Since word got out that the government was considering cutting back on the $2 billion handout to resource companies known as the Fuel Tax Credit scheme, there has been the normal outburst of complaint from the industry’s lobbyists. 

I mean, we don't give them enough as it is… Picture: Damian Shaw

In last week’s Financial Review, it was Australian Petroleum Production & Exploration Association’s turn to insist that any cutbacks to this boondoggle would result in risk to “billions of dollars in investment in oil and gas development”. 

If this sounds familiar, it’s because you’ve definitely heard it before.

When faced with the original mining tax, the Minerals Council claimed it would drive miners to other countries to dig up minerals, creating the now-mythical “sovereign risk”. Similarly, groups like the Business Council claim a price on pollution will eviscerate the economy, driving businesses broke and “exposed” industries offshore. 

The same, tired, argument was wheeled out last week when some of the country’s most profitable companies were asked to contribute a little bit to the global effort to cut down our use of fossil fuels. 

It was inevitable that at some point Australians would stop listening, and it appears that that time is now. What is the difference this time?

While the mining tax and the price on pollution were changes for business to adjust to, this is the government considering spending taxpayer dollars in a better way. The bleating of vested interests resonates with the public less when they consider where their money is being spent.

The Fuel Tax Credits scheme is an annual gift of taxpayer dollars of which $2 billion - $173 for every man, woman and child - finds its way into mining companies’ coffers. Originally intended to help Australian exports, it is now a nifty tax write-off for hyper-profitable companies that delivers no discernible economic benefit.

It’s not overcoming a market failure, rather it’s creating one by distorting investment towards higher fuel using technologies at the cost of more efficient alternatives. 

It is simply a donation of public money to an industry that is in no need of charity. 

Let’s be clear about what the fuel tax credits really mean.  It means if you are a hard-working commuter in Sydney’s western suburbs or Melbourne’s south-eastern growth corridor, with little or no access to reliable public transport, you pay 38 cents per litre in tax on the petrol you need to get to work. 

But if you are the world’s wealthiest mining company you pay virtually no tax for the diesel you use in your operations to dig up, refine and export Australia’s non-renewable mineral resources. 

With $450 billion in resource project investments in the pipeline across Australia, it is disingenuous for industry lobbyists to claim that unwinding this annual handout would be the tipping point that sends resources companies packing their bags. 

Considering that this is supposedly the third policy decision that will send the entire resources industry fleeing to Buenos Aires, it is understandable that Australians have begun to take their predictions of mass exodus with a hefty helping of salt.

It also may be because the lobbyists are getting lazy. 

APPEA offers no demonstration of “growing domestic and international concern”. 

It simply asserts it. Trust us. You have before. You will again. 

At the same time as claiming the scrapping of the Fuel Tax Credit handout would risk billions of dollars of investment the peak body has the gall to say the sector is “critical and growing”. Again, curious readers could be forgiven for wondering why these members of such a vital and robust industry were considering emigrating. 

The fuel tax break isn’t the only handout these companies enjoy. ACF estimates that accelerated depreciation for oil and gas is on its way to becoming a $2 billion annual imposition on taxpayers due to the explosion in investment.

One of the core pillars of good tax policy is equity, and these, among other tax breaks for the resources sector, fly in the face of this notion.

This is not simply the position of an environmentalist, dismissing handouts to Australia’s biggest polluters out of hand. These are bad policies, pure and simple. 

The Australian public has given miners, resources companies and their representative bodies a fair hearing. But when the same failed argument raises its head for the third time, and it involves a direct infusion of wasted taxpayer money? That’s where the line is drawn. 

Taxpayers who can’t see the sense in continuing to help pay for fuel for multinational mining giants are smarter than that.

Most commented


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    • acotrel says:

      06:49am | 12/04/12

      Another failure of the religion of trade based globalism ?  If the free market is so good, why does it require so much intervention ?

    • marley says:

      09:21am | 12/04/12

      @acotrel - you do understand that the point of this is to eliminate a tax, not provide a subsidy?

    • don says:

      09:26am | 12/04/12

      It is past high time that the petrol companies are stopped from getting higher and more and more profits .

      These sods say they are doing it ‘for the share holders’ . Wow . How about the greed of management wages ?

    • Emmy says:

      06:51am | 12/04/12

      100? mining bosses who vote, 12million? citizens who vote. It’s a no brainer.

    • Peter says:

      07:04am | 12/04/12

      Finally - the big miners and polluters might actually start having to contribute.
      What next? Lowy, Packer, scumbag lawyers and all the other family trust beneficiaries might actually have to pay some personal tax?
      Bring on tax reform. Best thing that Labor might leave us with before the LNP wrecks everything for the little people again.

    • SteveKAG says:

      07:16am | 12/04/12

      “This is not simply the position of an environmentalist, dismissing handouts to Australia’s biggest polluters out of hand. These are bad policies, pure and simple.”

      No this is simply the position of an environmentalist dismissing handouts to some of Australia’s biggest INVESTERS.

      So another story by an environmentalist, talking about the big bad miners leading up to the implementation of the most hated tax we will have…............What other channels are there?

    • Peter says:

      09:02am | 12/04/12

      @SteveKAG - Obviously we need to tax the big boys more because not enough is going towards education.
      INVESTERS. It was nice that you capitalised your ignorance.
      LNP will not invest one iota in education, or hospitals, or welfare, etc etc. The money will stay in the pockets of the big boys because heaven help if we ever tried to make them pay their fair share. I am sick of whining Piggy Forrest, Clueless Palmer and Ingenuous Rinehart being given a soapbox by our pathetic media.
      Most hated tax - that would be stamp duty on property transfers.

