Sustainability and ESG Perspective on Federal Budget 2023

Renewable energy takes the lead in driving growth

We are pleased to see environmental, social and governance (ESG) matters feature heavily throughout this year’s Federal Budget.

While easing the cost of living pressures certainly headlined the papers, it didn’t take much scratching of the surface to uncover several key initiatives to support economic growth, diversity and inclusion, reskilling, decarbonisation and many more areas of concern for the sustainability sector.

Here, we focus on three key measures which contribute to significant risks and opportunities as identified by business leaders across the globe.

1. Laying foundations for growth

Despite recessionary pressures, business leaders here and across the globe are focused on growth. In fact, a recent survey found that 47% of middle-market CFOs predict double-digit growth in 2023. It’s heartening to see this Government acknowledge renewable energy and strong strategic industries in global supply chains as driving growth and modernising our economy. This is identified through:

  • Making Australia a renewable energy superpower, including investing:
    • $4 billion in a renewable energy superpower plan
    • $2 billion in a new Hydrogen Headstart program, helping Australia to lead the world in producing and exporting hydrogen power
  • Investing in people and skills, including a $3.7 billion investment in a revamped national skills agreement with the states and territories, while also encouraging women into apprenticeships
  • Supporting small business innovation and growth through:
    • Instant asset write-offs for cash flow support
    • A new Small Business Energy Incentive to reduce the burden of energy bills on small businesses
    • Support in adapting to new technology.

2. Building a green future

Decarbonisation has been a topic of increasing significance to businesses over recent years, significantly heightened since the passing of the Climate Bill 2022. This Budget outlines several initiatives to accelerate Australia’s path to decarbonisation and guide our move to a clean energy economy.

Business leaders will be pleased to note, a critical initiative for achieving decarbonisation will be large-scale electrification and investment in renewable energy production. The Government acknowledges “As demand for fossil fuels is replaced with demand for electricity to support transport, industry, offices and homes; electricity generation will need to at least double by 2050.” While Treasurer Jim Chalmers noted in his speech, “Australia’s biggest opportunity for growth and prosperity is the global shift to clean energy.”

Beyond the renewable energy superpower plan and Hydrogen Headstart program (above), the Government has committed more than $40 billion to Australia’s clean energy transformation. A focus on strategic partnerships will offer “abundant, affordable renewable energy powering new jobs and new industry in our regions and suburbs” through a National Reconstruction Fund to support the development of green industries, and a new Capacity Investment Scheme unlocking over $10 billion of investment in firmed up renewable energy projects.

Our decarbonisation will be further enhanced by the establishment of a new Net Zero Authority that will support workers, communities, and regions as Australia moves to a clean energy economy.

3. Safeguard mechanism

It’s pleasing to see a $600 million investment in a Safeguard Transformation Stream of the Powering the Regions Fund following the revamp of the Safeguard Mechanism earlier this year. This program will support facilities covered by the Safeguard Mechanism with trade exposure to improve global competitiveness. Overall, this is also expected to encourage investment in our path to net zero.

A note on the approach toward gender equality

I believe equality for women is critical for prosperity and it is great to see the Government will publish the gender pay gaps of employers with 100 or more workers from early 2024. But beyond this, the Government has taken significant steps in this Budget to support the safety of women and children by dedicating an additional $589 million to the National Plan to End Violence against Women and Children.