Life on the West Island - Digging a deep hole in the Budget

Much West Island attention this week has focussed on the annual ritual of the federal budget. In many ways, this year’s budget, delivered on Tuesday by Treasurer Jim Chalmers, was predictable and unremarkable. Much of the analysis has identified that there were few losers, but that most winners received less than what they had hoped for.

There was a substantial package to relieve cost of living pressures through measures involving subsidies on power bills, big increases in lower-cost childcare, cuts in medical bills and some extra relief for renters and the unemployed. But overall the budget was cautious and fell far short of the big-spending Labor package many had expected.

And it also delivered a surprise surplus of what economists called a “tiny” amount – just $4,000,000,000! Life on the West Island expects that most readers would not mind such a “tiny” amount in their bank accounts. They would have to win every Powerball draw in a row until 2034 to garner such a “tiny” amount. But, then, it’s all relative – only a few years ago we all talked about budget figures in millions of dollars, but now every item seems to be in the billions – and national debt is hovering dangerously close to the dreaded trillion dollar abyss.

In the deluge of budget figures and analysis, most West Islanders might have missed some significant details. For example, the legislated stage three tax cuts, which will deliver huge bonuses to the rich and nothing to anyone earning under $45,000 a year, are slated to cost the budget around $30 billion in next year’s budget and some $280 billion overall. Labor says it is sticking to the coalition’s policy to deliver these tax cuts in full, but it will surely have to find a way to delay or cancel them if it hopes to fulfil its full promises on aged care and health.

Then there is the campaign by the “poor” mining companies to keep their monstrous profits and tax breaks and to go on exploiting fossil fuel deposits. Those companies boast that they work without government subsidies and that their exports are fuelling massive revenue gains for the economy. They usually fail to mention that they are also the primary source of deadly climate change emissions. As well, an independent report released just before the budget was handed down put the miners’ claims in severe doubt.

The report says that unlike Denmark, 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.

This new research, published late last week by the Australia Institute, 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.

The report details that the huge 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.

Further, it concludes that 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 next four years.

Environmental activists are outraged by these figures and that the mining companies have largely succeeded in concealing them from the public. For example, Shani Tager of 350.org Australia pointed 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. None of these arrangements are in line with the government’s commitments on climate change and there are obviously so many more worthy things this money could be spent on.

Crikey journalist Maeve McGregor put this into perspective: 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.

West Island fossil fuel miners have clearly found places to dig which will boost their already bloated multibillion dollar profits – they have dug deep into federal and state budgets and discovered a bonanza worthy of a new gold rush. Now might be the time to rein them in and return a large chunk of national wealth to where it belongs – the people of our nation, especially the poor and disadvantaged.