The Federal Government’s highly anticipated 2020-21 Budget has been revealed, with water infrastructure, waste management, energy security and emissions reduction highlighted as key priorities.
Federal Treasurer, Josh Frydenberg, delivered the budget measures on Tuesday 6 October, in what has been dubbed as one of the most important government packages in 75 years.
The Budget includes almost $2.5 billion allocated to the energy industry; outlines gas as a crucial component of economic recovery; and pours funding into water infrastructure projects.
Sparking energy recovery
Federal Minister for Energy and Emissions Reduction, the Hon Angus Taylor MP, said, “Our 2020-21 Budget initiatives will help to lock in lower energy prices while simultaneously developing the backbone of a reliable, lower emissions National Electricity Market (NEM) for the next decade and beyond.
“As we rebuild from the COVID-19 pandemic, the government will also accelerate the development of low-emission technologies to help reduce emissions, strengthen energy security and support jobs.”
Key initiatives announced for the energy industry for the 2020-21 period include:
- Up to $250 million to accelerate major transmission projects such as Marinus Link, Project EnergyConnect and VNI West to the next stage. Together with existing support for HumeLink and the QNI Interconnector, this means all priority transmission projects are being accelerated, creating thousands of new jobs, putting downward pressure on prices and shoring up the reliability of the grid
- A $53.6 million microgrid program to support the development of pilot projects in regional Australia, building on the success of the current Regional and Remote Communities Reliability Fund. This will help deliver more affordable reliable power in regional communities across Australia
- Helping connect the North West Minerals Province (NWMP) near Mount Isa to the NEM through further support for the CopperString high voltage transmission line. This will allow major users in the NWMP to access reliable and more affordable energy supply, and encourage further investment in mining and processing in the region
- $28.5 million to deliver cheap and reliable energy to Western Australians through the South West Interconnected System Big Battery project and a WA-based microgrids program for remote and indigenous communities
- $52.2 million to improve energy efficiency, lower bills and deliver abatement, including $24 million to fund building upgrades and reduce energy costs for community groups and for small and medium hotels
- $4.9 million over two years to improve cyber security in the energy sector, and prepare government and industry for future threats
The government is also strengthening Australia’s long-term fuel security through a $250.7 million investment in new diesel fuel storage facilities, and progressing reforms to boost the resilience of fuel supply and support local refineries.
This will create up to 1,000 new jobs, increase diesel stockholdings by 40 per cent, and contribute towards Australia’s International Energy Agency (IEA) obligation while also protecting motorists from higher prices at the pump.
Gas is set to play a huge role in the Federal Government’s economic recovery plans, with the announcement of an inaugural National Gas Infrastructure Plan (NGIP) to identify priority infrastructure projects, and options to boost the Wallumbilla Hub into a more transparent Australian Gas Hub, like the Henry Hub in the US.
On top of the $42 million of investments to unlock supply, $10.9 million will be invested to strengthen gas infrastructure planning and deliver market reform to lower the price of gas for households and manufacturers.
Gas will also play a critical role in the $1.3 billion Modern Manufacturing Strategy, which will target six national manufacturing priorities:
- Food and beverage manufacturing
- Resources technology and critical minerals processing
- Medical products
- Recycling and clean energy
- Defence industry
- Space industry
The backbone of this plan is enabling Australian manufacturing businesses to be globally competitive through cheaper and more reliable energy.
To that end, the Federal Government is helping to unlock five key gas basins starting with the Beetaloo Basin in the Northern Territory and the North Bowen and Galilee Basins in Queensland.
In his Budget speech in Federal Parliament, Mr Frydenberg said, “More gas at a lower price will support jobs in Australia’s manufacturing sector.
“Affordable and reliable energy will be critical to Australia’s future economic prosperity.”
The Budget also sets out measures that demonstrate how the government is reducing emissions through technology, including:
- $1.4 billion over ten years for the Australian Renewable Energy Agency (ARENA) to support the government’s Technology Investment Roadmap, by accelerating the development of new and emerging technologies to reduce emissions
- $70.2 million over five years to activate Australia’s first regional hydrogen export hub, and facilitate research collaborations and international supply chain studies to boost Australia’s hydrogen industry
- $95.4 million for a Technology Co-Investment Fund to implement recommendations from the King Review to support businesses in the manufacturing, industrial, transport and land sectors to invest in low emissions technologies to unlock energy and emissions savings and create jobs
- $50 million investment in the Carbon Capture Use and Storage Development Fund to pilot carbon capture projects that will help dramatically cut emissions from large industrial facilities
- $74.5 million over four years to enable Australian consumers and businesses to adopt future fuel and vehicle technologies in Australia, including hydrogen, electric and bio-fuelled vehicles
- $45.2 million for the government to progress reforms to make it easier and cheaper for businesses to participate in the Emissions Reduction Fund, and to support investment in offshore clean energy generation and transmission
Pouring funding into water infrastructure
The government is building on its existing investment in water infrastructure projects with an additional $2 billion in funding for projects through the National Water Infrastructure Development Fund. This more than doubles the fund to a total of $3.5 billion.
