Nicolette Boele (Bradfield, Independent) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that:

(a) under the Fuel Tax Credits (FTC) scheme introduced in 2006, Australian consumers can claim a tax credit for certain fossil fuels used in machinery, and for certain heavy and off-road vehicles;

(b) the FTC scheme cost the Australian taxpayer $10.8 billion in 2025-26;

(c) by 2028-29, the cost of the FTC scheme is forecast to reach $13.1 billion federally, at a rate of growth higher than growth in spending on a range of social services, including disability assistance, childcare subsidies and aged care;

(d) the Government has a legislated target of achieving net zero emissions by 2050;

(e) the Department of the Treasury's 2025 modelling shows that current government emissions reductions policies are insufficient for achieving that target;

(f) Australia's economy continues to be subject to geopolitical shocks which impact the availability and cost of fuel; and

(g) the FTC scheme is one of the largest headwinds for the Australian economy to electrify, a critical aim for meeting both our net zero emissions targets and supporting Australia's energy independence and therefore national security; and

(2) calls on the Government to:

(a) undertake an orderly phase-out of the FTC scheme; and

(b) consider, for that purpose, the introduction of a transition tax incentive with the following elements:

(i) a cap of $50 million annually, per consolidated corporate entity, to the FTC scheme (so that it will not apply to small users of the FTC scheme, such as farmers and small businesses); and

(ii) permit receipts by consolidated corporate entities above $50 million to be retained for capital expenditure in eligible electrification infrastructure and technology investments and to enable an orderly phase-out of fuels eligible for the FTC scheme.

The cost of living is hurting people across my electorate and the entire country. So wouldn't many of those hardworking Australians be outraged to learn that last year, while they were struggling to get by, the government was handing out billions upon billions of dollars in fossil fuel subsidies. In the last financial year, the government dealt out almost $11 billion under the Fuel Tax Credit Scheme, which is Australia's largest fossil fuel subsidy. This outdated subsidy is predicted to get even bigger, reaching $13 billion by the end of the decade.

Who's paying for these enormous tax breaks? You are; the taxpayer. This scheme is aimed at helping relieve the cost of businesses using petrol and diesel in certain applications in the economy—including miners, who use a lot of diesel on mine sites in machinery and to move materials between mine and port. And transport companies running heavy vehicles over 4.5 gvm are also potentially eligible for the handout.

Before I go on, I want to make something very clear. I am in no means proposing that we take away that support, especially now with fuel prices skyrocketing. What I'm proposing instead—and I'll explain the details very shortly—is that we stop giving mining companies, including polluting coal and gas companies, tax breaks that do nothing to sustain their risky reliance on imported liquid fuels. The mining industry receives the lion's share of the fuel tax credits. In financial year 2024 alone, it received almost $5 billion under the scheme, and the total amount received by the mining industry since the scheme began in 2007 is an almost unimaginably large $57.5 billion.

Subsidising mining companies like this doesn't seem to make a lot of sense from any angle. Firstly, and most obviously, these companies are doing quite well without it. They don't need our help. They're some of the most profitable companies in the world, and it makes no sense to artificially widen their margins at the expense of other high-value public investments like health care and education. On top of the subsidies these companies receive, we don't tax them heavily, especially our gas industry. So that's a double whammy: handouts in the form of subsidies which keep them addicted to dirty fossil fuels and low tax rates charged.

Secondly, by incentivising diesel use, the scheme locks us into continued dependence on imported fuels. The more we need diesel, the more vulnerable we become to global price shocks. And the last few weeks have shown us just how painful those shocks can be.

Thirdly, all that money could be spent better. Think about all the things that the government tells us are too hard to fund, too expensive and too impractical—from cheaper health care to more and better paid teachers and nurses; free university degrees; better funded public schools; more energy relief, especially for those who can't access solar, for example, in strata; and more funds for Australian creatives like musicians, actors and writers. The options are practically endless, and, while we can't pay for them all, we could certainly afford more if we spent less on fossil fuel subsidies.

How do we do it without hurting farmers and small businesses? Well, our friends at Climate Energy Finance have come up with an excellent proposal for phasing out the fuel tax credits, and that is to cap the scheme at $50 million per business. Most farmers would stay well below that cap. The only ones affected would be the small number of large mining companies currently benefiting from the scheme. These include coal companies like BHP, Glencore and Yancoal. In the 2024 financial year, BHP received over $600 million in fuel tax credits and made a profit of over $10 billion.

