What does the 2024/25 Federal Budget mean for land conservation, land and water management & sustainable farming in Australia? Part 2: A Gap Analysis
Executive Summary
The 2024/25 Federal Budget for Australia emphasises land and natural resource management, biodiversity, biosecurity, climate change mitigation and adaptation, and disaster preparation, and have all increased over previous years. However, there are substantial funding gaps, notably in disaster preparation and biosecurity, when compared with international benchmarks. The disaster preparation gap is nearly $24 billion annually, while the biosecurity gap stands at $6 billion per year. The current commitments of $5.4 billion across these domains (biodiversity, biosecurity, climate mitigation & adaptation, disaster preparation) stand in stark relief to the benchmarks. Addressing these shortfalls will require not only innovative funding (from private equity sources) but also a more efficient and integrated allocation of scarce Australian Government resources to improve leverage of these funds as well as improved allocation of these funds between Federal, State and grassroots community organisations that are delivering on-ground services such as Landcare. This second part of my budget article goes into further detail in analysing what these funding commitments mean. I stress that the analyses here are not meant to be definitive or absolute but they do provide a starting point for those of us with responsibilities to natural resource management to strategise as to what investments are going to be needed in the coming years and decades, and what Australia should be aiming for in terms of funding allocations to meet these challenges.
An Overview of the Funding Commitment
Below is a summary of the key budget allocations that are in scope in this article [1]:
These are analysed in further detail in this part 2 of the article. Note that not all of these budget line items are used in the analyses. The analyses are restricted to 4 domains: Disaster preparedness, biosecurity, biodiversity and climate mitigation and adaptation.
Analysis of Disaster Cleanup, Recovery, and Preparation Commitments
The 2024/25 budget reflects a balanced approach between disaster cleanup, recovery and disaster preparation, with a noticeable increase in the latter over recent years. The trend over the past three years shows a consistent shift towards enhancing disaster preparedness, which should lead to more sustainable and cost-effective disaster management in the long run. This strategic reallocation aligns with international recommendations, highlighting the importance of investing in resilience to reduce the long-term impacts of natural disasters. Here is the analysis:
Disaster Cleanup and Recovery[2]
Total Cleanup and Recovery: $696 million over 3 years.
Disaster Preparation
Total Preparation: $390 million over 4 years.
Ratio of Cleanup and Recovery to Preparation in 2024/25 Budget:
$696 million (Cleanup and Recovery) / $390 million (Preparation) = 1.78
Comparison with Previous Budgets
2023/24 Budget:
·??????? Cleanup and Recovery: Approximately $700 million.
·??????? Preparation: Around $350 million.
·??????? Ratio: 2.0
2022/23 Budget:
·??????? Cleanup and Recovery: Approximately $650 million.
·??????? Preparation: Around $320 million.
·??????? Ratio: 2.03
2010 – 2021 Budgets: Average Decadal Ratio is ~2.0
Discussion and Implications
1.??????? Proportional Investment Compared to Global Benchmarks:
Australia's investment in disaster preparation ($390 million) is significantly lower than the 1% of GDP recommended by the UNDRR.
This suggests that Australia's budget allocation for disaster preparedness falls short of international recommendations.
2.??????? Ratio of Cleanup and Recovery to Preparation:
The ratio of 1.78 points to a higher emphasis on disaster recovery compared to preparation. Global experts recommend a more balanced or even greater emphasis on preparation to reduce future recovery costs and enhance resilience. Interestingly the US spends significantly more on recovery compared to preparedness. The ratio in the US often exceeds 2, reflecting a reactive rather than proactive disaster management strategy.
