State and federal governments allocated a whopping $14.5 billion in subsidies to fossil fuel producers and major consumers during the 2023-24 fiscal year. To put this into perspective, that’s equivalent to $27,581 for every minute of every day, or $540 for every individual in Australia.
This eye-opening analysis by The Australia Institute (pdf) further exposes that over the forward estimates, the Federal Government has earmarked a staggering $54 billion for fossil fuel subsidies. To put this in context, this amount is five times the commitment made to its key housing policy, the $10 billion Housing Australia Future Fund.
Let’s delve deeper into the key findings, following this advertisement:
Does the government subsidise the gas industry?
Rapid Increase in Subsidies: There was a significant 31% surge in fossil fuel subsidies, reaching $14.5 billion in 2023-24 from the previous $11.1 billion recorded in 2022-23. This surge was primarily fueled by substantial increases in diesel and aviation fuel tax breaks.
Staggering Forward Estimates: The total fossil fuel subsidies over the forward estimates from all levels of government have skyrocketed to $65 billion, a staggering 16 times the balance of Australia’s Disaster Ready Fund as of December 2023.
OECD’s Recommendation: The OECD has urged Australia to cut or reduce its largest subsidy, the Fuel Tax Credit Scheme, which alone cost the Federal Government $9.6 billion in 2023-24, surpassing the expenses of the Royal Australian Air Force.
Rod Campbell, the Research Director at the Australia Institute, remarks, “Budgets are about choices. This research reveals Australian state and federal governments are budgeting for more fossil fuel use and more fossil fuel production, not less.”
He further emphasizes, “The magnitude of these fossil fuel subsidies overshadows government claims about climate action. Our state and federal governments are failing to implement even the most basic climate policy – cutting fossil fuel subsidies.”
Eliminating these subsidies could pave the way for significant government revenue to address pressing climate issues while simultaneously reducing emissions. Instead of foregone revenue, governments could redirect funds towards tackling housing affordability and other cost-of-living pressures.
As we stand on the brink of federal and state elections, policymakers have a golden opportunity to grasp the benefits of phasing out fossil fuel subsidies.
How much government subsidy goes to the gas industry?
Let’s take a closer look at some federal and state fossil fuel highlights for the 2023-24 financial year:
Federal: An increase in the cost of the Fuel Tax Credit to $9.6 billion, surpassing the expenses of the Royal Australian Air Force. The OECD recommends removing fuel tax exemptions.
Federal: $1.6 billion in aviation fuel concessions, reflecting a 36% increase, as Australians anticipate increased air travel.
Federal: $113 million allocated to upgrading coal railways to aid “coal producers to…capitalize on global demand and high prices for thermal coal.”
Queensland: A $520 million, six-year program aimed at driving emissions reductions, with a focus on the state’s highest-emitting metallurgical coal mines.
Northern Territory: $2.6 billion worth of gas purchase commitments and $674 million in pipeline commitments, not including recent announcements to buy fracked Beetaloo gas.
Western Australia: A $141 million Investment Attraction Fund aiding identified projects and sectors for strategic development, including energy primary industries.
South Australia: Budgeting for increased petroleum production, with subsidies to the Santos-operated Port Bonython totaling $21 million this year, with an estimated total cost of $64 million.
New South Wales: The recently announced Eraring coal-fired power subsidy will add to the NSW Coal Innovation Fund’s $45 million balance.
The revelation of these substantial subsidies underscores the critical need for policymakers to reassess their priorities and take decisive action towards a more sustainable and equitable future for all Australians.
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