Fri 13 Mar 2026 10.00
Photo: AAP Image/Richard Wainwright
Have you heard about the “exploding” and “runaway” costs of helping people with disability in the NDIS?
Or that we just can’t afford more “handouts” during the cost-of-living crisis?
And the one about how cheap childcare is “unsustainable”?
Yep, you’ve heard all these lines because politicians and business executives say them all the time.
But, have you heard about the exploding costs of tax breaks for BHP and Gina Rinehart?
No? How about billions in handouts for gas companies?
Or that governments give hundreds of millions for struggling foreign coal companies? Didn’t hear about that?
That’s a shame, because subsidies handed out by Australian federal and state governments are large, and they’re growing faster than the supposedly “exploding” costs of social services.
This week, the Australia Institute has published our annual tally of subsidies, concessions and tax breaks to major fossil fuel users and producers such as coal mines and gas companies. Our estimate is $16.3 billion in 2025-26.
That’s an increase of $1.4 billion on the $14.9 billion we estimated last year, an increase of 9.6%.
Meanwhile, the NDIS grew by 7.6%.
To be clear, this means that handouts to Clive Palmer and Rio Tinto are growing faster than the costs of helping Australians with a disability.
It’s time to call BS on the idea that we can’t afford to look after each other, while governments simultaneously hand out billions to foreign-owned mining companies.
Australia is one of the richest countries in the world and we can afford to do anything we want. Of course we can afford a great hospital system and to increase unemployment benefits.
But while we can afford to do anything we want; we can’t afford to do everything we want. At some point, governments have to choose whether to look after Australians more, or to look after mining companies more.
Phasing out fossil fuel subsidies, that go largely to mining companies, would allow governments to put more money into services that benefit millions of Australians rather than tax haven-based coal miners like Glencore.
Better still, this would assist Australia’s efforts to reduce greenhouse gas emissions.
Subsidising coal miners and gas companies is the worst possible thing a government can do on climate change… with the possible exception of giving away gas and coal for free, which Australian governments also do all the time.
Australia’s biggest fossil fuel subsidy is the Fuel Tax Credit Scheme, which cost the federal budget a staggering $10.8 billion in 2025-26. That’s more than is spent on the Australian Army.
The Fuel Tax Credit Scheme is basically a tax break for mining companies and other major users of diesel and petrol.
When you fill up your car with 50 litres of fuel, you pay 52c per litre in fuel tax, or $26 in total.
Many suburban families would do that every week, paying over $1,300 in fuel tax each year on the 2,600 litres of fuel they use.
By contrast, BHP uses nearly 1,300,000,000 litres of fuel each year and pays zero in fuel tax.
To be more accurate, BHP pays around $627 million in fuel tax that the government later pays back to BHP under the Fuel Tax Credit Scheme.
To summarise, suburban drivers pay $1,300 in fuel tax per year, while BHP pays nothing on over a billion of litres of the same fuel.
Fortunately, a growing number of people and organisations are calling for change, particularly on the Fuel Tax Credit Scheme. These include the mining company Fortescue, the Australian Council of Trade Unions (ACTU) and the Labor Environmental Action Network.
The chair of the Climate Change Authority, former NSW Liberal Treasurer Matt Kean, calls the Fuel Tax Credit Scheme “insane”, while Climate and Energy Minister Chris Bowen recently joined up to an international agreement recognising “the need to phase-out inefficient fossil fuel subsidies as soon as possible.”
Importantly, it’s not just the Federal Government that is paying to make climate change worse and social services harder to fund. Our report covers the many state government fossil fuel subsidies such as:
It is this kind of spending that is “unsustainable” and “wasteful”. These are the kinds of “handouts” that Australian governments could cut back.
It’s nearly budget time and budgets are about choices.
Australian governments are about to choose between mining companies and Australians.
Rod Campbell is the research director at the Australia Institute.
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