Environmentalists slam GST package
By Jim Green
Environmental groups are outraged by the government and Australian Democrats' goods and services tax (GST) package. A May 30 joint statement of the Australian Conservation Foundation (ACF), Friends of the Earth Australia, Greenpeace Australia, the Wilderness Society, the World Wide Fund for Nature, the National Parks Association of Victoria and several conservation councils condemns the package as highly damaging to the environment.
The environmental groups' stance contradicts the Democrats' claims, which were backed by the government, that they have secured their promise of a "green" GST.
The groups argue that, while the environmental initiatives negotiated by the Democrats may look good in isolation, they are part of a tax package which gives "at least $8 billion in subsidies to polluting industries and, at best, only $1 billion to environmental initiatives", according to Don Henry, ACF executive director.
The groups' greatest concern is the package proposal, only marginally modified from the government's original plan, for a diesel fuel excise (tax) rebate. Henry said the government and the trucking industry had fought to retain this because it shifts billions of dollars to the transport industry in reduced costs. The lower cost of diesel fuel, which the package documentation admitted was an important source of particle pollution, especially in urban areas, will also encourage more use of it.
The big winners from the revised package would feature in a who's who of corporate polluters. The May 31 Australian Financial Review says the biggest corporate winners will be diversified resource companies such as BHP, Rio Tinto, North and Western Mining.
The logging industry is also well served. The Greens have calculated that the diesel fuel rebate will make woodchips cheaper by $1 per tonne.
Greens Senator Bob Brown said on June 2 that the tax package provides an "anti-environment cocktail of woodchip stimulants, pollutants, and greenhouse emissions [which] would betray the Democrats' 20-year commitment to the Australian environment. We'll be doing our best to keep the Democrat bastards honest."
Another critic of the revised tax package is Dr Clive Hamilton, executive director of the Australia Institute, and a former unpaid technical adviser to the Democrats. He resigned the latter position the day before the GST deal was announced.
Writing in the Australian on June 2, Hamilton said, "The environmentally damaging force [of] the fuel price reductions originally proposed ... remain largely unchanged. With price cuts of these magnitudes, no amount of compensatory measures would be able to offset the environmental damage."
Diesel rebate
The government planned to reduce the diesel excise paid by on-road vehicles weighing more than 3.5 tonnes from 43 cents to 18 cents per litre. After negotiations with the Democrats, the excise will now be 20 cents per litre and limited to all vehicles over 20 tonnes and vehicles from 4.5-20 tonnes "that undertake their operations in service of regional areas".
Off-road concessions for diesel and like fuels will be limited to marine use, bush nursing homes, hospitals, nursing homes, aged persons homes and private residences. Construction, power generation, manufacturing and forestry are excluded.
The revised package did include some measures to encourage the production of less polluting diesel fuels and reductions in diesel fuel use or pollution from this. From the year 2006, only low sulphur diesel will be eligible for fuel credits.
Tougher standards are expected to reduce pollution from new vehicles using diesel, while testing stations and inspection protocols are to be introduced to encourage existing owners of diesel powered vehicles to meet standards. Clean fuel credits will be used to maintain the current price relativities between diesel and other fuels such as natural gas, liquid petroleum gas and ethanol. Funding will be provided for the conversion of buses and other large commercial vehicles to natural gas and liquid petroleum gas. Rail transport will be entitled to a 100% excise credit.
The impact of these latter measures on diesel fuel use and pollution is minor, however, when compared with the impact of the rebate. Federal transport and regional services minister John Anderson said: "The Democrats are claiming cuts of $3 billion over four years for diesel rebates, but this needs to be put in perspective. Over the same period, industry, farmers, miners, truckies and many others will get back $12 billion in lower diesel costs."
The range of measures to offset the environmental impact of the diesel rebates does not impress Hamilton. He said modelling of the revised package revealed that raising the weight threshold above which rebates would apply would not significantly reduce increases in pollution levels. He also said that bringing forward tighter diesel emission standards would not markedly change the pollution profile.
Also, the standards agreed in the new deal are precisely what the government planned to introduce anyway. Brown said, "It turns out that the emission control measures are not new and, anyway, will be swamped by the huge increase in pollution coming from the rebates for petrol and diesel".
The diesel fuel rebate will expire on June 30, 2002. It will be replaced by an energy credit scheme which, according to the government and the Democrats, "will provide price incentives and funding for conversion from the dirtiest fuels to the most appropriate and cleanest fuels".
Nothing more is said about the sunset clause for diesel rebates or the energy credit scheme in the joint document. Henry wrote to the Democrats on June 1: "In our view, all elements of tax changes to the fuels and energy sector must be completed together. It is unacceptable to leave negotiations on the phase out of the diesel fuel credit and the energy credit scheme till after the passage of the GST tax package, where the debate will be dominated by the massive vested interest in the status quo."
Comments by Anderson show the government is not considering abolition or reduction of the diesel rebate in 2002. "The new name simply reflects the fact that we are interdicting some incentives for businesses to use alternative fuels such as compressed natural gas and fuel ethanol. The size and scope of the rebates for diesel agreed with the Democrats will not change."
Greenhouse 'abatement'
The environment groups' view of the package also considers its context: the government's poor record on the environment. Henry said the Democrats "should not be sucked in by a range of add-ons which already should be part of government's response to greenhouse and air pollution".
One of these add-ons was an allocation $100 million per year for four years to support greenhouse gas abatement programs. The government says it "will develop options which will have maximum carbon reduction or sink enhancement capacity".
Ian Higgins, chief executive officer of Greenpeace, according to the June 1 Sydney Morning Herald, said, "The extra funding for greenhouse gas abatement will be spent largely on carbon sinks. That means planting trees, which, however, is not a lasting solution to greenhouse pollution. No amount of tree planting could counter the greenhouse gases we create from burning fossil fuels. Phasing out fossil fuels now is the only way to prevent climate change."
Hamilton said that when the government was "finally forced to do some modelling of its own, [its] numbers indicated that under the original GST package, greenhouse gases and particle pollution would be twice as high as the Australia Institute had estimated ... its modified package would still result in an increase in greenhouse gases from transport by more than 60% between 1997 and 2015. Since any serious intention to abide by our own commitments under the Kyoto protocol must limit such greenhouse gas emissions to around 8% above 1990 levels by 2010, the folly of any fuel price reductions was stark."
Two measures were proposed to encourage the use of renewable energy resources. The government will provide $16 million over three years — about 0.2% of the diesel rebate expenditure — to boost the commercialisation of renewable energy, thereby doubling existing expenditure on renewable energy.
The government will also offer rebates totalling an estimated $19 million over three years for rooftop and building-integrated photovoltaic systems, which will "more than offset the estimated net cost impact of GST for these products". Rebates will not be payable for solar hot water systems.
Brown said the Greens, who have already organised small protests outside Democrats offices, will continue to liaise with unions, environmentalists, student and community groups about protest actions. Protests are planned in Sydney and Melbourne on June 20 , and in Canberra on June 21.