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IEA's peak oil warning a message to Wayne Swan: scrap oil subsidies in May Budget

Media Release
Christine Milne 28 Apr 2011

The International Energy Agency's latest warning that the age of cheap, easily accessible oil is over is yet another reason for Wayne Swan to remove the fringe benefits tax concession that encourages people to drive more in the upcoming Budget, the Australian Greens said today.

"In a tight budget where the government is looking to make big cuts, the expensive and perverse subsidies that encourage the use of oil should be top of the list to be scrapped," Australian Greens Acting Leader, Senator Christine Milne, said.

Treasury costings show almost $1 billion in revenue could be restored over the forward estimates if the Australian Greens' proposal to introduce a flat rate fringe benefits tax concession for company cars, regardless of kilometres travelled, is adopted in next month's budget.

IEA Chief Economist, Dr Fatih Birol, who has been warning for some time that peak oil was reached in 2006, has told ABC that governments need to reduce their reliance on oil.

"When will an Australian government, a Resources Minister or ABARES acknowledge that the age of cheap, easily accessible oil is over, that turning coal into liquid fuel is deeply irresponsible in the face of climate change and that we need leadership to reduce our oil vulnerability fast?

"The best way to reduce our vulnerability is to help Australians to drive less and, when they do drive, to drive more efficient vehicles.

"That means investing in public transport, cyclepaths and pedestrian paths, bringing in appropriate mandatory vehicle fuel efficiency standards in line with those in Europe and Asia, and reforming perverse subsidies such as the FBT concession which encourages people to drive more and the diesel fuel rebate for miners which means miners pay no tax on the fuel they use to dig more fossil fuels out of the ground while commuters pay through the nose.

"The Greens have also called for subsidies to the car industry in Australia to be tied to high standards of vehicle fuel efficiency or manufacture of electric cars, and new government procurement policies which prioritise getting efficient or electric cars into the fleet.

"Successive governments have completely failed to act on any of the unanimous, cross-party recommendations of a Senate Inquiry I established into Australia's future oil supply 5 years ago. The recommendations clearly pointed to the need to invest properly in oil-proofing Australia.

"Wayne Swan can take a small but important step down this road next month by at least removing the FBT's concession that encourages people to drive more."

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