The Association of Mining and Exploration Companies (AMEC) contests the new campaign calling on the federal government’s Diesel Fuel Tax Credit Scheme for abolishment.
The Labor Environment Action Network recently launched a campaign to overhaul the mining fuel tax credits. An independent analysis of the fuel tax credit scheme shows major miners receive large sums of taxpayer money, including mining giant BHP (ASX:BHP) with some $627 million per year and Rio Tinto (ASX:RIO) with about $416 million, as reported by Mining.com.au.
AMEC is echoing the sentiments of the Minerals Council of Australia (MCA), which is also fighting for the fuel tax credit – considered critical to regional businesses reliant on diesel including the minerals and resources industry, as reported.
AMEC Chief Executive Warren Pearce believes the scheme is essential for exploration and mining operations, stating the removal of the scheme will weaken competitiveness and productivity for the mining industry.
Pearce says the scheme should not be viewed as an effective tool to fix holes in the budget.
“Diesel excise is collected from public road users, including industry, to support the repair and maintenance of the public road network,” he says.
“Industries that use diesel, but not on public roads, pay the excise but receive it back through the Diesel Fuel Tax Credit Scheme.
“The mining industry uses diesel, on private roads on private mine sites, that it builds and maintains. Meanwhile, the drilling and exploration industry uses diesel to explore and drill for minerals. Not to mention the agricultural sector that uses diesel to seed and harvest crops.”
Australia’s fuel tax credit scheme reduces business costs for offroad activities such as mining and farming. This provides businesses with credit for the excise included in the price of fuel used in machinery, plant equipment, and heavy vehicles.
The company says this is not the way to make alternative fuel sources more competitive, in fact quite the opposite.
AMEC agrees the range of recommendations to incentivise and encourage the development and use of alternative fuels requires investigation. However, implementing an unjustified new charge on industries is the wrong approach.
Fuel tax expert and member representative and Director at privately held Axum, Darryl Daisey, says the mining industry constantly innovates and adopts new technologies.
“But the reality is, we operate in some of the most remote and extreme environments on the planet, with established diesel infrastructure,” he says.
The company comments there are currently no cost effective comparatives and little to none other available options. As technology advances, AMEC anticipates the opportunity for cost competitive alternatives.
“Removing or capping the Fuel Tax Credit on diesel for the mining industry would raise costs, increase inflation, weaken competitiveness and productivity, and hurt jobs,” Pearce adds.
The MCA says fuel taxes are supposed to pay for roads, so when trucks and cars use public roads, they pay fuel excise to help cover maintenance. Yet miners, farmers, fishers, tourism operators, and businesses using fuel off-road do not use public roads, so should not pay a road tax.
Fuel tax credits provide businesses with a credit for the fuel tax (excise or customs duty) that’s included in the price of fuel used in:
- machinery
- plant
- equipment
- heavy vehicles
- light vehicles travelling off public roads or on private roads.
The amount depends on when fuel is obtained, what fuel is used and the activity it is used in. Fuel tax credits rates also change regularly. Some fuels and activities are not eligible including fuel you use in light vehicles of 4.5 tonnes gross vehicle mass (GVM) or less, travelling on public roads, according to the Australian Taxation Office.
AMEC represents over 500 companies as an industry association from all over Australia.
Mining.com.au is an associate member of AMEC.
Write to Paige Furner at Mining.com.au
Images: AMEC
