Doubt over emissions reduction fund

The opposition says the government is preparing to slash its flagship Direct Action climate policy, the emissions reduction fund, after Tuesday’s budget showed proposed spending on the scheme would be $1.4 billion less than expected in the first four years.

But Environment Minister Greg Hunt says there has been no change to the policy and the budget still allows the government to issue contracts for the promised $2.55 billion from July 1.

Doubt over the government’s plans for its replacement for Labor’s carbon tax emerged after Tuesday’s budget papers showed $1.1 billion in projected spending on the fund, which will pay polluters to reduce their emissions, in its first four years.

The government said the figure was not a cut because the bulk of the $2.5 billion would be budgeted for in years beyond the forward estimates as polluters completed long-term projects.

But Labor environment spokesman Mark Butler said businesses could rely only on the spending outlined in the budget papers and ''the budget papers show this policy has been slashed by more than half''.

''While it barely seemed possible, last night saw Tony Abbott backslide even further on Australia’s fight against climate change,'' Mr Butler said.

''This fig leaf of a climate policy now lies in tatters.''

Proposed expenditure sets out $75.5 million for the fund in 2014-15, $300 million in 2015-16 and $354.5 million in 2016-17.

Mr Hunt has previously said the forward estimates would give initial allocations of $300 million, $500 million and $750 million in the first three years of the fund.

He said on Wednesday the budget papers simply set out the likely cash flow to business for four years and there was ''flexibility'' to move funds if more money was required.

''Let me repeat this: the policy as it was set out in 2010 established $2.55 billion to be made available for contracts in the first four years. That has been delivered,'' Mr Hunt said.

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