The Australia Institute Feed Items

Had you been listening to the media after the Budget was released you could be forgiven for thinking that the government has unleashed a massive stimulus plan that is going to send interest rates higher. Such concerns however are woefully misguided and lack a true consideration of the economic picture.

Firstly, the $300 energy rebate will reduce inflation because the ABS calculates the price of energy by the actual cost paid by consumers. There has been some misguided commentary suggesting that this will only reduce “measured inflation” as though there is some mythical non-measured inflation that is the real amount. Government intervention affects inflation all the time – whether it be via increases in tobacco excise or changes to the cost of university tuition fees, or through subsidies.

We know that in the past government subsidies on things such as childcare and energy have had a significant effect on CPI.

The response from these critical economists is that this will lift demand in the economy because it is in effect free money that people will go out and spend on non-essential items that will in turn drive up prices.

Such a view is wrong because of a number of factors.

“The emphasis on a surplus is a missed opportunity to invest in measures that would lift those on Jobseeker out of poverty,” said Matt Grudnoff, Senior Economist at the Australia Institute. 

“Budgets are a question of choices, and the Government has chosen to bank a surplus over measures to reduce inequality or tackle a fall in real wages.

“Changes to Commonwealth Rent Assistance are much needed, but the fact remains that the Budget lacks the ambition required to address the underlying causes of growing inequality, especially access to affordable housing.

“Annual inflation has almost halved over the last year, and the measures in this Budget will help to continue that trend. Steps to address rent and energy costs will all make a difference to people feeling cost of living stress while keeping downward pressure on inflation.

“The Government’s choice not to increase the JobSeeker payment fails on both economic sense and compassion. In a time when inflation is having a disproportionate impact on non-discretionary expenditure, keeping those looking for work below the poverty line is cruel.

The Future Gas Strategy (the Government’s plan to expand fossil gas until 2050), the Minister for Climate Change and Energy’s defence of the “critical role” of the gas industry, and the Government’s $1.5 billion commitment for the Middle Arm “sustainable development” (actually a gas manufacturing hub) are completely contrary to the scientific reality, and make clear that the Government’s priorities lie with the gas industry, not with its climate commitments.

In this critical decade when fossil fuel use should be plummeting, Australian governments are investing in expanding the gas industry and telling us it’s both good for the climate and the economy.

It’s not. Here’s why expanding the gas industry is economically and environmentally reckless.

1. Gas is a small employer

While the gas industry would have you think it’s a huge employer in Australia, in reality, gas doesn’t create very many jobs.

Australia Institute research shows that for every million dollars it makes in sales, the gas industry creates just 0.2 jobs, while industries like education and training (private) create 9.3 jobs.

Targeted cost of living measures will directly reduce inflation in some areas (like energy and rents), while helping working Australians deal with higher prices in others (including reworked State 3 tax cuts, and support for higher wages for ECEC and aged care workers). Unlike previous years, the budget is projecting real wage gains in coming years that are actually likely to materialise — however, the damage from recent real wage cuts will take several years to repair, and further support for strong wage growth will be required, from both fiscal policy and industrial laws. The budget also spelled out initial steps in the government’s Future Made in Australia strategy to build renewable energy and related manufacturing industries; these steps are welcome but need to be expanded, and accompanied by strong and consistent measures to accelerate the phase-out of fossil fuels.

Our team of researchers at the Centre for Future Work has parsed the budget, focusing on its impacts on work, wages, and labour markets. Please read our full briefing report.

The post Budget 2024-25: Resists Austerity, Reduces Inflation, Targets Wage Gains appeared first on The Australia Institute.

As I noted last month, not really. But while the surplus might not matter, the choices in the budget do, so let’s have a look at what the budget tells us about the economy and some of the choices the government has made.

No real change in the budget balance

One of the things to remember about the treasurer announcing a changed budget deficit or surplus is that it really just means the Treasury estimates were more wrong than they expected.

It is no different from if, for example, in January the AFL predicted 80,000 people would turn up to the Anzac Day game between Collingwood and Essendon, but then because the weather is nice and Essendon are winning more than expected, 93,000 turn up.

Fossil fuel subsidies cost Australians $14.5 billion in 2023-24, equivalent to $27,581 for every minute of every day – $540 for every person in Australia.

That’s the estimate from the Australia Institute’s latest research on fossil fuel subsidies from Australian state, territory and federal governments.

It’s a large amount of money and, as budgets are delivered across the country, it’s one to remember when treasurers lament that they just can’t afford more public housing, cheaper education or resources for victims of partner violence.

Whenever a treasurer says they can’t afford something, they should be reminded that fossil fuel subsidies cost more than governments spend on the army, the air force, foreign aid or First Nations health.

But the $14.5 billion price tag isn’t even the worst part.

The really bad news is that fossil fuel subsidies are increasing – up 31% from 2022-23 – and they are increasing because Australian governments expect to use and produce more fossil fuels in the future, not less.

If Australia is to use and produce more fossil fuels than we are now, the rest of Australian climate policy is just tinkering at the edges.

The Reserve Bank have revised their inflation projections, suggesting that interest rates are going to remain high for longer than many expected.

This has sent plenty of people into a spin, with media speculating about interest rate armageddon and some economists calling for a recession.

But with inflation still heading in the right direction, cooler heads must prevail as policymakers navigate the tricky economic climate, Australia Institute Chief Economist Greg Jericho said on the latest episode of Dollars & Sense.

