In a win for the trucking industry, the federal budget has kept the industry's fuel tax credits despite a Productivity Commission plan to abolish the scheme.
Australian Trucking Association Chair Mark Parry thanked the Government for listening to the industry's response to the Productivity Commission plan, which recommended phasing out fuel tax credits for on-road heavy vehicles over ten years.
"The ATA carried out a strong, evidence-based campaign to retain fuel tax credits, supported by detailed modelling," Mr Parry said.
"I'd like to thank Treasurer Jim Chalmers, Transport and Infrastructure Minister Catherine King and Assistant Climate Change Minister Josh Wilson for considering the industry's views," he said.
The fuel tax credits system reduces the effective fuel tax rate paid by trucking operators, so they pay based on the cost of heavy vehicles' use of the roads. This is called the road user charge.
The Government has temporarily reduced the road user charge to zero in response to the Iran war, but the charge is currently scheduled to go back to 32.4 cents per litre on 1 July.
Mr Parry said the fuel tax credit system reduced the cost of freight for everyone in Australia, as well as our rural exporters.
"Removing fuel tax credits would increase costs for industry and hard-pressed Australian households, who face continued cost of living pressures as the effect of the high fuel prices flows across the economy," he said.
"Removing fuel tax credits would also hit trucking businesses hard. They have already paid a 19 per cent increase in fuel tax over the last three years, and the cost of diesel has increased dramatically because of the war.
"Despite the industry's success in arguing for support measures including the Fair Work Commission's fuel cost recovery order, it will take many businesses a long time to recover.
"The Government's immediate focus should now be on considering whether to extend the temporary reduction in the road user charge for another three months," he said.
Mr Parry said the Productivity Commission's plan would not achieve its goal of encouraging decarbonisation.
"Abolishing fuel tax credits would not address the engineering reality that there is no single technology available to replace diesel engines," he said.
"Many regional communities rely on trucking operators to move and deliver all their daily necessities. Because this requires diesel engines, the commission's approach would just be an unavoidable increase in tax.
"For those businesses that do have an alternative to diesel, the effective tax increase would reduce their financial capacity to invest in new vehicles and equipment.
"The ATA looks forward to working with the Government on measures that would be effective at reducing the industry emissions and Australia's reliance on imported fossil fuels, including a voucher scheme to reduce the up-front cost of electrification or alternative fuel options, a low carbon fuel standard to encourage the use of renewable diesel, and support for high productivity and low emission vehicles.
"Measures like these would complement the Government's very welcome fuel security and resilience plan, which will increase Australia's diesel and jet fuel reserves to 50 days," he said.
Read the ATA's pre-budget submission
