The government last night said it would cut the carbon tax and provide subsidies for fossil-fuel companies.

It is also axing the Australian Renewable Energy Agency that has funded clean-energy projects and driven research and investment.

Lauriston Muirhead, of Wodonga Albury Towards Climate Health (WATCH), called it an “anti-future budget”.

“Mostly, it will increase taxpayers’ costs and reduce services in order to keep an unsustainable, globally damaging fossil fuel industry after its use-by date,” he said.

“Australia will become a less comfortable place with more extreme weather, more bushfires, more floods.”

Mr Muirhead said the government was giving up billions of dollars from big polluters.

It was replacing it with its direct-action plan that handed big polluters money to try to reduce pollution.

“The carbon tax is reducing carbon pollution, but we do not know whether Direct Action will work.”

Mr Muirhead, who is Albury Council’s environmental health officer, said axing the carbon tax meant reduced or delayed spending on health and education.

“The taxpayer is slugged twice to pay the big polluters — once through direct action and again through fossil fuel subsidies,” he said.

Mr Muirhead said the government was “looking after its mates” by giving fossil fuel companies subsidies at a time when there were cuts to renewable energy.

He said this would lead to thousands of job losses in the sector.

The government said the axing of the Australian Renewable Energy Agency, set up in 2011, would save $1.3 billion over five years.

Over the next eight years, $1 billion would be used to support “priority projects” already started.

It can’t be abolished without legislation passing the Senate and Labor and the Greens have said they would oppose efforts to repeal the Gillard-era agency.

The government also announced $460 million in savings over three years by trimming the carbon capture and storage program.