Where’s Wally: find your favourite taxpayer subsidy to the fossil fuel giants

by Rod Campbell | Apr 27, 2021 | Energy & Environment

At almost $20,000 per minute, the Government spends more on fossil fuel subsidies than on the Australian Army, writes Rod Campbell.

What should a government do when fossil fuel subsidies start to cost more than the Australian Air Force?

Buy more F35 fighter jets, of course…

No, hang on, that’s not right! Perhaps it should start winding back the tax breaks and other hand outs that go to fossil fuel interests.

While the rest of us ordinary citizens dutifully pay our 42.7 cents per litre in fuel taxes, the federal government gives back to major fuel users some $7.84 billion in fuel tax revenue.

Research released by The Australia Institute yesterday tallies up the budgetary assistance that goes to fossil fuel producers and major users from federal and state governments. The total in 2020-21 was $10.3 billion, with another $8.3 billion committed to longer-term projects.

The fuel tax revenue was the biggest single subsidy identified. More than $1.5 billion of the $7.84 billion goes to the coal and gas industry, not only subsidising their diesel use, but making it cheaper for them to produce more coal and gas.

Much of the media coverage of our report has focused on this big ticket item, specifically whether it benefits farmers and truckies (A: it does) and what should be done about that (A: phase it out and potentially support them in ways that don’t encourage fossil fuel use).

But the report has so much more that the true connoisseurs of budgets and climate debates will enjoy.

While worth just a lazy $400,000, the WA Government’s handout to Chevron, one of the world’s premier tax cheats, is worth a look because of what it’s for.

Chevron has been failing for years to bury the carbon emissions from its Gorgon offshore gas project. Chevron received $60 million from the feds in 2016 to help build the carbon capture and storage (CCS) facility on which Gorgon’s environmental approval was apparently contingent. Years later, it still isn’t working and rather than paying any kind of penalty, the WA government is chipping in more money with no explanation in the budget.

Remember that Chevron cut 410 jobs last year even after maintenance checks revealed serious faults in the gas processing equipment at its Gorgon plant. This cut also occurred even though Chevron was a big beneficiary of the federal government’s $300 million subsidies to the gas industry as part of its JobMaker plan as the Australia Institute also reported.

JobSlayer: gas giants grab $300m subsidy then axe 3000 workers

It might come as news to Northern Territorians, but their government is now in the gas trade big time. Having committed $4 billion to buy more gas than it needed from Italian gas company Eni, the NT government is laying down another $1 billion to deliver the un-needed gas to buyers in Queensland and local power stations. This brought in $250 million for the NT government last year, a significant sum for a government that runs on $6.4 billion per year, but one that raises a serious conflict of interest around decisions on transitioning the NT energy system away from gas.

The NSW Government’s $100 million Coal Innovation Fund spent $4.5 million last year, including commissioning Deloitte to advise on the economic viability of carbon, capture and storage (CCS) in the state.

The Fund’s annual report outlines Deloitte’s finding that CCS development would result in a net cost to the state of $16 billion. This report has never been made public and, hilariously, Deloitte’s work was cancelled by the Fund and the minister who oversees it, Deputy Premier and Nationals leader John Barilaro.

Queensland dropped $744 million, mainly capital investment in the coal-fired power stations, related mines, with my personal favourite part being the $3.8 million “Mine dozer replacement program”.

There’s a lot more in our report, find your own favourites!

Rod Campbell is the Research Director at The Australia Institute.

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