The Fifth Estate staff reporters
14 May 2014 – BUDGET 2014: [UPDATED 2:50 PM]The Abbott government has fulfilled its threat to destroy or severely slash every climate, sustainable, clean energy, environmental and social program it can manage.
For the sustainable built environment sector and its related areas the news is severe and promises to be a foretaste of what’s to come as a new agenda to support the fossil fuel industry as long as possible becomes more deeply entrenched.
The biggest hits are the axing of the highly lauded National Rental Housing Affordability Scheme, with $235.2 million slated for Round Five cut, ending the program; $150.9 million cut from research programs, including CSIRO, the National Environmental Research Program and the Australian Climate Change Science Program; cuts to rural landcare programs, welfare, the health system and public broadcasting; and cuts to Cooperative Research Centres.
This tops the already flagged axing of the clean energy measures, such as the carbon tax, the Clean Energy Finance Corporation and the Australian Renewable Energy Agency.
The news comes as the US government reports on the seriousness of climate change already impacting that country. China also increasingly makes clear that cleaning up its environment is a growing priority, as its economy enters a serious decline in construction activity that has fuelled the resources boom in Australia for a decade.
Exemptions to budget cuts in the sustainability space are a $9 billion for climate adaptation, which could be read as a necessary but defeatist attitude to climate change, and the Emissions Reduction fund of $2.55 billion, which is increasingly seen as a subsidy to polluters while the budget coffers forgo $20 billion in income from the axed carbon tax. However, the budget allocation for the Emissions Reduction Fund was more than a billion dollars less than promised, at only around $1.15 billion dollars over the forward estimates. A spokesperson said that this was due to companies only being paid once they have achieved emissions reductions, however the Clean Energy Regulator could enter into contracts up to $2.55 billion during the first four years of the program.
Winners were confined to infrastructure, mostly roads, with no mention of assistance to Victoria for its budget promise last week to build new rail transport, and medical research, which now looks to be the sole hope to carry any ambitions Australia has left to compete as a global innovation hub.
Analysts on ABC’s The Business program on Tuesday night said a $20 billion medical research future fund had in effect become Australia’s pitch to creating an innovation hub in the global economy, building on its reputation for excellence in the field.
The irony was that the government would at the same time destroy existing centres of excellence in Australia, such as solar and renewable energy industries evidenced by the massive take up of solar power by Australian households and falling energy demand overall. All, however, threatening to coal and gas.
Funding for medical research would also come from bulk billing for doctors’ visits, which is targeted to the lowest income people.
The cuts would begin the dismantling of Australia’s health system that was “the envy of the world”, cheaper and better than the US and the UK, analysts said.
Doctors have been reported as saying that elderly patients on the pension were already seeking advice on which medications to prioritise because they could not afford all medications prescribed, leading to potentially highly levels of hospitalisation and much greater long term costs to the community.
The sleeper in the health measures that included $80 billion cuts to hospitals was that it would force the states to demand an increase in GST – or perhaps the power to raise additional direct taxes, as flagged by the Commission of Audit.
The Climate Institute called the budget a backward step, environmentalists outlined a long list of bad news and scientists were dismayed.
Among reactions on Tuesday night, the only pure positive came from Consult Australia, celebrating a big commitment to infrastructure, which included investment in rail and ports but headlined by roads. The Property Council flagged good news on structural budget reform and infrastructure but bad news on housing for low income people and seniors. Not to mention the “pilfering” of a national security insurance scheme for terrorism.
Following is a roundup of major impacts supplied by environmental and industry bodies, with reactions below
Funding for seven Solar Towns with $2.1 million over four years has been retained and $9 million funding for the National Climate Change Adaptation Research Facility.