Key funding includes:
- $325 million for Wyangala Dam
- $242 million to the Dungowan Dam project
The additional funding is expected to deliver increased water security, build resilience in Australia’s regions, deliver jobs and grow the critical agriculture sector.
The fund will become a ten-year rolling program of priority water infrastructure projects, which are designed to support and invest in Australia’s regional economies over the long term.
This long-term focus will help identify and build the dams, weirs, pipelines, water recycling plants and other projects that will deliver the National Water Grid – a series of region-specific systems that will help secure reliable supplies of water for rural and regional Australia now and into the future.
Deputy Prime Minister, Michael McCormack, said, “This is all about increasing water security to build greater resilience in our regions as we create more jobs and see continued growth in our agriculture sector.
“We have already committed to more than 20 water infrastructure projects across Australia, supplying billions of litres of water for productive use each year, but we want to do even more.
“We have also established the National Water Grid Authority, standing up an Advisory Body chaired by Mr Chris Lynch, which is developing a new investment framework and completing five construction projects.
“Even through this difficult year, the agriculture sector grew by $1 billion – with the right investments in water infrastructure, we are supporting its continued growth for the future, as we work toward making it a $100 billion industry by 2030.
“We are helping increase water security in areas where extensive irrigated agriculture already exists, while also helping to unlock new agricultural regions, especially in Australia’s north.”
The government is also providing an additional $50 million to extend the On‑Farm Emergency Water Infrastructure Rebate Scheme.
Minister for Resources, Water and Northern Australia, Keith Pitt, said, “This scheme has provided real assistance to some of our hardest-hit farmers by helping them install new water infrastructure, and I am pleased we can work with the states to continue helping them.”
The Budget includes funding for measures announced in August in the Murray–Darling Communities Investment Package that will build trust and transparency, as well as improve the health of the rivers and basin communities.
“The package puts communities and jobs at the heart of the Murray–Darling Basin Plan while also delivering for the environment and agriculture,” Mr Pitt said.
Laying waste management foundations
The government is also investing $103.6 million to undertake the critical foundational work required to build the National Radioactive Waste Management Facility, including establishing a dedicated agency for the management of Australia’s radioactive waste.
The new Australian Radioactive Waste Agency will be based in Adelaide and be responsible for all functions of the National Radioactive Waste Management Facility, including engagement with the Kimba community in South Australia.
“The creation of the new agency is the next important step in developing Australia’s radioactive waste management storage solution and capabilities,” Mr Pitt said.
“A single agency ensures a dedicated focus on managing Australia’s radioactive waste in accordance with domestic and international regulations and best practice.”
Other budget initiatives
Regional budget boost
Several key regional projects have been identified as priorities in the 2020–21 Budget.
Minister for Population, Cities and Urban Infrastructure, Alan Tudge, said the Budget ensures regions which are seeing strong population growth have the services and jobs they need, that regions in transition are supported to adapt to new circumstances and build resilience, and there are investments for all communities to make sure they continue to be great places to work and live.
Funding includes an additional $200 million in grants to extend the successful Building Better Regions Fund (BBRF) for a fifth round, including:
- $100 million available across regional Australia for community priorities
- $100 million dedicated for tourism-related infrastructure
Other funding initiatives include:
- $100 million to fund Regional Recovery Partnerships, which will coordinate investments in ten regions with other levels of government to support recovery and growth
- An additional $30.3 million for the Regional Connectivity Program to support telecommunications projects developed by local communities and providers to benefit regions
- $41.0 million for a Research and Development Program to continue the government’s regional decentralisation agenda, by funding research and development activities that will benefit regional industries
- An additional $28.1 million to extend the Stronger Communities Program, which provides grants of between $2,500 and $20,000 across the country to community organisations and local governments for small capital projects that deliver social benefits for local communities
The government will also invest $5.7 million in a new Building Strong, Resilient Regional Leaders initiative; $5 million for the Regional Australia Institute’s research program and promotion of regional living.