“[Inflation] is not dropping as fast as people thought because the previous thinking was probably a bit hopeful.

“Importantly, the long-term trend – where the Reserve Bank thinks inflation is going to go – really wasn’t changed. They still believe it’s going be below three per cent by the end of next year.

“That was what they were thinking in February – perhaps it’s just not going to be as sharp a drop.”

But that’s not necessarily a bad thing, Jericho argued – saying inflation’s fall had been roughly mirroring the pattern leading into the 1990s recession.

“That’s generally not a good thing to try and copy.

On Monday at 10:30am, Independent MLC Meg Webb will join Australia Institute Tasmania Director Eloise Carr to launch a discussion paper calling on Tasmania’s 51st Parliament to fortify the state’s democracy in Democracy Agenda for the 51st Tasmanian Parliament.

The report is the result of extensive consultation by the Australia Institute Tasmania, which hosted a public forum and a roundtable for parliamentarians and candidates to discuss
democratic reform ahead of the Tasmanian election.

Key Priorities:

• Strengthening donations disclosure requirements
• Introducing truth in political advertising laws
• Reforms to grants administration for funding commitments during election campaigns (“pork barrelling”)
• A Joint Standing Committee on Electoral Matters
• Fixed four year terms for the House of Assembly
• A new, appropriately funded, independent anti-corruption commission that is fit for purpose and holds public hearings is urgently needed
• Right to Information reforms

“Many current Members of Parliament committed to strengthening integrity in politics during the recent election and the 51st Parliament provides a golden opportunity to follow
through on this,” said Eloise Carr, Director of the Australia Institute Tasmania.

“Democracy should never be taken for granted, and fortifying Tasmania’s democratic institutions is the responsibility of all Parliamentarians.

Similar to the Code of Conduct for Members of the Parliament of Tasmania, the Nolan Principles are a succinct set of seven principles to guide the conduct of public officers. The
Nolan Principles have become synonymous with good governance and are provided in this discussion paper as relevant background to the recommended reforms.

The first nine recommendations to strengthen democratic architecture are identified as the highest priorities, with remaining reforms in this section recommended for action during
this term of Parliament. Several of these have draft legislation prepared or can be addressed quickly as soon as Parliament returns. The Australia Institute’s nine principles for fair
political finance reform are included. Actions to improve the functioning of, and representation within Parliament, have been proposed.

The post Democracy Agenda for the 51st Tasmanian Parliament appeared first on The Australia Institute.

The analysis finds that over the forward estimates the Federal Government has budgeted $54 billion for fossil fuel subsidies, five times the amount it has committed to its key housing policy, the $10 billion Housing Australia Future Fund.

Key findings:

• Australia’s subsidies to fossil fuel producers and major users from all governments totalled $14.5 billion in 2023-24, the equivalent of $27,581 for every minute of every day, or $540 for every person in Australia.
• 2023-24 saw a 31% increase in fossil fuel subsidies to $14.5 billion, from the $11.1 billion recorded in 2022-23, driven by large increases to diesel and aviation fuel tax breaks.
• Total fossil fuel subsidies over the forward estimates from all governments has reached $65 billion, or 16 times the balance of Australia’s Disaster Ready Fund (as of December 2023).
• The OECD has recommended that Australia cut or reduce the largest subsidy, the Fuel Tax Credit Scheme, which alone cost the Federal Government $9.6 billion in 2023-24, more than Australia spends on the Royal Australian Air Force.

“Budgets are about choices. This research reveals Australian state and federal governments are budgeting for more fossil fuel use and more fossil fuel production, not less,” said Rod Campbell, Research Director at the Australia Institute.

$14.5 billion equates to $27,581 for every minute of every day, or $540 for every person in Australia.

Beyond the 2023–24 budget year, total budgeted fossil fuel subsidies over the longer term have reached $65 billion.

This longer term total is 16 times the balance of Australia’s Disaster Ready Fund, and 6.5 times greater than the Housing Australia Future Fund (HAFF). The Federal Government’s share of this total is $54 billion, or 5.4 times the HAFF.

Australia is not taking serious action on climate change. Instead, the majority of its governments continue to subsidise the fossil fuel industry and greenwash their poor climate policies. Cutting fossil fuel subsidies would not only help achieve genuine reductions in emissions, but would save money that could be spent on public services.

But the coming months bring new opportunities to change course. Budgets will soon be passed for the 2024-25 financial year, and elections will be held in the ACT, Northern Territory and Queensland. A federal election is due in the next 18 months. The costs of Australia’s fossil fuel subsidies, both financial and environmental, and the opportunities that their phase out could present, should be front and centre of Australian policy debate.

The post Fossil fuel subsidies in Australia 2024 appeared first on The Australia Institute.

Researchers at the OECD, IEA and IISD describe it as a fossil fuel subsidy. The OECD has called for its elimination. Australian Government and mining industry representatives dispute the use of the term subsidy, but not its cost to government or benefit to miners.

Key points:

• The FTCS clearly meets the World Trade Organisation’s definition of ‘subsidy’, as the tax refund represents ‘government revenue that is foregone or not collected…such as tax credits’.
• Organisations that explicitly call Australia’s FTCS a subsidy include the Organisation for Economic Cooperation and Development (OECD), the International Energy Agency (IEA), International Institute for Sustainable Development (IISD), Overseas Development International (ODI) and Oil Change International.
• The International Monetary Fund (IMF) does not mention the FTCS specifically, but IMF fossil fuel subsidy estimates include the impact of the FTCS.
• The OECD has called for the elimination of the FTCS.