Clean energy and climate
- $1.7 billion cut from the abolition of the clean energy measures, including the Australian Renewable Energy Agency
- $150.9 million cut from research programs, including CSIRO, the National Environmental Research Program and the Australian Climate Change Science Program
- $2.55 billion to establish the Emissions Reduction Fund – a net cost to Government of at least $20 billion once lost carbon price revenue is included
- One Million Solar Roofs program at $50 million a year axed
- Support for Solar Schools axed
- Maintenance of the diesel fuel rebate for miners, a lost opportunity worth over $8 billion
Housing and property
- Ending the National Rental Affordability Scheme (NRAS) – Round Five of the National Rental Affordability Scheme will not proceed, at a loss of $235.2 million from this program over three years; matched with clawbacks from incentives not yet allocated as being absorbed into the budget; and no new funding will be directed to housing programs in its wake
- new pilfering of industry funds held in the Australian Reinsurance Pool Corporation
- scrapping of the Housing Help for Seniors program
- $483.8 million cut from land care by replacing Caring for our Country and Landcare with a new National Landcare Program
- $428.5 million cut by abolishing the National Water Commission and cuts to the Sustainable Rural Water Use and Infrastructure Program
- No reform of the Fuel Tax Credit subsidy (cost to the taxpayer over four years: $28 billion)
- No change to the Accelerated Depreciation (statutory effective life caps) rules that allow resource companies to claim their equipment lasts half the time it actually does (cost to the taxpayer over four years: $6.9 billion)
- A new Exploration Development Incentive (cost to the taxpayer over four years: $100 million)
- $2.1 million to establish Solar Towns
- Infrastructure Growth Package – delivering $11.6 billion of previously unannounced transport infrastructure
- An Asset Recycling Initiative – providing a 15 per cent incentive for states and territories to offload assets to fund new infrastructure
- confirmation of key election commitments such as the $2.55 billion Emissions Reduction Fund
- a 1.5 per cent reduction in the company tax rate
- $40 million for Reef Trust
- $525 million to establish the Green Army
The Australian Conservation Foundation
Australian Conservation Foundation chief executive officer Kelly O’Shanassy said the Abbott Government’s first budget had taken money away from clean energy, innovation and nature protection, in favour of subsidies for polluting industries.
“The government has cut from conservation, innovation and anti-pollution measures, while it has rejected the opportunity to save at least $20 billion by reforming wasteful fossil fuel subsidies to big business.”
It had also chosen to forgo $18 billion from “a carbon price that works”, instead “handing taxpayers’ money to polluters through the Emission Reduction Fund”.
“The cuts to renewable energy risk keeping Australian workers and businesses using 19th century technology to address a 21st century challenge,” Ms O’Shanassy said.
“Rather than boost investment in clean energy jobs and innovation, the government chose to scrap the profitable Clean Energy Finance Corporation.”
Land and water
The Coalition had broken its election promise to maintain full funding for Landcare, Ms O’Shanassy said.
“This is a slap in the face for conservation heroes in the bush, in cities and on the coast who work every day to protect the clean air, clean water and healthy soil that we all need to survive.
“ACF is concerned that the government has abolished the National Water Commission without setting out which agency will be responsible for delivering its critically important functions.
“The Green Army initiative is a useful land restoration program that ACF welcomes, but it is in no way an answer to the massive problem of climate change and its impact on Australia.
“Funding for the Reef Trust is welcome and fulfils a promise the Coalition made before the election.”
Property Council of Australia
Property Council of Australia focused on the positives but was critical of cuts to housing through NRAS and Housing Help for Seniors, and the “pilfering” of industry funds held in the Australian Reinsurance Pool Corporation.
Chief executive Peter Verwer said, “This is a budget that invests in Australia’s future and unlocks productivity boosting opportunities for the business community.
“The $50 billion infrastructure investment pipeline (over the medium term) will provide a significant boost to competitiveness in Australia’s cities and regions.
“Critical infrastructure projects will help unleash the productivity potential of Australia’s cities – the powerhouses of the economy.
“Every State and Territory will see investment in vital infrastructure projects.
“The Property Council is particularly excited by the Asset Recycling Initiative, which will allow the private sector to work with governments to deliver the transport infrastructure of the 21st century.
