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Why Scrapping Fuel Tax Credits Would Drill a Hole in Australia's Future

11 February, 2026

There’s renewed debate around the Diesel Fuel Tax Credit Scheme. But here’s the operational reality: For drilling contractors, fuel tax credits are not a subsidy. They’re a correction. As outlined in the latest Australasian Drilling, the Australian Drilling Industry Association (ADIA) has cautioned that abolishing or capping the scheme would have serious consequences for mineral exploration, water security, energy transition projects and regional employment.

Drilling contractors operate primarily in remote and regional locations — on private leases, mine sites, farms and infrastructure corridors. They pay fuel excise when travelling on public roads. Fuel tax credits apply only to diesel used off-road, where no public road infrastructure is being used.

As ADIA CEO Jeff Miller puts it: “Diesel fuel tax credits aren’t a subsidy — they’re the difference between drilling getting done and projects stalling.”

Drilling is the first link in the supply chain.

  • No drilling → no discovery.
  • No discovery → no development.
  • No development → no critical minerals, no new energy infrastructure, no regional water security.

Blanket changes to the scheme would disproportionately impact small and mid-tier contractors operating on tight margins — particularly in exploration and regional Australia. The industry generates nearly $4 billion in annual revenue, contributes $2.2 billion to GDP, and underpins around $500 billion in economic activity each year. The impact of higher operating costs would be immediate:

  • Fewer drilling programs
  • Reduced exploration activity
  • Weaker investment signals
  • Lost regional jobs
  • Reduced competitiveness for exploration capital

The drilling sector remains open to future-facing conversations around technology and emissions reduction. But policy must reflect how work is actually carried out in the field — not in theory. If decarbonisation is the goal, it must be grounded in viable alternatives. Until those alternatives exist at scale, fuel tax credits remain a practical mechanism to ensure fairness and enable the work that underpins Australia’s economic and energy future.

Read the full article in the Australasian Drilling Magazine