Image by Artefatica CC 2.0 via Flickr

It is increasingly recognized that ecological forces and climatic processes have had, and will continue to have, a significant impact on societies and their economies. With the controversial exception of one country, the Paris Climate Agreement was agreed upon unanimously in 2016, in recognition of the need to manage the human impact on climate change. In this light, it is worthwhile drawing this discourse into the fiscal realm, and ask if budgetary instruments might not help to highlight, explain, and then perhaps manage the ecological sustainability of nation-states.

In this regard, an important innovation has emerged from Nepal, which produced and released its first Citizens Climate Budget (CCB) in 2017 with the support of the United Nations Development Programme and the International Budget Partnership (IBP). The purpose of this document was to inform Nepalese citizens and stakeholders, in a simplified and straightforward manner, (1) the ecological impact of budgetary decisions, (2) the budgetary measures undertaken to mitigate that impact.

The Citizens Climate Budget highlights the important fiscal steps currently being undertaken by the Nepalese government. It shows, as an example, that roughly 30 percent of Nepal’s 2017 budget—worth 1.3 Trillion Rupees (roughly $15 billion AUD)—has been allocated to activities related to climate change. Five years ago, only 10 percent of the budget was allocated to such climate-related activities, representing a sevenfold increase in absolute terms. Along with providing a risk map of Nepal’s districts, it also identifies the regional budget outlays in light of that mapping exercise. It further provides a simplified breakdown across ministries in relation to their budgetary outlay from a climatic perspective.

This process is very important for Nepal, as it is one of the most climate-vulnerable countries in the world, bearing a disproportionate burden as global temperatures rise, with flash floods, landslides, glacial outbursts, and droughts representing just some of the risks that it has already begun to face with greater urgency. However, the real question for external observers is: why is such a Citizens Climate Budget not provided elsewhere? Or more specifically for us: should not such a process be implemented in Australia?

The merits of a Citizen’s Climate Budget

This proposition rests in tandem on both aspects of the Citizens Climate Budget: the “citizen” aspect and the “climate” aspect alike. From a “citizen” aspect, it is important to note, as the Tax and Transfer Policy Institute has carefully done in recent posts, it is the citizen participation in the budget process where Australia lags most. According to the 2017 Open Budget Survey, Australia scores a paltry 41/100, providing “limited opportunities to engage in the budget process.” This score is well below countries of a similar profile in economic and democratic terms where, as an example, New Zealand scores 59/100. The executive branch’s allotment of opportunities for public participation in Australia is particularly low, at 30/100.

The merits of a citizen budget in Australia would be that it would address two specific recommendations of the Open Budget Survey, namely:

  1. To “actively engage with individuals or civil society organizations representing vulnerable and underrepresented communities during the formulation and monitoring of the implementation of the national budget,” and
  2. To “provide more feedback to the public on how its inputs have been used when it participates in the budget process”.

From a climate change perspective, the need for such action is all the more evident. As far back as 2016, Australia was given “the worst possible rating of ‘very poor’ for its performance on emissions trends, carbon intensity, share of renewables in its energy supply and overall climate policy.” It thereby scored the lowest among G20 countries. More recent assessments have echoed Australia’s blatant disregard for climate change issues, a point that must repeatedly be articulated, and one that may in be part revisited through the sort of initiative that Nepal has taken.

Whether argued from a “climate” perspective (wanton disregard for the ecology) or from a “citizen” perspective (low public participation in budgeting), there seems to be a clear case for producing a Citizens Climate Budget in Australia. Prior to 2017, Australia was not a part of the biannual Open Budget Survey, and so it was not clear just how low public participation in budget transparency really was. While the country had been a pioneer in budget transparency twenty years ago through the Charter of Budget Honesty, it is time to stop resting on the laurels of a bygone achievement. It is also time to swap budget rhetoric for action, and push for better budget practices; ones that also speak resolutely to the salient issue of our time: the mitigation of severe climate change.

More from our Budget Forum 2018 series:

Budget Forum 2018: This is not a Genuine or Equitable Way to Simplify the Personal Income Tax System by Andrew Podger

Budget Forum 2018: A Missed Opportunity for Enhancing Australia’s Budget Transparency on Distributional Information by Teck Chi Wong

Budget Forum 2018: Targeting the Black Economy by Joel Emery

Budget Forum 2018: Tax Caps and Tax Cuts: Good for Australia? by Miranda Stewart

Budget Forum 2018: Risks Greater Than I Can Recall in My Working Life by John Hewson

Budget Forum 2018: The Future of Corporate Taxation by David Ingles

Budget Forum 2018: Cuts to Personal Income Tax – A Mixed Bag by Robert Breunig

Budget Forum 2018: A Political Budget Unlikely to Work Politically by John Hewson

Budget Forum 2018: The Government Could Be Boosting the Budget Bottom Line with a Change to How It Taxes Gas by Diane Kraal