The federal government could save billions of dollars a year by cutting fossil-fuel subsidies in next month's budget, green groups say.
Forward estimates indicate the government plans to offer $44 billion in tax rebates and concessions, accelerated asset write-downs and foregone revenue between the 2012/13 and 2015/16 financial years, according to analysis conducted by Environment Victoria and Market Forces.
Targeting just five of the main subsidies could save about $5 billion a year for the next three years, the groups said.
The largest savings would be to eliminate the fuel tax credits granted to the mining industry, which amount to more than $2 billion annually.
Ordinary consumers pay 38 cents a litre excise on their fuel but miners pay just 6 cents, said Victoria McKenzie-McHarg, Safe Climate Campaign Manager for Environment Victoria.
"We know the government wants to take action on climate change," Ms McKenzie-McHarg said. "But it's very difficult to stop climate change when the government is simultaneously funding it with billions of dollars of handouts to polluters."
The removal of concessional tax rates on aviation fuels would also save almost $3 billion over the three years, while payments and free permits to the most carbon-intensive power plants would save almost as much, the groups said in their report.
The government, it seems, has been considering such moves as it battles to make savings and prevent projections of more big deficits, just months ahead of the federal election in September.