The motion I've put forward today calls on the government to implement this simple but powerful reform. And, to make the proposal even more palatable, companies would be allowed to keep receiving credits over the $50 million but only if they use that extra money to invest in assets and systems that deliver the shift for businesses and their supply chains to electrify and to decarbonise—things like electric trucks, electric machinery and renewable energy infrastructure. These are great ideas to futureproof their businesses in the mining sector, insulate against fuel shocks and address climate change.

To be clear, no-one is worse off from this initiative. This is sensible, smart reform—smart for the budget, for reducing cost of living, for improving energy security and for cutting emissions. The fuel tax credit scheme must be reformed. Every day that the government continues to hand out these tax breaks, it's irresponsible and, quite frankly, it's disrespectful. It's disrespectful to all those Australians struggling each and every day—struggling at the checkout counter, struggling at the bowser— (Time expired)

Mary Aldred (Monash, Liberal Party) Share this | Link to this | Hansard source

Is there a seconder for the motion?

Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Julie-Ann Campbell (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

They say that economics is about choices, and right now Australians are staring down the barrel of some pretty challenging choices—choices that no-one should have to make. Australians are hurting when it comes to the bowser, they're hurting when it comes to the checkout and they're hurting when they go to pay their bills. Cost of living is the No. 1 issue in this country. It's the No. 1 thing on people's minds every single day, and this is a government that chooses to focus on cost-of-living relief all the time. It's a government that has its eye firmly fixed on ensuring that everything we do is focused on giving the Australian people the relief that they need at a challenging time.

I think it's worth looking at what choices can be made on this side of the chamber and on that side of the chamber, because, while the Albanese Labor government has chosen to make sure that our fuel reserves are here in this country, in Australia—in Brisbane and in Victoria—the opposition chose to send those fuel reserves overseas, over to the other side of the world, on a different continent. While the opposition were in power, they closed down urea facilities. They chose to do that, and this government has chosen to invest in opening a new one. When the opposition were in government, they oversaw the closure of four out of six refineries, and the Labor government is now working to ensure that we underwrite international fuel purchases.

We've passed legislation to double penalties for petrol companies for price gouging to $100 million. We've released 20 per cent of Australia's fuel reserves, targeted at the regions where people need that fuel the most. We've temporarily changed petrol and diesel standards to get more supply into the market so that we can ease prices, and we've been engaging with international partners to keep that supply flowing. We've appointed the National Fuel Supply Taskforce Coordinator, Anthea Harris, and that role is to coordinate the federal government and states and territories on security and the supply chain, to update it on supply outlook and distribution, and to support state and territory governments to get fuels to their regions.

This is an incredibly serious issue. It's an issue that Australians are feeling every day at their hip pockets, and this government has chosen to have a plan and to take action on that plan to ensure that, when it comes to fuel, we are driving more supply to try and give relief to families who need it most.

More recently, we have seen an amendment to the Export Finance and Insurance Corporation Act to enable the government to underwrite the purchase of new fuel from international markets by the private sector. Export Finance Australia will allow fuel suppliers to enter contracts of insurance or indemnity, to give guarantees, to make loans or to enter arrangements needed to help secure supply from those international markets. Commonwealth powers will only be used to help acquire additional supply for fuel security and where cost would be prohibitive for private suppliers to source on commercial terms without government support.

There is no doubt that fuel is impacting families. There is no doubt that fuel is impacting the movement of goods that Australians need. And there is no doubt that something needs to be done about it. That is why this Albanese Labor government is focused on getting fuel into the country, on keeping fuel in the country, on driving up supply and on cracking down on those who seek to take advantage of a difficult situation for so many. This Labor government is focused on making that a reality and taking action on that plan.

Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source

I'm here to talk about the diesel fuel tax credit scheme, which I think the previous member didn't actually mention in her speech. The diesel fuel tax credit scheme is increasingly hard to justify in its current form. This is a policy that affects farmers, miners, transport operators and small businesses but not evenly. There are two main problems with it. Firstly, it discourages decarbonisation. Secondly, when fuel supply is tight, it disproportionately benefits mining companies over farmers.

Firstly, on the decarbonisation problem, Australia now has a safeguard mechanism to encourage large emitters to reduce pollution but a diesel fuel tax credit to effectively subsidise pollution, and the incentive to keep polluting is much greater than the incentive to reduce pollution. Under the safeguard mechanism, there's an effective carbon cost of $30 to $40 a tonne, but the diesel fuel tax credit amounts to an effective subsidy of about $190 per tonne of carbon pollution from diesel use. That is more than five times the decarbonisation incentive created by the safeguard mechanism. So, for the very large diesel users, we have a weak incentive to decarbonise and a strong incentive not to. In one year, the diesel rebated under this scheme produced more emissions than the combined emissions from all of Australia's planes, buses and trains. That is extraordinary. The rest of us are working hard to do the right thing, but at the same time we're making it cheaper for big polluters to keep polluting than to decarbonise.

