Centre for Policy Development's Blog, page 2

Could Australia become a wellbeing economy?

Starts at 2:03:10. CPD senior strategic adviser Katherine Trebeck speaks to Prue Bentley about global progress towards a wellbeing economy.

Tackle problems earlier to get more bang for government buck – new report

The failure of governments in Australia to intervene early in areas like health, child poverty and chemical pollution is wasting billions of public money and reducing quality of life for Australians, according to a new report from the Centre for Policy Development (CPD).

Avoidable Costs: Better outcomes and better value for public money exposes the annual costs to Australian governments of failing to address child poverty, chemical contamination and health issues earlier. 

The report estimates that child poverty in Australia costs governments $16 billion a year. This huge sum includes costs like child protection, health services, legal system costs and homelessness services. Adults who experienced poverty as children are also more likely to rely on support payments such as Jobseeker and Family Tax Benefit.  

It also estimates Australian governments spend between $18-29 billion a year on hospital stays, Medicare services, PBS expenditure and welfare payments arising from potentially preventable disease.

It says a lack of timely regulation of harmful chemicals like asbestos, lead and forever chemicals in Australia has left more than 160,000 contaminated sites, the costs of which mean they are unlikely to be ever be fully cleaned up. Instead, the nation will bear the ongoing health consequences and land use restrictions.

The case studies presented are just three examples of the extent of avoidable government spending, and there are further examples across every government portfolio.

The report recommends embedding avoidable cost analysis – the practice of using evidence to estimate future costs from preventable issues – into government budgets and policy design, to ensure the true costs and savings of policies are accurately reflected. Doing so would incentivise investment in preventative government initiatives, that sometimes have high initial costs but can save money over their lifespan, as well as enhance wellbeing across the nation.

To support this, the report recommends establishing an Avoidable Costs Unit within Commonwealth Treasury and each state and territory treasury. These units would support government departments to identify avoidable costs, and build the internal capacity needed to implement more preventative policies and help with budget forecasting. 

CPD CEO Andrew Hudson said Australia is facing a dramatic increase in government spending that requires new solutions: “In many areas, our current approach is too reactive. Billions of dollars are spent cleaning up harmful chemicals that could have been regulated when their effects were known. Repeated hospital stays for someone experiencing homelessness is more expensive than helping them into housing. A young person’s interaction with the criminal justice system costs more than the support payments that could have kept their parents above the poverty line, and lowered their chances of offending.

“Australian governments should engage in avoidable costs analysis across all departments to stop the cycle of repeatedly using public resources to address harms that could have been prevented. By doing so governments can be more effective and productive, achieve a better quality of life for Australians and deliver better value for public money.”  

Wellbeing Economy Research Director Warwick Smith said while calculating the avoidable costs embedded in policies is challenging, it’s far from unachievable: “We have the ability to plan for the long term. Infrastructure and defence for example, are just two areas where long-term strategic planning, using evidence and forecasting, ensures future risks are mitigated.

“Many social and environmental issues that require expensive interventions are the result of broader economic structures, such as insecure employment and a lack of accounting for the value of nature.  Going to the source of issues, and ensuring basic foundations like economic security, can help avoid harms and prevent the need for runaway reactive spending. 

“While governments will always need to respond to immediate, unavoidable challenges – and to bear the costs that come with them – the need to address root causes and take proactive measures to prevent harm must be prioritised.”

Transisi Energi Kian Relevan, Bagaimana Persiapan Tambang Indonesia?

Transisi dari energi fosil ke terbarukan semakin relevan di tengah perubahan iklim yang semakin nyata.

Several partnerships with Indonesia are under way. Do they have what it takes to be successful?

Indonesia's energy transition will shape regional prosperity and global emissions.

New framework shows how Indonesia’s energy transition can deliver economic and social benefits for all

Indonesia’s energy transition is already well underway. But a new report warns that without a stronger focus on people and communities, progress could come at a cost.

Released today by the Centre for Policy Development (CPD), Powering Prosperity: A framework for a fair and inclusive energy transition in Indonesia sets out a practical roadmap to help ensure the transition strengthens, rather than undermines, economic opportunity and community wellbeing across the country.

Indonesia faces mounting climate risks—including flooding, cyclones, and extreme heat—that are already threatening lives and livelihoods. The World Bank estimates that climate impacts could cost Indonesia up to 7% of GDP by 2100. At the same time, with an economy still heavily reliant on coal and other emissions-intensive industries, Indonesia must adapt to a global market shifting rapidly away from fossil fuels.

Recognising these challenges, the government has committed to a number of climate targets, including cutting emissions by up to 43% by 2030 and reaching net zero by 2060. But the report warns that without greater focus on the human side of the transition, these changes could deepen inequality, displace workers, and create risks for social and political stability—both in regions reliant on high-emissions industries and in areas experiencing new pressures from renewable energy projects and critical mineral mining.

Powering Prosperity argues that for Indonesia’s energy transition to succeed, it must go beyond reducing emissions and building new industries. It must also create real opportunities for all communities to benefit, especially those most at risk of being left behind.

The report outlines three core principles for delivering a fair transition:

Ensure those affected by the transition have a voice: give workers and unions a seat at the table, let local authorities and communities lead regional transitions and actively consult households when developing transition plans.Ensure those who face vulnerability are not made worse off: protect vulnerable groups by ensuring energy is affordable, supporting access to renewables, and creating alternative employment for those impacted.Ensure the costs and benefits of the transition are shared equitably: make sure all households have access to better jobs and income in new industries, and that current generations aren’t overly burdened by high energy costs.

It also offers practical recommendations, including establishing a clear national vision supported by detailed policy roadmaps, creating a national coordinating body to help steer efforts, and developing strong workforce assessment and reskilling strategies. International collaboration will also be essential, particularly to support community engagement and workforce development.

