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Hands off the rebate for off-road fuel

30 April 2014

The National Farmers’ Federation (NFF) has voiced serious concerns about speculation of proposed cuts to the current rebate farmers can claim for off-road use of fuel, under the Fuel Tax Credit Scheme.

Under the Scheme, the Government provides a rebate of the excise and customs duty paid on certain fuels purchased for specific off-road uses.

NFF President, Brent Finlay, said that given the substantial benefits the agriculture industry provides to the economy, what the Government should be doing is looking for ways to reduce costs and make agriculture more competitive.

“Agriculture has been identified by the Government as one of five key pillars of the economy. Cutting the rebate would be like biting the hand that feeds and clothes the nation,” Mr Finlay said.

“While industry understands the fiscal position leading up to the Federal Budget, we would be surprised if the Government were seriously considering cuts to the rebate.

“Industry has already done its share of ‘heavy lifting’ through economic rationing. Any move to cut the fuel rebate would fly in the face of the Government’s stated commitment to the industry profitability and competitiveness,” Mr Finlay said.

Over the last 30 years the agriculture sector has increased productivity and achieved this with a reduction in farm support. The sector receives the lowest level of government assistance of all OECD countries. Further, the Government has commissioned a White Paper with the stated aim of improving competitiveness of the sector and farm gate returns.

The current design of the Fuel Tax Credit Scheme goes some way to maintaining industry’s competitiveness. The fuel tax helps fund upkeep and maintenance of the nation’s road network, and Australian farmers only receive the excise rebate for fuel used off-road.

“Put simply, the rebate ensures that farmers are not being taxed for road-use when they are not using our roads. It covers fuel used for activities such as irrigation and harvesting. Even a minor cut in the rebate could have substantial impacts on farm businesses,” Mr Finlay said.

“Beyond farming, the rebate is available to industries, businesses and communities using fuels for generating energy where there isn’t ready access to a commercial supply of electricity.

“Cuts to the rebate would not only be detrimental to agriculture’s contributions to the Australian economy, but would further exacerbate the inequity in cost for those living and working in regional Australia,” Mr Finlay said.

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