Right now, we're seeing another good reason to decarbonise. The war in Iran is demonstrating how exposed we are to volatile and concentrated global fossil fuel markets with geopolitical instability. If we were further on our way to decarbonisation, we would not be so exposed. Continuing to effectively subsidise diesel for mining companies delays investment in electrification and in cleaner alternatives that would strengthen energy security over the long term.

The second problem with the current fuel tax credit structure is that the scheme in its current form favours mining companies over farmers, truckers and small businesses when fuel supply is tight, like it is now. A small farmer cannot secure bulk contracts or hedge price risk or stockpile fuel in the same way a major mining company can. When supply tightens, farmers become price takers. Their ability to get diesel at all can depend on what's left.

The concentration of this scheme is extraordinary. In the most recent year of available data, just 15 mining and freight companies received almost $3 billion in diesel fuel tax credits. Those companies burned close to six billion litres of diesel in one year, and these 15 companies made up 25 per cent of total fuel tax credit claims. This is in a scheme with over 170,000 businesses buying diesel and claiming tax credits. So, while Australians are doing it tough at the bowser and copping huge prices, BHP is being given $600 million in taxpayers' funds for its use of diesel. Billions of dollars are going to some of the world's biggest companies while Aussies are doing it tough. With diesel supply chains tightening, this policy is actively shaping who gets access to fuel and at what price. Right now, that policy favours the biggest players in the market, and it does so at a time when farmers, truckers and everyday Australians who genuinely depend on diesel and often have no alternatives are under pressure.

This motion is not suggesting that we remove fuel tax credit support for farmers or small businesses. Many have no viable alternatives to diesel today. They should not be asked to carry the burden of reform, especially at a time like this. The proposal put forward by the member for Bradfield is modest and targeted. It places a cap on how much diesel fuel tax credit a single company can receive. Above that cap—$50 million—credits are still available but only if they're reinvested in reducing diesel use through electrification or other decarbonisation measures. This change would incentivise mining companies to reduce their reliance on a volatile international diesel market.

Decarbonising mining operations would make our economy more resilient to shocks like the Iran conflict. On last year's figures, this reform would affect only about 15 companies. Farmers, small businesses and most regional operators would not be affected. It would make the scheme fairer in a fuel constrained market, reduce pressure on diesel supply chains and bring tax settings into closer alignment with stated climate goals. This is about ensuring that scarce public resources aren't reinforcing outcomes that work against farmers, against resilience and against long-term competitiveness. I commend the motion to the Chamber.

Matt Burnell (Spence, Australian Labor Party) Share this | Link to this | Hansard source

I want to address this motion before us because, while it may be well intentioned, it risks missing the reality faced by communities like mine in the north. The fuel tax credit scheme is something that keeps trucks moving, farms operating and supply chains functioning across this country. It's worth explaining exactly what the fuel tax credit scheme is, because it is often misunderstood. The FTC allows businesses that use fuel off public roads—a very important piece—or in heavy vehicles and machinery to claim a credit for the fuel tax they pay. It applies to industries like agriculture, transport, mining and construction—sectors that quite literally keep our economy moving. Put simply, it is not a subsidy in the traditional sense; it is about ensuring these industries are not taxed twice for fuel use that does not rely on public roads. When we talk about fuel tax credits, we are also talking about the cost of getting food from paddock to plate, the cost of keeping construction sites running and the cost of ensuring regional Australia stays connected. If we get this wrong, Australians will feel it, not theoretically but at the checkout, at the bowser and in their power bills.

This motion suggests an orderly phase-out, but there is nothing orderly about pulling support out from under industries that rely on this scheme to operate day to day, especially in the situation that we find ourselves in nationwide, where, due to unforeseen global circumstances, petrol in some places is hovering around $2.50 a litre and diesel has peaked at above $3. To remove a scheme such as the fuel tax credits, would simply cripple businesses and mean we pay more to get food on our plate. The truth is electrification at scale is not yet a reality for many of these sectors. Heavy transport, agriculture and mining—these are not industries that can simply switch overnight. We all support the transition to net zero. That is not in dispute, but the path to net zero must be practical, it must be staged, and it must bring people with us not leave them behind.