Negatives included “the continued pillaging of Australia’s renowned terrorism re-insurance pool scheme”, which was “a cash grab of money paid in good faith by business” as Australia’s insurance against a major terrorist attack.
“The scrapping of the National Rental Affordability Scheme is also concerning if it marks the end of the federal government’s involvement in housing supply.
“We urge the federal government not to forget the importance of housing in underpinning productivity and liveability.
“A clear plan for housing is needed – one that tackles the affordability and supply challenge faced by Australians. Housing is an issue for all Governments, not just the states.
The budget said Round Five of the National Rental Affordability Scheme would not proceed – withdrawing $235.2 million from this program over three years.
Executive director of the Residential Development Council Nick Proud said this would be matched with clawbacks from incentives not yet allocated as being absorbed into the budget.
“However, no new funding will be directed to housing programs in its wake.”
He said the move was disappointing but welcomed a dialogue to create a new scheme that was better targeted, less ambiguous and with less red-tape.
“This could include levers such as a Commonwealth Land Audit flagged in the Government’s own Commission of Audit.
“Notably, it is important that levers such as the National Affordable Housing Agreement have been retained. This ensures the Federal Government can maximise its return on its investment from funding to the States.
“Combined with other reforms including red-tape reduction and environmental one-stop-shops the Federal Government can make significant improvements to housing supply”, said Mr Proud.
Green Building Council of Australia
The GBCA said the government’s decision to scrap NRAS was a disappointing step.
“We are disappointed to see NRAS shelved,” GBCA chief executive Romilly Madew said. “The Abbott Government is making a short-term decision – saving $235.2 million over three years – at the expense of long-term affordability for people on the lowest incomes.
“NRAS has been a driver of affordable housing projects across Australia, and many NRAS projects have met Green Star benchmarks for sustainable design and construction. These projects have fundamentally changed the low-cost housing market for the better. Affordable housing projects are now routinely integrating energy and water efficiency measures to achieve more sustainable, affordable outcomes for the people who can least afford big utility bills.
“Scraping NRAS funding will make it harder for urban, regional and rural areas to provide affordable housing.”
Retirement Living Council
On cuts to retirement housing, the decision to abolish a pilot program that removes penalties on age pensioners who wish to downsize was “a disappointing and retrograde step” executive director of the Retirement Living Council Mary Wood said.
“The Productivity Commission has recommended in two recent reports that the Australian government should support innovative schemes that allow wealth in family homes to be unlocked, and enable seniors to downsize without being financially penalised,” Ms Wood said.
The move would lead to “less housing choice and puts more pressure on residential aged care and the taxpayer”.
“This is an outcome contrary to the government’s desire to cut expenditure and support more consumer-directed care.
“Enabling senior Australians to choose homes containing grab rails and other mobility-enabling features, free of any trip hazards, such as homes in retirement villages, has many social and economic benefits, which will be harder to attain for many Australians due to this decision.
“The Federal Government states that 100,000 pensioners currently move house each year, but the Housing Help for Seniors trial could have opened up that option for so many more.”
A positive move was to “no longer subject retirement village operators to double taxation if ownership of a village changes because of a company acquisition”, Ms Wood said.
The Climate Institute
The Climate Institute said the budget was a major backward step.
“The Abbott government’s first budget returns entitlements to big polluters to pollute for free, shifting the burden of reducing emissions to taxpayers while slashing key climate and clean energy programs and independent agencies,” chief executive officer of The Climate Institute said.
“It’s an attempt to undo the good progress Australia has made recently in cutting carbon pollution, growing renewable energy jobs and taking advantage of our abundant solar, wind and other renewable resources.
“The biggest backward step is the intended repeal of the carbon laws.”
This would cost $12.5 billion of carbon revenue over the forward estimates.
“Taxpayers are then to fork out over $2.5 billion for the Emissions Reduction Fund to buy pollution reductions. All this while the government works out if or how it will ensure reductions from big polluters.”
