ERF funding confusion highlights enormity of Backwards Budget Media Release

May 14, 2014 - 12:06pm

Contradictions within the Budget papers highlight the risks of shifting responsibility for reducing carbon emissions from polluters to taxpayers, said The Climate Institute today as more details of last night’s Budget emerged.  

“This Backwards Budget reveals growing uncertainty about the Government’s commitment to its Emission Reduction Fund and highlights the enormity of putting pollution reduction at the whim of a highly uncertain annual budget arm-wrestle,” said John Connor, CEO, The Climate Institute. 

Just last week the Government assured the public that the Emission Reduction Fund (ERF) would spend $2.55 billion in the first four years. But the Budget Overview states that the ERF will spread this sum over a decade (p.27), while in Budget Paper 2, the appropriation table shows just $1.147 billion spent over the four year forward estimates.

The Climate Institute has been advised that this is a “misunderstanding” and that $2.55 billion is available over the four year forward estimates. The Government in Budget Paper No 2 notes the “Clean Energy Regulator will be able to commit the full level of funding [$2.55 billion] under contract funding from the commencement of the Fund,” and says there will be consideration of future expenditure.

However, the $1.147 billion reflects expected expenditure forecast by Treasury and the Finance Department.

“This disparity appears as a $1.4 billion shortfall. There are serious questions about the ability of the Regulator to expend more than appropriated under the Financial Management and Accountability Act,” said Connor.

“A number of consequences flow from all of this confusion, all of which highlight the enormity of shifting the burden of emissions reduction from polluters to taxpayers.”

“Firstly, it is a massive vote of no confidence from Treasury or Finance that sufficient emission reductions can be purchased as previously expected under the ERF.”

“Secondly, $1.1 billion will buy about half the emission reduction expected from the Fund’s first four years. This puts Australia under massive pressure to achieve even our minimum target of a 5 per cent cut in emissions in the two and a half years remaining to 2020.”

“Thirdly, this also puts massive pressure on future budgets. Not only will they bear the brunt of the deferred $1.4 billion but the Coalition had also originally projected ERF spending of $1.2 billion yearly after the four years. Every public independent assessment warns that even with that level of expenditure, we fall short of the minimum 5 per cent target, let alone the 25 per cent target that is still part of Australia’s international commitment.”

“This piles up the risk that there will be little or no extra funds and that there will be little or no extra ambition in climate action available to the Government.”

“The Government urgently needs to publicly and clearly explain this situation.” 

“This is a Backwards Budget. Parliament must reject the repeal of carbon laws—which have clear limits on pollution and bring in revenue from polluter payments—to avoid Australia’s climate progress relying on the uncertain annual budget arm-wrestle for taxpayer priorities,” concluded Connor.

For more information

Kristina Stefanova,  Communications Director, The Climate Institute, 0407 004 037

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