2012 federal budget coverage
9 May 2012 –[Updated 10.26 am and 11.23] Well, they axed the $1 billion Tax Breaks for Green Buildings program in last night’s federal budget, amid a few scraps for sustainability and casual redirection to the Clean Energy Finance package. We were warned early last week.
The Property Council chief executive Peter Verwer was scathing. The axing of the Tax Breaks was sending a valuable program that could leverage $7 billion of investment to the “policy knackery,” he said. The PCA would ask The Greens to step in and try to reverse this “short sighted decision.”
Tom Roper, president of the Australian Sustainable Built Environment Council and chair of the industry roundtable convened to redesign of the program was also furious.
The industry had worked hard and in good faith to improve the framework of the program and make it more relevant and effective, Roper said.
“Scrapping the program altogether sends clear signals to a sector already fatigued by uncertainty around carbon pricing,” he said
- See our recent story $1 billon tax breaks for green buildings program could be broken
The Green Building Council of Australia, the Energy Efficiency Council and anyone else who has a foot in the property industry was likewise highly disappointed.
The GBCA’s chief executive Romilly Madew said: “The Gillard Government is backing away from a 2010 election promise and abandoning its commitment to provide incentives for green buildings.”
The Energy Efficiency Council’s Rob Murray-Leach slammed the government and labelled the move a “backflip” that was “bad for business, bad for the environment and bad for the Government.”
The program initially estimated to be worth $1 billion was in the budget last night costed as a $45.2 billion saving to the government.
Some thin good news
The thin good news for sustainability was mainly in the negative. They didn’t dumb down the carbon price (not tax). Not yet. And nothing was said about slashing the $10 billion Clean Energy Finance Corporation, half of which is allocated to energy efficiency. And some of which at least, will be useful for commercial buildings.
Minister for Climate Change and Energy Efficiency Greg Combet said the tax breaks program could now be replaced by the CEF package.
“Since 2010 there have been major changes to the policy environment, most notably the passage of the Clean Energy Future package,” Combet said.
“Along with the incentive provided by the carbon price under the CEF package, support is available for retrofits of commercial buildings, for example through Low Carbon Australia.
“The Clean Energy Finance Corporation will also provide financing that will build up to $10 billion for renewable energy, energy efficiency and low emissions technologies.
“In light of these changes, proceeding with the program is not considered value for money.”
In a move to “Abbott proof” the fund, the government recently “appropriated” the full $10 billion five-year budget in legislation to be passed this year, enabling it to lend to clean energy projects at the rate of $2 billion a year.
Combet announced other smaller programs to improve energy ratings programs for buildings, for adaptation measures and for energy efficiency of equipment and appliances:
Building Energy Efficiency programs
$2.8 million in additional funding for a range of building energy efficiency activities, including maintenance and improvement of current building rating tools, information programs and regulatory schemes.
“This funding supports a package of programs to deliver cost effective abatement in the building sector, including administering the Nationwide House Energy Rating Scheme (NatHERS), monitoring compliance with the Building Energy Efficiency Disclosure (BEED) Act and contributing to measures in the National Strategy on Energy Efficiency,” Mr Combet said.
Greenhouse and Energy Minimum Standards
A program of $37.1 million in funding over four years to introduce a nationally-consistent legislative framework to regulate the energy efficiency of equipment and appliances.
“This framework will replace an inefficient patchwork of state and territory schemes. This measure addresses two important policy objectives of improving energy efficiency and reducing greenhouse gas emissions.
A $3 million funding program in 2012-13 for climate change adaptation policy and risk analysis.
“Further funding will be determined based on the recommendations of the Productivity Commission’s report on adaptation due later this year.
“This funding will support analysis of how well placed Australia is to deal with the unavoidable impacts of climate change and develop policy to enable business and communities to build resilience and adapt to a changing climate.
Along with the tax breaks cut came the scrapping of $15.2 million over the next five years for the Department of Climate Change and Energy Efficiency that was allocated to implement the program.
Among programs to be retained include:
The $4.5 billion National Rental Affordability Scheme.
Connecting Renewables to the Grid program has been retained and its $48 million of expenditure pushed out to 2018-19 and 2019-20
The Carbon Capture and Storage Flagships program funding up from $35 million to $65 million next year.
The Australian Centre for Renewable Energy, Australian Solar Institute and Solar Flagships programs shifted to the new Australian Renewable Energy Agency.
The Solar Hot Water Initiative is scrapped, with just $500,000 left to spend in the next financial year.
The Low Carbon Communities program of $53.5 million remains.
What they said on the Tax Breaks program
The Property Council of Australia
The Property Council of Australia chief executive Peter Verwer said the Gillard Government had sent a greener built environment along with productivity growth and a world class funds management industry to the “policy knackery.”
“It’s a budget of missed opportunities and misdirected priorities”, Verwer said.
“The Government has broken its regularly repeated promise to seed the retro-greening of commercial buildings.
“The billion dollar Tax Breaks for Green Buildings incentive, which was announced during the last election, would have leveraged up to $7 of private sector spending for every dollar of Government funding.
“The incentive would have proved a huge employment boon for the construction industry, which has been savagely hit by a post-GFC downturn.”
“Unlike so many other government programs, the green building incentive was only to be paid on the delivery of independently certified greenhouse gas abatement, based on tough environmental benchmarks.
“The incentive was a much-heralded complementary measure which recognised that a carbon price cannot do all the heavy lifting.”
“In fact, the incentive would have delivered a further 33 megatonnes of abatement in addition to the carbon price at around $12 per tonne. This is far more effective and efficient than the carbon tax or any other incentive scheme measured by the Productivity Commission.
“We will ask the Greens to help reverse this short sighted decision, which is exactly what occurred when they saved the Federal Government from foolishly cutting back the National Rental Affordability Scheme.
“We’ll also ask the Coalition to support this classic ‘direct action’ measure.”
Australian Sustainable Built Environment Council
ASBEC said the cancellation of the program contradicted government assertions that it had been merely deferred.
It “clearly demonstrates the Federal Government’s lack of commitment to the use of complementary measures as a method for reducing greenhouse gas emissions and improving energy efficiency in one of the largest consuming sectors of the Australian economy,” chair Tom Roper said.
The industry had worked hard and in “good faith” to help design a scheme that would maximise uptake among building owners and developers.
“Scrapping the program altogether sends clear signals to a sector already fatigued by uncertainty around carbon pricing.”
It will mean a loss of potential jobs and allows an “outstanding opportunity, for sector-wide carbon reductions and efficiency gains, to simply slip through our fingers,” he said.
Green Building Council
Chief executive of the Green Building Council of Australia Romilly Madew said the move was a backwards step and “extremely disappointing.”
“The Gillard Government is backing away from a 2010 election promise and abandoning its commitment to provide incentives for green buildings,” Madew said.
“The decision to scrap the Tax Breaks program is particularly bewildering, coming as it does at a time when Australia’s future green economy is a high priority. The scheme would have delivered triple bottom line advantages and helped the retail, hotel and commercial office sectors when confidence is low. It would have delivered jobs, green buildings and a sustainable future.
“Despite the hours of consultation, the willingness of the industry to provide input, and the goodwill generated by non-government and private sector organisations, the Australian Government has cowardly chosen to renege on its commitment,” Madew said.
The Energy Efficiency Council
The Energy Efficiency Council slammed the government for the move and labelled it a “backflip”.
EEC chief executive officer Rob Murray-Leach said the move was “bad for business, bad for the environment and bad for the Government.
- Above: the broken promise
“Energy efficiency is critical right now to help Australian homes and businesses save money. Renovating Australia’s existing commercial buildings to boost their efficiency could save the economy $1.4 billion a year, create 27,000 jobs over the next decade and cut building emissions by 30 per cent.”
Murray Leach reminded the Prime Minister of its statement when it announced the program:
“The incentive will also encourage the creation of thousands of new green jobs across Australia…. At the same time, the initiative will boost the competitiveness of Australian businesses, by reducing their energy costs.”
The government’s claim that the program was inefficient and a more expensive way of cutting emissions than the carbon tax than other programs was “absolute rubbish.”
Consult Australia said the decision to abandon the Tax Breaks for Green Buildings initiative is short sighted and completely fails to realise the significant opportunity to reduce emissions through energy efficiency gains in the buildings sector.
“This is a sector that contributes nearly a quarter of Australia’s emissions, so this is a failure to seize some low hanging fruit,” chief executive officer Megan Motto said.
Overall, the budget was too light in terms of driving productivity and economic growth over the longer term.
“In the race to surplus, the Federal government has produced a beige budget which concentrates more on welfare and short term stimulus than on using our relatively strong economic position to drive fundamental reform which will build the productivity of the nation,” said chief executive officer, Megan Motto.
This budget fails to continue the Government’s previous investment in the infrastructure backlog, Motto said.
However she applauded a $54 million investment in education funding aimed at increasing Australia’s engineering, maths and science graduates.
The Climate Institute
The Climate Institute chief executive John Connor said the cut to the Tax Breaks for Green Buildings was “regrettable as it forms part of a mix of energy efficiency, renewable energy and pollution pricing policies representing world’s best practice.
“There are dangers in this budget if it is based on the assumption that any permit price will drive the domestic changes in our high carbon economy. ”
However, Connor applauded the budget’s confirmation that “1 July will mark the end of an era when Australian businesses had a free ride on the emission of dangerous greenhouse gases.”
“Last night’s Budget confirmed that our largest polluters face a permit price on carbon pollution from 1 July and will help reduce Australia’s pollution by at least 12 million tonnes a year from 2015,” Connor said.
“What we are seeing in this budget is the pollution permit revenue at work, incentivising polluting companies to invest in low carbon innovations and backing significant investment for renewable energy, while at the same time supporting households and businesses.”
He was also happy that the budget backed the Clean Energy Finance Corporation, soon to be legislated.
“The budget also backs investment in carbon farming, renewable energy and environmental protection that will secure huge benefits for regional Australia, when combined with the renewable energy target legislation and the guarantee for investors of a continuation of a carbon price floor.”
Connor said the $2.9 billion cut in overseas aid was regrettable. It placed “extra importance in providing alternative sources than the aid budget for financing international commitments to invest in helping poorer countries prepare for the impacts of climate change and clean up their development pathway.”
Failing to cut fossil fuel subsidies like the $9.4 billion diesel rebate for mining industries was a missed opportunity, he said.
The Australian Conservation Foundation
The Australian Conservation Foundation said it was disappointed at the axing of the Tax Breaks program.
“Australia should not be axing tax breaks for green buildings and slashing the aid budget, while leaving untouched billions of dollars of tax breaks for mining and resource industries to pollute our environment,” chief executive officer, Don Henry said
However, full funding of the government’s Clean Energy Future commitments, including the assistance for nine out of 10 households to cover the introduction of the carbon price, was applauded.
“The budget includes full funding for the climate package, including assistance for households, a boost for renewable energy through the Clean Energy Finance Corporation and the Biodiversity Fund – we warmly welcome this,” Mr Henry said.
Mr Henry criticised spending on new roads, at the rate of $14 for every $1 spent on rail.
ACF also criticised the increase in the skilled migration program, resulting in an unsustainably large total migration program of 190,000.
“Australia could easily reduce the total migration program without damaging our economy which would put us on track to stabilise our population, protect our quality of life and ease the pressure on our natural environment.”