Federal Ministers have reiterated their backing for Australia’s long-standing fuel tax credit scheme, amid renewed political and policy debate over its future ahead of the upcoming Federal Budget.
The fuel tax credit, which provides refunds on fuel excise for businesses that use fuel off public roads, has become a focal point in pre-budget discussions, with some critics describing it as an outdated subsidy.
Industry leaders, however, warn that removing or reducing the credit would deliver a severe blow to regional economies.
Tania Constable, Chief Executive Officer of the Minerals Council of Australia (MCA), said the credit is fundamental to maintaining competitiveness across sectors such as mining, agriculture, fisheries, and tourism — industries that often operate in remote areas and depend heavily on diesel.
Constable explained that fuel excise funds road maintenance, meaning that businesses using fuel off-road should not be subject to what is effectively a road tax.
The fuel tax credit, she said, corrects this imbalance by refunding excise paid on fuel that isn’t used on public roads.
She noted that the scheme is not a subsidy, pushing back on claims to the contrary.
She stated that a subsidy would mean the government is providing money directly, adding that the credit simply ensures businesses are not charged a tax they do not owe.
Treasury itself has previously clarified that fuel tax credits are not a subsidy, but a mechanism to remove an unfair tax on off-road users, according to a submission the department made to the G20 Energy Experts Group.
Constable thanked senior Federal Ministers for reaffirming their commitment to retaining the credit, describing their stance as vital support for regional businesses and workers.
She cautioned that if the scheme were scrapped, many remote communities could face significant financial strain, leading to higher prices, job losses, and reduced commercial activity nationwide.
Constable said industry groups would continue to advocate strongly for the policy, calling recent attacks on the credit “ill-informed” and warning that undermining it would amount to targeting regional jobs and livelihoods at a time when cost pressures are already high.
