Earlier this week, the Australian Conservation Foundation released an analysis
comparing how much the Federal Government spent encouraging fossil fuel usage compared to how much it spent on climate change programs in recent years.
We asked the ACF for their data and then supplemented it with our own research to try to provide a longer-term take on the comparison. The ACF has compiled data on climate change programs announced in budgets going back to 1997, so we tried to collate data on all the rebates, tax expenditures and other types of spending that encourage fossil fuel use back to 1997 as well.
Some caveats are in order. The chief source for the data is Treasury's annual Tax Expenditures statement, which tries to nail down how much revenue is lost through tax concessions, exemptions and deductions. The quality of Treasury's Tax Expenditures work has improved each year, but that means the further you go back, the less data there is. Where necessary, we've used a deflator to simply reduce the value of a fossil fuel subsidy by inflation, and tried to err on the conservative side in doing so. We've also used the biggest figures we could find for climate change programs.
In some years, the forecast expenditure on climate change programs hasn't eventuated, but rather than use the real figure, we've given government the benefit of the doubt and used the higher forecast figure, not the actual spending. On the other hand, we calculated the increase in the lost revenue from the 2001 ending of fuel excise indexation differently to the ACF to provide what we think is higher, more realistic figure.
The first blush result confirms that the enormous disparity identified by the ACF from 2007-10 is only the worsening of an existing problem from the 1990s. This is the comparison of the ACF's identified fossil fuel subsidies versus climate change programs, in millions of dollars.
Yes, the little green stuff down the bottom represent climate change programs.
The big increase in fossil fuel subsidies in the last decade is mainly driven by the Howard Government's panic-stricken decision to end fuel excise indexation in 2001 (the story behind how that came about, and the appalling misjudgement of the ANAO in causing it, is a tale for another occasion).
That decision deprived the Federal Government of billions of dollars in fuel excise by ending the long-standing practice of indexing fuel excise, meaning each year the government loses more revenue as prices and fuel usage go up. But even if you ignore the fuel excise loss altogether, on the basis that failing to increase the nominal rate of tax on a fossil fuel isn't encouraging its use, you still get an alarming disparity.
This is the same comparison without the lost revenue from the fuel excise indexation: