Image: Shutterstock
THE diesel fuel rebate is emerging as a growing pressure point for the agricultural sector in 2026 following renewed public scrutiny of the scheme last year.
The diesel fuel rebate – officially known as the Fuel Tax Credits Scheme – refunds fuel excise paid on diesel used off-road. Mining is the largest recipient of the credits, accounting for about 50 percent of total payments, compared with around 15 percent for agriculture.
Farmers and miners have long made the point that the fuel excise was implemented to fund public roads, and because most farming and mining machinery operates on private land, the rebate is a correction to prevent businesses paying tax on inputs unrelated to road use.
The National Farmers Federation has stated that removing the scheme would significantly increase food production costs, damage regional economies and erode the global competitiveness of Australian farmers, many of whose international competitors do not face fuel taxes on off-road agricultural diesel.
Critics of the rebate – including some economists, climate groups, Teal independents and senior figures within government – are increasingly moving to reframe the rebate as a “fossil fuel subsidy” that encourages diesel consumption and hampers emissions reduction.
Rebate “insane”: Climate Change Authority chair
Public debate on the issue was reignited in October when Prime Minister Anthony Albanese government’s top climate advisor Matt Kean called for the Fuel Tax Credits Scheme to be scrapped and its funding to be redirected towards electrification technologies, rather than supporting what he has described as “legacy” industries.
Speaking at an Australian Financial Review event in Sydney last October, the Climate Change Authority chair said continuing “to provide the diesel fuel rebate to big mining companies and whatnot at the expense of helping Australian consumers benefit from electrification is insane”.
“Nature is not going to be fooled. The atmosphere counts the costs of emissions,” he said.
His comments followed the release of a mid-year report by Climate Energy Finance, a think tank focused on emissions reduction policies, which suggested the country’s biggest miners have banked almost $60 billion in diesel fuel tax subsidies in less than 20 years.
Independent senator David Pocock also weighed into the issue on social media last year, branding the diesel fuel rebate as a “subsidy”:
Australia’s biggest miners have pocketed almost $60BN in diesel tax subsidies in <20 years.
Unless we act, taxpayers lose $84BN more by 2030.
It makes no sense for 🇦🇺ns to pay tax while coal giants get a free pass.
End this fossil fuel subsidy now.https://t.co/a2GdsHTv6R
— David Pocock (@DavidPocock) August 19, 2025
“If you don’t use the road, you don’t pay the excise”
At an end-of-year livestock industry conference in Western Australia, mining industry leader David Parker identified the rebate as key pressure point for the the agricultural, resources sectors and remote and indigenous communities to be aware of in 2026.
Addressing the 2025 Livexchange conference in Perth in November, Mr Parker said the rebate was simply a refund of a tax that should never apply when fuel is used off-road.
WA Minerals Council of Australia executive director David Parker speaking at the 2025 LiveXchange conference in Perth.
“That’s a pretty fundamental, straightforward policy,” he said.
“If you don’t use the road, you don’t pay the excise.”
With a concerted campaign again underway to reposition the rebate as a subsidy, Mr Parker said it was critical for rural, regional and remote communities – including Indigenous communities – to remind policymakers how damaging the loss of the fuel tax credit would be.
“The cost of power would effectively double for operations reliant on diesel – mineral processing, remote power generation, the seafood industry, offshore vessels – the list goes on,” he said.
“Lighting the fuse on a multi-billion-dollar tax bomb”
In 2023, the NFF warned that proposals from the Grattan Institute to wind back the scheme would be economically disastrous, describing the idea as “lighting the fuse on a multi-billion-dollar tax bomb that would send a cost-of-living shockwave down the supply chain”.
“Imposing a road tax on vehicles that don’t use roads just doesn’t stack up,” then NFF president Fiona Simson said. “Tractors and boats don’t drive on roads, so they shouldn’t pay road tax. Should we also start paying tolls on toll roads we don’t drive on?”
Agree. Giving tax rebates to mining companies is crazy stuff. Same with farmers and graziers. If you need handouts from government get out of the industry.
The money does not go on our northern roads, it goes to city roads and to health care.
