Anthony Albanese’s first budget embeds a response to climate change – as a major economic factor – across departments. By Karen Middleton.

A decade on, Labor delivers a climate budget

The federal government is setting up a climate change unit in the Health department. Addressing public health experts recently, minister Mark Butler revealed he and Climate Change Minister Chris Bowen wanted to better integrate their two policy areas and joked about how far things had come.

“I was very heavily influenced in my thinking about this when I had the joy of eight years in the Climate Change portfolio – a gentle portfolio without much contest or sharp elbows,” the now Health minister told the Population Health Congress in Adelaide in September, tongue firmly in cheek. “And I’m just talking about my own party.”

This week, that decades-long political contest officially ended. Five months after the federal election delivered a new Labor prime minister and 15 years since the previous one outlined “the greatest moral challenge of our time”, climate change was formally acknowledged in Australia’s federal budget as a major, measurable determinant of both the nation’s economic future and the health and wellbeing of its citizens.

Action to monitor and mitigate the effects of the changing climate was also embedded into policy across government.

Butler’s new national health sustainability and climate unit will form part of a national health and climate strategy that will measure and address emerging health risks from climate change.

As an example of those risks, Butler nominated in his Adelaide speech the southern march of the tropical mosquito-borne virus dengue fever. By 2050, he said, it is expected to be detected routinely around Rockhampton, in central Queensland. By the end of the century, it will be in Byron Bay, on the New South Wales North Coast.

The health and climate strategy will aim to better co-ordinate policy development on climate and public health, along with reducing the sector’s carbon footprint and ensuring it is well prepared for the impact of climate change. The government is seeking to incorporate the health sector’s existing impact work to hasten the strategy’s development and avoid reinventing the wheel.

“The Albanese government recognises the impacts of climate change on health and the contribution of the health system to climate change,” Butler said in a statement to The Saturday Paper this week. 

“After nearly a decade of climate denial and inaction, the Albanese government is committed to providing national leadership on climate change.”

The government’s determination to embed climate action urgently was evident throughout the budget documents presented to parliament on Tuesday night. 

In so doing, it has slashed some of the previous government’s environment, water and climate change funding and redeployed it to other programs. 

One proposed dam-building project was cancelled, the $5.4 billion Hells Gate dam in Far North Queensland, and others deferred.

Another $700 million was clawed back from the previous government’s proposed allocations on emissions reduction, water, land restoration, technology investment, biodiversity, gas infrastructure and the Great Barrier Reef. 

Instead, money was redeployed, including $92 million towards “shovel-ready” Great Barrier Reef restoration projects and $42.6 million to the national Climate Change Authority, to provide independent advice. The minister will now present an annual climate change statement to parliament.

The government also ploughed some savings from cancelling $328.3 million in the former government’s manufacturing grants into addressing climate change.

A new section in the budget, devoted to the “fiscal impacts” of global heating, puts the government’s key climate-related spending at $24.92 billion between now and mid-2030.

This includes $1 billion on disaster mitigation and more than $275 million to boost the Department of Climate Change, Energy, the Environment and Water.

Borrowing a tag the Morrison government used on Australia-Pacific relations, the Albanese government is embarking on what it calls “Australia’s International Climate Step-Up” and has allocated $45.8 million over the next six years to “restore Australia’s reputation and increase international engagement” on both climate change and energy transformation.

It is undertaking what it calls “a realignment of investment in carbon capture technologies” to prioritise technology development in hard-to-abate industrial sectors, including cement manufacturing. It has also trimmed $7.3 million over the next two years from the Clean Energy Regulator and other departmental programs and redirected it to a carbon farming outreach program among farmers, land managers and First Nations people.

The budget funds 400 community batteries across Australia, at a cost of $224.3 million, as part of Labor’s promised Powering Australia plan, which emphasises switching to cheaper, renewable forms of energy. The government insists this will help lower rocketing household power bills – eventually. 

The Department of the Prime Minister and Cabinet gets $44.9 million to implement the new government’s policies, including developing a “national framework for economic transformation” to net-zero greenhouse gas emissions.

But the government has also maintained $40 billion in what unhappy independents and Greens insist are effectively subsidies to the fossil fuel industry.

“It is very, very good to see a budget that takes renewables seriously, and that is a welcome change from the last 10 years,” Greens leader Adam Bandt said, responding to the budget on Wednesday. “But they’ve got their foot on the accelerator and the brake at the same time … They’re also tipping new money into new coal and gas projects.”

