Diesel is the lifeblood of regional Australia.
From the machinery that harvests our crops, to the rumble of the dump trucks that cart our minerals. From the farmer criss-crossing paddocks in a ute, to the fishing trawlers casting deep off the continental shelf.
The hum of the generators that keep the lights on in our remote communities. The chug of the charter boats taking tourists to the best dive spots on the reef.
Diesel keeps the heart of rural Australia beating, connecting communities and sustaining industries across vast landscapes.
Yet despite this vital role, diesel use is under attack from a cohort of crossbench MPs and senators who seem out of touch with the communities sustaining our nation’s prosperity; a group whose voters have long benefited from a strong economy supported by mining through higher wages and healthy superannuation.
For 50 years in Australia, a straightforward rule has guided road funding: if you drive on public roads, you pay a fuel excise tax. If you use fuel off-road, you get a tax credit for the excise you have already paid.
This fair system ensures road taxes are for road users.
But this equitable system is now firmly in the sights of some teal MPs and crossbench senators who despite irrefutable Treasury analysis and reams of expert opinion to the contrary, wrongly slander fuel tax credits as “fossil fuel subsidies”.
Earlier this month, teal MPs Kate Chaney, Allegra Spender, Zoe Daniels, and ACT senator David Pocock called for significant changes to the scheme, warning they would leverage their influence in a potential minority government to drive this agenda.
For the minerals sector, this would have a devastating effect on regional Australia and beyond, hurting investment and rendering some projects unviable.
For tourism, agriculture, construction and seafood, it would not only be a job killer, but would compound cost-of-living pressures.
Removing tax credits would create a new tax on Australia’s most productive, job-creating industries, with costs ultimately passed to households already struggling with rising living expenses. A new tax on farmers means higher grocery prices. A new tax on construction means higher housing costs. A new tax on mining erodes Australia’s global competitiveness. The ripple effects of such a tax would be felt right down the supply chain, from the farm gate to households.
These four crossbenchers are openly targeting the mining industry, seeking to tax the diesel it uses off-road. This stance follows a pattern of disparaging the very sector that pays the nation’s highest wages, contributes more tax than all other industries combined, and is doing the heavy lifting on emissions reduction.
But while miners are the primary targets here, other industries should feel equally concerned.
Take the words of Kate Chaney, the teal member for Curtin whose constituency is more aware than most of the economic and societal benefits of mining and agriculture: “For agriculture and logistics and trucking, which is largely under that $50 million cap, we wouldn’t change that at the moment.”
The last three words are revealing, indicating that this new tax proposal would eventually extend to other sectors. First they come for the miners, then they come for the farmers and other essential industries. It’s a slippery slope.
Australia has significant policy infrastructure in place to tackle climate change, laying the foundation for a more sustainable future. We have a system in place to do the heavy lifting for Australia to meet these important emissions reduction targets.
These measures include the safeguard mechanism, designed to reduce emissions from large industrial companies, 58 per cent of whom work in the mining sector. It includes the Renewable Energy Target, which drives the shift towards cleaner energy sources, as well as various energy efficiency and renewable fuel policies.
Australian mining wholeheartedly supports the bipartisan ambition of reaching net zero by 2050 and is investing billions in technology to fast-track emissions reduction.
But you don’t tax your way to fixing the problem.
In his report Assessing Fuel Tax Credits, economist Chris Richardson makes clear the need to keep taxation and climate policies at arm’s length.
“You shouldn’t change the fuel tax credit system if Australia is having trouble in meeting its emission targets,” Richardson argues.
“If the intent is to do the right thing on the tax front and the right thing in helping to fight global warming, then the key is to have two good policies rather than one flawed one.”
Regional Australia and its vibrant businesses have copped a lot in recent years.
They’ve had to shoulder the burden of high energy prices, inflexible industrial relations changes, an unpredictable approvals regime and increases in operational costs.
A new tax, created by stripping away fuel tax credits, would be another considerable blow. One that some businesses fear will be a knockout blow.
Tania Constable is the CEO of the Minerals Council of Australia
“First they come for the miners, then they come for the farmers and other essential industries. It’s a slippery slope.”
