Crossbench MPs eye tax credit overhaul on major miners (3 Nov 2024)
Article summary: Crossbench MPs, led by Western Australian teal independent Kate Chaney, are campaigning to reform Australia’s diesel fuel tax credit system, particularly for large mining companies. The diesel fuel tax credit, which offsets fuel excise for vehicles operating on private roads such as mine sites, has come under scrutiny for its role in subsidising the mining industry without supporting decarbonisation.
Chaney and her crossbench allies, including Allegra Spender and Senator David Pocock, argue that the current system hinders climate goals by encouraging continued diesel usage among major miners, who collectively claimed around $2.3 billion in credits in 2020–2021.
Chaney’s proposal seeks to condition these credits on demonstrable decarbonisation efforts, asserting that tax incentives should not impede Australia’s transition to a lower-carbon economy. Her suggested reforms would preserve the credits for farmers and smaller entities, with only large miners who claim over $50 million in credits being affected. Spender and Pocock support this approach, citing the possibility of advancing such reforms if independents hold the balance of power in a minority government scenario following the upcoming election, due by May 2025.
Although Chaney’s stance has garnered notable support, it faces significant opposition. Federal Resources Minister Madeleine King insists the rebate is vital for both farmers and miners using private roads, dismissing calls for change. The Chamber of Minerals and Energy of Western Australia, representing major companies such as Rio Tinto and BHP, also opposes altering the tax system, arguing it could weaken the economy. However, Fortescue Metals Group, a key player in the mining sector, has broken ranks by supporting a shift in the tax credit policy to favour emissions reduction, positioning itself in contrast to the industry majority.
Tania Constable, CEO of the Minerals Council of Australia, contends that effective emission reduction mechanisms already exist and that revising the tax credit structure would not enhance sustainability efforts. Meanwhile, crossbench MP Zali Steggall echoes her colleagues’ concerns, asserting that miners should not receive credits at all, even if tied to decarbonisation, as a stronger stance on incentivising emissions reduction within the sector.
This policy debate underscores a broader shift among independent MPs, who are increasingly pressing for legislative reforms aligning tax incentives with climate objectives. Their influence may grow if a minority government arises, potentially enabling these independents to shape the policy agenda more assertively. Chaney’s ongoing discussions with stakeholders and Fortescue’s recent advocacy mark a pivotal moment, signalling possible divides within the resources industry on environmental responsibility and financial accountability.
Related article: Teals, Greens fume over Labor gas move (10 May 2024)
