no cut to diesel rebate, page-2

Well spotted FROG here is the article you refer to.

WAYNE Swan has told a group of economists there will be no cuts to the diesel fuel rebate in Tuesday's budget despite fears the mining sector is set to be slugged with another bottom-line hit.

The Weekend Australian understands the Treasurer made it clear to a group of banking economists at a dinner on Tuesday night that he would not penalise the miners by removing or varying the rebate.

It is understood the big miners have also been given an indication from government sources that the rebate will not be touched in the budget, as feared by the industry, but there is little confidence from the sector that it won't be cut outside the budget.

Mr Swan's assurance provides little comfort to the sector, whose relationship with the government soured with the introduction of the resources super profits tax in 2010 - later watered down to the minerals resource rent tax - despite the industry previously being told the tax would not be introduced in that form.


The sector will also be hit by the carbon tax, which will also affect the diesel rebate. Off-road use of diesel is subject to a 38c a litre rebate, but the carbon pricing package will wind the rebate back by 6c a litre for miners.

Northern Star Resources managing director Bill Beament said yesterday his bottom line would be hit by 15 per cent if the rebate was cut further.

Mr Beament said he sat at a table with Julia Gillard at a function in Perth two weeks ago but she gave no indication of what impacts the sector could face in the budget. He said if the rebate were cut, it would be a breaking point for many in the industry.

"Eventually it is going to get to a situation where the economics to run a mine will see many shut up shop and move on," Mr Beament said. He said uncertainty about the government's policies was forcing the industry to increasingly look offshore to more stable environments.

He said he was speaking to brokers in London earlier this week who said they would not invest in any Australian companies until they saw the results of the budget because of concerns the diesel rebate would be cut.

Association of Mining and Exploration Companies chief executive Simon Bennison said a cut to the fuel rebate would be significant to the smaller miners, whose diesel bill was about 25 per cent of their costs.

Mr Bennison said for the junior sector it would have a bigger impact than the mining and carbon taxes. "Some of the commentary out of government is this is just the beginning, their ad hoc tax reform is about where they can grab a dollar and they are going to cripple the junior sector as collateral damage in trying to penalise and get the money out of the big end of town."