Elsewhere in the budget, Treasurer Jim Chalmers eschewed direct cost-of-living relief, which could further fuel inflation, in favour of the indirect kind, through cheaper medicines, increased and expanded childcare subsidies and a boost to paid parental leave from 20 weeks to 26 weeks annually, to be phased in gradually between now and 2026.  

A new housing “accord” between all levels of government and the private sector, including superannuation funds, promised to build one million new homes within five years, up to 30,000 of which would be co-funded “affordable” homes. Critics queried the accord’s real impact, noting that 900,000 new homes were created over the past five years anyway.

In total, the government found $22 billion in savings, cancelling funding allocated by its predecessor. The forecast deficit had been reduced by $41.1 billion to $36.9 billion this year, due in part to improved tax receipts after the war in Ukraine forced up commodity prices. But it is still forecast to worsen steadily over the next four years. Unemployment will rise to 4.5 per cent next year. Inflation will outstrip wages for at least another 18 months.

Insisting he wanted to be honest about the economic challenges, Chalmers warned Australia that it faced more pain and was living beyond its means, with cost blowouts looming in the National Disability Insurance Scheme, health, aged care and defence, and in the interest payable on national debt.

Rather than making further cuts or raising taxes now, he wanted the budget to start a national “conversation” about how to address the problem. 

“I think the days of pretending that we don’t have structural pressures on the budget are over…” Chalmers told the National Press Club on Wednesday. “People are appreciating our willingness to talk up to people, not down to people. Part of that is about being up front about the sorts of things that the nation needs to contemplate. The nation does need to contemplate how we trim spending, how we show budget restraint, and whether we’ve got the best tax system that we can have fit-for-purpose for the challenges that we confront.”

The government sought to avoid delivering shocks in the measures it announced, mindful of the political damage the Coalition government caused itself in 2014 when it made unexpectedly savage cuts in its first budget after winning office. 

But Tuesday’s documents still contained a few. They revealed that Treasury expects electricity prices to rise by 20 per cent by the end of this financial year – some of which Chalmers said was already being felt – and a further 30 per cent next year.

Chalmers foreshadowed possible regulatory intervention in the energy market to help stem burgeoning costs, but wouldn’t say if that could involve a price cap on gas.

The worsening pain was confirmed within 24 hours, when new data showed inflation had reached 7.3 per cent for the year to the end of September.

The opposition seized on the figures to put a spotlight on what Prime Minister Anthony Albanese promised before the election: that modelling showed his policies would bring down Australians’ power prices an average $275 yearly by 2025.

Opposition Leader Peter Dutton and his colleagues reminded Albanese he had made the promise 97 times.

Albanese responded that the electricity forecasts had been hidden from Australians before the election when the former government used a legal instrument to keep them secret until afterwards.

In his budget reply speech on Thursday night, Dutton continued his attack on what he said was a significant broken promise. 

He said Australians had a right to feel angry and let down because “the prime minister has broken his faith with you”.

He commended some budget measures – the childcare subsidy extension, cheaper medicines, more housing for veterans, domestic violence programs and flood relief funding. But overall, he said it was “a missed opportunity”.

“It’s a budget which breaks promises rather than keeps them,” Dutton told parliament. “It’s a budget which weakens Australia’s financial position rather than strengthens it and it’s a budget which adds to, rather than alleviates, your cost-of-living pressures,” Dutton said.

He called for changes to education to improve literacy and numeracy and make schools places “where students learn respect and discipline and how to think, not what to think”.

On energy, he said renewable energy and battery storage options were not yet reliable enough to take over from coal and gas and called for “an intelligent conversation” on nuclear technology.

Earlier, Albanese told parliament the Coalition had announced 22 different energy policies “and didn’t land a single one”. 

Now in office himself – and having had key previous climate and energy policies abolished by an incoming Coalition government – he has moved to enshrine climate action firmly enough in the economy that, next time, it can’t be so easily undone.

This article was first published in the print edition of The Saturday Paper on October 29, 2022 as "A decade on, Labor delivers a climate budget".

For almost a decade, The Saturday Paper has published Australia’s leading writers and thinkers. We have pursued stories that are ignored elsewhere, covering them with sensitivity and depth. We have done this on refugee policy, on government integrity, on robo-debt, on aged care, on climate change, on the pandemic.

All our journalism is fiercely independent. It relies on the support of readers. By subscribing to The Saturday Paper, you are ensuring that we can continue to produce essential, issue-defining coverage, to dig out stories that take time, to doggedly hold to account politicians and the political class.

There are very few titles that have the freedom and the space to produce journalism like this. In a country with a concentration of media ownership unlike anything else in the world, it is vitally important. Your subscription helps make it possible.

Select your digital subscription

Month selector

Use your Google account to create your subscription