For 2022-23, $7.8 billion worth of fuel tax credits are forecast, rising to $11.3 billion in 2025-26.

It’s worth remembering that the biggest beneficiary is the mining industry. While farmers, agricultural businesses and other sectors also receive fuel tax credits, none receive nearly as much as the mining industry – so not only does this subsidy encourage the use of a fossil fuel, it also primarily benefits the fossil fuel industry.

Whichever way you cut it, the mining industry, particularly the coal mining industry, benefit most.

In terms of total amount claimed, the mining industry takes 45% of the total. The graph below estimates the fuel tax credit benefit to industries based on ATO tax statistics for 2020-21.

Looking at top sub-industries by total claim, metal ore mining and coal mining are the top earners – claiming over one billion dollars each.

Looking at the average individual claim, claims from farmers average in the thousands of dollars, while claims from coal mining are in the millions. Of the top ten fine industries by average claim size, six are mining industries. Moreover, because coal mining is dominated by a few large players, it’s likely that many of those individual claims are going to the same company – with a few large companies taking a chunky cut.

That means that a potential avenue for reform involves limiting the amount of credits an entity can claim, thereby restricting the large claims from the mining industry without overly affecting other industries like farming and agriculture, where claims tend to be smaller.

For a budget that was all about fiscal responsibility while restoring Australia’s climate reputation, the lack of scrutiny of this anachronistic fossil fuel subsidy is a missed opportunity.