THE Australian Conservation Foundation’s (ACF) proposal to cap the Fuel Tax Credits Scheme (FTCS) at $20,000 per individual claim has angered NSW Nationals MP Mark Coulton.
ACF made the cap proposal in its submission to the 2015 federal budget that’s due to be handed down on May 12.
It has reignited perennial and heated pre-budget debate over the scheme’s fate with the Greens and other groups targeting mining’s eligibility, and farmers have been caught in the firing line.
A statement today from the ACF said it had new research which found five companies – Glencore Xstrata, BHP Billiton, Peabody, Rio Tinto and Anglo American – took around $366 million a year from taxpayers to subsidise the diesel used in their coal mining operations, via the scheme.
ACF CEO Kelly O’Shanassy said: “ACF proposes a $20,000 cap per claimant, so those making small claims, like farmers, would not be adversely affected.”
She said changing the scheme would save the federal budget $15 billion over the forward estimates.
“Australian taxpayers’ hard earned dollars should be used to build a better life for all of us, not to add to the bottom lines of multinational coal companies,” she said.
But Mr Coulton said the ACF’s plan to cap fuel tax credit claims at $20,000 per claimant by 2018-19 was “disastrous for farmers and the State’s regional economy.”
He said ACF had claimed the proposed cap would not adversely affect farmers but that statement was, “ludicrous and proved the Greens affiliated organisation was completely out of touch with rural and regional communities”.
“They simply don’t understand the complexities faced by the agriculture sector and how this shallow, unrealistic and ill-conceived idea would damage the economic viability of the farmers and producers of our nation,” he said.
“The rebate ensures that farmers are not being taxed for road use when they are not using our roads and covers fuel used for activities such as irrigation and harvesting.”
Mr Coulton said his electorate remained in the grip of one of the worst droughts in history with farmers are battling to stay on the land.
“So for the ACF to suggest a cap on fuel tax credits are an absolute insult,” he said.
“Most broadacre farmers and irrigators in my electorate use large amounts of diesel and a $20,000 cap would be a fraction of what they currently claim.”
Mr Coulton said farmers were being caught up in a “misguided and adversely-tainted Greens agenda which did not understand the diesel fuel rebate system in its entirety and failed to recognise the importance of farmers and their future.”
The case for credits
In March, nine peak representative bodies from primary industries, mining and tourism published a 36-page report backing their support for the FTCS to counter pre-budget speculation.
The Fuel Tax Credits Coalition (FTCC) included the National Farmers' Federation (NFF), National Irrigators Council (NIC) and Minerals Council of Australia (MCA).
The publication, Powering Regional Australia: The Case for Fuel Tax Credits, argued tax provisions were originally founded on a fundamental principle of sound tax policy, namely that taxes on intermediate business inputs are inefficient and distortionary.
The report said the FTCS was subject to 690,710 separate claims in 2012-13 with agriculture accounting for 45 per cent valued at $679m or 13pc of the total $5.408 billion.
In contrast, mining was responsible for 1pc of those claims but comprised 40pc of the overall value totalling $2.13b.
Transport was next, accounting for 21pc of the claims and taking 19pc of the overall value, totalling $1b.
NIC CEO Tom Chesson said the ACF’s call for a $20,000 cap was based on a lack of accurate data about potential impacts on individual primary producers.
He said the proposed cap is “the thin edge of the wedge, totally unacceptable and would be a new tax on farmers and primary production”.
“It’s also based on a lie that the scheme is a subsidy when Treasury has said as recently as this year that it is not a subsidy,” he said.
“We don’t drive our water pumps on roads so therefore we don’t pay.
“Energy costs are a huge input cost and a 25 per cent increase or more would be a devastating blow, not just for irrigators but broadacre farming in general.”
ACF economist Matthew Rose told Fairfax Media the $20,000 figure was based on available data requested from the Australian Tax Office (ATO) during the report’s research, which showed the agricultural sector’s average claim of $2211 was well below the chosen cap.
But he said the ATO data did not provide information to show how many individual farmers made an annual claim over $20,000 on the FTCS.
“That statistic is not available; we’ve chosen a figure based on the average claim,” he said.
While acknowledging the ACF had released a report in the absence of that information he said: “It’s not our intention to include farmers in any restructure.”
Mr Rose said in comparison, the coal mining industry’s average claim for the FTCS was almost $950,000.
“Considering the government spends more than $5 billion of taxpayers’ money every year on the FTCS, ACF believes it is reasonable to put up reform proposals for discussion,” he said.
The NFF, MCA and other groups in the FTCC said the report “singles out mining activities but is ultimately an attack on regional businesses, masquerading as concern for budget responsibility and fairness”.
“Hundreds of thousands of producers across a wide range of industries rely on this scheme to keep producing and to stay competitive,” the statement said.
“Hacking into fuel tax credits would simply constitute a new tax on regional Australia, with knock-on effects to communities in every state and territory.
“It would undermine Australia's export competitiveness at a time when we need to expand the economy and support jobs, especially in regional Australia where unemployment has risen in recent years.”