Centre for Policy Development CEO Andrew Hudson said Indonesia’s energy transition is at a turning point, and success will depend on how well policies reflect the needs of people and communities.

“Indonesia has made progress on energy transition, but the true test will be ensuring that it benefits everyone.

“The government should  address the impacts on households, workers, and communities early. By doing this it can build stronger public support, unlock economic opportunity, and move faster and more confidently toward its climate goals.”

Senior Adviser Ruddy Gobel said the report shows a just transition is not only achievable, but already within reach.“We’ve seen how quickly Indonesia can mobilise around big national priorities. Now we need the same ambition to ensure communities are heard, supported, and can genuinely benefit from this transformation.“With the right strategy, Indonesia can show the world what’s possible when no one is left behind.”

CPD urges holistic approach to early childhood education reform

With less than two weeks to go until the federal election, the Centre for Policy Development (CPD) is urging all parties to commit to comprehensive reform of Australia’s early education and care system, warning that partial solutions will not deliver lasting improvements.

CPD welcomes the commitment and focus on improving the system, and commends the government, opposition, Greens and Independents for putting early childhood education and care firmly on the agenda. For the sake of Australian children and families, it is crucial that—regardless of the election outcome—affordability, accessibility, and quality remain core priorities.

Recent measures such as improved pay for educators and fee-free TAFE courses are important steps towards addressing workforce issues, and we are glad to see bipartisan support for initiatives like the $1 billion Building Early Education Fund, which aims to expand access to early learning services in rural and remote areas.

CPD strongly supported the 3 Day Guarantee Act and its removal of the activity test for up to 72 hours per week.  The test has long prevented access for children in households with casual or unpredictable employment, low incomes, or other vulnerabilities, and it has no place in a future universal system.

CPD also welcomed comments made during last night’s leaders’ debate, where Prime Minister Anthony Albanese stated that one of his big policy ambitions is creating universal early childhood education and care in Australia. CPD agrees that this should be a national ambition—and one that requires a sustained, non-partisan commitment from all sides of politics.

Centre for Policy Development CEO Andrew Hudson stressed that it was crucial that these measures were taken forward into the next government.

“Real progress demands that we tackle workforce shortages, expand services in regional and remote communities, and fundamentally reform funding—including removing barriers like the childcare activity test.”

“It’s encouraging to see bipartisan support for initiatives like the $1 billion Building Early Education Fund. But ensuring every child benefits means we must also address the system’s deep-seated inequities.”

“The evidence is clear: the activity test locks vulnerable children out of essential early learning. Reinstating it would undermine progress towards a fairer and more effective system. We strongly urge all parties to avoid reinstating measures that harm the very children who stand to benefit most.”

“Building an early childhood education system that truly serves all Australian families requires bold, comprehensive action—not picking and choosing reforms.”

Restructure government, says think tank

Australia’s structure of government needs to change if ongoing challenges such as housing affordability and climate change are to be handled effectively, says an expert.

How decision-makers can help government systems pursue citizen wellbeing

New research says frustrated champions within the system are key to reshaping government through bold, preventive reform efforts.

Put it in the budget: Federal government underestimates disaster recovery costs by $6 billion

The federal budget doesn’t account for the real cost of natural disasters — and it’s costing Australians in more ways than one.

A new paper from the Centre for Policy Development reveals that the Commonwealth spends around $1.6 billion a year on disaster recovery, but only budgets for $215 million — creating a $6 billion gap over the forward estimates.

The paper, Budgeting for Climate Disasters, by CPD’s Toby Phillips and Warwick Smith, and former Reserve Bank Deputy Governor Dr Guy Debelle, calls for future disaster recovery costs to be included in the federal budget — not treated as an unquantified risk.

Including future disaster costs would improve transparency and fiscal discipline, ensuring the budget better reflects the real pressures on public finances and helps avoid unexpected fiscal shocks.

It would also create stronger incentives to invest in resilience and adaptation — by making the long-term savings from mitigation efforts visible in fiscal decision-making, rather than hiding the true cost of inaction.

The paper shows that this fix is straightforward, both actuaries and insurance companies already model future disaster risks with a sufficient degree of accuracy over multi-year periods — and even the government’s own Intergenerational Report projects future disaster costs.

Properly accounting for disaster recovery would reduce fiscal blind spots and improve accuracy and transparency in the federal budget. In fact, the Charter of Budget Honesty already demands that the government account for any factors with a material impact – and CPD’s paper argues that current budgeting practice fails this test. 

Beyond just improving fiscal discipline, this proposal would also give adaptation and resilience policies a fairer chance at Cabinet level, ensuring their future savings are recognised alongside upfront costs

Dr Guy Debelle said that this wasn’t about new spending, it was about reflecting reality.

“Disasters are inevitable, not unpredictable. We know they’re coming, we just don’t know exactly when. That’s no different from other budget forecasts like unemployment or inflation.

“The actual budget outcome won’t change, it would just make the estimates more accurate.

“This spending is going to occur either way — by not budgeting for disaster recovery, we underestimate the long-term cost and under-value the benefits of preventing harm in the first place.”

Economic Director for the Centre for Policy Development Toby Phillips said the approach being recommended is standard practice in many industries.

“Insurers already use these kinds of estimates to set premiums and manage risk — and they also factor in how resilience investments reduce long-term costs. If a global financial industry can solve this problem, then so can our government.

“If your roof is nailed down properly or your house is elevated above flood levels, your insurance is cheaper. The same logic should apply to public spending.

“Disaster risk mitigation is actively discouraged by current budget practices. Governments have no incentive to reduce a risk that isn’t counted in the first place, that’s why the future expenditure needs to be in the budget.”

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