Climate Institute research recently showed that the cost to the federal budget of the ERF and the loss of carbon revenue could cost taxpayers $24 billion, without achieving Australia’s minimum five per cent emission reduction target and about $40 billion to achieve the target.
Among cuts to funding and axing of programs were the Australian Renewable Energy Agency, despite a pre-election promise not to do so, the Climate Change Authority and the Clean Energy Finance Corporation.
Other major cuts included:
- “One Million Solar Roofs program” omitted (It was to to provide households with $500 rebates for solar systems at a cost of $50 million a year)
- Support for Solar Schools axed
A positive was the return of indexation of fuel excise but it was unfair that motorists would pay more while fuel subsidies for miners would remain.
Environment Victoria said the budget was “permanently damaging, both to the environment, but also to the coalition’s environmental credentials”.
“The Budget proposes to scrap important institutions like the Australian Renewable Energy Agency, which the Coalition repeatedly promised to retain in the lead up to the 2013 Federal Election, raising serious questions about whether Coalition promises on environment protection made while in Opposition can be trusted or taken at face value,” Environment Victoria acting chief executive Mark Wakeham said.
“Last week in Victoria we saw the Napthine Government slash environment funding in the state budget, after having scrapped all climate programs in the past three years on the basis that we have a national carbon price.
“In Opposition Greg Hunt made a very clear commitment days before the 2013 Federal election to retain the Australian Renewable Energy Agency.
“Now we find ARENA will be axed along with the carbon price. Similarly the Coalition promised to maintain Landcare funding.
“Over the past 30 years national governments of all persuasions have at least had some credible environment policy. That record of bipartisanship appears to be drawing to a close.”
Another disappointment was that the promised one million solar roofs election promise did not eventuate.
“It’s clear with this budget that the Coalition is siding with polluters and against clean energy,” Mr Wakeham said.
“Make no mistake, this budget is a freeway builder’s dream and a public transport commuter’s nightmare. The Budget provides $1.5 billion for the East-West Link freeway, yet not one cent for the Napthine Government’s proposed new train lines.
“The Napthine Government’s Melbourne Rail Link looks like a mirage in the desert while their freeway plans are well underway with Federal funding”.
The Australian Academy of Science
The Australian Academy of Science said good news on a new Medical Research Future Fund was negated by science generally left “substantially weakened.”
Academy president Professor Suzanne Cory said the cuts of at least $420 million would hit:
- Australian Research Council – $74.9 million
- CSIRO – $111.4 million
- The Defence Science and Technology Organisation – $120 million
- Australian Nuclear Science and Technology Organisation – $27.6 million
- The Australian Institute of Marine Science – $7.8 million
- The Cooperative Research Centres program – $80 million
Professor Cory said, “These cuts come after an overall decline in the science budget of $470 million since 2011.
“The Academy welcomes the target to double National Health and Medical Research Council spending by 2022, new spending on the Future Fellowships program for mid-career researchers, additional support for the Agricultural R&D Corporations, the continuation of the National Collaborative Research Infrastructure, and a new commitment to the academy’s education programs Primary Connections and Science by Doing.
“Funding for research infrastructure is vital and we hope this is just the first stage of a longer term vision to support major infrastructure.
“But the introduction of tuition fees for research students in PhD programs is of great concern as these students are the engine for our nation’s research.”
“We need to increase our science investment now and grow it for decades to come. The commitment to medical research needs to be matched in the rest of the science sector or we will not be able to meet Australia’s big challenges.”
Australian Local Government Association
Local governments and their communities have not been spared the impacts of the federal budget, with the indexation of Financial Assistance Grants frozen for the next three years, the Australian Local Government Association said.
In the first year this means councils will miss out on an expected $96 million increase in FAGs for the provision of essential local services and infrastructure in local communities.
The loss of indexation over the three year period means FAGs will stay at $2.28 billion per annum until 2017-18, $200 million in FAGs increase will be foregone in 2015-16 and $321 million foregone in 2017-18; a total of $925 million lost in FAGs over the next four years.