To the drivers around Australia who still use fuel, we are providing greater fuel support for those that are doing it tough at the bowser right now. We have taken practical steps to protect Australians from unfair fuel price spikes, because, when global uncertainty hits, it should not be everyday Australians who wear the cost. That is why we have empowered the ACCC to crack down on unfair price rises, ensuring there are real consequences for companies that do the wrong thing by motorists. We have also acted to boost supply, releasing 20 per cent of the base line minimum stockholding obligation for petrol and diesel, getting more fuel into the system when it is needed most. At the same time, we have temporarily amended fuel standards—a sensible, targeted measure designed to increase supply and ease pressure on prices without compromising long-term standards. Importantly, we are working hand in hand with industry and with the states and territories to make sure that fuel is getting to the communities that rely on it most, particularly in regional Australia. For many communities, especially across places like mine in Spence, access to affordable fuel is not a luxury; it is essential to daily life.

We know there is more to do, and this government will continue to examine every practical option available to shield Australian households and businesses from the worst impacts of global volatility. That is why the Prime Minister brought together National Cabinet this morning—coordination matters and leadership matter in moments like this. This approach is consistent across the board. On tax, we reshaped the stage 3 tax cuts so that every taxpayer benefited not just those at the top end of town. That is not about ideology; that is about fairness and making sure relief reaches the people who need it most. On energy, we did not offer a promise decades into the future and walk away. We have set clear targets, we backed them with real investment, and we are getting on with the job of building the infrastructure needed. That is how you bring prices down over time—not through slogans but through action. It is about doing the work now, making the investments now and supporting Australians now.

Andrew Willcox (Dawson, Liberal National Party, Shadow Assistant Minister for Manufacturing and Sovereign Capability) Share this | Link to this | Hansard source

If you wanted to design a policy for deliberately sabotaging the Australian economy, bankrupting our farmers and paralysing our mining industry, you would look no further than this motion. We're currently standing in the middle of a national fuel emergency, yet here we are debating a motion that treats our most productive industries as if they are a problem to be phased out. What we're seeing here today is the height of illogical nonsense, a motion that places ideology above the wellbeing and prosperity of our nation.

The member's argument rests on a false premise that the fuel tax credit is a subsidy. Let me be crystal clear—it is not. It is a mechanism to ensure that businesses are not taxed for the road infrastructure they simply don't use. Isn't that fair enough? Why would you ask people who are not using the roads to pay for a tax on the roads? That is just nonsensical—a total false premise. The heavy machinery, the harvesters, the tractors and 400-tonne mine haul-out trucks that power our economy do not drive on our highways. To tax their fuel is like having a double tax on production, a move that would drive up the cost of every single thing that is grown, mined or made in this country.

Let us talk about the total fiscal lunacy of this motion. We're talking about the fuel tax credit here, an expense of $11 billion. The FTC is a vital lubricant for a $1.2 trillion industrial engine. To suggest we save $11 billion by handicapping the sectors that return over $60 billion in mining royalties alone is dangerously naive. Is anybody ever going to trip over a dollar to pick up a cent? Furthermore, the environmental logic behind this motion is nothing short of laughable. This motion suggests we will phase out these credits to meet net zero targets. Net zero is killing Australia. All we are doing is exporting our emissions along with our jobs and prosperity.

Right now, Australia is forced to have diesel refined overseas because the Albanese Labor government has made domestic production almost impossible. But here's the kicker: when we import fuel, we are adding to global emissions through massive shipping distances and processing in countries with far lower environmental standards than our own. This House is being asked to adopt a not-in-my-backyard attitude, pretending that as long as the smoke isn't coming out of an Australian chimney it doesn't count. It is hypocritical, nonsensical and a betrayal of the national interest.

If this Labor government really cared about the environment and our sovereign capability, we would be taking ownership of our own resources. We would be extracting, refining and using our own fuels. We should be encouraging our resource industry, not penalising it. In this motion, the member for Bradfield suggests a $50 million cap to protect small business, but this is a hollow gesture. In my electorate of Dawson, the large-scale mines of the neighbouring Bowen Basin are the engine room of our local economy. They provide jobs that support local grocery stores, our mechanics and our schools. When you penalise the big end of town in the resources sector, you're effectively cutting the throat of every small business that services them.

We're also told that this will force electrification. This may shock the teals, but you can't run a D11 dozer or a cane harvester on a battery. The nation's heavy industry runs on molecules not on electrons. To force a phase-out of fuel credits before there is a viable, affordable and proven technological alternative—that's not a transition; that is a shutdown. The net zero fantasy is a tax on the prosperity of every Australian. We need a system that reduces energy costs not one that bankrupts the nation to satisfy a city-centric agenda. We either are to be a sovereign power or an economic disaster. This motion, if supported, will be an economic disaster.

Zaneta Mascarenhas (Swan, Australian Labor Party) Share this | Link to this | Hansard source

The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.