The post Australia’s Fuel Tax Credits and the debate over fossil fuel subsidies appeared first on The Australia Institute.

The FTCS costs the Commonwealth Budget around $10 billion per year and largely benefits iron ore and coal miners. The scheme is controversial because of its large cost and the sensitivity of government and industry to the use of the term ‘subsidy’.

Key findings:

• The FTCS clearly meets the World Trade Organisation’s definition of ‘subsidy’, as the tax refund represents ‘government revenue that is foregone or not collected…such as tax credits’.
• Organisations that explicitly call Australia’s FTCS a subsidy include the Organisation for Economic Cooperation and Development (OECD), the International Energy Agency (IEA), International Institute for Sustainable Development (IISD), Overseas Development International (ODI) and Oil Change International.
• The International Monetary Fund (IMF) does not mention the FTCS specifically, but IMF fossil fuel subsidy estimates include the impact of the FTCS.
• The OECD has called for the elimination of the FTCS.

“The Australia Institute considers the FTCS to be a fossil fuel subsidy, as do most international researchers such as the OECD, IEA and IMF,” said Rod Campbell, Research Director at the Australia Institute.

“The debate over the word ‘subsidy’ is not the real point. The real point is the cost of the FTCS to the public and its role in increasing fossil fuel use and emissions.

The Government’s Future Gas Strategy is a future climate disaster.

Richard Denniss explains the problems with the Government’s new Future Gas Strategy to help you wade through the spin.

This is a plan to expand the industry that’s causing climate change, and we’re greenwashing it and calling it a solution.

It’s sick.

— Richard Denniss, Executive Director of the Australia Institute.

The post Video: Future Gas Strategy with Richard Denniss appeared first on The Australia Institute.

You’ve probably heard things like “gas is a transition fuel”, “gas is a big employer” and “gas companies pay a lot of tax”.

Even the Government is spreading these gas-friendly sentiments. Australia’s Minister for Climate Change and Energy, Chris Bowen, has defended the “important role” of gas in the energy industry, including touting that in 2030, fossil gas will make up 18% of Australia’s energy mix. The Government has also committed $1.5 billion for the Middle Arm “sustainable development” precinct in the NT (and internal documents have shown that the cost could blow out to $3.5 billion), which will provide major export opportunities for fracked gas from the Beetaloo Basin, and produce emissions equivalent to 12 new coal-fired power stations.

In this critical decade when fossil fuel use should be plummeting, Australian governments are investing in expanding the gas industry and telling us it’s both good for the climate and the economy.

To help you combat some of the misleading rhetoric about the importance of gas that you might come up against this holiday season, the Australia Institute has debunked some of the loudest myths about gas.

With the announcement of the Future Gas Strategy, the Commonwealth Government has stepped through the looking glass.

Like Alice when she climbs through the mirror in Lewis Carroll’s famous novel, government policy has entered a backward land where logic is reversed.

In this absurd landscape, expanding fossil fuel use is the path to “net zero”; burning far more gas and producing more greenhouse emissions is the answer to the climate crisis; and ramping up gas exports, which have hiked domestic prices and damaged local manufacturing, is the way to produce new “green” industries.

Resources minister Madeleine King claims that the strategy will be based on “facts and data”, not ideology.

Yet, from the climate perspective, the strategy ignores the key, salient fact: the world needs to stop developing new oil and gas projects and needs to phase out fossil fuels to avoid a climate catastrophe.

This is the consensus of climate science, the United Nations and the International Energy Agency, once an ardent supporter of fossil fuels.

Despite this reality, the Government is backing new gas projects that would radically increase greenhouse gas emissions.

Since the release of the March quarter inflation figures, there has been much commentary about the “stickiness of inflation” and the need for further rate rises to bring down inflation.

One economist even suggested that the official CPI did not reflect the “actual” inflation rate because it included the impact of government subsidies on energy costs and thus inflation was actually higher than the mere “measured” inflation.

While such a view ignores the multitude of government interventions on all manner of items in the CPI basket, and weirdly suggests that somehow CPI should not reflect people’s experiences, it also reflects a belief that inflation must get below 3% as quickly as possible.

The problem with this belief is it ignores what drove the initial increase in inflation and what is contributing to the current level of “stickiness”. The current level of inflation is mostly driven by the prices of items where supply remains an issue or the cost of services and goods is largely based on either government regulations or world prices.

In the past year, the major contributors to inflation have been rental prices, new dwelling purchases by owner-occupiers (essentially the cost of building a new home), other financial services and automotive fuel. These four items account for a third of all inflation over the past year.

Indeed of the 12 biggest contributors, which account for two-thirds of all inflation, only takeaway and restaurant meals could be said to be driven in part by demand or labour costs.

The letter, published in the Sydney Morning Herald, The Age, The Canberra Times, and The Courier Mail, comes ahead of today’s release of the Senate Inquiry report into the government’s proposed reforms to the PRRT. Australia Institute analysis shows that these reforms fail to deliver any meaningful economic benefits and do not meet community expectations for tax reform.

Key findings

Yesterday, Resources Minister Madeleine King released the government’s Future Gas Strategy. On the same day, the Commonwealth regulator granted approval for Chevron’s massive expansion of their Gorgon project (you know, the one in the news all the time for its chronically underperforming carbon capture and storage project).