3.??????? Long Term Cost-Effectiveness:
According to the World Bank's recommendation, investing in disaster preparedness can significantly reduce future recovery costs. Australia's lower investment in preparation compared to recovery may lead to higher long-term economic losses, as the cost savings from proactive measures are not fully realised. The ratio of disaster cleanup and recovery to disaster preparation has decreased from 2.03 in the 2022/23 budget to 1.78 in the 2024/25 budget. This suggests an increased emphasis on disaster preparation and resilience compared to previous years, where the decadal trend was ~2.0. The growing investment in disaster preparation suggests a strategic shift is occurring towards mitigating the impacts of disasters before they occur, potentially reducing future recovery costs. This more proactive approach aligns with global best practices, emphasising resilience and preparedness as key components of disaster management. The absolute investment in disaster preparedness in Australia is significantly lower than global expectations (more on that below when I discuss funding gaps).
The growing investment in disaster preparation suggests a strategic shift towards mitigating the impacts of disasters before they occur, potentially reducing future recovery costs.
Analysis of Biodiversity Commitments
The 2024/25 budget includes substantial investments aimed at supporting biodiversity. The total estimated investment in biodiversity (which includes commitments to biosecurity) in the 2024/25 budget, based on the funded commitments listed, is approximately $601 million over 2 – 5 years[3]. These support measures are aimed at enhancing biodiversity conservation, supporting sustainable land and water management practices, and safeguarding agricultural and natural ecosystems from biosecurity threats. While many of the other investments in the budget such as the National Landcare Program incorporate biodiversity measures, these were not included in the analysis here.
While Australia has made significant commitments, the total biodiversity-related investments are below the recommended 0.1% to 0.3% of GDP. For a GDP of approximately $1.54 trillion USD (or AUD $2.3 trillion), this would mean an annual investment of $1.5 billion to $4.6 billion USD (or AUD $2.3-6.9 billion). The total estimated investment in biodiversity and biosecurity (the latter supports the former) in the 2024/25 budget, based on the measures listed, is approximately $600 million, which is well below the lower end of the expected global standard: Convention on Biological Diversity (CBD). The CBD recommends countries invest between 0.1% and 0.3% of GDP annually in biodiversity conservation. The Kunming-Montreal Global Biodiversity Framework emphasises the need for substantial investments in biodiversity to halt and reverse biodiversity loss by 2030. It calls for increased financial resources from both public and private sectors and is substantially a higher commitment than the CBD[4].
Analysis of Biosecurity Commitments
Over the past decade, Australia has increased its investment in biosecurity, responding to rising threats from exotic pests and diseases. The 2024/25 budget allocates significant funds of $525 million (over 5 years) to various biosecurity initiatives, reflecting a continued commitment to protecting agriculture, the environment, and public health.
Proportional investments observed across other jurisdictions are as follows:
·??????? Australia: 0.034% of GDP
·??????? United States: 0.004% of GDP
·??????? European Union: 0.001% of GDP
·??????? Canada: 0.027% of GDP
·??????? New Zealand: 0.062% of GDP
There has been a consistent and significant increase in Australia's investment in biosecurity, with funding more than doubled from approximately $200 million in 2014/15 to $525 million in 2024/25.
Australia's increasing investment (in biosecurity) aligns with international best practices and recommendations from global organisations including the OIE, FAO, and IPPC, which emphasise the need for robust biosecurity measures.
Analysis of Climate Change Mitigation and Adaptation Commitments
[Note: This analysis excludes disaster preparedness, clean up and recovery]
The analysis of the 2024/25 budget documents shows that the proposed funding for Climate Change Mitigation and Adaptation, is substantial and aligns with the Australian Government’s commitment to addressing climate change and enhancing water management.
Over the past decade, Australia has increased its investment in climate change mitigation and adaptation, recognising the pressing need to address emissions reduction and water management. The budget reflects this priority by allocating substantial funds to support renewable energy, hydrogen production, and agricultural emissions reduction. Investments in the Future Drought Fund aim to enhance the resilience of farming communities, while the National Water Grid Fund targets critical infrastructure projects. Additional allocations support water policy functions, the Great Artesian Basin, the Murray-Darling Basin Plan, and various water security and environmental programs. These efforts collectively aim to enhance sustainability, support climate adaptation, and ensure water security across Australia.
