Taxpayers can ill afford to indulge the economy wrecking demands of the Greens

The Albanese government has got off to a worrying post-budget start by accepting the anti-gas demands of the Greens. Agreement by Labor to shelve its offshore gas fast-track proposal is merely a taste of what can be expected in the future. It makes a mockery of the pre-budget acknowledgment by Resources Minister Madeleine King that Labor was firmly behind the critical gas sector. The Greens have made it clear they believe gas is the new coal and they will exploit their casting vote in the Senate to stymie the industry. Greens leader Adam Bandt has claimed success in blocking the offshore gas fast track – leaving the industry exposed to the sorts of lawfare actions that have frustrated and delayed billions of dollars worth of investment – is proof that “big corporations may have others parties in their pockets but the Greens will take them on”. His claim is all the more alarming given it comes immediately after the Prime Minister said he would work with the Greens to pass budget measures that provide billions of dollars in producer tax credits to develop a hydrogen industry.

Thursday’s deal in the Senate exposes the naivety of Anthony Albanese’s stance. The Greens agreed to pass Labor’s petroleum resource rent tax reforms, which will impose a $2.4bn tax impost on the gas industry. They were able to further punish the offshore gas sector in exchange for their support for a new vehicle efficiency standard that will force car companies to meet new emissions targets across their retail fleets. Industry analysis shows the new measures will increase the cost of popular vehicles to subsidise electric models. The Greens’ pledge to use their Senate position to work against the gas industry is counter to the national interest given the contribution gas makes to national income and the role it can play in the low-emissions transition globally.

The federal government will need all of the income it can muster to fund the big-spending green initiatives contained in Tuesday’s budget. These include a Capacity Investment Scheme to underwrite the profits of companies responsible for $65bn of investment in renewable energy capacity. There is a $1.7bn Future Made in Australia Innovation Fund, a 10-year extension of funding to the Australian Renewable Energy Agency, an estimated $6.7bn Hydrogen Production Tax Incentive, and a $1.3bn Hydrogen Headstart program.

The budget establishes a $7bn production tax incentive for processing and refining critical minerals. It commits up to $1.2bn in strategic critical minerals projects through the Critical Minerals Facility and the northern Australia Infrastructure Facility. This is in addition to $566.1m to support Geoscience Australia to map all of Australia’s critical minerals, strategic materials, groundwater and other resources essential for the transition to net zero.

Meanwhile, the government’s much criticised winner-picking industry protection policy includes $1.5bn to manufacture clean-energy technologies, including $1bn for Solar Sunshot and $523.2m for the Battery Breakthrough Initiative.

The government will have to find the money for all of these promises somewhere and it won’t be from savings. Real government spending will grow at more than double the predicted rate of the economy over the next two years and reach 26 per cent of GDP as debt increases and deficits are delivered across the forward estimates. The nation can ill afford to further indulge the economy-wrecking ideological demands of the minor protest parties.