These announcements are a gut-punch to anyone who hopes to live on this planet in the future – especially our Pacific neighbours, whom the government are currently trying to placate, even while ensuring their homes sink beneath the waves.

At the same time, a survey of leading climate scientists showed their universal frustration with and condemnation of politicians and business who continue to approve and develop fossil fuels.

An aged care worker registration scheme including minimum education and ongoing training requirements is the missing piece of current aged care regulatory reforms addressing workforce problems. Without this, there is a risk too little progress will be made on developing the care workforce and improving the status of aged care work. Yet progress is critical to building a sustainable aged care workforce that can meet current and future care demand.

Increases in award minimum pay rates and current reforms to aged care regulation are moves in the right direction. However, more needs to be done to ensure Australia has an appropriately skilled and qualified aged care workforce able to provide safe and high-quality care.

The recent Fair Work Commission decision to award significant pay increases to direct care workers recognises the long-standing undervaluation of aged care work and the skills required to perform the work. The industrial tribunal awarded benchmark pay increases of around 23% to properly reflect the value of the work, including the exercise of ‘invisible’ skills. This decision provides important formal acknowledgement that the characterisation of aged care work in our industrial system has been blind to the skilled nature of personal care work.

Simple reforms to the Petroleum Resources Rent Tax could raise $18 billion over the next four years, new Australia Institute research has found.

The report, A Stronger PRRT Cap, demonstrates that straightforward reforms would raise more revenue than the government’s proposed 90% cap on the expenses oil and gas companies can deduct from their PRRT payments.

The research come as the Federal Government’s Future Gas Strategy makes no mention at all of the PRRT – one of the main ways that the Australian Government collects tax from the gas industry.

Key Findings

Inflation isn’t coming down as fast as many hoped, but it’s still heading in the right direction. Some economists are calling for recession, but that’s playing with fire, according to Greg Jericho. On this episode of Dollars & Sense, Greg calls for calm as policymakers navigate a difficult economic climate.

Greg Jericho is Chief Economist at the Australia Institute and the Centre for Future Work and popular columnist of Grogonomics with Guardian Australia. Each week on Dollars & Sense, Greg dives into the latest economic figures to explain what they can tell us about what’s happening in the economy, how it will impact you and where things are headed.

Host: Greg Jericho, Chief Economist, the Australia Institute and Centre for Future Work // @GrogsGamut

Producer: Jennifer Macey // @jennifermacey

Additional editing: Emily Perkins

Theme music: Blue Dot Sessions

Current Commonwealth Government attempts to reform the Petroleum Resources Rent Tax (PRRT), do little to address structural problems that allow the gas industry to pay little tax relative to large profits. The Australia Institute proposes a stricter cap on PRRT deductions that would better deliver for all Australians.

In this paper we propose reforms that could improve the Petroleum Resources Rent Tax (PRRT). Currently the government is proposing a deduction cap limited to 90% of assessable PRRT income. The deduction cap is far too small to make a material difference to PRRT revenue over the long term. We propose instead two stricter caps of either 80% or 60%.

While a stricter cap of either 80% or 60% is preferred to the government’s current proposal, it remains a least-best solution. We propose the Commonwealth Government tax also investigate introducing a true windfall profits tax. Such a tax would raise much greater revenue but would still be a modest return relative to large industry profits and revenue.

The post A stronger PRRT cap appeared first on The Australia Institute.

The plan relies on the false promise of carbon capture and storage to justify fossil fuel expansion. Chevron’s recently approved Gorgon LNG Stage 2 expansion will release 3 billion tonnes over the next five decades; Chevron’s CCS program has, by contrast, sequestered just over 9 million tonnes to date (and will only capture about 100 million tonnes over the life of the system).

“The world has just experienced its hottest April on record and the Australian Government is doubling down on fossil fuel expansion. It’s scientifically and economically reckless,” said Polly Hemming, climate & energy program director at the Australia Institute.

“To be clear, Australia has more than enough gas. In fact, the gas industry itself is the biggest user of Australia’s gas, which they use for export production.

“It is a flawed argument to say that Australia needs more fossil fuels to become a renewable energy superpower. First, we had the “gas-fired recovery,” and now we have “gas-fired renewables.” It is as if the Coalition Government never left.

“It’s not just Australians who are facing the burden of climate change; this affects the countries the Australian Government has gone to pains to describe as its so-called ‘family’.

The Wrap with Ebony Bennett

It’s just five sleeps until federal budget night, but today’s big story is the government’s announcement that it will be doubling down on fossil fuel production and exports.

On the same day that scientists declared the world has just experienced the hottest April on record, the Australian Government released its Future Gas Strategy, setting the scene for new gas developments to 2050 and beyond.

The entire premise of the strategy is that gas is ‘critical’ to the Australian economy and we need MORE. A myth the Australia Institute has debunked again, and again, and again, and again.

Investing in literally *any other industry* would create more jobs than investing in gas. #auspol pic.twitter.com/mCuGMxaNkq

Next week, Treasurer Jim Chalmers will announce what the government has chosen to prioritise in this federal budget. So, will the government address some of the big issues facing social security, the climate, HECS, housing and more, or will it be a budget of band aid solutions? Senior Economist at the Australia Institute, Matt Grudnoff, joins Ebony Bennett to discuss what to look out for in next week’s budget.

This episode was recorded on Tuesday 7 May 2024 and things may have changed since recording.