Creating 100,000 apprenticeship positions
The Federal Government will also invest an additional $1.2 billion to support Australian businesses to employ 100,000 new apprentices or trainees as part of its COVID-19 economic recovery plan.
From 5 October 2020, businesses who take on a new Australian apprentice will be eligible for a 50 per cent wage subsidy, regardless of geographic location, occupation, industry or business size.
Prime Minister, Scott Morrison, said apprenticeships are an important pathway to get young people into jobs and to ensure there is a skills pipeline to meet the future needs of employers.
“During this pandemic the Federal Government has been focused on supporting and creating jobs as well as identifying the skills we need in the economic rebuild,” the Prime Minister said.
“Already 760,000 jobs that were either lost or reduced to zero hours as the COVID crisis hit have come back into our economy.
“We want to continue to recover what has been lost and get young people into work.
“Whether it’s the manufacturing, housing and construction, arts or mining sectors – this new wage subsidy gives businesses certainty to hire and provides a career path to aspiring, young tradies.”
The subsidy will be available Australia-wide to employers of any size or industry who engage an Australian apprentice or trainee from 5 October 2020 until the 100,000 cap is reached.
Under the new measure, employers will be eligible for 50 per cent of the wages for a new or recommencing apprentice or trainee for the period up to 30 September 2021, up to $7,000 per quarter.
Budget initiatives met with mixed industry response
APPEA Chief Executive, Andrew McConville, said the Budget acknowledged investment is a central pillar to recovery, and the oil and gas industry has a clear plan to support the government in driving job creation, skills development and promoting domestic spending and investment across all industries.
“The Budget, together with the government’s previous announcements on energy and technology, recognises the pivotal role of Australia’s oil and gas industry in providing energy security for homes and businesses and making a sustained contribution to government revenues,” Mr McConville said.
The oil and gas industry has invested more than $350 billion in the Australian economy over the past decade, has contributed to government revenue through the payment of $71.6 billion in tax payments and levies, and supports 80,000 jobs.
“The Budget is another important step in helping unlock the next wave of investment that will underpin Australia’s economic recovery out of the COVID-19 recession,” Mr McConville said.
“The announcement to introduce an investment allowance for businesses is a positive step. It will help to improve capital availability and investment, growth in wages and GDP in the same way as a company tax cut, while also raising national income.
“These initiatives coupled with personal tax cuts will help kickstart the domestic spending needed to repair the economy.
“Like many industries, Australia’s oil and gas sector has faced some tough conditions through the pandemic.
“Despite these challenges, the sector stands ready to provide reliable and secure energy for homes and manufacturing businesses, generate jobs through exploration and new operations, provide taxation revenue to build schools, roads and hospitals – all of which will help strengthen our economy.
“The right fiscal settings combined with stable, efficient regulation will encourage investment, create jobs and support businesses across all industries.
“We look forward to working collaboratively with the government to continue projects and pursue exploration to help kick start Australia’s COVID-19 economic recovery.”
However, the Clean Energy Council argued that the Federal Budget missed the mark on critical opportunities to leverage Australia’s renewable energy sector, and create tens of thousands of sustainable jobs in rural Australia.
Investing in clean, sustainable infrastructure not only produces an immediate economic boost but also creates long term jobs and industry for regional Australia, according to the Clean Energy Council (CEC).
The CEC maintained that there was enormous support for Australia to follow the many countries in prioritising a clean recovery from right across the spectrum – big business, community groups, energy experts and economists.
The CEC stated in a response to the Budget, “It’s disappointing the Australian Government has largely ignored the unparalleled opportunity to create regional jobs, while reducing emissions and setting Australia on a path to become a global clean energy superpower.”
The Budget locked in previous commitments to extend ARENA and support important transmission investments.
“New initiatives such as the instant asset write-off available for business will likely boost the uptake of commercial-scale solar, and a range of programs to develop skills and workforce capability will likely help develop the clean energy workers of the future,” the CEC stated.
“As proud stewards of the Women in Renewables program, the Clean Energy Council is also encouraged by the allocation towards Women in Science, Technology, Engineering and Mathematics (STEM) and the potential to develop a more inclusive clean energy workforce.
“Unfortunately, the Budget commitment for the previously announced feasibility study into a new coal-fired power station in Collinsville and funding for an expansion of Vales Point – one of Australia’s oldest and dirtiest power stations – will only add to investor confusion and uncertainty about the Australian Government’s energy policy priorities.”
“The Federal Budget didn’t deliver on the next generation’s expectations of a renewable energy future.”