The Wrap with Richard Denniss
Budgets, like life, are all about priorities. It’s easy to talk about all the things we can do, but it’s harder to decide where we’re going to channel our efforts.
And as in life, sometimes the hardest part of prioritising is telling other people that their priorities aren’t yours.
On the weekend the Prime Minister was confronted with just how hard it is to explain to people living in tents that while there is going to be new government money available for an AFL stadium in Hobart, there was no new money to address the shortage of affordable housing in Tasmania, or anywhere else. Likewise, the reporting this week that unemployment benefits might be lifted for those over 55, left a lot of unemployed people under 55 furious.
Next week’s budget will likely see a big reduction in the size of the budget deficit as company tax revenue lifts off the back of high gas, coal and iron ore prices. While more company tax collections from the fossil fuel industry are an unambiguously good thing, the sad reality is that the absence of some form of windfall profits tax has already cost Australians around $40 billion. While there may be some changes to the Petroleum Resource Rent Tax in the budget this year, if that had been implemented back in 2017 when we were calling for it, then the Australian budget and our society would be in much better shape.
That brings us to the Stage 3 tax cuts. I hope you have seen the wonderful infographic put together by the ABC to help people understand just how enormous the quarter trillion dollar cost of those tax cuts really is. I was proud that the journalists who put it together gave a shout-out to the director of our economics team, Matt Grudnoff, for his help in pulling it together. And because no good deed goes unpunished, the Australian Financial Review subsequently had a go at the ABC journalist for relying on the Australia Institute’s data. In short, the sooner the Stage 3 tax cuts get carved up and delayed, the better. Our research will continue to highlight that with rising inequality and falling real wages for low paid workers, the Stage 3 tax cuts will simply make inequality, and inflation, worse.
Finally, to fossil fuels. Despite the recent passage of the so-called ‘Safeguard Mechanism’ the Albanese Government and its state counterparts remain committed to expanding Australia’s lightly taxed fossil fuel industry as fast as they can.
On Wednesday 3 May we published an open letter in the Sydney Morning Herald, The Age and the NT News calling on the Northern Territory government to stop fracking in the region. It was signed by almost 100 leading scientists and experts who agreed that fracking in the area would cause irrevocable damage and could result in up to 1.4 billion tonnes of emissions.
On the same day, the Chief Minister of the Northern Territory Natasha Fyles and Deputy Chief Nicole Manison appeared together in a press conference giving the green light to fracking in the NT. When questioned about our open letter, the Deputy Chief Minister replied, “I would ask those people…to perhaps be a bit more practical and level-headed.”
The International Energy Agency (IEA), the United Nations, the Intergovernmental Panel on Climate Change (IPCC) and scientists globally have called for an end to new fossil fuel development as fossil fuels are the key driver of the climate emergency. I wonder which of these scientists, along with the prominent and respected scientists that signed our open letter, are not ‘practical’.
— Richard Denniss, Executive Director of the Australia Institute
With crucial issues like housing, fossil fuel expansion and the stage 3 tax cuts on the agenda, the Federal Budget will reveal a lot about the Government’s priorities.
Join Richard, Matt and Eliza as we unpack the Budget via webinar at 11am on 10 May, or in person (and online) at Politics in the Pub at Verity Lane Market, 6pm 10 May.
The Big Stories
$57.1b: Record Breaking Fossil Fuel Subsidies Following Climate Election
Australian Governments are now planning to spend more on making climate change worse through fossil fuel subsidies than they are on getting ready for climate disasters.
Our research found that fossil fuel subsidies over the forward estimates have risen to $57.1b, up $1.8b from the $55.3b slated in the 2022 budget. That’s 14 times more than the Australian Disaster Ready Fund.
The biggest individual subsidy is the fuel tax credit, which costs $7.8 billion, more than we spend on the Australian Army ($7.6B). The biggest beneficiary of it is the mining industry. While farmers and other sectors also receive fuel tax credits, none receive nearly as much as the mining industry — so not only does this subsidy encourage fossil fuel use, it also primarily benefits the fossil fuel industry.
The government subsidising and propping up the oil and gas industry is an ongoing issue.
The IMF has called for an end to fossil fuel subsidies, while the Australian Government moves in the opposite direction.
Raising the Minimum Wage and the Rate of JobSeeker is Good for People and the Economy
Calls to raise the minimum wage are often met with arguments that such a move would wreak havoc on the economy. However, new research from the Centre for Future Work has revealed that raising the minimum wage could have the opposite effect.
