The Treasurer in Australia’s conservative Liberal-National government, Joe Hockey, has moved to head off a damaging fight with Australia’s mining industry over fuel subsidies.
Mr Hockey has assured them there will not be any cuts to the diesel fuel rebate in next Tuesday’s federal budget.
Opposition parties and the even the International Monetary Fund (IMF) have suggested that governments should get rid of fuel subsidies as a way of moving to a greener economy.
Leaked confidential correspondence between top mining chief executives, obtained by ABC News, reveals deep anxiety within the resources sector.
ABC News reports that sharing the concerns members of the coalition government have warn any reduction to the multi-billion-dollar tax credit would have a devastating impact on farmers.
Recent speculation of a possible cut to the 38 per cent fuel tax credit in next week’s budget had prompted emergency crisis meetings across the resources sector.
The ABC Radio’s AM program obtained a confidential brief sent on April 28, which warns of the potential impact of the budget savings measure.
“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 explains 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 said.
Government sources have confirmed the government had examined the diesel fuel rebate, now formerly known as the fuel tax credit.
According to the Parliamentary Budget Office, the rebate to the mining industry is expected to cost $2.4 billion over the next financial year.
The AM program reports Mr Hockey gave an assurance late yesterday that the government would not touch the rebate in its first budget.
A spokesperson for the Treasurer would not comment on the suggestion.
ABC Radio reports Mr Hockey appears to have also avoided a dispute with his coalition colleagues in the Nationals.
Nationals Senator John Williams, a former farmer, warned if the rebate is significantly reduced it could push some marginal producers into bankruptcy.
“The diesel fuel rebate is essential for the people on the land,” he said.
Senator Williams said it was important that costs are kept down for farmers so they could compete.
2 Responses
Unbelievable – endless subsidies to hurry our demise – endless tax breaks for miners to burn carbon fuels to produce more carbon fuels to be burnt.
I’m not a fan of the mining industry but this is not a subsidy. The diesel fuel levy was initiated as a user-pays tax on heavy vehicles using roads (supposedly going to road maintenance). If you have diesel equipment which does not use roads, you pay the levy and then claim the rebate. If it’s a “user pays” tax then if you don’t use, you shouldn’t have to pay.
Unfortunately seeing this as a “subsidy” is not only a hit at the mining industry, but also at primary producers, who are also big users of diesel equipment and are also frequently accused of receiving this “subsidy”.
I am against any and all subsidies to mining of fossil fuels, but let’s get it right.