Federal spending favours fossil fuels, study finds

Age
1 March 2011, Page: 7

AUSTRALIAN taxpayers spend 11 times more encouraging the use of fossil fuels than on climate change programs and the sum is growing. fossil fuel incentives and subsidies will cost an estimated $12.2 billion this financial year, compared with $1.1 billion spent on programs designed to cut greenhouse gas emissions and boost clean energy research. An Australian Conservation Foundation analysis found the cost of the incentives has increased $1.6 billion since 2007-08, the final year of the Howard government, while spending on climate programs had jumped just $500 million.

The biggest fossil fuel incentives were in unclaimed revenue, including nearly $5 billion in fuel tax rebates for greenhouse intensive industries. More than $1.1 billion was spent on fringe benefits tax concession for company cars a scheme that leads to people driving further than they otherwise would to gain access to a larger rebate.

ACF executive director Don Henry said the government must cut fossil fuel incentives at the May budget if it was to convince the community it was serious about tackling climate change. Keeping them would undermine the value of a carbon tax, he said. "Funding these is bad for the climate and it is bad economics", he said.

The analysis comes as documents released under freedom of information laws showed bureaucrats had identified up to 17 programs costing more than $8 billion a year that may have to be cut for Australia to meet a G20 agreement that member countries eliminate inefficient fossil fuel subsidies that lead to wasteful consumption.

Treasurer Wayne Swan has argued that Australia had no programs that met the G20's definition of a fossil fuel subsidy. Mr Henry said the foundation's analysis included all programs that made it cheaper to use fossil fuels. You can get into an arcane economic debate about what is defined as a subsidy and what isn't at the end of the day this is public money that is going to businesses to pollute", he said.

He said the fringe benefits tax concession for company cars was a "virtual pollution factory" equal to a mediumsized coal fired plant each year. Mr Swan's spokesman, Adam Collins, last night said none of the programs qualified as subsidies under the G20 definition. "All credible analysis shows the only way to meet our targets is by putting a price on carbon through a market mechanism so that's exactly what we are doing".