Hockey retreats from diesel fuel budget cuts

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Treasurer Joe Hockey has reassured mining companies that next week’s budget will not include any change to the off-road fuel rebate.

Last week Rio Tinto iron ore boss Andrew Harding voiced his disapproval of the prospect of the contentious diesel fuel rebate being cut in the budget.’

The ABC reported having received leaked confidential correspondence between mining executives, in which anxiety about the rebate going under the budgetary razor was revealed.

The radio program AM obtained a confidential brief sent on April 28, which warned of the potential impact of a fuel rebate budget cut.

“We’ve run the numbers on any substantial change to the rebate and the impact would be profound. Most likely far greater than any MRRT (Minerals Resource Rent Tax) and probably a little less than the first mining tax,” it read.

The leaked correspondence, written by one CEO, explained that after labour costs fuel is the next biggest expense for miners.

“With so many projects in their infancy or in early stages of developments in three states – such changes would alter the landscape for investment – and no doubt spook financiers,” the message read.

According to the Parliamentary Budget Office, the diesel fuel rebate to the mining industry alone is expected to cost $2.4 billion over the next financial year.

Farmers also lent their weight against the move, as they are also eligible for the off-road fuel rebate, with Nationals senator John Williams warning that abolition of the rebate could send many marginal producers to bankruptcy.

Image: SMH