In the face of a global energy crisis, the Australian Government has introduced short-term measures to manage fuel supplies and price spikes, including releasing emergency stockpiles and halving the fuel excise.
While this relief is welcome, it doesn’t fix the core problem: as long as Australia relies on fossil fuels, households will stay exposed to supply shortages and soaring prices.
The switch to renewable power is our best chance to ensure energy security, to shelter households and businesses from volatile global fossil fuel markets, and cut climate pollution permanently.
This is not the first time global events have driven up energy costs, and it won’t be the last. The decisions made in the Federal Budget on May 12 will shape whether the hip pocket of Australians keeps getting hit, or whether we’re better protected next time.
The Climate Council has outlined four key priorities for the Federal Government to implement in its budget
1. Reduce fuel dependence with electric vehicles, shared and active transport
How does it strengthen energy security?
Electrifying transport and increasing shared and active transport use is one of the most effective ways to permanently protect Australians from surging oil prices.
Electric and hybrid-electric vehicles are already saving fuel: Australia’s weekly petrol and diesel use is already about 15 million litres lower every week than it would be if we had no EVs. Every additional EV reflects permanently lower oil demand, and more fuel available for those who still need it.
Increasing shared and active transport use is a rapid and lower cost option to reduce fuel use and reliance. Delivering fast, frequent and accessible public transport is also key to increasing uptake.
Our policy settings must reflect the dual benefit of both reducing our dependence on imported oil, and slashing climate pollution.
What should this year’s Federal Budget do?
This year’s budget should power-on with EVs and back-in other clean and energy-independent transport options by:
To support EV uptake,the Federal Budget should maintain the EV FBT exemption, and build on this by extending exemptions or discounts to shared and active transport like public transport fares or e-bike leasing. In addition, FBT exemptions for large, fuel-intensive utes and vans should be scaled back. (Under current rules some high-end vans and dual-cab utes still receive generous tax breaks, despite being among the most fuel-intensive and polluting vehicles, and often priced far beyond what most Australians would consider appropriate for taxpayer support).
- Provide funding or incentives to accelerate the rollout of charging infrastructure for both cars and trucks.
- Make common sense regulatory changes to enable more electric heavy vehicles on our roads, like allowing slightly heavier vehicles to accommodate battery electric trucks, which are typically heavier.
- Provide low-interest finance or grants to early adopters of electric heavy vehicles, to help support this industry to scale in Australia.
The Federal Budget should reboot the hugely popular National Active Transport Fund – which received many more applications than could be funded in its first round – showing that many valuable projects could be built with further support. Expanding active transport also delivers wider benefits beyond reducing fuel use, including improving public health.
2. Power heavy industry with Australian renewables, not imported diesel
How does it strengthen energy security?
Heavy machinery, particularly in mining, is a major user of diesel – and a big opportunity to save diesel by electrifying.
Heavy machinery has predictable usage patterns and a short range, which suits battery-electric options. Electrifying heavy machinery can also support economies of scale that make electrifying other heavy vehicles – like trucks – cheaper and easier.
What should this year’s Federal Budget do?
Currently, the Australian Government is actually encouraging diesel use by heavy machinery, maintaining our dependence on imported fuel. That’s because the Fuel Tax Credit provides a tax credit of 52c for every litre of fuel that is used off public roads.
The mining industry is by far the biggest beneficiary of this tax break, which is forecast to cost about $13 billion every year by 2030. That’s billions of dollars that could be spent on cutting diesel use and improving energy security. To fix this, this year’s Budget should:
This Federal Budget should begin a phase out of the diesel fuel tax break, by capping the tax break of $50m per year. This would only affect 18 large mining-related diesel users, but would free up more than $2.5 billion per year.
This cap wouldn’t impact other beneficiaries of the fuel tax rebate in farming, fishing, or tourism.
Redirect the money saved with this cap to support more electric heavy machinery that doesn’t use diesel – unlocking billions of dollars in support for energy security, at no extra cost to the Federal Budget.
3. Cut household bills with electrified homes, solar and batteries
How does it strengthen energy security?
Powering homes and businesses with clean, affordable electricity is a win for our energy security, our wallets and the climate. When homes are powered with renewable electricity instead of gas, they are more affordable and healthier.
Australia already leads the world in rooftop solar. Now, home batteries are booming, supported by the Australian Government’s Cheaper Home Batteries Program. The government expects the program to deliver two million batteries over the next five years, more than tripling the large-scale storage capacity in Australia’s main grid.
What should this year’s Federal Budget do?
By making electrification, solar and batteries even more accessible, the Australian Government can deliver immediate savings and long-term protection to households from rising energy costs. This federal budget should:
- Maintain the Cheaper Home Batteries Program’s strong support, accelerating uptake of home batteries, and supporting economies of scale and cost reductions.
Strengthen the Household Energy Upgrades Fund by offering zero-interest finance for household energy upgrades, replacing the marginally discounted rates currently available.
4. Make gas corporations pay their fair share of tax
How does it strengthen energy security?
Australia produces more than enough gas for our use, but we export most of it. As a result, Australia’s gas prices are tied to volatile global markets. Put simply, gas corporations are taking our resources, polluting our climate and pocketing the vast majority of returns – leaving Australians to pay now and into the future.
Across our fossil fuels, Australia captures less than 30% of the profits. Most other countries are collecting 80% or more – including Qatar, the world’s biggest LNG exporter. Despite gas exporters making huge and growing revenues, the tax from gas exports has been flat.
What should this year’s Federal Budget do?
Australia should implement a gas exports tax – a fair and practical reform that ensures Australian resources deliver for Australians. The revenue should be applied to cost-of-living relief and fund efforts to scale up clean energy.
Energy security is no longer something Australia can take for granted. Recent examples in Iran and Ukraine show how quickly global shocks can drive up energy costs and expose how vulnerable we are due to a reliance on imported fuels.
Fortunately, there is a clear path forward, and the Federal Budget is an opportunity to take that path.
Moving faster on renewables and electrification will reduce our exposure to global volatility, while making energy more affordable and reliable for households and businesses.
Now is the time for the Australian Government to accelerate clean energy efforts that shield households and businesses from fossil fuel chaos and deliver lasting cost-of-living relief, all while cutting climate pollution and building a safer future for future generations.