Guest: Matthew Grudnoff, Senior Economist, the Australia Institute // @MattGrudnoff

Host: Ebony Bennett, Deputy Director, the Australia Institute // @ebony_bennett

Producer: Jennifer Macey // @jennifermacey

Additional editing: Emily Perkins

Theme music: Pulse and Thrum; additional music by Blue Dot Sessions

The estimates of inflation not falling below 3% until the end of next year has led some commentators to demand higher rates as though there is an ability to have inflation drop quickly while at the same time delivering the hoped for economic “soft landing”.

After the RBA’s decision on Tuesday to keep rates steady, you would be forgiven for thinking that a rate rise is imminent. Other than Peter Hannam, who maintained a level of calm, some media organisations were suggesting rate rises are now much more likely and that there is a sense of doom ahead for inflation.

It might therefore be somewhat surprising to be told that the market’s expectations for a rate rise are actually lower now than before the RBA’s decision on Tuesday.

A month ago, I suggested that it was unlikely we would see a rate cut soon. Back then the market was still predicting rate cuts this year; now they are not. Cuts are on the horizon, but probably not until next year:

Too often we are told by economists that the only way to reduce inflation is by the Reserve Bank hiking interest rates. But this ignores that the government can actually reduce the prices and costs of many items and services.

We know this is true because it has happened before!

Just last year the Treasurer, Jim Chalmers, said when the government increased the childcare subsidy

What we’ve tried to do is to provide cost of living relief in a number of areas so that we can make things a little bit easier. Cheaper childcare will make life easier for a lot of families in a way that doesn’t add substantially to the inflation challenge in our economy.

Over the last year, the government has continued to provide cost of living relief that also reduces inflation. Inflation (measured by the Consumer Price Index) is the change in prices of goods and services paid by people. The government has control over many prices in the economy. For example, the price of university degrees or medicines listed on the Pharmaceutical Benefits Scheme (PBS). Lowering these prices not only directly reduces inflation but also provides cost of living relief for those who now have to pay less.

Here is a list of 6 inflation-busting ideas for the upcoming budget that would also provide cost of living relief.

Looking at the latest media reports you would be forgiven for thinking that inflation had started to rapidly increase. While the talk at the beginning of the year was about inflation slowing and possible interest rate cuts later this year, now some of the financial talking heads are suggesting that interest rates need to rise, and Australia might even need a recession to get inflation under control.

How confused you would be then if you happened to stumble onto the Australian Bureau of Statistics website and see that annual inflation rate in the most recent quarter was down half a percent to 3.6%. Annual inflation has almost halved over the last year.

The sudden calls for higher interest rates as the inflation rate continued to fall was so jarring, even the unusually mild-mannered Treasurer, Jim Chalmers, called it an “overreaction”.

Some in the financial commentariat responded that the inflation rate wasn’t falling fast enough. That inflation was sticky and was at risk of stalling outside the RBA’s target range of 2% to 3%. Failing to get inflation back to the target range as quickly as possible, they claimed, was imposing huge costs on the economy and crippling household’s budgets through cost-of-living pressures.

The only problem with all of these claims is that they are misleading nonsense.

The rate of inflation is still falling. The rate at which it is dropping has slowed but that is to be expected. The rate of inflation is not going to crash down at great speed only to suddenly flatten out when it reaches the target band.

Australia is in the midst of a climate and biodiversity crisis.

In response, people are rolling up their sleeves and fighting for something better. But environmental activism often gets a bad name, denigrated by some in the media and hostile special interests.

The Knitting Nannas, a group seeking “to ensure that our land, air and water are preserved for our children and grandchildren”, are changing that.

“We get a pretty good response because we look bright and cheerful, and we do things like sing,” said Marie Flood, a Sydney-based Nanna, on the latest episode of Follow the Money.

“Craftivism is very much a part of our group – combining craft and activism,” said fellow Nanna, Kathy McKenzie.

“When we get together, we’re on serious business, but we have a lot of fun.”

The Nannas formed in 2012 in Lismore, New South Wales, in opposition to a proposed coal-seam gas project. Since then, their mission has expanded to more environmental causes (outlined in their full ‘nannafesto’), but opposition to new gas projects remains a major focus.

Gas royalties make up just 1.3% of the state budget, less than half the contribution of vehicle registration.

Federal taxes paid by Chevron, Exxon, Woodside and Shell raise less money than beer excise.

Just 0.7% of the state’s workforce is employed in oil and gas extraction.

The gas industry enjoys large public subsidies. According to the WA Government, without its $8 billion in subsidies to the North West Shelf project, the project would not have proceeded. Its support was “massive and integral”. Subsidies continue, particularly through investment promotion and infrastructure provision.

The gas industry clings to its social license by exaggerating its economic benefits and hiding its negative economic impacts. In WA, the industry’s close links to government and media outlets ensure that its spin is rarely contested.

The post Gas in WA: the economy appeared first on The Australia Institute.

The report finds that twice as much revenue is forecast to be collected from vehicle registration ($1.3 billion) than from gas royalties ($522 million) in the 2024-25 budget.

The research findings are presented on a prominent billboard at 263 Georges Terrace, Perth, in view of the WA Treasurer’s office, WA Parliament and tens of thousands of motorists daily. In part, the billboard reads: “WA motorists pay more in rego than the gas industry pays in royalties. Does that seem fair?”

