It's time the Australian Government said no to polluter handouts, and yes to billions more dollars for clean energy, health, education and other important government priorities.
Right now, the federal government spends around $10 billion a year as handouts – in the form of subsidies, cash, tax breaks and infrastructure - to big polluters. 1
These handouts make fossil fuels (like coal, gas and petroleum) artificially cheap. So companies use more fossil fuels than they would with a level playing field – creating more pollution, blocking clean energy projects and fuelling the threat of climate change to all Australians.
The Chief Economist of the International Energy Agency has said removing fossil fuel subsidies around the world could cut half the emissions needed to avoid exceeding two degrees of warming. Major international organisations like the International Monetary Fund, the World Bank, the OECD and the UN have all said fossil fuel subsidies should be scrapped.
These fossil fuel subsidies also put a massive black hole in the Federal budget and represent the most perverse form of corporate welfare.
We can cut pollution, unlock clean energy, protect our environment AND improve the budget – if we end polluter handouts.
The next 18 months present a number of clear opportunities to help end polluter handouts –two federal budgets either side of the G20 meeting to be hosted in Brisbane in November 2014.
Australia’s biggest polluter handouts:
1. Paying the fuel bill for big mining companies – around $2 billion a year
The average Australian pays 38 cents of tax per litre of fuel. But big mining companies operating in Australia pay just 6c a litre. Instead of paying their fair share, they get a massive tax refund costing the Australian taxpayer around $2 billion a year. 2
2. Subsiding cheaper fuel for airlines – $5 billion over four years
Australian taxpayers are funding cheap fuel for big airline companies like Qantas and Virgin. If these companies paid their own way it would literally save us billions3, and the airlines would have more incentive to be more fuel efficient, meaning less pollution.
3. Special tax treatment for big oil, coal and gas projects – more than $2 billion over the next four years
The coal, oil and gas sectors get special treatment under Australia’s tax system allowing them to depreciate their assets like drilling rigs and pipelines over a much shorter period than they are actually in use. Detailed analysis by the Australian Conservation Foundation found that this legal tax dodge for big oil, gas and coal projects is costing the rest of us billions, and it’s growing. 4
Thanks to the Paid to Pollute campaign, the Federal Government reduced this loophole at the budget in May 2013, saving Australian taxpayers $1.1 billion over the next four years, but there is still another $1 billion being lost to big polluters.
4. Handouts to Australia’s dirtiest power stations - $1 billion in 2013-14
The carbon price is an important reform that is starting the transition to a cleaner Australian economy.
However one part of the carbon price package represented a massive payday for polluters. Under the Energy Security Fund, Australia’s dirtiest power stations have been receiving around $1 billion in assistance annually.5 These payments should be scrapped to allow the carbon price to send a clear signal to companies to reduce their pollution.
It’s not hard to cut these polluter handouts
Australia has already committed to cut polluter handouts. As a member nation of the G20, Australia made a clear commitment in 2009 to phase out fossil fuel subsides6, but billions of dollars worth of taxpayer money continues to be handed over every year.
In November 2014, Australia will host the G20 in Brisbane. Australia must take action to cut polluter handouts at the Federal Budget in May 2014 in order to respect and uphold the commitment made to this important international body.
Who else wants to end fossil fuel subsidies?
1. Environment Victoria & Market Forces, 2014 Pre-Budget Briefing Paper, "Ending the fossil fuel industry’s age of entitlement: An analysis of Australian Government tax measures that encourage fossil fuel use and more pollution"
2. ANAO Audit Report No.49 2010-11, Fuel Tax Credits Scheme, p.73. http://www.anao.gov.au/Publications/Audit-Reports/2010-2011/Fuel-Tax-Cre...
3. Commonwealth of Australia, Treasury, Tax Expenditures Statement 2013, January 2014, p.153. http://www.treasury.gov.au/Treasury%20Home/PublicationsAndMedia/Publicat...
4. Australian Conservation Foundation, September 2011. Drill now, Pay Later: The growing cost of tax breaks for the oil and gas industry in Australia.
5. Value of Free Carbon Units to be issued by the Clean Energy Regulator under the Coal-fired Generation Assistance Program.
6. Australian Conservation Foundation, 25 June 2010. Media Brief.