Australians pick up the tab for billions of litres of diesel used by mining companies each year, under the fuel tax credits scheme.
It costs taxpayers more than $10 billion a year and is predicted to grow to more than $13 billion by 2028/29.
Not only is this subsidy a drag on the economy, it serves as a disincentive for fossil fuel companies to transition to renewable energy.
Fortescue Metals Chief Executive Dino Otranto is today calling for a $50 million cap on the amount companies can claim for the diesel they use.
"That would be a good start," said Greg Jericho, Chief Economist at The Australia Institute.
"This scheme is nothing more than a fossil fuel subsidy – and the Australian government promised to scrap fossil fuel subsidies way back in 2009.
"The theory behind the scheme is that money raised by fuel excise goes to maintaining public roads, and mining companies operate largely on private roads.
"But if this is all about user pays, then how about we have a user pays scheme for the damage fossil fuel companies unleash in emissions, which make natural disasters more frequent and severe?
"How about they pay fair royalties or petroleum resource rent tax for Australia's resources which they extract and sell at huge profit?
"This scheme costs Australia more than it spends on the Air Force and more than twice what it spends on foreign aid.
"The government has just won a mandate for sensible reform on climate action. This should be high on its agenda when Parliament resumes next month."