Key findings:

• The WA Government is expected to receive $522 million in royalties from the gas industry in 2024-25, down from $660 million in 2023-24, and will contribute just 1.3% to state government revenue.
• This is less than half of the $1.319 billion expected from vehicle registration fees, up from $1,263 billion in 2023-24. [see Figure 1 below].
• The gas industry also pays little in federal tax – the combined tax payments of Chevron, Exxon, Woodside and Shell raise less money than beer excise.
• Just 0.7% of the state’s workforce is employed in oil and gas extraction.
• In the current skills shortage, new gas projects will divert jobs from other industries rather than create additional jobs.

“Gas companies have been ripping off West Australians for too long,” said Mark Ogge, Principal Advisor at the Australia Institute.

JobSeeker unemployment payments are “seriously inadequate” according to the government’s Economic Inclusion Advisory Committee. But why has their value fallen so far behind the aged pension? And with budget night fast approaching, will the government choose to fix a broken system – or do its priorities lie elsewhere?

Greg Jericho is Chief Economist at the Australia Institute and the Centre for Future Work and popular columnist of Grogonomics with Guardian Australia. Each week on Dollars & Sense, Greg dives into the latest economic figures to explain what they can tell us about what’s happening in the economy, how it will impact you and where things are headed.

Host: Greg Jericho, Chief Economist, the Australia Institute and Centre for Future Work // @GrogsGamut

Producer: Jennifer Macey // @jennifermacey

Additional editing: Emily Perkins

Theme music: Blue Dot Sessions

The federal government’s hand-picked Economic Inclusion Advisory Committee has called for a significant increase to the JobSeeker unemployment payment, describing the current rate as “seriously inadequate”.

While the aged pension has increased over time, JobSeeker has stagnated for decades, dragging people without a job well below the poverty line, Australia Institute Chief Economist Greg Jericho said on the latest episode of Dollars & Sense.

Currently worth less than 70 per cent of the aged pension, JobSeeker payments should be increased to 90 per cent, according to the Committee.

The significant disparity between the two payments is the result of a policy decision by the Howard government, Jericho explained.

“What John Howard did was change how [JobSeeker and the aged pension] were indexed,” Jericho said.

“He linked the aged pension – but not unemployment benefits – to average, full-time, male earnings.

“In a sense, what [Howard] was saying was, ‘those people on that government benefit, they’re worthy – these people on unemployment benefits, not worthy.

There’s a global crackdown on greenwashing underway, but not everyone is getting the message – not even the Australian Government. On this episode of Follow the Money, the Australia Institute’s Climate & Energy Program Director Polly Hemming joins Ebony Bennett to discuss state-sponsored greenwashing.

This episode was recorded on Tuesday 30 April 2024 and things may have changed since recording.

Guest: Polly Hemming, Climate & Energy Program Director, the Australia Institute // @pollyjhemming

Host: Ebony Bennett, Deputy Director, the Australia Institute // @ebony_bennett

Producer: Jennifer Macey // @jennifermacey

Additional editing: Emily Perkins

Theme music: Pulse and Thrum; additional music by Blue Dot Sessions

In 2022 Josh Frydenberg gave the Budget game away when he was reported justifying the many billions of dollars spent on Aukus by saying, “everything is affordable if it’s a priority.” Julia Gillard in 2014 also revealed the Budget reality when she told the audience at the Joan Kirner justice oration “Budgets are made of choices. They make us… think about what we care about the most”.

When we put those two lines together it becomes what I call the Budget Commandment: “Everything is affordable if we choose to care about it”.

Over the next two weeks we are going to hear a great deal from the government about not being able to afford everything. What it means is that it has decided not to spend money on something because it has decided it is not a priority that it cares about the most.

This is relevant because last week the government’s Economic Inclusion Advisory Committee released its second report. It recommended help those in poverty, especially those who were unemployed.

The first recommendation was to raise the level of Jobseeker to 90% of the age pension.

We should at this point note that Australia has the lowest unemployment rate in the OECD when measured using the standard “replacement rate” metric of the level of the benefits relative to average earnings. In essence it is tougher to live in unemployment benefits in Australia than in any other advance economy.

It sounds like a joke. And it would be.

Like Qatar and Saudi Arabia, Western Australia is a major producer of gas. In fact, if WA was a country, it would be the third-largest liquefied natural gas exporter in the world, beaten only by Qatar and the USA.

And yet last week WA Premier Roger Cook urged gas companies to develop large reserves off the coast of WA to deal with a “shortage.”

The premier is wrong. The so-called shortage relates to the fact that 90 per cent of gas produced in WA is used for exports, mostly to Japan and China.

WA produces more than enough gas; it just does not keep enough. Exporters use more of the fuel to run their own vast processing plants than any other industry in WA. The export plants burn twice as much gas as is used to generate power in WA.

And while huge amounts are exported from WA, it is not by West Australian companies.

A handful of multinational gas giants – Chevron, Shell, ExxonMobil and others – dominate the business.

Perth-based Woodside does not disclose its level of foreign ownership, although at least 23 per cent is with American investors.

Overall, gas exports from WA are at least 80 per cent foreign-owned.

This matters for two reasons.

First, the foreign companies that control WA’s and Australia’s gas resources do not necessarily act in the best interests of the state or the country.

A WA parliamentary inquiry recently investigated the operation of the state’s domestic gas reservation policy.

On the same day the AUKUS security pact between Australia, the United Kingdom and United States was announced on September 16 2021 (New Zealand time), New Zealand officials gathered in Wellington for the first of two joint-agency meetings to discuss AUKUS.

