from The Guardian
Why does Tony Abbott support $10 billion per year in fossil fuel subsidies but oppose an aid package for food manufacturer SPC-Ardmona?
The Australian Prime Minister Tony Abbott was only elected in September 2013, but already has a rapidly growing list of broken promises and inconsistent decisions regarding public funding support for private industry and non-profit organisations.
Meanwhile, Tony Abbott has intervened into Toyota’s workplace affairs by supporting cuts to employee wages, has privatised the Australian Valuation Office, is in the process of winding back Tasmania’s forest World Heritage listing, defunded all international environmental programs (including those run by Oxfam, Save the Children and Caritas) and cut $4.5 billion from international aid programs, has started to dismantle Australia’s marine park protection system, repealed poker machine reform designed to protect victims of gambling addiction, and approved coal-baron Clive Palmer’s coal mine in the Galilee Basin.
What’s more, the prime minister seems very happy to continue to give taxpayer’s money to fossil fuel companies to the tune of $10 billion per year in subsidies.
The fossil fuel subsidy decision is particularly inconsistent with his stance on industry support for SPC-Ardmona and the car industry. This is a prime minister who in December declared an end to corporate welfare.
But he said “we don’t want to see corporate welfare … we don’t believe in corporate welfare”.
“This government will be very loth to consider requests for subsidies, we will be very loth to do for businesses in trouble the sorts of things they should be doing for themselves,” he warned.
Fossil fuels subsidies are the most pernicious and distorting of subsidies. The biggest in Australia is the fuel tax credit scheme, which is worth $2 billion per year to mining companies, the equivalent of each taxpayer in Australia handing over $182 to the mining companies.
The national president of the Mining Union, Tony Maher called out this squandering of public funds in an article for The Drum:
I’m pro-mining to my core. But a mining sector that grows too fast causes social and economic problems that will cause damage for decades to come, if we let it. …
Down the track, it would also make sense to look again at tax and whether we are getting a fair return from mining company profits.
Ditto, subsidies. Does it really make sense for taxpayers to be funding a rebate on diesel fuel for the mining industry at a cost of $2 billion a year?
The union is a firm supporter of an emissions trading scheme, and a renewable energy target, and opponent for the fuel subsidy. In a Senate submission in 2008, it wrote:
It has been especially glaring that the mining industry, one of the most profitable industries in Australia, has received the highest rate of fuel tax credit. It is rebated the full 38.143¢ per litre, and so effectively receives its fuel free of excise. This has provided the mining industry with an incentive, in relative terms, to use liquid fossil fuels, and it has taken up that incentive with gusto.
The Australian Taxation Office has stated that for the 2006-07 year, the mining industry was easily the heaviest user of the fuel tax credit schemes, claiming $1.47 billion of the $4.9 billion claimed. The next highest claim by an industry was transport and warehousing with $1.28 billion.
The latter industry made 171,085 claims for the credits, while the mining industry made just 6,735. This vast difference demonstrates that mining industry claims are made by a relatively small number of very large companies, while the transport claims often come from small businesses.
The mining industry’s claims on the public purse have grown rapidly over the last decade, from $754 million in 1999-2000 to $1.47 billion for the most recently-reported year. It has virtually doubled over the course of 8 years. …
That the mining industry receives such extensive fuel tax credits while claiming to be internationally competitive and unsubsidised has attracted significant criticism from an environmental perspective.
The continuing level of significant subsidy weakens the substantial argument that the industry is otherwise able to make that is it one of Australia’s great success stories. Industries that rely on subsidies or other forms of protection are not generally able to be portrayed as a success story.
Further, the mining industry is not a deserving case. There are no grounds in terms of equity, social justice or industry development to justify a significant subsidy to the mining industry.
Tony Maher made a good call when he said “Let’s stop being fooled that the interests of a small club of mining billionaires are the same as the interests of the broader Australian economy. They’re not.”
Despite global warming posing an imminent threat to Australia, and its predominate cause being the burning of fossil fuels, the Australian government is using your tax dollars to literally pay these fossil fuel companies to pollute.
As I’ve noted in the past, Tony Abbott and his government seem intent on turning Australia into a reckless “charco-state” (the coal equivalent of a petro-state).
These fossil fuel subsidies don’t just pay companies to pollute our air, water and atmosphere. They also distort our markets by making fossil fuels, like diesel and gas, artificially cheap. Special tax treatment for big oil, gas and coal projects allows fossil fuel companies to rapidly depreciate their assets, like drilling rigs. This means they get away with paying taxes that other companies are forced to.
Finally, fossil fuel subsidies are socially dangerous because many pension and superannuation funds have fossil fuel investments, risking tens or hundreds of billions in retirement savings in a carbon bubble.
What’s the basis for these decisions?
Why are massive $10 billion subsidies for one industry acceptable, but a relatively modest aid package for SPC-Ardmona unacceptable?
No doubt there are many answers to these questions.
One possible answer can be found in the work of Drew Westen, professor in the Departments of Psychology and Psychiatry at Emory University in Atlanta, Georgia. The author of The Political Brain, Westen describes the neurological differences in the brains of conservatives and (in US terms) liberals.
Westen, and the likes of liberal neuro-linguist George Lakoff, posited that the way that conservatives viewed money was tied to morality.
To very briefly summarise, if a person is rich, it is proof that they are a good and moral person. It demonstrates that they must be hard-workers, wise investors, who are self sufficient and possess personal discipline.
The corollary of this is that poor people, who lack money, also lack morality. To a conservative, lack of money proves that you must be lazy, ill-disciplined, self-indulgent, deviant and dependent on others.
The role of government is to support morality and punish immorality. Thus, people on welfare are immoral and thus should be penalised, while rich people should be further rewarded and incentivised to continue to be moral.
This moral system, in my view, underpins the Abbott’s government’s approach to corporate welfare, and especially to the environment.
In the conservative world-view, companies like Holden and Ford, or SPC-Ardmona are unworthy of government support because they lose money. By definition, because they need government aid, they’re immoral, dependent, ill-disciplined and lazy.
Meanwhile, companies like hugely profitable fossil fuel companies and coal miners like Clive Palmer, are good, moral companies. Their enormous profits are proof of their morality.
What does this have to do with climate change?
The conservative world view is threatened by the very existence of climate change and global warming.
If making money and profits through mining and burning fossil fuels are moral behaviours, but those activities cause dangerous climate change which threatens you and your loved ones, then can it be moral? Any suggestion that fossil fuel extraction is harmful therefore threatens the basis of conservative morality.
If nature and natural resources exist as things to be conquered, exploited or used to make moral profits, then regulation that prevents this by definition is immoral. When it comes to conservation, environmental protection and climate change mitigation, the conservative morality of Abbott sees laws that protect biodiversity and our natural heritage as illegitimate hindrances to the moral activity of making profits.
Regulation is a form of interference in moral activities, and at worst, creates dependency. Renewable energy subsidies and targets distorts the profit-meritocracy.
Tony Abbott will always support subsidies for fossil fuel companies because they are moral companies, although at times his political instincts have made him a weather-vane on the issue.
Support for renewable energy, assistance for disadvantaged people, foreign aid, or industry packages for Holden, Ford and Australian manufacturing should be opposed because it is the role of government to punish immorality, and lack of money is proof of that immorality.
As I said, there are many possible reasons for Tony Abbott’s stance on fossil fuel subsidies and “corporate welfare”. You may have your own view; let me know in the comments.
Find out more about fossil fuel subsidies here.