“Federal government spending on failing net zero programmes is set to jump by roughly one-third, despite the finance minister claiming only days ago that such expenditure growth was ‘unsustainable’,” said Adam Creighton, Senior Fellow and Chief Economist at the Institute of Public Affairs.
Analysis by the Institute of Public Affairs of the 2026-27 federal budget, which outlines the federal government’s funding priorities over the next financial year, has found that annual spending on ‘net zero measures’ is set to increase by roughly one-third by 2029-30.
- The Treasurer announced that the federal government would commit to $18.2 billion on new ‘net zero measures’ over the next decade, including $12.3 billion over the next four years, just over $3 billion per year over the forward estimates.
- The reduction in subsidies for hydrogen in the budget is just $2.2 billion over the next 14 years, or roughly $157 million per year.
- The net new spending commitments in the budget increase total annual net zero spending to $11.9 billion.
“This spending growth is particularly extraordinary given the world’s biggest economies have been moving away from the failed pipedream of ‘net zero by 2050’, making these home-grown impositions on Australians unjustifiable on any metric,” said Mr Creighton.
Previous research by the IPA conservatively estimated federal spending on ‘net zero’ at $9.01 billion per annum following the 2025-26 budget. That alone would have been one of the top 20 programmes by expenditures were they consolidated.
“Net zero spending ranges from the truly wasteful, such as the $178 million announced for ‘international climate leadership’, to an, as yet, unknown amount tied up in contingent liabilities via the Capacity Investment Scheme.”
“The latest budget papers concede that net zero spending has become so complicated and vast that it is almost impossible to fully calculate, even for a federal bureaucracy with thousands of staff.”
Finance minister Katy Gallagher told The Australian on Monday that “you wouldn’t expect to see what we’ve done in earlier budgets where we’ve kind of supercharged the investment [in net zero measures]. That’s not sustainable.”
“While the reduction in ‘green hydrogen’ subsidies is commendable, it is tiny in comparison to new and continuing government spending.”
“The so-called net zero restraint in the latest budget is non-existent. For every dollar of spending on net zero cut, $20 of new spending has been added,” said Mr Creighton.
Related IPA research can be found here.
