Reckless Proposal threatens jobs in regional Australia
A reckless proposal to hike taxes on Australia’s most productive industries by cutting the Fuel Tax Credit would threaten jobs, slash investment, and drive up the cost of living for all Australians.
From higher grocery bills to more expensive building materials and transport costs, the impacts would reverberate across the economy and undermine the nation’s competitiveness at a critical time.
These proposals, set out in a report sponsored and co-authored by Fortescue and released through the Australian Academy of Technological Sciences and Engineering, are self-serving and misguided. Road taxes are for road users.
As confirmed by Treasury and the Productivity Commission, the Fuel Tax Credit is not a subsidy – it restores fairness by removing a tax that was never meant to apply. Fuel excise was designed to fund roads, not to penalise fuel used in machinery, boats, or equipment that never touch a public road.
Most concerning, cutting the Fuel Tax Credit would amount to a direct tax on regional Australia, hitting big and small businesses alike, while driving up the cost of essential products and services.
But the sponsored report recommendations to cut the Fuel Tax Credit will place an additional $4 billion tax on transport, piling yet more costs onto Australian households and businesses.
Any move to cap the Fuel Tax Credit and divert funds into decarbonisation subsidies would be the thin end of the wedge, opening the door to ongoing demands to lower the cap further. This kind of policy uncertainty would erode investment confidence and punish the very industries that keep Australia strong.
Calls for these changes are not about genuine decarbonisation, but about shifting costs and asking Australian taxpayers to subsidise corporate emissions reduction.
Australia already has a clear policy for large emitters to cut emissions through the Safeguard Mechanism. Using the tax system as a back-door climate policy is inappropriate and counterproductive, a point underscored by economist Chris Richardson, and the Henry Tax Review, which made clear that business inputs should not be taxed.
Meanwhile, Australian farmers, miners, seafood and tourism operators, and transport companies are already investing billions in cleaner technologies, from electrification to biofuels to battery innovation. These businesses recognise not only the importance of emissions reduction, but also the commercial imperative of cutting diesel use and developing viable alternatives.
Delays in technology readiness, however, remain a challenge. Mining companies are working with manufacturers on large-scale trials of electric and hydrogen-powered haul trucks, but widescale deployment is not yet possible. Likewise, farmers and transport and marine businesses are testing and deploying low-emission machinery, biofuels, and renewable energy solutions.
The commitment is clear – even if technology is still catching up, these industries are driving the innovation needed to deliver decarbonisation without disruption.
The FTC scheme does not, as the sponsored report suggests, encourage the use of fossil fuels.
All businesses have an incentive to minimise costs, including by limiting fuel usage.
Proposals to cut the Fuel Tax Credit would only increase costs, damage competitiveness, and hand an advantage to our global rivals. At a time of growing global trade and tariff uncertainty, this would be an own goal cheered loudly by Australia’s competitors.
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