One fossil fuel loophole closed, $10 billion worth to go

15 May 2013

The Government has closed one loophole, but missed the opportunity to remove $10 billion of fossil fuel subsidies from the Federal Budget and limit further climate change, according to ‘Paid to Pollute’, the alliance of environment and community organisations.

The Paid to Pollute alliance has welcomed the change to the mining exploration deductions, which will save $1.1 billion over four years.  However the fuel tax credit subsidy remains the Government’s 14th largest expense, costing $5.9 billion in 2013-14 alone.  That’s half the entire Federal Government spend on schools. This massive subsidy undermines the carbon price and makes polluting cheaper.

The alliance has vowed to continue campaigning against these wasteful subsidies in the lead up to the Federal election and into 2014 when Australia will host the G20.  As Chair, Australia may find it difficult to justify providing the highest levels of producer subsidies of the G20 nations, given the group has collectively agreed to phase out fossil fuel subsidies.

Environment Victoria’s Campaigns Director Mark Wakeham said: “Only one of the five major fossil fuel subsidies has been cut, with taxpayers to save $1.1 billion over the next four years from the Government’s decision to reduce depreciation for mining exploration and prospecting.   Despite a few positive elements this budget has missed an opportunity to consolidate Australia’s transition to a low carbon economy and protect taxpayers’ funds by ending wasteful and polluting fossil fuel subsidies.”

WWF Australia’s Climate Change National Manager Kellie Caught said: “The Government has again missed the opportunity to phase out Australia’s biggest fossil fuel subsidies, including the business fuel tax credit scheme, worth $5.9 billion.  Ditching these perverse subsidies would help the planet and the budget bottom line.  The Government should stop underwriting carbon pollution.”

Leading international organisations, including the World Bank, the International Energy Agency (IEA), the International Monetary Fund (IMF) and the United Nations, have all called for an end to government subsidies for fossil fuels, as has the G20, which Australia chairs from later this year.

The Australian Conservation Foundation’s Climate Change Program Manager Tony Mohr said: “The carbon price is pulling pollution down, but these handouts are pushing pollution up.  This contradiction needs to end before Australia can say we are cleaning up our economy.”

Polling conducted for Market Forces in January 2013 showed 64% of Australians were opposed to the mining industry’s fuel tax credits, with the highest opposition (72%) found in Queensland.2

Market Forces Lead Campaigner Julien Vincent said: “Cutting the mining industry’s taxpayer-funded fuel discount was an opportunity for Treasurer Swan to make a multi-billion dollar per year saving that would actually be popular with the community.  Sadly, it appears the mining industry’s ‘hands off our money’ ads have worked, keeping their unnecessary handout at the expense of nation building projects that are still lacking funds.”

Throughout the Paid to Pollute campaign, people stood up and made their voice heard.3 The $1.1bn savings from removing the tax break on exploration is a sign community pressure is working.  The alliance will be keeping up pressure on our politicians until Australia no longer pays those who pollute.

For further information or comment contact:

Julien Vincent              0419 179 529


Paid to Pollute Alliance members include:

Environment Victoria
Australian Conservation Foundation
Climate and Health Alliance
Australian Youth Climate Coalition
100% Renewable Energy
Public Health Association of Australia
Friends of the Earth Melbourne
Nature Conservation Council of NSW
Queensland Conservation Council
Conservation Council of South Australia
Conservation Council of Western Australia
Conservation Council ACT Region
Environment Centre Northern Territory
Market Forces
Quit Coal
The Australia Institute
Alternative Technology Association
Climate Action Network Australia
and 62 community organisations