The mining and petroleum industries and associated services in Western Australia will reel under the impact of the removal of the diesel fuel rebate scheme, Mines Minister Kevin Minson warned today.
"The ramifications of removing the rebate are enormous. It is tantamount to the Commonwealth Government killing the goose that lays very golden eggs for not just WA but the rest of Australia," Mr Minson said.
He said if the rebate was removed, Australia's mining sector would bear the brunt of more than half the cost.
This would mean:
+ some marginal mines would close;
+ others under consideration would be scrapped due to unviability;
+ only rich ore bodies would be mined leaving lower grade ore which may never be regarded as viable; and -
+ support industries will also suffer a heavy blow.
Mr Minson said he was being approached by mining companies and associated firms presenting a worrying picture for the future.
"One heavy earth moving company has told me that about 70 per cent of its work is with mines which contain only marginal grade ore," he said.
"The removal of the rebate could tip the economic scale heavily against the continued viability of operations such as those.
"If they were to close, the earth moving company tells me it would gut its operation and result in half its staff - about 300 people - losing their jobs."
Mr Minson said in 1994-95 the national rebate amounted to $1,256 million. Of that mining accounted for $710 million, or 56 per cent. Of the $710 million, the WA mining sector rebate came to $387 million.
The Minister said that if the Commonwealth removed the rebate for the mining industry, it followed that other exempt sectors would also come under scrutiny.
"I believe the fishing industry, which also comes under the scheme, will be the next," he said.
The diesel fuel rebate scheme was established to compensate export industries for the costs of the fuel excise.
"The fuel excise was a tax to raise revenue for road maintenance - these days very little of that money goes towards road maintenance - and it was decided that industries which did not use public road systems should not have to meet the cost," Mr Minson said.
"It was considered an unfair levy on export industries, which were up against foreign competitors which did not have a similar impost on their fuel costs."
Isolated mine sites which did not use public roads, farmers ploughing paddocks and ocean-based industries such as the fishing industry were granted the rebate.
"Scrapping the rebate has been suggested by the Commonwealth Department of Finance as part of the Federal Government's strategy to balance its budget," Mr Minson said.
"I have written to my Federal counterparts strongly urging them to resist hitting what seems an easy target.
"The Department of Finance needs to be aware that removing the diesel fuel rebate will actually result in less revenue for and heavier demands on both Commonwealth and State Government coffers.
"The diesel fuel rebate should stay."
Media contact: Caroline Lacy 222 9595 or 222 9211