Australia unveils budget aimed at becoming a “renewable superpower" May 15, 2024

Treasurer Jim Chalmers said Australia was on track to achieve a budget surplus of $6 billion this year. (Arsineh Houspian)

By AFP - Agence France Presse

Australia unveils budget aimed at becoming a “renewable superpower

Australia unveiled plans to become a “renewable energy superpower” in an annual budget on Tuesday, but the government's books also revealed the economy's deep dependence on mining and fossil fuels.

Treasurer Jim Chalmers said the country was on track to achieve a budget surplus of US$6 billion (Aus$9 billion) this year, a windfall sustained partly by rising iron ore and coal prices.

While highly polluting commodities will fuel Australia's economy for years to come, Chalmers said the mining giant can no longer ignore the clamor for clean energy.

“We know that the global energy transformation represents a golden opportunity for Australia,” Chalmers said in his budget speech.

“If we fall behind, the chance of a new generation of jobs and prosperity will pass us by. This budget invests in our ambitions as a renewable energy superpower.”

At the heart of the budget was the fledgling “Made in Australia” program, which aims to catalyze the country's clean energy and advanced manufacturing sectors.

Following the US Inflation Reduction Act model, the program will earmark $15 billion for the manufacture of solar panels, low-carbon fuels, tax incentives for essential minerals, and other priority areas.

- From dream to reality? -

Blessed with abundant sunshine, windswept coastlines, and plentiful deposits of rare metals and minerals, Australia's potential as a renewable energy superpower has been discussed for years.

However, these dreams invariably fail to materialize, as policymakers are faced with the country's long dependence on iron ore, thermal coal, and natural gas, which remain one of its most lucrative exports.

Iron ore alone accounted for 18% of Australia's exports last year, according to the budget documents.

“But these huge economic gains from mining and coal will soon start to diminish as economies decarbonize,” energy analyst Tim Buckley told AFP.

“With this plan in place, and if we make the right choices, the dream of renewables could become a reality in the next decade.”

Buckley said encouraging local manufacturing could also limit Australia's exposure to external economic shocks.

“We can accept that China has dominated the market in an area like solar panels and decide to buy from them forever,” he said.

“Or we can build some domestic capacity as a kind of energy security policy.”

Many climate activists are already questioning whether Australia is capable of phasing out fossil fuels or is just paying lip service to the idea.

Last week, the Australian government made clear its intention to continue relying on natural gas - a fossil fuel - as its main source of energy for the next 30 years.

- Military review -

Australia will be spending big as it embarks on its biggest military overhaul in a generation, a series of investments aimed largely at keeping a rising China in check.

The first and most important is a 30-year plan for Australia to manufacture its nuclear-powered submarines, part of the tripartite AUKUS pact between Washington, London, and Canberra.

The first drops of AUKUS funding, outlined in the budget, will help Australia recruit and train the 20,000-strong workforce needed to build a nuclear sector from scratch.

Meanwhile, the army will be re-equipped with an arsenal of missiles and long-range strike weapons, while six Hunter-class frigates and three Hobart-class destroyers will reinforce an aging naval fleet.

Australia has also earmarked major upgrades for the main military bases on its northern coast, the first line of defense if trouble spots in the Taiwan Strait or the South China Sea ever get out of hand.

This military force will be complemented by a renewed diplomatic push in the South Pacific, where China has long been eager to build its influence.

Australia will fund land reclamation projects in climate-threatened countries, install undersea cables to connect isolated islands, and help finance a range of other infrastructure projects.

Although Chalmers hailed Australia's first consecutive budget surplus in almost two decades, a deficit of US$19 billion (Aus$28.3 billion) looms over the government's accounts next year.

However, the budget documents painted a more optimistic picture than expected for inflation, which could return to the government's target range sooner than expected later this year.

By Steven TRASK

sft/arb/mca