By Greg Hocking
Queensland Nationals Senator Matt Canavan recently denied that the government subsidises Australia’s fossil fuel industry.
However, Jeremy Moss, Professor of Political Philosophy at the University of New South Wales, has debunked that claim in The Conversation and has confirmed the fact that Australian taxpayers provide extensive financial support to prop up fossil fuels.
Professor Moss refers to a working paper in May 2019 by the International Monetary Fund which said that Australia spends US$29 billion (A$47 billion) a year to support fossil fuel extraction and energy production. This can be compared to support for renewable energy, referred to in media reports, at A$2.8 billion.
Even if subsidies for the costs of fuels to extract resources, tax benefits such as accelerated depreciation for assets and funding for fossil fuel export projects are not taken into account, the government’s own Productivity Commission has acknowledged that “combined assistance” for petroleum, coal and chemicals in mining was about A$385 million for 2018-19.
Estimates by other organisations of the annual federal subsidies for the fossil fuel industry range from A$5 billion to A$12 billion a year.
Professor Moss says these payments don’t make any sense for a number of reasons. The falling cost of renewables and COVID-19 are delivering a hit to the export fossil fuel industry in Australia from which it may never recover.
Fossil fuel companies like Santos are under pressure from superannuation funds to adopt strict emissions targets.
Others, like Chevron, are under pressure from both activist shareholder groups and community groups like 350.org to rethink what they are doing.
He also notes that these subsidies produce very few direct jobs in fossil fuel extraction; being just 64,300 in coal, oil and gas extraction according to the Australian Bureau of Statistics.
Professor Moss calculates that the governments of Australia spend A$730,000 each year for every direct job in the coal, oil and gas industry. This equates to A$1,832 for every Australian.
He asks where are the profits for all this support and the tax on those profits.
Eight of the ten largest fossil fuel producers in Australia paid no tax in 2016-17, despite the fact that nine of these companies had revenue of about A$45 billion for that period.
Professor Moss suggests government financial support would be better directed at retraining or providing generous redundancy packages for the relatively small number of workers in fossil fuel industries and their communities.