Renewed calls for Climate Levy on Fossil Fuel Exports as Black Summer Disaster Bill Soars

In the lead-up to Summer, the Australia Institute, emergency leaders, and bushfire survivors have renewed coals for a Climate Levy on fossil fuel exports to help pay for increasing disasters due to climate change.

The call follows estimates that the Black Summer bushfires cost Australians over $50 billion, which represents a step change in disaster costs. The previous most costly climate related disasters in Australia were the 2011 Queensland floods which are estimated to have cost $14 billion, followed by the Victorian Black Saturday bushfires in 2009 which cost $7 billion.

Key Findings:

  • Natural disasters exacerbated by climate change such as fires, floods and heatwaves already cost Australians tens of billions of dollars per annum. This damage bill is rapidly increasing as climate change accelerates.
  • Ordinary Australian households and businesses, either as a direct expense or via taxpayer dollars, currently pay all the costs of climate disasters.
  • Fossil fuel consumption remains the largest contributor to climate change and fossil fuel producers pay virtually none of the costs climate disasters.
  • Australia is the third largest exporter of fossil fuels in the world and these exporters pay little if any local tax.
  • The Australia Institute is proposing a National Climate Disaster Levy initially set at $1 per tonne of embodied carbon on all fossil fuel exports from Australia.
  • Such a levy would:
    • Raise around $1.3 billion per annum to be used entirely to assist communities to respond to and recover from climate disasters
    • Create over 5,000 jobs in disaster response and recovery.
    • Have no effect on energy prices in Australia as the levy is only on fossil fuel exports (which make up three quarters of fossil fuel production).
  • According to the Australia Institute’s 2020 Climate of the Nation report, the majority of Australians (65%) support a levy on fossil fuel exports to pay for climate disasters, with only 21% opposed.
  • These funds could then be used to address the growing cost of climate disasters, such as: assisting businesses to recover, fund more fire-fighting equipment, including more water-bombing planes, or help fund paid leave for volunteer fire-fighters. Grants could also be made to at-risk households and businesses to assist with fire prevention measures.

“Last summer’s unprecedented Black Summer bushfires exposed just how unprepared all levels of government are to meet the costs of bushfire crises. Currently, the burden of natural disaster costs falls almost entirely on ordinary Australian households and businesses. Whether it’s through higher rates and taxes, property damage, higher insurance premiums, disruption to our lives or impacts on our health. This is neither fair nor equitable,” said Richie Merzian, climate & energy program director at the Australia Institute.

“A National Climate Disaster Levy would help to begin shifting the economic burden of climate disasters from our at-risk regional communities to the global coal and gas companies that are creating the problem in the first place.

“It is clear there is growing community concern for how we as a community pay for the costs of climate related disasters. The Australia Institute’s Climate of the Nation 2020 report found that support the introduction of a fossil fuel levy to pay for the impacts of climate change is growing, with 65% of Australians now supporting such a levy and only 21% opposed.

“A modest $1 levy would at least begin to raise revenue from those profiting from climate change. Industries that face enormous costs as a result of climate change, including agriculture and tourism could then benefit from the national fund assisting with disaster recovery and building resilience. If we continue with the status quo, businesses and everyday Australians will continue to pay the high price for the impacts of climate change that are being fuelled by fossil producers.

“It is a fundamental principle of economics that companies profiting from activities that cause damage to others should pay the costs of that damage.”

Watch the Australia Institute’s new video calling for a Climate Disaster Levy here.
The report ‘Who Pays for Climate Disasters? Proposal for a National Climate Disaster Levy’ by Mark Ogge, principal advisor at the Australia Institute, is available to download here.

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