By Leith van Onselen

In all the talk about tackling corporate welfare, tax concessions granted to Australian companies are yet to gain much attention from the Government, despite their significant cost to the Australian Budget.

One of the largest tax concessions is the diesel fuel rebate, which allows eligible companies to claim a reduced rate of excise for fuels. The rebate costs the Budget around $6 billion annually, with the lion’s share of concessions – around $2.3 billion – going to the mining industry (see next chart).

Some may argue that granting diesel rebates to miners is justified, since they operate off-road and are not adding to wear and tear. While somewhat valid, fuel excise has never been about cost recovery, with the Federal Government collecting roughly three times more in excise than it spends on roads. So in effect, while most Australians are paying full price for their fuel at the pump, the mining industry is getting a free ride – at least in part.

Even the national president of the Mining Union, Tony Maher, agrees that the mining companies are being subsidised, claiming that public funds are being squandered:

I’m pro-mining to my core. But a mining sector that grows too fast causes social and economic problems that will cause damage for decades to come, if we let it. … Down the track, it would also make sense to look again at tax and whether we are getting a fair return from mining company profits. Ditto, subsidies. Does it really make sense for taxpayers to be funding a rebate on diesel fuel for the mining industry at a cost of $2 billion a year?

The continuation of diesel rebates is at odds for a Government that has taken a hard line on subsidies, corporate welfare and the end of the age of entitlement.

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