At the time, New Zealand’s non-involvement was put down to the pact’s central purpose of supplying nuclear-powered submarines to Australia, and New Zealand’s prohibition of nuclear-powered vessels in its territorial waters.

Then Prime Minister Jacinda Ardern said: “We weren’t approached, nor would I expect us to be.”

It wasn’t until March 2023 that possible “non-nuclear” involvement in technology sharing was publicly discussed in New Zealand, during a visit by US National Security Council coordinator for the Indo-Pacific, Kurt Campbell.

However, the newly released information – provided following an Official Information Act request – shows “Tier 2 AUKUS” meetings took place at Defence House in Wellington on September 16 and 23, 2021.

The proposal to support a small number of workers through the transitioning of our domestic electricity system is welcome and should be supported.

However, the NZEA Bill turns a blind eye to the vast majority of workers who will be impacted by the transitions caused by climate change and climate policy. The Act also strategically sidesteps Australia’s subsidies and expansion plans for fossil fuels exports which will increase the number of workers who will eventually need to transition out of these industries.

To be effective in achieving its stated goals, the powers of the NZEA would need to expand to both prevent the development of new fossil fuel projects that will increase the number of workers requiring transition support, and to strengthen the NZEA’s ability to plan and coordinate the unfolding transition.

The post No Jobs on a Dead Planet appeared first on The Australia Institute.

The billboard, which draws on Australia Institute research into gas use in WA and its gas royalty system, is located at 263 Georges Terrace, Perth, and has been unveiled the week following the tumultuous annual general meeting of Woodside, one of Australia’s largest gas producers and greenhouse polluters.

Key findings:

• The LNG industry exports 35 times the amount of gas WA uses for electricity generation
• LNG producers themselves are the state’s biggest users of gas, using 2.5 times more than WA’s electricity generation to process gas for export (Figure 1)
• No royalties are paid on around three quarters of the gas exported from WA, including from Chevron’s Gorgon and Wheatstone projects, Woodside’s Pluto LNG or Shell’s Prelude

“It is staggering our governments allow a handful of mostly foreign-owned corporations to export 90% of WA’s gas and give most of it to them royalty-free,” says Mark Ogge, Principal Adviser at The Australia Institute.

“Multinational gas companies are receiving a level of government generosity, in the form of royalty-free resources, that families doing it tough can only dream of. In giving away the community’s gas, governments are forgoing billions of dollars that could be providing cost-of-living relief.

Despite repeated claims by business groups that Australia needs to reduce its reliance on income tax, the reality is that Australia is not only a low tax country when compared with other developed (OECD) countries but is also one of the least reliant on income taxes. Of the 38 developed nations Australia is the 9th lowest for all taxes and 7th lowest for income taxes including Social Security Contributions (SSCs).

The argument that Australia is over-reliant on income tax relies on narrowly defining income tax that mistakenly excludes SSCs. These social security contributions are levied by almost all developed countries to assist in the funding of a wide range of social benefits which can include unemployment benefits, accident, injury and sickness benefits, old age, and disability pensions, as well as the provision of various hospital and medical services. Importantly they act similar to income tax, in being levelled as a percentage of income earned (often just on employment earnings). SSCs are categorised as taxes on labour income by the OECD.

Claims that Australia is over-reliant on income tax do not stand up to scrutiny. Australia sits well below the OECD average when it comes to both income taxes and the amount of tax collected overall.

The post Income tax in Australia’s tax system appeared first on The Australia Institute.

If buildings shifted one third of their peak electricity consumption to the middle of the day, this would save $1.7 billion annually and add additional peak capacity equivalent to 52% of Australia’s existing coal generation fleet. It would reduce Australia’s greenhouse gas emissions from electricity by 1.9% (2,780,000 tonnes) per year and accelerate decarbonisation by encouraging more renewable energy investment.

In order to pursue such potential benefits governments should measure and incentivise demand flexibility in buildings.

The post Buildings as batteries appeared first on The Australia Institute.

The Institute objects to this proposal as appears driven by short-term speculation rather than energy market needs or economic viability.

“This is not a serious proposal to address energy challenges in Australia and NSW,” said Rod Campbell, Research Director at The Australia Institute.

“The assessment documents include no discussion of how this defunct power station can suddenly become viable using a highly uncertain fuel source. There is no discussion of levelised costs, electricity market strategy or a host of other issues that a genuine proposal would have.

“The environmental impact statement has vastly underplayed the greenhouse gas emissions and other potential environmental impacts that the project could have, not least what a large new customer for woodchips would mean for logging operations.

“This project should be rejected and allow community, regulatory and investor focus to return to viable, sustainable renewable energy projects.”

The post Submission on restart of Redbank Power Station appeared first on The Australia Institute.

This submission makes recommendations that would ensure private schools are more transparent and accountable for how they spend public money.

The NSW Government review into Section 83C of the Education Act 1990 (NSW) is a timely addition to the broader discussion on school funding in Australia. Many private
schools in NSW receiving government funding or tax concessions appear to be operating in breach of the relevant legislation that requires them not to operate for
profit, to pay wages in line with market values, and with expenditure that is not required for the operation of the school. Examples include:

• Cranbrook School, which spent $125 million on a five-story sandstone building that contains a double-height orchestra room, 267-seat theatre, and Olympic-sized indoor pool;
• The Scots College, which in 2019 paid a reported $29 million to renovate a library so that it would resemble a Scottish Baronial castle; and
• The King’s School, which paid $15 million to buy six hectares of land next to Lane Cove National Park for staff and student camps.

