Subsidizing mining operations that burn diesel for coal extraction, only to then impose taxes on electric vehicles - is this fair play?
In the realm of environmental concerns, Australia's transport sector continues to be a significant contributor to air pollution and greenhouse gas emissions. A recent analysis reveals that traffic-related air pollution results in between 1,800 and 8,000 deaths annually, with the lower figure being 500 more than our country's road toll.
The Australian government plays a crucial role in this scenario, as it funds the majority of subsidies for the coal mining sector's use of diesel fuel in the country. This support extends to the transportation sector, where excise taxes are primarily used as a revenue-raising tool and a deterrent for the consumption of certain products, such as cigarettes and alcohol.
However, the fuel excise tax (FET) goes directly into general revenue, with approximately 5.5% hypothecated to road infrastructure since 2014, amounting to around A$1 billion per year. The remaining 51% of fuel by volume is mainly used by private citizens and attracts the full FET with no Fuel Tax Credit (FTC), raising A$9.6 billion in 2021.
Despite these taxes, Australia's transport emissions are on the rise, projected to increase by 2% in 2025. One of the primary culprits is the use of diesel fuel in non-road engines, such as excavators and haul trucks, which account for 6% of Australia's greenhouse gas emissions, despite having a fleet 33 times smaller than the on-road diesel fleet.
A potential solution to this issue is the electrification of transport, a move that would encourage electric vehicles (EVs) to pay their way and ensure that polluters shoulder their share of the costs. Interestingly, a universal Road User Charge based on vehicle mass and distance traveled is being considered, applicable to all vehicles from mopeds to heavy trucks, regardless of fuel type.
It's worth noting that the States and Territories raise more revenue than net FET through vehicle registration and licensing. Additionally, the volume of diesel sold over the same period increased by 27.5%, meaning that overall fuel sales increased by 12%. This growth contrasts with the decline in the volume of automotive gasoline sold in Australia between 2014 and 2024, which decreased by 10.3%.
The growing gap between general expenditure raised from transport and expenditure on transport infrastructure is a concern that cannot be ignored. Carbon pricing policies, such as the FTCs paid by the mining sector (A$3.397 billion in 2021, with coal mining accounting for A$1.033 billion), could potentially simplify this situation.
In conclusion, addressing Australia's transport emissions requires a multi-faceted approach that includes the implementation of carbon pricing policies, the promotion of electric vehicles, and the reevaluation of fuel taxes and subsidies. By doing so, we can work towards a cleaner, healthier, and more sustainable future for all Australians.