The research examined how rises in the minimum wage have almost no impact on inflation, and thanks to the collapse in value of the minimum wage in real terms over the last 2 years, workers on the minimum wage are owed a 7% wage increase.
Over the past two years the minimum wage has risen less than inflation, affecting the purchasing power of millions of workers.
An increase of 7% would make up for a portion of the real wage losses workers have experienced and translate to an increase of just 0.4% in economy-wide prices.
In the same way, a wage increase would improve the lives of minimum wage workers, so too would raising the Job Seeker rate improve the lives of those reliant on the payment. At its current rate it is acting as a barrier to gaining employment.
If the government can afford to spend $243 billion on Stage 3 tax cuts over ten years, it can afford the much smaller figure of $24 billion over four years to lift over a million out of poverty.
The economic reasons to tackle inequality are significant, but so are the societal ones — equal societies are also happier, healthier and more prosperous.
Ebony Bennett discusses how the tax cuts could compound with the rate of JobSeeker to further entrench people in poverty, and widen the economic divide in Australia in Poor Policies Stopping Our Fair Go, published in the Canberra Times.
Voters Want the Housing Crisis Addressed in the Budget
Australia’s housing crisis is only getting worse – our social housing shortfall has ballooned and rent is skyrocketing. As the cost of living increases, people are feeling the squeeze and many are facing homelessness, while our research shows two-thirds of Australians think the Federal Government is not doing enough to tackle the housing crisis.
The government is pledging $10 billion for an investment fund, but critically it’s only the returns of that capital that can be invested in building social housing. If the fund doesn’t make a return, then there’s no money for housing.
An overwhelming majority (80%) agree the Government should use the next Federal Budget to spend more money to directly build affordable housing, and twice as many Australians disagree (51%) as agree (25%) that the Federal Government’s proposed investment fund would provide enough social and affordable housing.
You can access the full breakdown of the polling results here and listen to Follow the Money’s discussion on the topic here.
Defence Exceptionalism: Government’s Spending Priorities
With the Government’s recent Defence Strategic Review, there were new spending announcements which highlight the Government’s priorities.
Defence needs $4.1bn for missiles? No worries. Defence needs $368bn for subs? Sure thing. Defence needs public housing? You bet.
Increase JobSeeker, lift people out of poverty? Can’t afford it. Pay rise for care workers? Can’t afford it. Building new public housing? Can’t afford it.
It doesn’t make sense to us either.
Executive Director Richard Denniss explains.
16 Reasons Why the Stage 3 Tax Cuts Should be Scrapped
There’s no doubt that the Stage 3 tax cuts are an unfair, costly exercise, that will do little to help low and middle-income earners. We’ve compiled a handy list of 16 reasons that show why they should be scrapped, including stats, figures, graphs and in depth analysis.
The top three reasons why Stage 3 must go:
- The Stage 3 tax cuts are massively expensive and massively unfair
- Giving a $254 billion tax cut to the rich means there’s $254 billion that cannot be spent on things like Aged Care or Education
- They will give bankers, surgeons, and MPs an extra $9075 a year, while hospo workers, aged care workers, and hairdressers get nothing
Keep reading: 16 reasons why the Stage 3 tax cuts should be scrapped
RBA Raises Rates Again
When you’ve only a hammer, everything looks like a nail. The RBA, in its attempts to combat inflation has raised interest rates once again, a move that disproportionately affects young people, especially young home owners.
Richard Denniss explains some much fairer ways in which we can control inflation, and investigates the recent changes from the recent review into the Reserve Bank Australia.
ASIC Misses the Target in Action Against Greenwashing
This week Australia’s corporate watchdog, the Australian Securities and Investments Commission (ASIC), fined sustainable superannuation fund Future Super for what it described as a potentially ‘misleading’ Facebook post.
Greenwashing is undoubtedly rife, both in Australia and globally, and the community is increasingly calling out and litigating misleading claims by industry. Australian regulators such as ASIC and the Australian Competition and Consumer Commission (ACCC) have made tackling greenwashing a priority, as it should be.
While it’s welcome that our regulators are on the greenwash beat, Future Super is hardly a climate criminal. Some of Australia’s biggest banks and super funds are investing in active fossil fuel expansion by companies like Chevron, Woodside and Santos – all of which are justifying their massive gas expansion with carbon capture and storage or carbon offsets.
Misleading claims should be called out, but making a show of fining a small green super fund for an overzealous Facebook post is akin to the police publicly cracking down on graffiti to distract from the fact that it’s doing nothing about organised crime.