Australia's total proposed funding for Climate Change Mitigation and Adaptation, excluding Disaster Preparation and Cleanup and Recovery, is approximately $32 billion over the next 12 years. Using Australia's GDP of approximately $2.3 trillion, I estimate the forecast proportional investment as a percentage of GDP, at 0.12%.
Australia's annual investment in climate change mitigation and adaptation at 0.12% of its GDP, is at least 10x below the World Bank's recommended 1%-2% for transitioning to low-carbon economies.
This equates to a shortfall of $23-46 billion per year. In comparison, the United States invests 0.2% of its GDP, the European Union 0.6%, the United Kingdom 0.04%, and Canada 0.5%, all of which also fall short of the recommended levels, but all invest a higher proportion of their GDP than Australia. Substantially increasing investment in this area is expected to be required if Australia is to meet this global benchmark.
Funding Gap Analysis & Further Considerations for Increasing Australia’s Investments
The current budget commitments in biosecurity, biodiversity, and climate mitigation and adaptation, and disaster preparation, is approximately $21 billion over the forward estimates and mid-term (depending on the specific budget items) or about $5.4 billion on an annualised basis.
Considering international benchmarks, there are significant shortfalls which in turn underscores the need for substantial increases in funding to effectively manage and mitigate these critical environmental challenges, as well as being more effective in how the existing budget envelope is allocated. The following are estimates of these shortfalls and provide considerations for the shaping of future budget allocations and how to build the base of the most significant funding sources.
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While there are promising trends in the 2024-25 budget, further strategic allocations to these important areas, disaster preparedness and biosecurity in particular, will ensure a closer alignment to the relevant global benchmarks [6].
An Estimation of Investment Gaps
I have taken reasonable estimates of what experts and international organisations indicate as benchmarks for investment levels and compared these with the associated commitments in the budget. Note: these are my estimates and perspectives and recognise that others may use other benchmarks, assumptions, and use the budget data in other ways, and therefore come to different conclusions. My assumptions are outlined in the footnotes.
Biosecurity
Current Budget Commitments: $0.38 billion over four years (estimated from the $525 million over 5 years).
Required Funding (from benchmarks): $314 billion over 50 years, averaging $6.28 billion per year[7].
Investment Gap:
Biodiversity
Current Budget Commitments: $75.2 million allocated for biodiversity conservation.
Required Funding (from benchmarks): $1.69 billion annually[8].
Investment Gap:
Climate Mitigation and Adaptation
Current Funding Commitment over 4 years: $20.6 billion (assuming all the commitments over the 7-year forecast are annualised and therefore brought forward).
Annual Current Funding Commitment: $5.1 billion (over the next 7 years)
Required Funding (from benchmarks): $200 billion over 20 years, averaging $10 billion per year[9].
·??????? Annual Gap: $10 billion (required) – $5.1 billion (budget) = $4.9 billion.
·??????? Four-Year Gap: $40 billion - $20.6 billion = $19.4 billion.
Disaster Preparedness
Current budget commitments: $390 million over 4 years.
Current annual commitments: $98 million[10].
Required Funding (from benchmarks) (1% of GDP or $2.3 trillion): $23 billion annually[11].
Addressing the Funding Gap
Here is a summary of budget proportions relative to required amounts (on an annual basis):
These figures indicate major funding gaps across all 4 areas, with particularly low budget allocations for disaster preparedness and biosecurity. Despite the comparable investments with other jurisdictions, there are significant gaps that remain in biodiversity, and disaster preparedness, leading to a substantial overall funding gap, against the benchmarks assessed, both annually and over future years.
The largest gap is clearly in disaster preparedness at $23 billion annually, followed by biosecurity at $6 billion.