Mayor Felicity-ann Lewis, president of the ALGA said the grants were “absolutely essential to allow local communities across Australia to provide a reasonable level of service and infrastructure to local residents”.
The federal government has remained committed to Roads to Recovery funding at $350 million a year but has flagged than an additional $350 million will be provided in R2R funding in 2015-16 from the Asset Recycling program once established.
A new $300 million program for the renewal of bridges, to be spread over five years, will also begin in 2014-15. But there is disappointment for South Australian councils that have lost their supplementary funding for local roads, valued last year at almost $18 million, Ms Lewis said.
Local government was responsible for 80 per cent of the nation’s roads by length and “while investment in major transport infrastructure was important, we cannot afford to forget that almost every journey, whether by car or truck, begins and ends on local roads”, she said.
“Councils need help to maintain the first and last mile of our transport network, on which the nation relies for the movement of goods and people.”
Consult Australia chief executive Megan Motto said the budget “rightly identifies infrastructure investment as a critical economic lever to build productivity, jobs and growth for years to come”.
“There will be a lot of debate about who wins a larger slice of this budget pie, but the key outcome of this budget will be to increase the size of the pie.
“In a tough market where many firms are struggling with the gap left following the investment boom in the resources sector, the additional $11.6 billion announced through the Government’s Infrastructure Growth Package is urgently needed across the states and territories.”
The investment will be well targeted and not “the government just doling out the cash for infrastructure projects”, Ms Motto said. “We are seeing the delivery of more far-sighted policy frameworks.
“The government is putting the foundations in place to support a more sustainable funding base for a long-term infrastructure pipeline.”
Projects included $5 billion for an “Asset Recycling Initiative” and a $2 billion concessional bridging loan for Sydney’s WestConnex.
But the test would be for the government to link the funding promises made in this budget with improvements in planning, procurement and delivery, Ms Motto said.
UPDATE 2:50 PM, 14 MAY 2014
Compiled by Willow Aliento
National Environmental Science Program
Cuts of $21.7 million over four years through the amalgamation of the National Environmental Research Programs and the Australian Climate Change Science Program to form a new National Environmental Science Program. The new program will provide administrative efficiencies and greater cohesion between environmental and climate science research, and will have ongoing funding of $25.5 million a year.
National Greenhouse and Energy Reporting Scheme – Savings of $2 million over four years through more efficient administration
Reducing the rate of research and development offsets
Reduced rates of refundable and non-refundable offsets by 1.5 percentage points, effective from 1 July 2014. Estimated to provide a gain to the Budget of $620.0 million in fiscal balance terms over the forward estimates period. In underlying cash terms, the gain to the Budget is $550.0 million over the forward estimates period.
Companies in the engineering and development sector who fund their own R&D will be affected.
New fund for entrepreneurs and less money for clean energy innovation and CRCs
The budget provides $484.2 million over five years from 2013-14 to establish the Entrepreneurs’ Infrastructure Program .
“The program will focus on supporting the commercialisation of good ideas, job creation and lifting the capability of small business, the provision of market and industry information, and the facilitation of access to business management advice and skills from experienced private sector providers and researchers.
To be delivered through the Department of Industry.
Cuts of $845.6 million over five years will be made by axing:
- Australian Industry Participation;
- Commercialisation Australia;
- Enterprise Solutions;
- Innovation Investment Fund;
- Industry Innovation Councils;
- Enterprise Connect;
- Industry Innovation Precincts; and
- Textile, Clothing and Footwear Small Business and Building Innovative Capability.
Clean Technology (Investment and Innovation) programs and Cooperative Research Centres to be cut by $124.7 million over five years.
The National Climate Change Adaption Research Facility at Griffiths University, will be made to focus exclusively on coastal zone risks, funded by $9 million over three years.