    • SteveKAG says:

      09:51am | 12/04/12

      Peter it shows how clueless the loonie left and extreme marxist green brigade really are…........

      Just in case you have not noticed the most hated tax is the carbon tax and it has not even kicked in yet….......but you keep sterotyping the conservatives as careless, thoughtless and devoid of any moral compass…....... you have just demostrated pure lazy thinking, the left would not have an original idea if they tripped over one.

    • Craig of North Brisbane says:

      02:11pm | 12/04/12

      “Investors”, my good man.

      If you can’t do business without receiving a handout from the public purse, you should not be doing business.  Period.

    • Dean says:

      07:35am | 12/04/12

      Government should not be helping the petrol companies or any companies out at all. also @acotrel the government doesn’t have to intervene but they do it anyway to make themselves look good and corporations look bad.

    • SteveKAG says:

      08:00am | 12/04/12

      Dean - how can private companies make the investment nessecary if they do not have public money to assist in this process?

      Private investment is driven by profit, public investment is driven by the public good…........we have public investment to assist the steering privateers direction.  This way everyone in the end wins.

      I agree with the last part of your statement by the way

    • Charles says:

      07:50am | 12/04/12

      To suggest that taxing the expenses that go into business or wealth creation wouold have to be the dumbest idea ever thought up of.  If you want to spend $300K to build a house to rent it to someone, and you get taxed on the $300K you spend would you be likely to spend it?  Not likely!!

      If you have no idea on how economies work, or how the normal laws of supply and demand function,  then perhaps best if you don’t parade your ignorance on the net in such a blissfully unaware manner.

    • SteveKAG says:

      08:36am | 12/04/12

      love your work Charles

    • Gomez12 says:

      09:51am | 12/04/12

      “If you have no idea on how economies work, or how the normal laws of supply and demand function,  then perhaps best if you don’t parade your ignorance on the net in such a blissfully unaware manner”

      Physician, heal thyself….

    • jimmy of Melbourne says:

      01:38pm | 12/04/12

      Charles - what planet are you on? The point is that companies that are already making a massive profit are getting more handouts from the government that ordinary citizens. The author is an economist, with the qualifications to prove it. What about you? Just a serial online slagger? I thought so.

    • subotic says:

      08:08am | 12/04/12

      Handing over my firstborn child even as we speak….

    • SpiralDown says:

      08:29am | 12/04/12

      It is because of the carbon tax stoopid!

    • TheRealDave says:

      08:43am | 12/04/12

      I wish to invest 10 million dollars in a new startup industry…but only if the government gives me back my 10 million if the idea fails…..

      so business as usual then??


      08:46am | 12/04/12

      Why doesn;t Wayne Goose, Penny Wrong and Juliar Gillard display some guts and impose a “OBSCENE PROFITS TAX” on the blood sucking banking industry?


      08:46am | 12/04/12

      Why doesn;t Wayne Goose, Penny Wrong and Juliar Gillard display some guts and impose a “OBSCENE PROFITS TAX” on the blood sucking banking industry?

    • Peter says:

      09:03am | 12/04/12

      So you are anti-Labour.
      Do you think Abbott and co will do anything about these “obscene” profits?
      I am at a loss to understand what your rant is about.

    • JD says:

      11:42am | 12/04/12

      Surely ‘Wayne Swine’ would be a better pun than ‘Wayne Goose’?

    • Fiddler says:

      08:51am | 12/04/12

      so how is this about the petrol companies receiving charity? The article is all about the mining companies not paying tax on their fuel purchases, which has nothing to do with profits made by fuel suppliers.

    • Justin of Earlwood says:

      09:53am | 12/04/12

      They get the credit for use of fuel in vehicles that don’t use public roads. It makes perfect sense that if you’re not contributing to the wear & tear of roads, you shouldn’t be paying a levy on your fuel for road maintenance.

      To argue (poorly) that it’s simply a handout is not an over-simplification, it’s purely wrong.

      But don’t let the facts get in the way.

    • Gomez12 says:

      10:23am | 12/04/12

      So, since about 80% of the fuel levy goes to general revenue and not roads maintenance, I should also not be paying the majority of the levy?

      Please, direct me to the form to arrange my tax-credits.

    • Justin of Earlwood says:

      12:03pm | 12/04/12

      The key word is “about”.

      If the government legislated the percentage (or number of cents per litre) that went to the roads/transport budget, they could reduce the credit to that amount. They won’t, as they’re using the flexibility as a mechanism to balance the books.

      Like most tax policy, it was introduced for a specific role & then bastardised. If more of our specific taxes had defined uses it would make for better government as they couldn’t fiddle the revenue for pork barrelling.

      No single element in the taxation web can be taken in isolation when there are so many add-ons to correct issues.

    • daf says:

      01:51pm | 12/04/12

      I support the entire mining/resources industry de-camping to Buenos Aires.  Let ‘em destroy someplace else - and see if they receive any FTCs there.

    • Jim says:

      03:05pm | 12/04/12

      Yeah good call daf….though you forgot the ‘t’ on the end of your name.

      Last year there was $12bn worth of coal exported from NSW alone, at the same time we imported $10.5bn worth of fuel into NSW. Won’t take much to tip the balance…damn, your useless arts degree may have its funding cut!

      Coal also pumped billions into the economy.

      Have fun waving bye bye to them, I’ll be trying to find a way to pay for things once they’re gone.

    • marley says:

      03:17pm | 12/04/12

      Let them decamp to Canada.  We can use the money.  Man does not live by pemmican alone. Sometimes, being able to pay for a steak is nice.


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