Unfair Fuel | Environment Victoria

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Help us cap the diesel rebate in the federal budget


What is the diesel rebate? 

The diesel rebate, more formally known as the Fuel Tax Credit Scheme, gives most industries 38 cents back for every litre of diesel they use. The money they get back is the diesel excise, which is what you pay at a petrol station if you run a diesel car.

Essentially, the Federal Government is letting them get away with not paying tax on fuel, which you and I have to do. This rebate adds up to almost $7 billion per year.

The scheme is used by mining companies, farmers, transport companies, boat operators … pretty much any business that uses a diesel engine. Mining companies take the biggest chunk of the subsidy at $2.5 billion each year. Many of these companies already have billion-dollar profit margins, yet they’re still getting hundreds of millions of taxpayer dollars each year so they can have cheap fuel.

We think that’s not fair, which is why we’re campaigning for the diesel rebate to be capped.

For more information about the diesel rebate, read the questions and answers below.


What does the diesel subsidy mean for the environment?

$7 billion dollars of subsidy covers about 18 billion litres of diesel every year.

18 billion litres of diesel produces about 50 million tonnes of CO2 pollution.

That’s 8 percent of all of Australia’s greenhouse gas emissions – and we’re subsidising it!

Not only that, but almost $1 billion of the diesel rebate goes to coal mining companies – which burn this diesel to dig up coal, which is then also burnt, releasing even more carbon dioxide, the major contributor to climate change.


Why is this fuel subsidy ‘unfair’?

Every dollar spent subsidising polluting diesel is a dollar not spent on more worthy things.

The Abbott Government has cut back spending from unemployment benefits, schools, hospitals, renewable energy programs, the ABC and SBS, foreign aid … but not this diesel rebate that gives rich mining companies cheap fuel. Does that sound fair to you?

For context, Rio Tinto and BHP Billiton both have annual profits of around $9 billion. Why should our tax dollars be used to subsidise companies with such stratospheric corporate profits?

Back in 2012, the Minerals Council slammed the idea of cutting the diesel rebate because the industry was about to be hit with a mining tax and a carbon price. Neither of those exist anymore, and yet mining companies are still getting cheap fuel.

A survey early in March found 67 percent of Australians think miners don’t pay enough tax. And 74 percent of people said large multinationals don’t pay enough tax. Cutting back the diesel rebate is a way of fixing that and freeing up money in the budget for more worthy recipients, all while reducing our carbon pollution.


What can we do about it?

We’re not saying scrap the scheme altogether. That would hit deserving sectors like small farmers who, after all, are growing our food.

We’re saying there should be a limit on how much a given company can get in diesel rebates in a single year. With a cap of $100,000, for example, farmers and many other industries would be unaffected. The only losers from a cap like that would be big, profitable mining companies.


Answers to common myths

1. But the diesel excise is used to pay for roads construction, and mining companies and farmers don’t use public roads much, and that’s why they get the diesel rebate.

Wrong. Back in the day, when the excise was first introduced, there was a direct link: all money raised from the excise was used to pay for new roads. But since 1959 there has been absolutely no link between the two: the money raised from the diesel excise helps fund schools, hospitals and a range of other things. By giving big mining companies the rebate, we’re choosing to boost their profits at the expense of everyone else in the country.


2. The diesel rebate isn’t a ‘subsidy’.

Wrong. That’s what the mining industry likes to say, but the World Trade Organisation disagrees. The WTO says that if the government doesn’t collect a revenue that is otherwise due, such as through tax credits, then that is a subsidy. And that is exactly the case with the diesel rebate.

© 2015 Environment Victoria