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Why does Australian PM Tony Abbott support fossil fuel subsidies?

 
Coal Mine in Australia

An open cut mine in the Hunter Valley. Photograph: Dean Lewins/AAP

 

Powered by Guardian.co.ukThis article titled “Why does Australian PM Tony Abbott support fossil fuel subsidies?” was written by Alexander White, for theguardian.com on Sunday 2nd February 2014 20.55 UTC

The Australian Prime Minister Tony Abbott was only elected in September 2013, but already has a rapidly growing list of broken promises and inconsistent decisions regarding public funding support for private industry and non-profit organisations.

This includes the Australian car manufacturing industry (Ford and Holden),  scrapping the Home Energy Saver Scheme, axing $2.5 million in funding for community radio stations, stopped support for Caterpillar in Tasmania which has cost over 1000 jobs, and last Thursday rejected an aid package for Victorian-based food processing company SPC-Ardmona (despite supporting a similar aid package for Cadbury).

Meanwhile, Tony Abbott has intervened into Toyota’s workplace affairs by supporting cuts to employee wages, has privatised the Australian Valuation Office, is in the process of winding back Tasmania’s forest World Heritage listing, defunded all international environmental programs (including those run by Oxfam, Save the Children and Caritas) and cut $4.5 billion from international aid programs, has started to dismantle Australia’s marine park protection system, repealed poker machine reform designed to protect victims of gambling addiction, and approved coal-baron Clive Palmer’s coal mine in the Galilee Basin.

What’s more, the prime minister seems very happy to continue to give taxpayer’s money to fossil fuel companies to the tune of $10 billion per year in subsidies.

The fossil fuel subsidy decision is particularly inconsistent with his stance on industry support for SPC-Ardmona and the car industry. This is a prime minister who in December declared an end to corporate welfare.

But he said “we don’t want to see corporate welfare … we don’t believe in corporate welfare”.

“This government will be very loth to consider requests for subsidies, we will be very loth to do for businesses in trouble the sorts of things they should be doing for themselves,” he warned.

Fossil fuels subsidies are the most pernicious and distorting of subsidies. The biggest in Australia is the fuel tax credit scheme, which is worth $2 billion per year to mining companies, the equivalent of each taxpayer in Australia handing over $182 to the mining companies.

The national president of the Mining Union, Tony Maher called out this squandering of public funds in an article for The Drum:

I’m pro-mining to my core. But a mining sector that grows too fast causes social and economic problems that will cause damage for decades to come, if we let it. …

Down the track, it would also make sense to look again at tax and whether we are getting a fair return from mining company profits.

Ditto, subsidies. Does it really make sense for taxpayers to be funding a rebate on diesel fuel for the mining industry at a cost of $2 billion a year?

The union is a firm supporter of an emissions trading scheme, and a renewable energy target, and opponent for the fuel subsidy. In a Senate submission in 2008, it wrote:

It has been especially glaring that the mining industry, one of the most profitable industries in Australia, has received the highest rate of fuel tax credit. It is rebated the full 38.143¢ per litre, and so effectively receives its fuel free of excise. This has provided the mining industry with an incentive, in relative terms, to use liquid fossil fuels, and it has taken up that incentive with gusto.

 

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