A campaign within the Australian Labor Party to reform or eliminate fossil fuel tax credits could lead to increased costs for businesses and potentially higher household bills, according to industry groups. The Labor Environment Action Network (LEAN), a faction within the party, has been pushing for policies that align with Australia's net-zero emission goals, including changes to taxation.
Delegates at the party's national conference recently backed an amendment from LEAN that calls for all policies, including taxation, to support the nation's transition to net zero. The focus of the debate has been the Fuel Tax Credits system, which provides refunds on excise taxes for diesel used by industries such as agriculture, construction, mining, fishing, forestry, and tourism when operating away from public roads. Critics argue that scrapping or capping these credits would increase production costs.
Jerome Laxale, a Labor MP who supported the amendment, stated that taxation policy is a key lever for driving emissions reductions. LEAN's broader campaign proposes capping diesel fuel rebate claims at $50 million per company and redirecting the savings into a decarbonisation fund. On its website, LEAN argues this approach would close a loophole that "rewards pollution" and channel billions into clean energy solutions, accelerating investment and aligning policy with emissions reduction goals.
Although the conference did not endorse direct changes to the Fuel Tax Credits system, industry groups have expressed concern that the proposal's prominence indicates the issue is unlikely to be resolved soon. The Fuel Tax Credit Alliance, representing bodies like the National Farmers' Federation, Master Builders Australia, and the Minerals Council of Australia, acknowledged the conference outcome but cautioned against future attempts to alter the concessions. They view Fuel Tax Credits not as a subsidy, but as a mechanism to ensure businesses operating off public roads are not taxed for road infrastructure they do not use.
Industry leaders argue that capping or removing these credits would impose higher costs on regional and trade-exposed industries, ultimately increasing the cost of living for all Australians. Tania Constable, chief executive of the Minerals Council, stated that higher costs would threaten the survival of industries. Michael Guerin, chief executive of the National Farmers' Federation, described the rebate as reflecting a principle of tax fairness for vehicles not used on public roads. Denita Wawn, chief executive of Master Builders Australia, warned that any reduction in the credit would flow through supply chains and increase the cost of new homes.