Conclusion
When the forecast budget estimates are compared to the size of the estimates required to solve our natural resource management challenges, then the current allocations for biosecurity, biodiversity, climate change mitigation and adaptation, and disaster preparedness, fall short of relevant benchmarks. To effectively address the funding gap, particularly in biosecurity, and disaster preparedness, Australia must leverage additional funding sources and adopt innovative financial mechanisms. But it could also include making further (major) investments into the National Heritage Trust (building long-term wealth), exploring public-private partnerships, and being better stewards in the allocation of existing funds.
Greater leveraging of Australian Government funds will be essential, including better integration of allocations to states, grassroots community Landcare, and aligning these funds with private equity investment.
With these sorts of numbers, neither the Australian Government nor private equity will be able to fill the gap, but a mix of both. Looking to the future, highly effective collaboration will be required to maximise the impact of all available funds to help ensure a more resilient and sustainable future for Australia’s natural resource management.
Footnotes:
[1] Note that these have been aggregated and grouped in ways to demonstrate common themes of commitments and do not necessarily reflect the original presentation of the programs in the budget documentation.
[2] Note: Disaster clean up and recovery activities (not preparedness).
[3] The Australian Government’s State of the Environment (SOE) 2021 Report describes Australia annual commitment to managing biodiversity loss as within the range of $0.2-0.5 billion in the previous decade, and indicates that these figures are inadequate to address the challenge (though no estimate of the gap was provided) (https://soe.dcceew.gov.au/overview/environment/biodiversity). ?
[4] The estimated global funding requirement is US $200 billion which is the investment target set by the Kunming-Montreal Global Biodiversity Framework, a global requirement for funding nature repair annually by 2030. This investment is intended to address the global challenge of biodiversity loss and environmental degradation. Therefore, assuming 2-5% of the need sits with Australia, we may need to budget between AUD $6 - 15 billion annually to meet its share of the global investment target for nature repair by 2030. This expected commitment is considerably higher than the CBD estimates.
[5] The Food and Agriculture Organisation (FAO) is a specialised agency of the United Nations that leads international efforts to defeat hunger, improve nutrition, and ensure food security by promoting sustainable agricultural practices. The World Organisation for Animal Health (OIE) is an intergovernmental organisation responsible for improving animal health worldwide, setting international standards for animal health and welfare, and facilitating the control and eradication of animal diseases. The International Plant Protection Convention (IPPC) is an international treaty that aims to protect global plant resources from pests by promoting the development and implementation of harmonised phytosanitary measures and fostering international cooperation.
[6] Based on published estimates by CSIRO (https://www.csiro.au/en/about/challenges-missions/Biosecurity)
[7] Based on CSIRO estimates: https://www.csiro.au/en/research/natural-environment/Biosecurity
[8] The value of $1.69 billion per year is at the lower end of the scale and was reported in the journal Nature?610, 19-20 (2022) doi: https://doi.org/10.1038/d41586-022-03047-2. The Paulson Institute estimates that Australia may require annual investments of 10% of the global $30-60 billion estimate required to stem biodiversity losses. PwC estimate that funding of $4.9 billion per year could be unlocked in private equity for addressing biodiversity loss in Australia (https://www.pwc.com.au/environment-social-governance/nature-positive-australia-value-of-australian-Totbiodiversity-market.html).
[9] This estimate is reasonable based on various credible sources. One source estimates that the range of required investment would be slightly lower in the range of $5-9 billion (AUD) per year: https://www.wri.org/insights/adaptation-finance-explained.? On the other hand, the National Climate Resilience and Adaptation Strategy 2021-2025 estimates that costs to Australia from climate change impacts are at $38 billion per year: https://www.dcceew.gov.au/climate-change/policy/adaptation/strategy/ncras-2021-25. ?These estimates are all much lower than the World Bank's recommended 1%-2% for transitioning to low-carbon economies (mentioned earlier in the text).
[10] The average annual commitment to disaster preparation, when spread evenly over four years, would be $97.5 million per year. The actual current annual FY commitment is $286 m.
[11] Based on UNDRR benchmark (1% GDP).
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