Budget 2021-22: What it means for the Circular Economy

By Dr Kar Mei Tang

With international pressure mounting on Australia to commit to more substantial action on climate change, Budget 2021-22 was an opportunity — coupled with a once-in-a-generation social license to spend strategically to ‘build back better’ — to set out the government’s strategy towards addressing these concerns.

So what’s in the budget for the Circular Economy?

Supply chain resilience

• The Government is examining supply chain vulnerabilities for critical products, starting with personal protective equipment (PPE), medical products and agricultural production chemicals, which will inform initial investments. From July 2021, the Government will deliver grants to businesses under the $107.2 million Supply Chain Resilience Initiative established last year to build capabilities that address and identify critical supply chain vulnerability to ensure we have access to the critical product inputs needed to secure our supply chains and support Australian manufacturers.
• The Government is also establishing an Office of Supply Chain Resilience to monitor vulnerabilities and coordinate whole-of-government responses to improve ongoing access to essential goods.

NSW Circular welcomes the focus on Supply Chain resilience. Against this priority we would like to see greater emphasis on building local jobs and investment around local recycled and manufactured products with lower carbon footprints.

Agriculture

• Soil health. $237.9 million to help improve farms’ soil health to support the National Soils Strategy, increase farm yields and reduce emissions. This includes incentives and services to help farmers in soil testing, building up the National Soil Resources Information System with additional data, introducing a National Soils Science Challenge to advance understanding of Australia’s soils.
• Murray-Darling Basin: managing water resources. The Government is redirecting $1.5 billion from the Water Efficiency Program to water saving Initiatives, including $1.3 billion to invest in modernising off-farm irrigation infrastructure in the Murray-Darling Basin, $150 million for grants to support off-farm water saving projects, and $60 million to support states’ on-farm water efficiency initiatives.

The circular economy has a significant role to play in reducing carbon emissions in food production and agriculture and improving productivity. NSW Circular would like to see greater focus on circular agricultural practices to reduce waste (not just organic waste), recycle water and generate local renewable energy. Optimising transport is an important element to achieving efficiencies and can be supported by increasing the percentage of food grown and consumed locally. Australia and the world cannot get to zero carbon without a circular economy. Recent analysis by the Ellen Macarthur Foundation and Material Economics demonstrates that while the transition to renewable energy can cut about 55 percent of the Paris Agreement carbon reductions needed, the remaining 45 percent are locked in products and food.

Climate resilience

• An Australian Climate Service will be established, to formally start operations from July 2021. This will bring together scientists from the Bureau of Meteorology, CSIRO, ABS and Geoscience Australia to support Emergency Management Australia and the National Recovery and Resilience Agency. The service will provide advice on risks from climate change, and provide an environmental road map to inform planning for infrastructure, housing and basic services like power, telecommunications, and water.
• The Government is refreshing its 2015 National Climate Resilience and Adaptation Strategy, to be released in the second half of 2021, to provide an updated pathway for building the community and economic resilience to climate change.
• $100 million over five years from 2021-22 to support the blue economy through its Oceans Leadership Package to manage ocean habitats and coastal environments while reducing emissions.

Building the jobs and industries of the future

While there are many things to applaud in the Budget, a clear pathway for Australia to modernise and decarbonise its economy remains a missed opportunity.

The jobs and industries of the future will be underpinned by circular, zero emissions technologies, infrastructure, products and services. These industries will leverage resources that can stay in the economy longer, extracting more value, growing jobs and investment.

Australia still hasn’t yet committed to achieving net zero emissions by 2050, making it an outlier among developed nations (something that over 100 other nations, including New Zealand, the UK, Japan and Korea have committed to doing so). However, the Prime Minister did state that Australia would update its long-term emissions reduction strategy ahead of the November COP26 climate conference in Glasgow.

The multi-billion infrastructure spending package is silent on how this pipeline can be leveraged to incorporate circular economy. While Infrastructure Australia has made important steps to recognise next-generation circular waste infrastructure in its priority infrastructure list, A greater focus on circular economy outputs is urgently required including:

• Next- generation Infrastructure
  • electric vehicles and charging stations
  • Shared mobility options
  • Recycled water
  • Circular economy hubs to recycle and re-manufacture components
• Infrastructure procurement:
  • using low-carbon and recycled materials
  • Infrastructure construction methods
  • prefabrication, modular design, low carbon, sustainable building materials
• Infrastructure materials tagging and tracing
  • to optimise asset maintenance, repair, and recycling at end-of-life

These initiatives would not only embed more sustainable practices in our infrastructure sector nationally, but importantly also catalyse new industries and markets for these goods and services, and add to long-term productivity and sustainability while reducing our environmental impacts.

To ‘build back better’, we need the right policy environment to make our industries future-ready in a resources-constrained world. The 2021-22 Budget makes an incremental step towards a circular economy and net zero emissions, but there remain substantial opportunities for future work and investment.

Picture: The New Daily

Dr Kar Mei Tang is Chief Circular Economist, NSW Circular.

This briefing first appeared at NSW Circular’s website. Click here to see the original version.

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