“Under a new funding agreement, NCCARF will be required to deliver a framework for understanding and managing coastal climate risks, including sea-level rise in the coastal zone. NCCARF will also continue to synthesise and communicate research and maintain national adaptation research coordination and capacity building in priority areas (including human health, ecosystems, and settlements and infrastructure),” the budget papers said.
Reduction in Research Training Scheme
Research Training Scheme funding to be cut by $173.7 million over three years from 2015-16. Student contribution can be sought to a maximum of $3900 per equivalent full-time student (EFTS) for high cost courses and $1700 per EFTS for low cost courses.
$50.0 million over four years to support the planting of native trees and associated understory species to re-establish green corridors and urban forests; $3 million over three years from 2014-15 to support weed control and fuel load reduction in the Dandenong Ranges in Victoria. “The programs will provide funding for community-based environmental projects, the management of weeds and the development, promotion and management of the Bullen Bullen Bush Tucker and Medicine Tours”.
$7.5 million over three years from 2014-15 towards a Cumberland Conservation Corridor in Greater Western Sydney, including acquisition of threatened land in the corridor.
An additional $7.5 million in funding for the corridor will be provided through the 20 Million Trees program.
The Government will provide $1 billion over four years ($291.3 million in 2014-15, $261.3 million in 2015-16, $244.1 million in 2016-17 and $231.4 million in 2017-18) to establish the National Landcare Programs.
The new programs will merge Caring for our Country and Landcare to create a single National Landcare Program, delivered by the Department of the Environment and the Department of Agriculture.
The Barrier Reef
Reef 2050 Plan, funded at $40 million.
The cost of this measure will be met by redirecting funding from the National Landcare Program.
Cuts to Carbon Capture and Storage program
$459.3 million over three years from 2017-18 cut from the Carbon Capture and Storage Flagships Program. Funding of $191.7 million over seven years will remain available to support existing projects.
Funding remains for “clean” coal
Cuts of $16.8 million for “clean” with $96.6 million remaining.
Biofuels funding cut
Cuts of $5 million in 2014-15 by not proceeding with the Harnessing the Potential of Algal Synthesis and Biofuels programs “as the increased uptake of alternative fuels, including advanced biofuels, will be considered in the context of the 2014 Energy White Paper”.
Cuts of $156.0 million over four years by reducing grants made under the Cleaner Fuels Grant Scheme to zero and reducing the excise on biodiesel to zero from 1 July 2015.
“From 1 July 2016, the excise rate for biodiesel will be increased for five years until it reaches 50 per cent of the energy content equivalent tax rate. The excise equivalent customs duty for imported biodiesel will continue to be taxed at the full energy content equivalent tax rate.”
No more grants under Voluntary organisations program for environment or sustainability groups
Cuts of $500 million in 2014-15 from the Sustainable Regional Development Program.
Cut to support for tourism in Tasmanian forests, of $4 million over three years from the Tasmanian Forest Reserve Tourism component of theTasmanian Forests Agreement Implementation Package. “Ceasing this component is consistent with the Government’s policy not to support further reserves in Tasmania”.
Deferral of Phase 3 of the Single Living Environment and Accommodation Precinct project, saving $300 million;
$10.6 million over four years to service up to 250 existing renewable energy systems in remote Indigenous communities in Western Australia, Queensland and the Northern Territory.
$15.0 million over three years from 2014-15 to states and territories to implement long term bushfire mitigation strategies and better fuel reduction programs.
Global Green Growth Institute
$5 million in 2014-15 for specific projects of the Global Green Growth Institute that will be identified by Australia.
Gold Coast Commonwealth Games infrastructure
$156 million to the Queensland Government in 2013-14 as the Australian Government’s contribution to permanent infrastructure for the 2018 Gold Coast Commonwealth Games.
More money for expanding mining
The Government will provide $100.0 million over three years to introduce an Exploration Development Incentive The EDI will allow small mineral exploration companies with no taxable income to provide exploration credits, paid as a refundable tax offset, to their Australian resident shareholders for greenfields mineral exploration.
This measure is designed to encourage increased mining exploration and delivers on the Government’s election commitment.