Eco talks with Don Henry of the Australian Conservation Foundation about the impacts of government subsidies.
Don Henry is the Executive Director of the Australian Conservation Foundation (ACF). Henry has led the ACF since 1998, helping it to become a strong advocate for the environment by promoting solutions through research, consultation, education and partnerships. In 2008, Henry won the Equity Trustees Not For Profit CEO of the Year award. In 1991 Henry was awarded a Global 500 Environment Award from the United Nations Environment Program in recognition of outstanding practical achievements in the protection of the environment. (source: wikipedia)
Don Henry, Executive Director, Australian Conservation Foundation
ECO: Why is it important in your opinion to eliminate fossil fuel subsidies?
HENRY: Recent analysis by the Australian Conservation Foundation shows the federal government spends $12 billion each year on subsidies that encourage greenhouse pollution, but only $1 billion on programs to tackle climate change. The $12 billion of fossil fuel subsidies are a dead weight on the economy, the budget and the environment. Not only do they encourage pollution, they also discourage industries from becoming more efficient, because they are getting paid from the public purse to keep on doing things the old, dirty way.
ECO: In September 2009 in a Communiqué from Pittsburgh, the G20 nations committed to “rationalise and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption”. As a member of the G20 has Australia done anything to phase out any subsidies?
HENRY: A Freedom of Information request by Greenpeace has uncovered documents that show bureaucrats last year identified billions of dollars of fossil fuel subsidies that should be cut for Australia to honour the G20 commitment. Yet the government told the international forum no such subsidies existed. It’s important our government comes clean about taxpayer-funded support for fossil fuel industries – and got on with the job of reforming those subsidies and putting us on the path to a clean energy economy.
ECO: Which subsidies should be targeted initially?
HENRY: The fringe benefits tax (FBT) concession for private use of company cars is projected to cost Australian taxpayers more than $1.2 billion dollars per year by 2012-13. What possible justification is there for an investment of our nation’s wealth in tax concessions that mean that if you drive a company car, the benefits increase the more you drive it and the more you pollute the atmosphere? Researchers at Latrobe University found 20 per cent of the beneficiaries of this FBT concession drive more than they otherwise would have in order to secure the increased tax benefits. The FBT concession for company cars should be restructured to create positive incentives for efficient vehicles, to remove perverse incentives to drive more and to complement efforts to re-tool the Australian car industry for cleaner car production.
By far the largest fossil fuel subsidy, the fuel tax credits scheme, costs Australian taxpayers around $5 billion a year. Most of this goes to subsidise the diesel fuel use of large mining, forestry and transport companies. Let’s be clear about what the fuel tax credits scheme means. It means if you are a commuter in Sydney’s western suburbs or Melbourne’s south-eastern growth corridor or outer Brisbane, with little or no access to reliable public transport, you pay 38 cents per litre in tax on the petrol you need to get to work. But if you are the world’s wealthiest mining company, making record $10 billion half-year profits, you pay not a single cent in tax for the diesel you use for your off-road mining operations. This is unfair and it’s bad for the environment. It must be changed.
ECO: Do you think there would be political fall out from their removal?
HENRY: It’s time for the government to stand up to the big polluters and say enough is enough. Australia cannot afford, environmentally or in terms of sound and responsible fiscal policy, to continue these subsidies. We need to stop putting taxpayers’ money into pollution promotion and start investing in clean energy, like wind and solar, and in cleaner fuels and cleaner transport.
ECO: What should the government do with the money the elimination of fossil fuel subsidies will bring?
HENRY: The money saved by restructuring fossil fuel subsidies should be put towards a range of programs to tackle climate change and shore up our natural environment against the threats it faces. Australia’s ecosystems are our silent life support systems. We need to invest in keeping them healthy and functioning. A new Climate Change & Ecosystem Protection Fund should be set up and resourced with at least $1 billion per year. This would be put towards ending land clearing and forestry operations in high conservation value native forests, protecting wetlands in the Murray-Darling Basin, establishing a network of marine sanctuaries and National Heritage listing for the Kimberley.
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