We fielded an avalanche of responses to the federal budget brought down on Tuesday night. Everyone had an opinion it seemed because the budget touched nearly all the sensitive bits of Australia’s voting anatomy that the PM hopes will swing him back to office in an election held probably now sooner rather than later.
Why wait when you have the brilliant and unique opportunity to spend a lot of money and feel good about it, rather than risk being branded “Labor lite” or a traitor to the neo-liberal agenda? As someone in our office commented during the week (with some irony, let’s be clear).
But not all parts of the body politic was tickled or delighted. There were glaring omissions: the opportunity to reform the taxation regime for housing, for instance. This sits squarely in the realm of the Feds thanks to their power over negative gearing and capital gains tax, which is at least partly fuelling this mad pricing bubble we’re in. The Feds’ only answer is to try to douse the flames with petrol, sending firepower (badly needed admittedly) to single mums or first time-buyers. But watch, this leg up will benefit those who are quick to act first and the vendors. Bad luck about those who are left behind. But gee, how good are the optics!
This leaves state governments floundering about with secondary tools such as the possible removal of stamp duty. As much as it’s a great idea to replace stamp duty with land tax because it captures the tax-free windfall that comes to home owners through no particular effort of their own (and is especially obscene for the super wealthy) the end result will be more spending power and higher house prices.
There was also lots spending on training and skills – a good idea given we don’t have immigrants right now to do the dirty work (or much skilled work if truth be told).
It was only a few weeks ago that Justin Hemmes from the Merivale group said he had 400 jobs he couldn’t fill – from unskilled to skilled – and he was therefore forced to run his empire at half speed.
The theory is that the government wants to push unemployment down to the point where wages might rise a bit and therefore create the missing ingredient of inflation that for decades was the nemeses of good economic management and for which there’s now some weird yearning to have back, even just a bit.
This might be misplaced. The AFR’s Alan Mitchell on Wednesday morning reminded his readers that the US is on a big inflationary trajectory with the big spending – and very worthwhile – agenda from Joe Biden.
But the fear is it will unleash the Frankenstein side of the inflationary beast that won’t be able to be controlled by smug governments who think they’ve nailed modern monetary theory without actually accepting it. This is where you can print money and get away with it. Certainly, this cattle prod method of jolting the economy to life has worked well in this time of pandemic, for some, like us. And with with little to no inflation, which gives people security they can afford a $1 million loan etcetera.
But we’ve seen warnings lately of a mutant breed of inflationary monster about called “street” inflation. And that if this takes off it won’t be pretty, partly because it’s not controlled by the central banks.
So let’s take a whip around to see what the various growing sectors and sub sectors of the sustainability and climate industries have to say about the budget:
Green energy has been labelled a loser of last night’s federal budget, with some calling the lack of investment in the sector a missed opportunity in terms of positive economic and environmental outcomes.
Despite Australia falling behind its overseas counterparts on climate action, new investment in carbon initiatives, waste management and infrastructure were broadly welcomed.
Overall, the response to the budget by those within the sustainability industry was lukewarm, with the Australian Conservation Foundation calling the monetary commitment “loose change”.
“Environment and climate spending represents less than 1 per cent (0.8 per cent) of the federal budget,” ACF economy and democracy program manager, Matt Rose said.
Gas is not fun
If you thought gas had gone away think again.
Announcing $58.6 million to support an expansion of the gas industry, Treasurer Josh Frydenberg said that unlocking vast gas reserves in the North Bowen and Galilee Basins and investing in hydrogen-ready gas plants would create “more affordable and reliable energy”.
The Australian Local Network of the United Nations Global Compact, Global Compact Network Australia said that not enough was spent on transitioning Australia to clean energy and that the country had fallen behind when compared to most other developed countries.
“We recognise the challenges posed for both government and business in a swift and unplanned transition to clean energy. However, the focus of the budget allocation towards gas is not a long-term sustainable energy source,” GCNA executive director Kylie Porter said.
Carbon Market Institute chief executive John Connor welcomed what he described as “pragmatic initiatives” to expand Australia’s carbon markets.
These included more than $100 million to assist farmers in measuring soil carbon, $56 million for soil carbon technology innovation and $60 million for assisting the development of high integrity carbon credits in the Indo-Pacific region.
“We look forward to further details on investments in emission reduction at some of Australia’s emission intensive facilities as well as in soil carbon measurement and innovation,” Mr Connor said.
We need resilience now, no deniers on that
Additionally, two new operations revealed last week will help cope with climate change-induced disasters and build resilience in the community. They are the National Recovery and Resilience Agency, backed by $600 million in funding and the Australian Climate Service, which will receive $209.7 million.
