Mining industry bodies have pushed back against a mooted proposal to cut the Diesel Fuel Tax Credit scheme, saying any changes would undermine the competitiveness of Australia’s resources sector.
Reports indicate that the Labor Environment Action Network (LEAN) has launched a campaign calling for an overhaul of the scheme, which was introduced in 2006 to replace a complex system of grants and rebates.
Responding to reports that LEAN has been lobbying the Federal Government to scale back the scheme, the Association of Mining and Exploration Companies (AMEC) said any move to cut fuel tax credits would unfairly penalise miners operating in remote areas.
AMEC chief executive officer Warren Pearce said the majority of diesel used by the mining industry is consumed on private roads and mine sites, rather than public road networks.
“Diesel excise is collected from public road users, including industry, to support the repair and maintenance of the public road network,” Pearce said.
“Industries that use diesel but not on public roads still pay the excise and then receive it back through the Diesel Fuel Tax Credit Scheme.
“The mining industry uses diesel on private roads and private mine sites that it builds and maintains. The drilling and exploration industry relies on diesel to explore and drill for minerals, and the agricultural sector uses diesel to seed and harvest crops,” he said.
The Minerals Council of Australia (MCA) also spoke out against any proposal to abolish or reduce the scheme, warning of broader economic consequences.
“If fuel tax credits are scrapped, some of Australia’s most remote communities would face financial hardship, and all Australians would face higher prices, job losses and weaker local businesses,” the MCA said.
“Claims that fuel tax credits are a subsidy are incorrect. A subsidy means the government is handing out money. Fuel tax credits do not do that – they simply prevent businesses from paying a tax they do not owe.”
The debate follows the release of a recent report by the Institute for Energy Economics and Financial Analysis (IEEFA) examining diesel use in Australia’s mining industry.
The report found diesel is emerging as one of the largest sources of emissions in the resources sector, with fuel consumption growing faster than mining production as strip ratios increase. It argued that the diesel fuel tax credit scheme acts as a disincentive to invest in alternative technologies, potentially slowing progress towards decarbonisation.
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