'Inexcusable': Australia’s $10 billion time bomb revealed

As the world moves towards a zero emissions future, new research has revealed Australia has a $10.3 billion problem in the climate-change fight.

Ahead of the US-led Leaders Climate Summit late last week, the Secretary-General of the United Nations called on all countries to end subsidies for fossil fuels and ramp up investments in renewable energy sources.

However, a new report shows Australia spends more money on fossil fuel subsidies than it does on the nation's army.

Left-leaning think tank The Australia Institute has combed through recent federal and state budgets, finding there has been $10.3 billion in fossil fuel subsidies this financial year.

Australian taxpayers spend more than $10 billion on fossil fuel subsidies, according to analysis by the Australian Institute. Source: Getty
Australian taxpayers spend more than $10 billion on fossil fuel subsidies, according to analysis by the Australian Institute. Source: Getty

Most of it – $7.84 billion – is from a federal government fuel tax credit scheme, which provides a refund to industries that consume diesel on non-public roads.

"In 2020, every minute of every day $19,686 was effectively given to coal, oil and gas companies and major users of fossil fuels," the report says.

The Australia Institute's Rod Campbell says spending taxpayer money in such a way is "irresponsible" from an economic perspective and "inexcusable" through a climate lens.

"Coal, oil and gas companies in Australia give the impression they are major contributors to the Australian economy but our research shows they are major recipients of government funds," he said.

As the report points out, the fuel tax credit scheme not only subsidise the consumption of fossil fuels, but fossil fuel producers themselves are key beneficiaries of the subsidy with 43 per cent of total credits since 2006 going to mining companies, and around half of that accruing to coal and gas companies.

"The major subsidies are Commonwealth tax breaks that mean the largest users of fossil fuels get a refund worth $7.8 billion on a tax that the rest of the community has to pay," Mr Campbell said.

“This tax break not only funnelled $1.5 billion to the coal and gas industries last year, but it made it cheaper for them to export fossil fuel to the rest of the world."

Fossil fuel companies Australia's biggest political donors

Supporters of the fuel tax credit scheme argue it is not a subsidy. The Fuel Tax Credit Alliance – including the Minerals Council of Australia, the National Farmers' Federation and the peak oil and gas industry lobby – say it helps keep companies competitive.

US President Joe Biden has committed to ending fossil fuel subsidies and is urging other nations to follow suit as he pushes for greater global action on climate change.

The EU is also grappling with ending fossil fuel subsidies after spending hundreds of billions on them in recent years.

Australia's resource intensive economy faces a difficult task in reducing emissions with Prime Minister Scott Morrison putting the emphasis on future technologies at last week's Leaders Climate Summit.

As a global outlier on climate-change action, Australia also faces the growing threat of tariffs being placed on its carbon intensive exports.

Analysis published in January by the Centre for Public Integrity, which reviewed the last 20 years of public disclosures of political donations, found that the resources sector has been by far the largest financial contributor to Australia’s political parties.

"The largest single industry contributor over the period studied was the resources and energy industry, which disclosed a total of $136,757,553 in payments over the period," the centre said.

with AAP

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