Australia’s hidden $57.1bn blowout

Federal, state and territory governments are set to spend a record-breaking $57.1bn combined on assisting fossil fuel producers or major users over the next four years, according to the The Australia Institute.

That’s an increase of $1.8bb from the $55.3bn which was slated across the jurisdictions last year and is 14 times the balance of the Australian Disaster Ready Fund, the left-wing think tank says.

Much of the total figure is driven by an expected 33 per cent increase over the next three years to fuel tax credits, which the federal government provides to businesses that pay fuel excise.

The Fuel Tax Credit Scheme is forecast to cost $7.8bn in the 2022-2023 financial year, which The Australia Institute says is more than the $7.6bn spent on the Australian Army.

Assistance to the coal sector has declined by $270 million, while measures that support the oil and gas industry have increased by $350 million.

The Australia Institute has released its research paper with the Albanese government poised to hand down its first full federal budget next Tuesday.

The researchers counted as fossil fuel subsidies anything that had a line item or a value in a federal or state government budget paper that went to fossil fuel producers or major users, including direct financial assistance as well as tax breaks.

They found total assistance to producers and major users from all governments declined from $11.6bn in 2021-22 to $11.1bn in 2022-23, but said this figure still amounted to $21,143 for “every minute of every day”.

The paper’s publication on Wednesday comes shortly after the NT government gave the controversial Beetaloo Basin gas exploration project the green light by lifting its moratorium on fracking.

Environmental groups have condemned the decision after staging a lengthy-campaign against the project they say will badly jeopardise Australia’s climate commitments.

Some Territorians have also raised concerns about the potential for groundwater contamination around the fracking site.

But others have welcomed the move after a year of soaring electricity prices and gas shortages in Australia that have occurred despite the country being one of the world’s biggest producers of liquefied natural gas.

The Australian Pipelines and Gas Association said allowing natural gas production in the Beetaloo would provide much-needed supply to the domestic market and support higher levels of renewable electricity generation.

The Australia Institute has lashed the decision, citing modelling by carbon advisory Reputex showing the Beetaloo Basin will pollute up to 1.4 billion tonnes of greenhouse gas over 20 years.

This figure is 2.5 times Australia’s total annual emissions.

The think tank’s fossil fuel subsidy research found the NT government is set to spend $3.59bn on fossil fuel assistance over the longer term.

Most of this is made up of the territory-owned Power and Water Corporation’s purchase commitments, the report says.

In the shorter term, the NT government will spend $680m in gas transport commitments relating to the Blacktip Gas Project and $12m on business case development for the Middle Arm petrochemical precinct.

The new industrial hub on Darwin Harbour will also receive $1.9bn in funding from the federal government.