The 2022-2023 Budget Papers.
The Greens claim climate funding was cut by more than a third in the federal budget. Image by Mick Tsikas/AAP IMAGES

Did the budget include a 35 per cent cut to climate spending?

Max Opray April 14, 2022

The Morrison government cut climate spending by 35 per cent in the 2022 federal budget.


Mostly True. Budget papers show a 35 per cent decline in funding for climate programs over four years, although this doesn't necessarily account for all spending by government agencies.

Greens leader Adam Bandt has attacked the coalition’s commitment to fighting climate change, claiming the Australian government’s 2022 budget included a one-third cut to climate-related funding.

“The budget gives coal, oil and gas corporations more than $37 billion, but climate spending is cut by 35 per cent,” Mr Bandt said in his budget reply speech on March 31. He made the same claim in multiple social media posts (see here and here).

The claim is largely correct; budget papers indicate spending on select climate change-specific programs will decline by 35 per cent over the next four years, although the figure does not include all expenditure by government agencies in the policy area.

Asked by AAP FactCheck for evidence to support Mr Bandt’s claim, a spokesman highlighted a table in the budget that shows “select climate spending” declining from an estimated $2 billion in both 2021-22 and 2022-23 to $1.3 billion in 2025-26 (table 6.11, page 198). These figures represent a 35 per cent annual fall by the end of the forward estimates period.

The table is part of a section of the budget papers that summarise climate spending, introduced in 2013 by the Abbott government as part of a deal with the Greens to abolish the debt ceiling.

The figures include funding for the Clean Energy Finance Corporation (CEFC), the Australian Renewable Energy Agency (ARENA), and the Clean Energy Regulator, which is responsible for the Emissions Reduction Fund.

In an email to AAP FactCheck, a spokesperson for the Department of Industry, Science, Energy and Resources denied there had been a cut in climate change-related spending. They said the table highlighted by Mr Bandt only showed spending that contributed to government debt and did not include all related expenditure.

These figures do not include spending by the CEFC, for example, that does not contribute to government debt, such as investments made using interest on loans taken out in previous years. Nevertheless, budget documents show the CEFC’s spending is also forecast to fall 35 per cent over the forward estimates – from $2.282 billion in 2021-22 to $1.476 billion in 2025-26 (table 3.4, page 183).

Professor John Quiggin, an economist at the University of Queensland with an interest in climate change economics, said in an email that it was correct that “the forward estimates show a cut of 35 per cent to funding for the main climate agencies”.

“As far as I can tell, there are no significant expenditure increases in other areas of climate policy that would offset this,” he said.

Several experts said the reason for the spending decline was that budgets for many of the climate agencies were set in place over a decade ago by the Gillard Labor government for a fixed period, and their operations were tapering down as not all funding had been extended.

Previous budget papers also show significant revisions in the spending figures from year to year. For example, the 2018 budget listed $3 billion in climate spending in 2017-18 (table 11, page 7-15), compared to a forecast $1.6 billion in expenditure that financial year in the previous budget (table 11, page 7-15).

UNSW economics and climate expert Timothy Neal told AAP FactCheck in a phone interview that “the claim is true but it’s a bit more complicated than that – (the coalition is) letting a natural reduction take place, rather than changing what was promised”.

In the case of ARENA, legislation enacted in 2011 (part 5) brought the body into existence with up to $2.5 billion in funding from 2012 to 2020, later extended to 2022. In 2020, the Morrison government announced ARENA funding would be extended for another 10 years, with the smaller sum of $1.62 billion provided to 2032.

Alison Reeve, deputy program director of energy and climate change at the Grattan Institute, told AAP FactCheck in a phone interview the selec climate spending table was “only a partial picture and shows over forward estimates for four years, whereas a lot of government proposals are stretched over 10 years.”

Ms Reeve added that it was difficult to tell where money was being spent based on budget documents, adding: “If a program is announced in one year and then it’s been reallocated, you can’t see that year-to-year. But this applies to most policy areas, it’s not just a climate thing.”

One major new measure highlighted in the climate spending section of the budget papers is $1 billion over nine years to protect the Great Barrier Reef. More than half of the money will go towards addressing water-quality issues related to agricultural runoff.

Another significant change involves adjustments to the Emissions Reduction Fund that allow holders of carbon credits to exit their contracts with the Commonwealth and sell them on the private market instead – potentially saving the government money in the short-term.

The forecast financial impact of this measure was not published due to commercial sensitivities, but the budget papers make clear that any savings would be reinvested into the Emissions Reduction Fund.

Prof Quiggin told AAP FactCheck: “The changes to the (Emissions Reduction Fund) appear likely to undermine the operation of the scheme, but don’t directly involve changes in public expenditure (though more expenditure may be required in future if targets are to be met).”

The Verdict

The claim that the 2022 budget includes a 35 per cent cut in climate change-related spending is largely accurate.

Budget papers forecast a 35 per cent reduction in funding for select climate programs over the four years of the forward estimates, during which funding is expected to go from $2 billion in 2021-22 to $1.3 billion in 2025-26. While these figures do not incorporate all climate spending by government agencies, they indicate the amount of expenditure that is expected to contribute to government debt.

Experts note the reduced spending may reflect the wind-down of funding commitments made by previous governments rather than a cut to prior expenditure pledges.

Mostly True – The claim is largely accurate but includes minor errors or problems.

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