Labor’s billions to fossil fuel companies heralds a new era of political betrayal

“We’re restoring Australia’s climate leadership at home and abroad.” Those are the unfiltered words of Climate Change and Energy Minister Chris Bowen, tweeted last Friday to mark his meeting with his Danish counterpart, Dan Jørgensen, in Sydney.

There’s no doubt the Albanese government has shifted the tenor of policy debate in this country on the environment’s famously inconvenient truths. But as far as any potential future epitaphs for the government go, Bowen’s crisp fable is freighted with unreality, hypocrisy or — more charitably — denial.

Unlike Denmark, and indeed the United States, the United Kingdom and others, the federal government has made no explicit promise to jettison or phase out the $10 billion in subsidies it alone delivers to the fossil fuel sector every year. And nor has it implicitly flagged any intention to do so.

New research, published by the Australia Institute on Thursday, instead reveals a conflicting trend, with federal government fossil fuel subsidies set to increase to a record-breaking $49.7 billion over the forward estimates, up from the $48 billion forecast the previous year.

That price tag includes the rising $8 billion annual cost of the fuel tax credit scheme along with $1.9 billion for a giant gas processing hub in the Darwin Harbour. It also comprises $1.2 billion in aviation fuel concessions, the $129 million spent on upgrading Hunter Valley coal railways, and more than $217 million more for roads exclusively servicing the Northern Territory’s onshore gas industry, including the controversial Beetaloo Basin, the latter of which is estimated to produce 1.4 billion tonnes of greenhouse gas in its first 20 years of operation.

When combined with existing public subsidies across state and territory governments, the collective weight of measures to artificially lower the price of coal, oil and gas or directly subsidise the expansion of fossil fuel projects surpasses $57 billion over the same period, gratis.

State capture

To the minds of environmental campaigners, these figures are emblematic of the noxious ways in which state capture has become synonymous with the natural order of things, polluting and delimiting the fading futures of younger people and generations to come.

“Even with some of the Morrison-era gas projects gone,” Greenpeace Australia’s Jess Panegyres told Crikey, “it’s clear fossil fuel companies continue to wield a disproportionate influence over Australian politics.

“We know from [the Glasgow pact] that phasing out fossil fuel subsidies is a fundamental step towards a successful clean energy transition and that this is money that could instead be targeted to help Australian households transition to renewable energy.”

Shani Tager of 350.org Australia was of a similar view, pointing out that such subsidies are morally, ecologically and economically indefensible at the best of times, let alone in an age whose contours are immutably defined by the sting of global warming.

“It clearly makes no sense from a climate or a budget perspective,” she told Crikey. “None of these arrangements are in line with the government’s commitments on climate change and there’s obviously so many more worthy things this money could be spent on.”

In relative terms, the $57 billion in public subsidies over the forward estimates is higher than the (initial) $368 billion price attached to the AUKUS nuclear submarine deal — which crudely carves out to about $12.3 billion a year, not including its slated contingency fund.

The annual cost of fossil fuel subsidies also dwarfs that required to raise recipients of JobSeeker and like payments out of poverty; is greater than that individually spent by the federal government on public schools, the army or the air force; and, to sharpen the point, outstrips the funds allocated to stem environmental degradation by a factor of ten.

With the sum also 14 times the amount allocated to the nation’s disaster-ready fund as of December last year, the report suggests an unconscionably grim situation. Indeed, the full, unvarnished significance of the $57 billion figure only shifts to centre stage when it’s remembered that it excludes what might be called indirect subsidies, such as the almost intangible costs associated with air pollution and those that accompany the increasingly extreme weather impacts of the climate crisis.

Seizing on this, independent MP Zali Steggall said the subsidies on any view defied sense and logic. “They fly in the face of reason — the public purse should not be funding subsidies and paybacks to the fossil fuel industry,” she told Crikey, citing the colossal profits recorded by the industry against the backdrop of the Ukraine war and the pandemic.

“It’s short-changing Australians who are [then also] left with paying the cost of the consequences of climate change fuelled catastrophes.”

Profit crescendo

Much like a matryoshka doll, it’s beneath this mantle to state capture that there lies yet another tale of utterly dismal fiscal and regulatory failure.

Last year, multinational fossil fuel corporations operating in Australia collected $120-$140 billion in gross profits exporting the nation’s sovereign coal and gas assets. Coinciding with this crescendo in profits, and in stark contrast with the situation prevailing in many other countries, most of these multinationals have paid little to no tax for close to a decade.

Taken together, the full weight of this eminently perverse moment in history scarcely requires elucidation — except, of course, in one particular respect: that it’s liable to shield from view the material extent to which the super profits of these companies have contributed to the twin inflation and cost-of-living crises of today, further unravelling the nation’s social and economic fabric.

As a recent analysis of September GDP data revealed, more than half of the inflation sitting above the Reserve Bank’s target band of 2.5% owes to the extraordinary profits banked by fossil fuel companies along with Coles, Woolworths, Qantas and the major banks.

And if that is so, a helplessly thorny narrative emerges: the government tells us it cares about climate action, and yet it continues to deplete and endanger the wealth of the nation by both subsidising fossil fuel companies and turning a blind eye to dangerously loose tax arrangements. It tells us it is concerned about inflation, yet it deliberately ignores the harmful role untaxed windfall profits play in exacerbating the problem. It promised us a Labor government would ensure “no-one is left behind”, and yet — as if to intentionally complete the circuity of this journey — it turns to the spillage of red ink across the budget books and inflation as valid reasons to break that promise.

And it does all this with the undiminished knowledge that those most acutely vulnerable to the impacts of global warming, as the world careens towards climate disaster, are the usual victims of multigenerational injustice: the poor and oppressed.

It’s a narrative, in other words, which brings to the fore what ACOSS deputy chief executive Edwina MacDonald told Crikey are the “relative budget priorities” of a government caught between its sunny rhetoric and darker realities, and what independent Senator David Pocock said revealed the tendency of the government to “cherrypick which expert advice it’s willing to take on board”.

In this connection, Pocock cited the calls of leading economists, including Ken Henry, and the two government-appointed expert committees that strongly recommended an across-the-board substantial rise to JobSeeker and like payments.

“As the government keeps telling us, budgets are all about priorities,” he said. “The thing I’m hearing from ACT people is clear: this budget needs to prioritise people and respond to the challenges we’re facing as a country.”

And it’s in this precise sense that the government’s emerging position vis-à-vis climate change and JobSeeker yields a tale of political and generational betrayal. With one hand, it declares its ambition to rise to the fundamental challenges of our time, and with the other it closes the door on those for whom such issues were firmly on the ballot at the last election.

As Greens Leader Adam Bandt told Crikey: “People voted for change at the last election. How can the prime minister go to someone who is living out of their car, or battling rising energy bills and rent, and say that a billion-dollar gas corporation is more deserving of [taxpayer] support?”

Are fossil fuel subsidies a benefit to the economy or state capture? Let us know by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.