Miners and farmers say they should not have to pay a new 1c-per-litre fuel levy designed to keep Australia’s three remaining refineries in business, in a blow to government efforts to shore up the nation’s fuel security.

The government will fund the new 1c/l “production payment” until July next year, when a new market mechanism will be introduced to charge the levy to petrol, diesel and jet fuel users.

But the National Farmers Federation and Minerals Council of Australia say their members should be exempt from the payment, as they are from the rebatable 42.3c/l fuel excise, in a move that would leave taxpayers or everyday motorists to foot the bill.

“In the first instance we would expect that issues of fuel security should be paid via consolidated revenue. In the second instance we would expect the payment to be rebatable,” NFF chief executive Tony Mahar said.

He said the NFF domestic refinery capacity needed support, “as a failure to do so would imperil Australia’s fuel security, ultimately impacting its ability to produce food and fibre”.

But he said farmers should not have to bear the cost of the ­measure.

“There was never any indication that this refinery support would impose a cost burden on industry, and we consider that matters of national security — which we consider fuel security to be — should be borne by the broader economy and community, and therefore drawn from consolidated revenue,” Mr Mahar said.

MCA chief executive Tania Constable said the mining lobby would participate in upcoming consultations with the government on the new market mechanism, but “we do not expect any new tax on the minerals ­industry”.

The federal budget shows 37 per cent of fuel excise collected by the government was returned to exempt users — chiefly miners and farmers.

A 1c/l production payment on 18 billion litres of fuel — the amount produced by domestic refineries last year — would raise about $180m, about $66m of which would have to be paid by taxpayers or everyday motorists if farmers and miners were exempt.

Industry sources have also suggested a 1c/l production payment would have to be at least doubled to give refineries a chance of staying afloat.

A spokesman for Energy Minister Angus Taylor said the government would work with fuel suppliers and users to finalise the production payment’s long-term design.

“The government’s package will enhance fuel security through increasing onshore stocks, maintaining competitive tension to keep fuel prices down, and securing jobs,” he said. “This will particularly benefit motorists, truckers, farmers and miners who are highly dependent on a reliant supply of fuel ­products.”

The government has also allocated $200m to build an additional 780 million litres of diesel storage, created a new minimum stockholding obligation for key transport fuels and purchased $94m of crude oil for storage in the US Strategic Petroleum ­Reserve in case of global ­emergencies.

Geelong’s Viva plant, ExxonMobil’s Altona refinery in Melbourne and Ampol’s Lytton facility in Brisbane will receive the production payments.

All three were facing potential closure amid a plunge in global fuel demand during the COVID-19 crisis.

BP announced in October it would close its Kwinana refinery south of Perth, leaving the entire west coast to rely on imported fuel and raising fears over the ­future of its east coast counterparts.

International Energy Agency rules require member countries to maintain 90 days of average fuel imports across all stocks. The government says Australia has 85 “IEA days” of supply if stocks en route to Australia are included.

But October 2020 fuel statistics show the country has only 25 “consumption days” of petrol stocks, and 21 days of diesel. Those numbers aren’t directly comparable with IEA days, but strategists say they’re far too low in the event of a shock to fuel supplies.

National security consultant John Blackburn said: “The bottom line is this — we do not have a coherent energy policy, we have not done a comprehensive risk analysis of our fuel supply chain, we have not updated our national energy security assessment since 2012.

“Future generations will look back at this period in our history and see a lot of marketing and spin, but a complete absence of political leadership and coherent policy.”

Extracted in full from: https://www.theaustralian.com.au/nation/politics/miners-and-farmers-baulk-at-fuel-levy/news-story/1c5848f9d349e7a2e6a9fe6e021c3970