Federal budget: Praise for tax cuts drowns out deafening silence on climate
Cameron Jewell | 4 May 2016
Judging by business community responses, last night’s federal budget hit the nail on the head.
Glowing reviews poured in from the Business Council of Australia, Australian Industry Group, small business groups, and property lobby groups including the Property Council and Urban Development Institute.
The general view was that business tax cuts were good for growth and jobs, and would boost economic output and make Australia more competitive internationally. The record $50 billion in infrastructure investment was key to the built environment sector’s prosperity, many said.
The Property Council welcomed the budget in relation to certainty around negative gearing and capital gains tax concessions.
“There is good news in this budget for the industry – record infrastructure investment continues, there is certainty over property taxation and business stimulus measures are provided,” PCA chief executive Ken Morrison said.
Master Builders Australia, too, delivered glowing praise.
The company tax cuts for SMEs and the expansion of the $20,000 instant tax write-off to companies of up to $10 million turnover was “an immediate shot in the arm for builders, particular in the equipment intensive building industry”.
A “coal and gas” budget
Environmental groups were not so kind.
While the Great Barrier Reef received new funding of $70 million (most of which doesn’t take effect until 2019-20), 350.org said the budget handed out billions in fossil fuel subsidies.
“This is a coal and gas budget,” 350.org chief executive Blair Palese said. “Economists tell us that cutting handouts to the coal and gas industry is a fair and effective way to stop wasting taxpayers dollars. Yet here we are with a budget that gives the big polluters billions of dollars in handouts.
“As the Reef undergoes the worst bleaching event in history and temperatures rise to unprecedented levels, it is unconscionable for our politicians to be propping up the companies driving these tragic impacts.”
The Australian Conservation Foundation said spending on the environment was forecast to fall 17 per cent by 2019-20.
“This is not a budget that will lead Australia out of a climate and extinction crisis,” ACF’s chief executive Kelly O’Shanassy said.
Environment Victoria said the budget failed to reverse attacks on the environment from the last budget, and failed to mention energy at all.
“The lack of further funding commitments for the Emissions Reduction Fund – the sole piece of climate policy the Coalition currently has – shows that the Turnbull Government currently has no plan for cutting Australia’s pollution,” Environment Victoria campaigns manager Dr Nicholas Aberle said.
He said the government wanted an economic transition, but had ignored the crucial need to transform the energy sector and move away from coal.
“Funding cuts to renewable energy show that the Turnbull Government has chosen to destroy the jobs and growth that come with renewable energy investment and instead prop up old, polluting interests.”
The Fuel Tax Credits Scheme was set to grow by $834 million over the forward estimates, reaching $7.1 billion a year by 2020/21, which Dr Aberle said was tantamount to subsidising eight per cent of Australia’s greenhouse gas pollution.
The Greens said the government was pretending it could afford tax cuts by claiming levels of economic growth that were “fanciful”.
“While champagne will be flowing in board rooms across the country, these irresponsible cuts come at the expense of long-term funding for schools, hospitals and public services,” Greens leader Senator Richard Di Natale said.
“Rather than reducing inequality the government has chosen to make it worse by cutting social support, university funding and health services.
“The Treasurer wants to claim that this is an economic plan for extraordinary times, but he failed to mention global warming once. His speech has a wasteful defence plan but absolutely no plan to deal with the single greatest challenge facing our economy: the transition to clean energy that would power the new economy.
Mr Di Natale also called the $50 billion in infrastructure funding “smoke and mirrors”.
“It’s just a repackaging of existing funding.”
Senator Janet Rice added that just 10 per cent was going to public transport, and that national support for cycling infrastructure was ignored.
Cities policy: action or motherhood statements?
The Green Building Council of Australia praised funding for cities in the budget, much announced at the launch of the government’s Smart Cities Plan last week.
“We are pleased to see a renewed national focus on Australian cities, with more than $3.4 billion allocated to urban rail projects,” GBCA chief executive Romilly Madew said.
She noted that this infrastructure needed to meet best practice for sustainability.
“Only then will Australian taxpayers know they’ve invested in infrastructure that is resilient and that delivers the best value for decades to come.”
There will be $20 million given to tree planting too, boosting total investment to $70 million (however the $20 million comes from existing resources of the National Landcare Program).
“This investment in urban forests is important, but we’d like to see the development of a national green infrastructure policy that goes further than being just about trees, and include boosting biodiversity, enhancing the public domain and building more resilient cities,” Ms Madew said.
An allocation of $4.6 million to expand the Cities Taskforce was also praised as a sign that cities were firmly back on the agenda.
However, along with the praises came acknowledgement of the elephant in the room – a complete lack of an effective climate change strategy.
“It is disappointing that the budget announces no new funding to assist Australia to reach its international commitments for emissions reductions and to transition to a low-carbon economy,” Ms Madew said.
“The built environment represents significant opportunities for emissions reductions at relatively low cost, but there are no new incentives or support for the property and construction industry, or any other industry for that matter, to make the most of these opportunities.”
The current Emissions Reduction Fund effectively excludes much of the sector from participating. The PCA last week welcomed Labor’s proposed climate change policy, noting the lack of opportunity for the sector in the current federal policy settings.
“The current Emissions Reduction Fund provides little incentive or opportunity for property to participate, despite the large gains we could bring to the table,” Mr Morrison said.
Countering the positive spin from the GBCA on cities, professor of urban policy at RMIT Jago Dodson called the budget “uninspiring” for urban infrastructure.
“In this area one might expect to see new and urgent intervention to transition our cities away from carbon-dependent transport systems, to improve access to infrastructure for socioeconomically less-advantaged households, to support improved urban productivity and to ensure a more equitable distribution of economic activity,” he told The Conversation.
“[The budget] seems to appreciate little of the challenges facing our cities and does even less to address them.”
Curiously, he noted there was $3 billion earmarked for the failed East West Link in Melbourne, in case it was ever revived, and just $10 million towards the business case of the Melbourne Metro, which the Victorian Government said it would fully fund if the Commonwealth would not redirect its East West Link money.
University of Melbourne professor of urban planning Carolyn Whitzman also called out the budget for its lack of “meaningful affordable housing measures”.
“First, negative gearing and capital gains tax concessions both remain essentially untouched,” she said. “This represents billions of dollars lost annually to Australian taxpayers for a tax-avoidance strategy that disproportionately benefits high-income households.”
She noted that this lost tax could be put into an affordable housing fund that could tie in with the government’s innovation focus by directing funds to prefab housing, which would also create new manufacturing job opportunities.
One small win was a $38.8 million increase in funding to the National Partnership on Natural Disaster Resilience, which aims to increase resilience and reduce the impact of natural disasters.
In 2016-17 support for the program will rise to $52.2 million, up from $13.4 million in 2015-16.
The science community was also cautiously optimistic, following previous attacks on the CSIRO.
“The government is maintaining support for the science budget,” president of the Australian Academy of Science Andrew Holmes said. “The Academy is pleased to see this indication of a long-term commitment to science in Australia.”
A common theme in budget commentary has been one of “holding” – tinkering at the edges, ticking all the boxes, though no real structural reform.
Labor pulled out the inequity card, calling it a budget for the big end of town.
“The Liberals say this is a plan for jobs and growth – but it’s really a plan to deliver tax cuts for multinationals at the expense of Australian families,” shadow Treasurer Chris Bowen said.
“It fails to set up Australia for the future by cutting services, cutting infrastructure, cutting skills and education.”
The Greens were similarly scathing regarding the budget’s lack of vision.
“The Treasurer was right about one thing: we are in extraordinary times and that’s why this budget needed to show some vision and courage to tackle the major challenges of the 21st century,” Richard Di Natale said. “Instead we got more cuts to essential services, a ramping up of defence spending and a deafening silence on global warming.
“When Malcolm Turnbull took on the leadership, he said that Tony Abbott was not capable of leading the economic transition this country needs. Tonight the Prime Minister has shown he is not up to the task either.”
On Thursday Labor will provide its budget reply, though is already under attack for agreeing to tax cuts for those on incomes of over $80,000 and for failing to reinstating $1 billion taken from ARENA.