TRANSCRIPT
Amid all the debates of a Federal Budget week, government spending on some of Australia's top industries is one focus.
And new research from the Australia Institute has found federal and state government subsidies to fossil fuel producers have increased, which it says appears to be undermining efforts to move towards a more climate-friendly economy.
Research Director at the Institute, Rod Campbell, says they've increased to $14.5 billion in the 2023/24 financial year.
"Our research goes through all government budget papers, state and federal, and the annual reports of government-owned entities, and we look for items of spending or tax breaks that bring some kind of direct benefit to major fossil fuel users and fossil fuel producers, like gas and coal mines. And over the forward estimates, over the sort of future predictions and the lifetime of projects that are in the budgets, we estimate that there's $53 billion worth of subsidies to major fossil fuel users and coal and gas mines."
The Institute has suggested $14.5 billion is an increase of 31 per cent on the $11.1 billion recorded in 2022–23.
So in one financial year, why have the government subsidies to fossil fuel users increased so much?
Mr Campbell says it's been driven by the federal government's fuel tax credits scheme, which provides credits for businesses which have bought fuel for their company.
"Governments are expecting Australians to use more fossil fuels in the future. So more diesel and mining equipment, more people flying around on airlines - and the tax breaks associated with those are getting bigger too. So the big problem is not just the money, although it's as much as we spend on the Army every year, the big problem is this is increasing and the increase is being driven by the worst possible thing we could be doing for the climate, which is producing and consuming more fossil fuels. So we're going in exactly the wrong direction."
The report shows the total fossil fuel subsidies over the next four years would total $65 billion.
It would include $1.6 billion in aviation fuel concessions in the current financial year, an increase of 36 per cent due to Australians flying more, with the federal government also spending $113 million on upgrading coal railways.
Queensland was the jurisdiction with the highest level of subsidies at $1.6 billion, while no fossil fuel subsidies were identified in the budgets of the Tasmanian or ACT governments.
Meanwhile, mining and gas organisations continue to warn investment, productivity, tax revenue and regional jobs are under threat unless Labor backs the gas industry.
Minerals Council of Australia chief executive Tania Constable says the government must resist policies which deliver short-term gains.
"It is so important to Australia, it is so important to the well-being of all Australian's and if we don't have the mining industry, then what will happen is that we will not have investment in Australia and we will just make all Australians that much worse off."
Ms Constable defends the federal government's Fuel Tax Credits scheme - with estimates placing this year’s costs at $9.6 billion.
"The mining industry, the fishing industry, the tourism industry, the agriculture industry, a whole range of regional industries that are off roads, claim this fuel tax credit - it is not expenditure. The Productivity Commission and the Treasury say it's not expenditure. It's not a subsidy."
So what does the Australia Institute want to see?
Put simply, it wants the Commonwealth to scrap the financial assistance to fossil fuel industries.
Rod Campbell says these increases are undermining the government's stance on reducing emissions and the use of fossil fuels.
He has highlighted that fact that subsidies in the forward estimates have increased from $57 billion to a record $65 billion.
"That represents five times what the federal government is looking to invest in housing through the Housing Australia Future Fund. This is their big-ticket housing item, and it's one fifth of the money that they're going to spend on subsidising major fossil fuel producers and users. It says something pretty major about the priorities of a government, that they're prepared to benefit polluters far more than they're looking to help people who are affected by Australia's housing crisis."
In response to the report, resources minister Madeline King says the government does not consider the fuel tax credits a subsidy, and they ensure businesses are not disadvantaged.
