Diesel underpins the operation of some of Australia’s most important sectors, including mining, agriculture, forestry, regional tourism, construction, transport and manufacturing.

Many of these sectors are based, or have large investments, in rural, regional and remote Australia. Fuel is a vital input for a range of businesses in these sectors. Diesel is used off-road in vehicles, generators for power supply and in heavy equipment.

The Fuel Tax Credits Scheme ensures these businesses are not disadvantaged by paying excise on the off-road use of diesel in the production of goods and services.

Beyond industrial use, diesel is also used for emergency services vehicles, regional tourism infrastructure and domestic household power generation.

Fuel tax credits are not a subsidy for fuel use, but a mechanism to reduce or remove the incidence of excise or duty levied on the fuel used by business off road or in heavy on-road vehicles.

The Fuel Tax Act 2006 automatically operates to offset the government’s excise for off-road use of fuel by businesses and non-transport uses of fuel such as electricity generation.

It should be remembered that energy access is restricted in the regions.

Generators of off-grid electricity are located from the north east of Queensland to the Pilbara in Western Australia and from Darwin in the Northern Territory to King Island in Tasmania.

Any move to reduce fuel tax credits would introduce a tax distortion by imposing a tax on industries that are reliant on diesel fuel to generate power and operate heavy machinery.

It would also create financial hardship for some of Australia’s most remote communities.

 

OFF-GRID AND SMALL GRID ELECTRICITY GENERATION, AUSTRALIA

Bureau of Resources and Energy Economics, 2013. Source: ACIL Allen 2013

Losing fuel tax credits would cripple our town. We depend on diesel for everything.

Rick BrittonGrazier, Queensland

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We are one of the most remote mine sites in Australia. All on-site power is diesel driven.

Jarrod RileyManager Sustainability and External Relations
Newmont Tanami Operations, Northern Territory

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