The real test for regulators is whether they are prepared to take action against greenwashing by some of Australia’s worst offenders. These are the companies that have traditionally been in the ‘good books’ of state and federal governments: companies that donate to governments or receive material and policy support from them…or both.
Vigilance by regulators is welcome but until we see the worst offenders held to account it’s hard not to see Future Super’s fine as more state-sponsored greenwash.
If you have seen an environmental claim that just doesn’t stack up, there are things you can do. In fact, the ACCC wants to hear from you.
What to look for:
- What claims are they making?
- Why don’t their claims make sense?
- Are they potentially confusing for customers or investors?
- Are they getting an advantage over other businesses?
You can also take action against greenwashing by:
Make a submission to the Senate Inquiry into Greenwashing
I find it a little bit embarrassing to hear politicians roll out lines that are straight from the gas lobby playbook.
David Pocock on ABC News following the NT Government’s green light to fracking. His tweet followed with “opening up huge new fossil fuel projects in 2023 is morally indefensible.”
Kate McBride on Australian Story
The Australia Institute’s Kate McBride featured on Australian Story, which followed her journey from accidental activist to Parliamentary Liaison officer – all in just four years.
In 2019 Kate brought attention to the mass fish kills occurring in the Darling River, when she posted a video of her father holding a dead Murray Cod. The news quickly caught on and before too long Kate was the face of the efforts to save the Darling River from decline. Four years later, Kate is working as Parliamentary Officer and still advocating hard for the bush.
Watch Kate McBride’s incredible story:
How to Make 85 Million Tonnes of Gas Emissions Disappear
Despite the clear connection between fossil fuel expansion and climate change, the Northern Territory Government continues to pursue fracking in the Beetaloo Basin. In 2018 it committed to implement all the recommendations of the Scientific Inquiry into Hydraulic Fracturing in the Northern Territory (Fracking Inquiry), including:
That the NT and Australian governments seek to ensure that there is no net increase in the life cycle GHG emissions emitted in Australia from any onshore shale gas produced in the NT.
The Northern Territory Government has failed to keep its commitment.
However, during their press conference giving the green light to fracking, Chief Minister Natasha Fyles said “In terms of 9.8, we have absolutely met the recommendation,”
The details are missing, even according to the NT Government’s own website. At noon on Wednesday, Recommendation 9.8 was listed as just 50% complete, and 5 months behind its deadline for completion.
After we highlighted this on Twitter, Recommendation 9.8 was swiftly updated to read 100% complete.
It's been a busy 2 hours in the NT – just like that recommendation 9.8 is 100% complete! ✨🙌🥰#auspol https://t.co/OkwYlsYS7R pic.twitter.com/i91kJzr9us
— Australia Institute (@TheAusInstitute) May 3, 2023
9.8 wasn’t the only incomplete recommendation. On May 3 the website displayed a quarter of the total recommendations as incomplete, but overnight every single action item had been completed.
Unfortunately for the climate, it takes more than updating a web page to prevent harmful climate change that will result from 89 million tonnes of gas emissions entering our atmosphere.
Claims that the NT Government has implemented all recommendations from the Pepper Inquiry, including 9.8, are untrue as there is no requirement or agreement to offset emissions from burning the gas in Australia.
In March, Independent Oversight Commissioner to NT Fracking Inquiry Dr. David Ritchie published a letter confirming 9.8 is not implemented:
We’re yet to see any evidence to the contrary.
End Fracking in the Northern Territory
The Northern Territory is particularly vulnerable to climate impacts, yet the NT Government continues to pursue fracking in the Beetaloo Basin.
96 scientists and experts signed an open letter calling on the Northern Territory Government to stop fracking and protect our climate.
You can help by adding your name to the open letter, backing the scientists and experts calling for an end to fracking in the Northern Territory.
Unpacking the 2023 Budget | Webinar
Join the Australia Institute’s team of economists, Dr Richard Denniss, Matt Grudnoff and Eliza Littleton, as we decode the budget. Tune in to get the scoop on what 2023 brings for Australia.
6:30pm AEST, Wednesday 10 May. Free, registration essential.
Politics in the Pub | Budget Wrap 2023
Join the Australia Institute’s team of economists for their analysis of the 2023-24 Federal Budget. Who wins? Who loses out? What’s hiding in the budget papers? Join Dr Richard Denniss, Matt Grudnoff and Eliza Littleton as they unpack the budget.
6:30pm AEST, Wednesday 10 May. Free, registration essential.
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