Both services will support Australia’s disaster preparedness by pooling key data on climate research to help inform long term planning for infrastructure, housing and utilities.
Infrastructure needs to connect the dots
Green Building Council Australia chief executive, Davina Rooney was among those to welcome the government’s $15.2 billion dollar infrastructure splash which will go towards supporting priority projects such as Perth’s METRONET and the Canberra Light Rail.
“We know investment in infrastructure is a great economic multiplier. Every dollar of public infrastructure investment can generate GDP increases that can add up to $4 of value over the life of an asset,” Ms Rooney said.
However, she added that infrastructure investment should also take into account sustainability outcomes, and that so far Australia has largely under-delivered in this respect.
Infrastructure Sustainability Council of Australia SCA’s Chief Executive Officer, Ainsley Simpson, described it as a “once-in-a-generation opportunity to achieve a transformative impact.”
“By leveraging planning, policy and procurement, the federal government can send strong clear market signals about our national priorities,” she said.
And… the regions
$1.2 billion will be spent over 10 years through the Technology Co-investment Facility to invest in priority low emissions technologies including regional hydrogen hubs and carbon capture, use and storage technologies.
“This funding focuses strongly on investment in technologies identified in the Technology Investment Roadmap which has been widely debated as not going far enough to create a pathway away from a future reliant on fossil fuels,” chief circular economist NSW Circular Dr Kar Mei Tang said.
Again… more dots please. And a nod to less energy consumption
In addition, $316.7 million was allocated for helping businesses reduce their energy usage along with $215.4 million to boost dispatchable generation including battery and microgrid projects in the Northern Territory and Queensland.
All up $78 million was committed to waste management, with close to $11 million going towards improving Australia’s recycling industry and $67 million to diverting organic waste from landfill.
The bulk of that will be to enhance existing organic waste and processing infrastructure through a Food Waste for Healthy Soils Fund, a move which industry experts NSW Circular welcomed.
However, the organisation called for further spending in developing a genuinely sustainable economy, including next-generation infrastructure spending on things like electric vehicle charging stations and encouraging sustainable building practices through new materials and methods.
“While there are many things to applaud in the budget, a clear pathway for Australia to modernise and decarbonise its economy remains a missed opportunity,” NSW Circular’s Dr Kar Mei Tang said.
Community services charity Mission Australia slammed the “disappointing lack of leadership” on creating affordable housing, despite welcoming several other measures on tackling homelessness and domestic violence.
“The essential social infrastructure of social housing has been ignored yet again while the Federal Government continues to heavily invest in other infrastructure,” Mission Australia chief executive, James Toomey said.
The budget expanded the New Home and Family Home Guarantee schemes by 10,000 places each, creating a lower deposit threshold for more people to purchase newly built and existing homes.
Toomey said the measures fall short of tackling the widespread problem of housing affordability in Australia with many people not eligible for the schemes.
“We call for a housing capital aggregator to enable large scale private investment in affordable housing to help end homelessness,” Toomey said.
“This is an idea generated by The Constellation Project, where private investment can be pooled into affordable housing and unlocked by Federal Government co-investment.”
Riding on the ute’s back, OK
It wasn’t all bad news, as far as tradies and builders are with the extension of the Homebuilder and broad investment in infrastructure continuing to support construction jobs and investment. Though we’re not at all sure what this does for sustainability, without a firm direction in the handouts to produce some energy efficiency or quality gains.
Chief executive of Master Builders Australia Denita Wawn certainly gave it a thumbs up.
“Builders and tradies will strongly back the budget. It will boost the confidence of the industry that the recovery can continue to largely ride on the ute’s back,” she said.
Property wants a bigger population
The Property Council of Australia was among those questioning the government’s plan to keep international borders closed until mid-2022, however, it welcomed additional support for new home ownership.
Population growth was forecast within the budget to be limited to just 0.2 per cent over the next 12 months, with a return to normal levels of migration not expected until 2024/25.
“Growth in GDP, employment and dwelling investment all shift down gears dramatically as the reality of negative net overseas migration takes over,” Property Council chief executive Ken Morrison said.
“Population growth is not an optional extra for Australia’s economy. Without it we cannot sustain our economic success over the long term.”
Committee for Economic Development of Australia chief economist Jarrod Ball agreed that Australia should be attempting to open its borders sooner and echoed Morrison’s calls for a larger investment in Australia’s quarantine system to enable more migration.
Mr Ball also flagged that to recover from the fiscal hole the pandemic has necessitated would require a “significant and sustained lift in business investment, the likes of which we have not seen in a decade or more.”