If budgets are the government's attempt to chart the course for the next few years, what can this one teach us about how climate change is leaving its mark, and how the government is looking to tackle it?It's difficult to measure just how much climate change has already cost the federal budget, but there are some key figures to look at.
Grattan Institute Energy and Climate Deputy Director Alison Reeve says Australia needs to be ready for this drop. "Agricultural yields are expected to decline with climate change. The increased frequency and severity of natural disasters will also lead to reductions in output through disruptions to economic activity and destruction of property and infrastructure.""We need to stop pretending that this whole transition is possible without anybody having to pay anything, because that is simply not true," she said.
On both fronts, there's not much evidence in the budget the government is looking to take this approach. The transition away from fossil fuels has entered a new stage where countries like China and the US are locked in increasingly fierce competition over who can dominate this space. "And most importantly for the economic argument, green industries could be worth more than $10 trillion globally by 2050. Countries that get in there first will have important first-mover advantages."There is money in the budget to directly support the growth of industries like solar and battery manufacturing, but it also unveiled two tax incentives.
"I understand from talking to the treasury officials in the lock-up that the tax break is just 10 per cent of your operating costs and it's available to existing facilities, not just new ones," Reeve said. "We showed years ago, decades ago that if you reduce subsidies to fossil fuels, you can get decarbonisation with economic activity increasing, because you're getting rid of all these inefficient activities," McKibbin said.
"You may find cases where it's worth the government doing something because there's a market failure, or there's some reason that the private sector won't take the risk, you can make that case," McKibbin said. "The size of the stuff they've been given to administer is orders of magnitude larger than what they've had before," she said.
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