The Australian government is facing growing calls to scrap or reduce its fuel tax credits scheme, which is set to cost taxpayers £5.4bn (A$10.8bn) this financial year. The policy, which refunds fuel excise to miners, farmers, and other industries using diesel and petrol, amounts to nearly £15m (A$30m) a day, or £10,250 (A$20,500) a minute.
Critics argue the scheme is a costly fossil fuel subsidy that undermines climate goals. The fuel excise, currently 52.6 Australian cents per litre, is paid by most motorists but refunded to businesses using fuel off public roads or for heavy vehicles. Supporters claim the excise funds roads, but only about 5% of revenue is legally earmarked for that purpose, with the rest going into general government funds.
The Climate Change Authority chair, Matt Kean, described the rebate as 'insane', suggesting the money could instead help consumers switch to renewable energy and electric vehicles. The OECD has also called for the exemptions to be reduced or eliminated, listing the policy as government support for fossil fuels.
The scheme also conflicts with the safeguard mechanism, which requires major polluters to cut emissions or buy offsets. As Australia aims for a 62% emissions cut by 2035 and net zero by 2050, stripping away such incentives for pollution is seen as a necessary step.
