`Scrap subsidies' urged

Launceston Examiner
Monday 28/4/2008 Page: 12

CANBERRA - The Federal Government is being urged to scrap billions of dollars in subsidies to the fossil fuel industry ahead of likely cuts to education and health in next month's Budget. Treasurer Wayne Swan is expected to make good on his promise of delivering a surplus equivalent to 1.5 per cent of gross domestic product when he hands down his first Budget on May 13. He has also promised it will be a tough Budget intended to curb inflation and reduce the upward pressure on interest rates.

Cuts to spending in the key areas of health, education and welfare are likely as the Government seeks billions of dollars in savings. Community advocacy group GetUp says the Government should first consider cutting billions of dollars worth of subsidies to the fossil fuel industry. The subsidies, which GetUp says amount to about $4 billion, include $1.1 billion in fringe benefit tax concessions for company cars, $800 million in concessions for the aviation industry and $600 million for the automotive industry.

"The $4 billion in subsidies to the fossil fuel industry - they are wasteful and inappropriate in the context of the climate crisis that we're facing," GetUp executive director Greg Solomon said. "Hidden within the Budget are these anachronistic subsidies for the fossil fuel industry and they should be redirected, partly to investment in renewable energy." In a Budget submission released yesterday, GetUp says scrapping subsidies to the mining industry alone would save the Federal Government $257 million a year.

"Why is it that we're subsidising the mining industry - surely that industry is able to stand on its own two feet in the context of a resources boom," Mr Solomon said. "All of the polling we've done shows that the Australian community supports renewable energy being subsidised over the fossil fuel industry." Mr Solomon says GetUp has identified more than $8 billion in savings that would help the Government realise its surplus target of 1.5 per cent of GDP. Cutting the tax concession on capital gains to 35 per cent would net a saving of $1.5 billion, he said. On the other side of the ledger, Mr Solomon said the solar hot water rebate should also be increased, from $1000 to $2000, and extended to 500.000 homes.