Poker chips on display at the $1M Wild Turkey APL Tournament Of Champions event in Sydney, Australia. A national emissions tax pushed up some electricity and fuel prices so low-income Australians get a rebate check. Many, however, use it to gamble. - 

Jeremy Hobson: In Australia, there's a new tax on greenhouse gas missions, and it was expected to help the poor and the elderly. They get a refund to pay for basic goods like food and electricity.

But as Stuart Cohen reports from Sydney, it seems that extra money is being diverted elsewhere.

Stuart Cohen: Saturday night at one of the hundreds of RSL clubs across Australia. The Returned Services League is meant to be a veterans' support organization. But its clubs are little more than glorified casinos. Here, you can bet on horse races or rugby or even get in on a card game.

But the most popular activity is the poker machine, or pokies, as Australians call them. There are over 200,000 pokies across the country in clubs, pubs and hotels. They rake in billions of dollars a year. Responsible gambling advocates say much of that comes from lower- and middle-income problem gamblers. Official figures show that spending on pokies went up when the government sent out its first carbon tax compensation payments. They're meant to offset the rising cost of food, electricity and other essentials for low-income earners and pensioners.

But Keith Delacy of the Reef Casino in Queensland says you can't tell people how to spend their money.

Keith Delacy: Oh, I've got no doubt that there's more money spent on the pokies. I mean, every time there's a cash handout from the government, there's an increase in revenue at all of the gaming venues. I'm not sure what they expected.

Australians are the world's biggest gamblers. They lose more per capita than any other country; some gamblers here lose more than $1,000 an hour on the machines. Several lawmakers are pushing for legislation to limit how much a person can lose in any one sitting.

Sen. Nick Xenophon is one of them. He's angry that people are spending their government rebates this way.

Nick Xenophon: This is meant to be a compensation package for the carbon tax, not something that will unjustly enrich pokies. If the government is serious about this being a compensation package, then it ought to be done in a different way, and that could involve having rebates on electricity bills -- more targeted, more directed, more effective.

The government insists that the vast majority of people receiving compensation payments are actually spending the money on everyday essentials.

In Sydney, I'm Stuart Cohen for Marketplace.