What the federal budget means for you and the climate
What the budget means for you and the climate
The big picture of this year’s federal budget was keeping inflation in check while battling the cost of living crisis.
What’s inflation? It’s why your groceries have been costing so much - it’s the measure of the prices of household goods and services. The theory is that when people are happily spending, demand goes up, prices go up and inflation increases. The Reserve Bank ramps up interest rates like it has been recently because it wants to curb inflation by encouraging people to spend less (i.e. because the interest on their mortgages and credit cards will be higher) and lowers interest rates when it wants people to spend more.
The federal budget has a role to play when it comes to inflation too - the government can’t hand people money when inflation is high, theoretically, because it would encourage us all to spend and that in turn would heat up inflation even more. So the government had to walk a fine line in this budget to try and deliver cost of living relief without worsening inflation. Did they go far enough to offer relief to those doing it tough? Time will tell.
But one area where the government splashed the cash this year was in Australia’s path to net zero. Treasurer Jim Chalmers delivered a budget full of measures aimed at building Australia into a renewable energy superpower.
Getting Australia to net zero by 2050
The Treasurer talked a big game on net zero in his budget speech, saying: “The world is committed to net zero by 2050. This will demand the biggest transformation in the global economy since the Industrial Revolution. Australian energy can power it.”
The government’s Future Made In Australia program is designed to power the transition to net zero. It includes $1 billion in funding for local solar panel manufacturing, $523.2 million for the Battery Breakthrough Initiative and $2 billion to encourage more green hydrogen projects.
Ambitions that Australia will be a renewable energy superpower underscored measures to attract investment and growth in this area. The Treasurer announced $13.7 billion in production tax incentives for green hydrogen and processed critical minerals and the $1.7 billion Future Made in Australia Innovation Fund, which will be targeted at developing new industries like green metals and low carbon fuels. There’s also $520 million to deepen net zero trade and engagement and $566 million to map the geological potential of Australia to get a picture of critical minerals and groundwater.
And there was some support for communities impacted by the transition to renewables too, with $20.7 million earmarked to improve engagement through a bolstered Australian Energy Infrastructure Commissioner and voluntary national developer standards. There’s also $63.8 million to support emissions reduction efforts in the agriculture and land sectors.
In terms of climate adaptation, Labor’s Future Drought Fund will get a $519.1 million boost to fund programs to help farmers and regional communities prepare for droughts and improve climate resilience. Also announced was $448.7 million for advanced satellite data on climate, agriculture, and natural disasters.
All that being said, the mapping of the geological potential of Australia will also identify gas reserves. Labor has been clear that it sees gas, including new gas fields, as central to Australia’s energy strategy. This doesn’t fly with net zero and emissions reductions, and climate groups have been disappointed by this announcement — and we all know why.
At least, this budget shows renewable energy is a sector where the government is supporting growth - so it’s sounding like there are going to be opportunities for investors who wants to put their money in climate solutions.
Addressing the housing crisis
Prior to the budget, the Treasurer had confirmed that housing would be a “big focus”. The government unveiled a $11.3 billion package aimed at boosting the supply of social and affordable homes.
The lion’s share of the package will be $9.3 billion worth of funding to establish the new five-year National Agreement on Social Housing and Homelessness, with support to be administered by state and territory governments.
And with housing supply a hot-button issue, $90 million has been allocated to boosting the number of skilled workers in the construction and housing sector.
The infrastructure package delivered in this budget also had housing in mind. States and territories are also set to benefit from $1 billion for road, energy and other infrastructure specifically aimed at supporting new home construction.
An additional $1 billion will be directed towards crisis and transitional accommodation for families and children fleeing violent circumstances as part of the government’s efforts to eliminate family and domestic violence.
Future Super has several investments in social and affordable housing, as well as specialist disability housing, including:
Nightingale Wurru wurru biik. This new apartment building in Brunswick, Melbourne includes affordable housing.
Conscious Investment Management (CIM) Social Housing Fund 2. This fund has partnered with community housing providers to deliver social and affordable housing including a Melbourne City Mission project to specifically help vulnerable young people access housing.
Australian Unity Specialty Disability Accommodation Fund. This fund invests in residential accommodation for people with disabilities, designed to maximise accessibility and help people live independently.
All that being said though, one group without much of a solution in this budget is renters. Rents have soared in all capital cities, with affordability in a dire state. There was some relief for renters who are receiving Centrelink payments, with Commonwealth Rent Assistance getting an increase of 10% on top of the 15% increase delivered in September last year. Realistically, it’s nice to see some rent relief but it’s still a very tough time to be renting while on a JobSeeker payment or pension.
Cost of living relief for young people
A total of $3 billion will be wiped from student debts by indexing HECS and HELP debts to the lower of the consumer price index or the wage price index, backdated to June 2023. This will help to avoid a repeat of the high indexation last year, which saw 7.1% charged on student debts. Its estimated indexation will be closer to the more reasonable figure of 4% this year.
The government will also pay eligible student teachers, nurses, midwives and social workers up to $320 a week during their mandatory work placements, starting from July 2025. This will go some way towards relieving the placement poverty students have been suffering as they start careers in these essential roles.
Young people also got a helping hand under revised stage 3 tax cuts. The original tax cut plan would have given people earning over $200K a year an extra $9K back at tax time. This revised version will see low-income earners receiving a few extra hundred dollars back in their tax return. Given that the median yearly salary of someone in their early 20s to 30s is under $60K, that means the average young worker should have an extra $804 to play with next year.
In an extra cost of living relief measure, the government committed $3.5 billion for $300 in energy bill relief to all Australian households.