Finding new ways to fund climate action and defence | Australian government to charge departments for outsourcing: news in brief 

By on 09/05/2024 | Updated on 09/05/2024
Piles of silver coins acting as stepping stones
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Global Government Forum’s weekly news roundup of public service intelligence 

Nations around the world are dealing with tight public finances, and this week’s GGF roundup highlights how governments are looking to meet the costs of providing services amid increasing pressures – from funding additional defence spending and climate action, to cutting the cost of outsourcing. 

Fossil fuel tax could raise $900bn in climate funding by 2030 

A new tax on the extraction of fossil fuels in the world’s richest advanced economies could raise hundreds of billions by the end of the decade to help the worst-affected nations cope with climate change, according to a new report. 

The Climate Damages Tax report proposes that OECD countries, in particular members of the G7, lead in introducing a fee per tonne of CO2 embedded (CO2e) for the domestic extraction of coal, oil and gas.  

The report argues for 80% of the proceeds, equating to US$720bn, to be transferred to the newly established Loss and Damage Fund for assisting developing countries in their response to climate losses and damages. In addition, 20% – US$180 billion – could be reserved as a ‘domestic dividend’ to support the climate transition in countries where the tax is imposed.  

The report, which is backed by over 100 climate organisations worldwide including Greenpeace, Stamp Out Poverty, Power Shift Africa and Christian Aid, states: “The tax could be easily administered within existing systems of royalty payments or similar that fossil fuel companies already have to pay in the states where they operate.” 

Read more: Money talks: Integrating climate action and government budgeting focuses minds, say European leaders 

David Hillman, director of Stamp Out Poverty and co-author of the report with Dr Sindra Sharma, said: “Finally, the international community has agreed to financial support for people at the sharp end of catastrophic climate change. It would be unforgivable if they fail to deliver the money needed.  

“The Climate Damages Tax paper shows that the funds are there. It demonstrates that the richest, most economically powerful countries, with the greatest historical responsibility for climate change, need look no further than their fossil fuel industries to collect tens of billions a year in extra income by taxing them far more rigorously. This is surely the fairest way to boost revenues for the Loss & Damage Fund to ensure that it is sufficiently financed as to be fit for purpose.” 

Read more: Biden’s EPA awards $20bn for climate projects, court rules national climate action is a human rights issue, and more 

Labour says plans to cut civil service jobs to boost UK defence spending ‘don’t add up’ 

Labour Party officials have said there are no plans to cut civil service jobs to fund increased defence spending if the party gets into power at the next general election. 

In April, UK prime minister Rishi Sunak pledged to increase UK military spending to 2.5% of gross domestic product by 2030, from 2.3% today. 

The commitment would be partially funded by current government pledges to cap the size of the civil service at current levels, and then aim to reduce it by 70,000 posts to pre-pandemic levels. According to the government, this would free up £2.9bn (US$3.6bn) a year by 2028-29. 

Labour leader Sir Keir Starmer said recently that he aimed to match the defence spending increase “as soon as resources allow”.

Labour officials told the Financial Times last week that the Tories’ plans for civil service cuts are “fanciful” and questioned whether the savings would cover the defence pledge. One told the publication: “There’s no point committing at this stage to cutting the civil service in the service of costings that don’t add up.” 

Starmer also previously told the BBC that the Conservatives’ plan to fund the increase in defence spending “doesn’t stack up”.  

Read more: UK chancellor caps size of civil service 

Gemma Tetlow, chief economist at the Institute for Government, said claiming that savings from civil service efficiencies would pay for a hike in defence spending was a “line to take” for ministers in interviews, “not a serious plan”. 

“There is a case for making savings from the civil service, though it would be better to focus on how best to save money instead of setting arbitrary headcount targets,” she said. 

Read more: Senior US official defends telework policy – as Canadian government wants officials in the office three days a week 

Australian government to charge departments for outsourcing 

Australia’s government has announced plans to deliver AUS$1bn (US$650m)in savings by further reducing spending on consultants, contractors and labour hire in the 2024-25 Budget.  

A statement said that the savings will comprise AUS$625m (US$412m) across all government agencies in 2027-28, plus an “additional external labour levy” of AUS$375m (US$247m) over four years from 2024-25.  

This would be in addition to the AUS$3bn (US$1.9bn) in savings from reducing spending on external labour that the government delivered in the 2022-23 October Budget, taking the total to AUS$4bn (US$2.6bn). 

Minister for finance and the public service Katy Gallagher said: “This is part of the government’s commitment to reduce the reliance on external labour and rebuild a fit-for-purpose public service that is resourced to deliver the services Australians expect.” 

Read more: Beyond budget cuts: Experts discuss strategies for boosting government productivity while protecting services 

Gallagher said that since the Albanese administration came to power in May 2022, around 8,700 roles that were done by contractors or labour hire are now being performed by public servants.  
 
“The use of the biggest consulting firms has significantly reduced under the Albanese Government, dropping by $624m [a] year-to-date this financial year compared to the comparable period in 2021-2022,” she said. 

Read more: Senior US official defends telework policy – as Canadian government wants officials in the office three days a week 

US Department of Transportation seeks AI ideas 

The US Department of Transportation’s Advanced Research Projects Agency – Infrastructure has released a request for information seeking input on the potential applications of artificial intelligence in transportation.  

The request for information also calls for feedback on the emerging challenges and opportunities related to creating and deploying AI technologies in applications across all modes of transport. It follows direction in President Biden’s executive order on AI, published in October 2023. 

Read more: Governments set out plan to ensure AI safety as US makes bid to lead standards 

The RFI states that: “Virtually all aspects of transportation and mobility – from the design, construction, operation, and maintenance of physical infrastructure systems to the operation of the digital infrastructure that underpins and enables the movement of people and goods – will likely be impacted by the deployment of AI tools and applications.  

“Beyond the direct impact of the technology itself, AI has the potential to reshape how individuals, communities, corporations, governments, and other users interact with the transportation network in ways that are difficult to anticipate.” 

The RFI welcomes information from innovators and technology developers, researchers and universities, transportation system and infrastructure owners and operators, transportation-focused groups, associations, and the public. 

Interested parties should submit written responses within 60 days of the publication of the RFI

Read more: Protecting elections from deepfakes, France to use AI to help simplify public services, and more 

What’s on Global Government Forum this week 

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