Australian fossil fuel subsidies hit $10.3 billion in 2020-21

Fossil fuel subsidies cost Australians a staggering $10.3 billion in FY 2020-21 with one Commonwealth tax break alone ($7.84 billion) exceeding the $7.82 billion spent on the Australian Army, according to research released today by The Australia Institute.

In fact, $10.3 billion in Government subsidies means that in 2020, every minute of every day $19,686 was effectively given to coal, oil and gas companies and major users of fossil fuels.

Key findings:

  • The Commonwealth’s main tax break to major fossil fuel users cost $7.84 billion, exceeding the $7.82 billion spent on the Australian Army
  • In fact, $10.3 billion in Government subsidies means that in 2020, this equates to $19,686 per minute effectively given to coal, oil and gas companies and major users of fossil fuels
  • State Governments spent $1.2 billion mainly through subsidising exploration, refurbishing coal ports, railways and power stations and funding ‘clean coal’ research.
    • State governments continue to pour money into coal ports and railways despite Queensland Treasury advice that ‘spending on mining related infrastructure means less infrastructure spending on hospitals and schools’.
  • $8.3 billion in assistance is already committed to longer term fossil fuel subsidies, led by the NT government’s $3.8 billion gas purchase from Italian oil and gas company Eni.

“Coal, oil and gas companies in Australia give the impression that they are major contributors to the Australian economy, but our research shows that they are major recipients of government funds,” said Rod Campbell, Research Director at The Australia Institute.

“From a climate perspective this is inexcusable and from an economic perspective it is irresponsible. The major subsidies are Commonwealth tax breaks that mean the largest users of fossil fuels get a refund worth $7.8 billion on a tax that the rest of the community has to pay.

“This tax break not only funneled $1.5 billion to the coal and gas industries last year, but it made it cheaper for them to export fossil fuel to the rest of the world.

“A few years ago such subsidies would have been announced quietly, but now they’re central to government policy. Australia is increasing fossil fuel subsides, while the Biden administration is committing to phase them out. Yet again, Australian governments are going against the tide of global trends and good climate policy,” Mr Campbell said.

Further examples of state subsidies

  • Queensland upgraded its coal and gas power stations, ran a ‘mine dozer replacement program’ and provided other assistance measures worth $744 million last year, only slightly less than the $818 million spent on Fire and Emergency Services.
  • Over the longer term, the Northern Territory is the biggest backer of the gas industry, with almost $4 billion committed to an offshore gas project and $1 billion for pipelines.
  • Western Australia is spending hundreds of millions on fossil fuel-fired power stations, including $93 million on a gas-fired power station in a town of 848 people in partnership with Chevron.
  • New South Wales is putting $100 million into ‘coal innovation’, but much of the research remains mysteriously unpublished, such as a cost benefit analysis of carbon capture and storage in the state.
  • Victoria is spending $8.8 million to re-start an onshore gas industry and develop a ‘gas roadmap’, spending dwarfed by the $100 million going to turn brown coal into hydrogen and export it to Japan.
  • South Australia put $10.5 million into a program that aims to accelerate gas exploration and has also budgeted $30 million for a jetty mainly used by gas company Santos.
  • Tasmania’s 2020-21 budget has no clear assistance for fossil fuels, although $73,000 was given to coal companies in 2019.
  • The ACT is the only jurisdiction in Australia with no subsidies for fossil fuels, along with the most ambitious climate targets in the country.

Related research

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