treasury, $46 million to lift our engagement with UN Framework Convention on Climate Change, $117 million for environmental assessments under the Environmental Protection and Biodiversity Conservation Act, $43m for the Climate Change Authority, and $41 million to lift oversight of the gas market.
There is investment to reprioritise regional communities, with a $1.9bn Powering the Regions Fund, designed to support industry to decarbonise, develop new clean energy industries, and help build the new energy workforce; and to support the most economically disadvantaged, with $102 million to establish a Community Solar Banks program to drive 25,000 low income household rooftop solar installs.
For First Nations people, there is a First Nations Clean Energy Strategy including deployment of First Nations Community Microgrid projects, and an additional $16m for engaging First Nations Peoples on Climate Change.
The budget also includes investment in 400 community batteries ($224 million), 1000 landcare rangers ($90 million), and support for sustainable farming, with a National Heritage Trust injection of $302 million, continued purchases of carbon offsets, and $20 million for carbon farming.
On building community climate change adaptation capacity there $200 million per annum for a Disaster Ready Fund, and $38 million to Disaster Relief Australia.
Also on the upside, reducing imported oil dependence and electrifying our transport sector gets several tangible and welcome new initiatives, including $500 million for EV charging infrastructure under the Driving the Nation Fund.
The $15 billion National Reconstruction Fund is being used to drive value-adding production onshore, and to improve our supply chain resilience.
While we need more details on this, the potential here is something CEF has repeatedly highlighted, with huge value-adding opportunities in the Australian critical minerals sector to refine resources pre-export, which will bring regional employment, catalyse private investment, and accelerate decarbonisation.
The government’s flagship decarbonisation strategy, Rewiring the Nation, will provide $20 billion of low-cost finance to make much needed upgrades to Australia’s electricity grid by building interconnectors and linking renewable energy zones to the existing grid at lowest cost. This is fulfilling a key ALP election pledge.
We saw the first announcements last week of critical transmission infrastructure links between Tasmania and the mainland (Marinus Link), and between Victoria and NSW (VNI West). This also includes $64 million support of large scale battery deployments.
Another key aspect of the budget was rebuilding the skills capacity of the workforce to deliver on decarbonisation opportunities: $62 million over 4 years towards Skilling the Clean Energy Workforce, part of the Government’s commitment to support 10,000 New Energy Apprenticeships, and delivery of 180,000 fee-free TAFE and community-based vocational education places over 12 months.
There were also welcome commitments around hydrogen. The government is targeting $525 million investment in regional hydrogen hubs, including $72 million for Townsville, and the expectation of $41-70 million funding per hub in the Hunter, Bell Bay and the Pilbara regions.
On the huge potential to boost the bottom line and accelerate decarbonisation by reducing fossil fuel sector subsidies, there was disappointment and lost opportunity.
For example, the budget reinstates the full petrol excise on all Australians, but continues to allow the mining industry its 60 year old $4-5 billion annual diesel fuel excise exemption.
Multinational tax reform is mentioned, and the budget assumes a $953 million increased contribution by limiting multinationals’ debt-deductions and other loopholes.
However, there is no further insight on how multinationals like Exxon and Chevron, BP and Shell who book Australian revenues in the tens of billion dollars but pay zero corporate tax here in the last seven years (according to the ATO Tax Transparency disclosures) will be made to pay their fair share.
Likewise, there is no commitment to reduce the scam of the Petroleum Resources Rent Tax, which is delivering Federal LNG royalties at just a fraction of leading global peers like Norway, India and Indonesia and costing the Australian people billions in lost revenue.
We can only hope that the government builds on the strong foundation it has established in this budget by addressing these glaring omissions come the next federal budget in May.
Tim Buckley is a leading energy analyst and the director of independent think tank Climate Energy Finance. Most recently, Tim was the Australasian Director of the international Institute for Energy Economics and Financial Analysis, and previously Head of Equity Research at Deutsche Bank, and MD and Head of Equity Research at Citigroup for 17 years. His focus is on the accelerating energy transition in Australia and the Asian region.