To arrest growing inequality in our school system, we recommend that:

Government-commissioned economic analysis suggests the economic case for red imported fire ant eradication is marginal. The main flaw in this modelling is that it only covers a 15-year time period. By simply extending the analysis of the latest government-commissioned modelling, the economic case for RIFA eradication goes from marginal to compelling. For every dollar spent eradicating the ants, the public benefit is between $3 and $9.

This analysis shows that RIFA will cost Australia more than $22 billion by the 2040s. This means that it is less costly to spend $200 million or even $300 million per year every year for the next ten years (which would be a total of between $2 billion and $3 billion) to eradicate RIFA now.

We suggest that one of the reasons that the eradication plan has gone underfunded is that the latest cost-benefit analysis – commissioned by Biosecurity Queensland of Department of
Agriculture and Fisheries, titled Assessing the Impacts of the Red Imported Fire Ant and published in 2021 – downplays the economic case for urgent action.

The post Red imported fire ants – the benefits of avoiding a national disaster appeared first on The Australia Institute.

The Australian supermarket sector continues to be dominated by a duopoly of two firms: Coles and Woolworths. There is increasing evidence that this duopoly has used its market power to propagate and magnify recent inflationary shocks.

Supermarket profits have increased in recent years and there is now evidence that margins have also increased. Food retailers are an important and significant part of household’s weekly expenses, with low-income households spending a bigger proportion of their income on food. This means that food inflation is a particularly important pain point for Australia’s
most vulnerable households.

The current cost of living crisis makes investigating the lack of competition and pricing behaviour of food retailers very relevant. We hope the following insights and policy recommendations will be useful to help reform this essential market.

The post Supermarkets or super mark-ups? appeared first on The Australia Institute.

The 2023 state election served to highlight some of the fundamental issues with the electoral system in New South Wales. The Australia Institute welcomes the inquiry into the election, and our submission to the inquiry builds on existing research to examine several of these issues in detail:

• The enormous advantages enjoyed by incumbent MPs and established political parties;
• The way in which donation and spending caps favour major parties;
• The lack of transparency and effective regulation around political finance;
• NSW’s failure to implement measures used successfully elsewhere in Australia, including the state’s continued use of optional preferential voting, and its lack of truth in political advertising laws.

The post Submission – Review of the 2023 NSW election appeared first on The Australia Institute.

The results show that:

• Seven in 10 Australians (69%) support an end to native forest logging on public land across Australia, including 37% who strongly support an end.
• Only one in five (19%) oppose an end to native forest logging across Australia.
• There is majority support for ending native forest logging across Australia in Western Australia (71%), NSW (70%), Victoria (66%) and Queensland (68%).
• There is majority support for ending native forest logging on public land across Australia from all major voting intentions, with highest level of support from Labor voters (79%), followed by Greens voters (76%), Coalition voters (62%), One Nation voters (61%) and Independent/Other voters (57%).

The post Polling Research: Ending native forest logging across Australia appeared first on The Australia Institute.

The proposed changes to the PRRT as contained in Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023 deliver returns to taxpayers that are well below community expectations and do little to alter the current reality that gas companies are failing to pay a fair level of tax under the current PRRT regime.

We argue that the government should:

• Adopt a stricter cap of either 60% or 80%, or
• Reform the PRRT regime to ensure any windfall gains are taxed.

Our polling demonstrates that stricter caps would have much greater support than the 90% proposed. The concern that any changes to the cap would continue to play into the hand of the oil and gas industry accountants however could be countered by reforming the PRRT so that whenever the rate of return on the funds employed exceeds a certain threshold the liability would be triggered. This supports our recommendation that the government pursue a PRRT regime that would ensure any windfall gains are taxed, given such gains are not expected or included in investment decision taxing them would not affect investment decisions.

These recommendations would also meet the demands of the more than 10,000 people who have signed the Australia Institute petition calling for the repair and increase of the PRRT to address this imbalance and ensure the Australian people get a fair share of the windfall profits from our own natural resources.

The aim of the government should be not to shift PRRT return from a later period to earlier, but to deliver bigger returns, always.

Key findings:

• An overwhelming majority (84.6%) of voters agree truth in political advertising laws should be in place in time for the next federal election, with almost 7 in 10 (69.7%) of voters strongly agreeing. Only 4.9% of voters disagree, 10.5% didn’t know or weren’t sure.
• 7 in 10 voters (70.8%) say the NACC should be able to hold public hearings in any circumstance, or when a hearing is in the public interest. Only 15.9% say the NACC’s power should be limited to holding public hearings in exceptional circumstances, which is currently the case.
• Two-party preferred: 65% Simon Kennedy (LNP) vs 35% Martin Moore (GRN) based on respondent allocated preferences.
• First preferences: 53% Simon Kennedy (Liberal Party), 17% Martin Moore (Australian Greens), 12% Roger Woodward (Independent), 8% Natasha Brown (Animal Justice Party), 6% Simone Francis Gagatam (Sustainable Australia Party), 4% Vinay Kolhatkar (Libertarian), including the redistributed Undecided voters.
• Nearly one in four respondents (24.5%) have not decided their first preference vote in the upcoming by-election.

The post Polling – Cook By-Election: Integrity Reform appeared first on The Australia Institute.