The Federal Labor Party has released its budget costings ahead of the 2019 election, promising to deliver bigger budget surpluses and revealing that it will abolish the Coalition’s re-badged “Climate Solutions Fund” and redirect funds to new clean energy initiatives.
The budget costings released on Friday by Shadow Treasurer Chris Bowen and Shadow Finance Minister Jim Chalmers, map out Labor’s budget trajectory across the budget “forward estimates” and lay out its spending and revenue initiatives for the four years through to the 2022-23 financial year.
While the costings detail what impact various policies will have on the government’s budget, Labor has not laid out the estimated economic costs (or the potential benefits) of its plans to strengthen and extend the Safeguard Mechanism, which will apply to the 250 largest emitters and account for the bulk of its 45 per cent emissions reduction target.
Labor says it will recoup $1.7 billion through the abolition of the Climate Solutions Fund and will redirect the unallocated funding from the Coalition’s policy towards its clean energy initiatives. This includes $448 million over the next four years.
The Coalition government announced that it had allocated additional funding to the rebranded Emissions Reduction Fund in February, which has been used to purchase emissions reductions, but has been criticised for being deeply inadequate. It was once described as a “fig-leaf” of a climate policy by former prime minister Malcolm Turnbull.
“We’ll abolish the Climate Solutions Fund, that’s a $1.7 billion save over the decade. We’ll make contributions to the CEFC, and we’ll have an Energy Security Modernisation Fund. All those costings are there, outlined in very considerable detail”, Bowen said on Friday.
The abolition of the Climate Solutions Fund will provide Labor with a significant chest of funds to direct towards its own clean energy initiatives, which will include funding for community energy projects, residential energy storage, and direct infrastructure investment.
At an earlier press conference in Cairns, Labor leader Bill Shorten announced that Labor would establish Renewable Energy Zones in Cairns and Northern Tasmania. Projects in these zones will receive priority access to government finance through the CEFC and the Energy Security Modernisation Fund.
“What we do if we nominate an area as a renewable energy zone, we will make sure they get fast track access to the $10 billion CEFC.” Shorten told reporters.
These funds will be redeployed, with Labor committing $200 million over the next four years for the rollout of its Household Battery Program, which aims to kickstart battery storage and have it in one million homes by 2025, and $120 million over the same period for the Neighbourhood Renewables Program.
Labor will also provide $40 million for Carbon Offset Research and Development, $39 million for its Climate Adaptation and Coastal Rehabilitation Plan and $30 million towards the establishment of a Federal Environmental Protection Authority.
Labor will also boost funding for training within the clean energy sector, a boosted rooftop solar inspection and auditing regime and to reactivate the Climate Change Authority.
Labor will also allocate $170 million to a newly formed Energy Security and Modernisation Fund. Labor intends to grow this fund to $5 billion over the next decade, targeting investment in new energy transmissions and distribution infrastructure.
To achieve its target of reaching 50% renewable energy by 2030, Labor has previously announced that it will boost the funds available to the Clean Energy Finance Corporation (CEFC) by $10 billion.
As the CEFC makes investments in renewable energy projects on behalf of the Government, is able to deliver a return to the Government, and has a positive impact on the budget, rather than being recorded as an expense measure.
Overall, Labor’s budget costings show that it will deliver a larger surplus over the forward estimates, compared to the budget delivered by the Coalition in April. Labor has forecast it will deliver total surpluses of $57.9 billion through to 2022-23, compared to $40.8 billion by the Coalition.
An analysis released by Climate Analytics on Friday showed that policy commitments by both Labor and the Greens were compatible with the level of action required to be consistent with the Paris Agreement.
Labor’s 45% emissions reduction target was considered to be “just within the Paris Agreement 1.5°C compatible range”, while the Greens’ target of 63-82% emissions reductions was “within the “fair share” range.”
The analysis found that the Liberal-National Coalition’s targets of 26-28% reductions by 2030 were “very far away from Paris Agreement-compatible domestic emission reductions.
It said its determination to use so-called “carry over” units from the Kyoto Protocol means that, in effect, the Coalition domestic emission reduction target is only a 17-18% reduction below 2005 emissions levels.”