If a tax foregone is a subsidy, then income tax rebates are a subsidy to PAYG workers. In actual fact both income tax refunds AND diesel fuel taxes forgone are rebates and not subsidies.
only labor and the greens would want to destroy a Australia so badly 😢
who are these members of the community? it wouldn't be some bureaucratic Canberra Labor department scheming there next money grab to hide more budget blowouts. I may not be the most intelligent person but at least I have the guts to put my name behind what is say. absolute cop out to have an article written on behalf of anonymous people to fuel a hidden groups agenda. cheers Matthew Della Gola
<strong>Hi Matthew, you've got me a bit stumped on this one. The article directly references two of the people who have been speaking out against the diesel fuel rebate - Matt Kean and David Pocock - and the Climate report that brought the issue back into public discussion. I'm a bit perplexed by your comment that this is an "article written on behalf of anonymous people to fuel a hidden group's agenda". The article is admittedly a very belated update stemming from the LivexChange conference in Perth in November last year where a direct warning was made that a new campaign is emerging against the diesel fuel rebate and is likely to be an issue for the ag sector to be aware of in 2026. Cheers James </strong>
What a show!
I am sure there are plenty of families with stories like mine.
We have 3 major transmission lines, the easements were compulsory acquired and my parents got paid less than $800 for what would be worth around $4.2m today for the first 2. We didn’t get the benefit of mains power for more than 5 years afterwards, the issues during construction were many, they were meant to be comfortable with being told that there was a price to be paid for progress. Historic electrification would have been considerably more expensive without compulsory acquisition!
Fast forward to the 90’s when the Howard government with Senator Robert Hill as the lead negotiated an 11th hour agreement known as the Australia clause in the Kyoto agreement. Short changed the true value of our carbon sink, but never mind the cost was largely borne by owners of land that was used for beef production mostly in Queensland with zero compensation.
The true cost of the latest travesty which is the amendments made to EPBC act will not be known for some time because those in charge of overseeing the changes can’t give any unconditional advice at this stage,
We could become the custodians of land that might as well be national park without the right to mismanage like government does.
As is mentioned the rebate is a reimbursement of on road fuel tax, a tax that is meant to be used for road building and maintenance, which is rarely evident in many rural areas.
Recently some federal coalition politicians have been saying that agriculture has contributed around 95% of Australia’s emissions reduction up till now, would be interesting to know how much of that could be attributed to beef production, these will be the people that will likely be most affected by the EPBC changes as well!
To see that Minister Watt mentioned former environment minister Robert Hill’s submission to the EPBC review calling for the end of the continuous use exemption should be no surprise.
We have been done over again, just like we were around 25 years ago.
To now have people advocating for us to lose the fuel tax rebate to fund electrification shows how much value is put in the ability of Australian agriculture to be able to produce food competitively.
Imagine what would happen in Europe if something similar to removing the rebate was suggested or changes like those that have recently been made to the EPBC act!
What is the true price of progress where food prices and security are concerned?
The attack on agriculture has been slowly going on for decades and you have to go back a long way in time probably mid 1980's when it started gaining traction.
Certainly by the mid 1990's the controls on agriculture really got going. Vegetation laws starting to be legislated. Even the beef industry itself was hellbent on adding more controls with demands producers take up cattle care (the prerunner to LPA) and a bit later NLIS. Like a slowly boiling frog, now look at where we are. Over regulated for no benefit and costs through the roof.
The writing has been on the wall for decades that a government in the future will essentially outlaw a percentage of beef production through regulation and cost. It has got to the stage now I would not recommend any young person take up a career in the beef industry. Greens, Labor, Liberals, Nationals have made it clear they will slowly strangle the industry making it more and more unviable. The EPBC act despite the federal government having no authority over vegetation in the constitution (they pass these laws by legal back door methods) was a Howard initiative, no doubt backed by the Nationals. So the rubbish is across near the entire political spectrum and also well embedded in our leading industry groups based in Sydney and Canberra.
Pretty much all the old timers today tell me they saw the best of times in the beef industry.
David Pocock must have had 1 too many knocks to the head