Cut to diesel rebate for miners a 'cash grab': coalition

Opposition resources spokesman Ian Macfarlane said on Thursday there were "very strong predictions" the mining industry was about to lose the diesel fuel rebate.

Macfarlane said if it was scrapped it would effectively be the third hit Labor had imposed on miners this year after the carbon tax and the mining tax.

"We understand in the budget week they will apply a tax to diesel fuel used off-road for the first time ever in Australia," he told reporters in Canberra.

"This is simply a cash grab by the Labor government to try and prop up its very flimsy surplus."

Macfarlane said it would cost the mining industry billions of dollars.

The fuel rebate is currently worth 38 cents per litre but will be reduced by six cents after the carbon tax starts on July 1.

About 40 per cent, or $2 billion, of the $5 billion a year spent on subsidising diesel fuel goes to mining companies.

Macfarlane said any change would need to be legislated and the coalition planned to make it clear it wasn't going to allow "constant attacks" on the mining sector.

It had always been a given that if you didn't use fuel on roads you didn't pay the tax, he said.

"That's the case with the farming industry and the mining industry."

Labor has vowed to return the budget to surplus in 2012/13.

Greens lower house MP Adam Bandt says the mining industry should certainly lose the diesel fuel rebate.

"There's no justification for everyday Australians turning up to the petrol pump and paying 38 cents a litre in tax but if a wealthy mining corporation turns up they pay nothing," he told reporters.

"The diesel fuel rebate is a drain on the budget."

Bandt said one of the best ways for the government to raise revenue was to abolish the rebate for miners.

But he argued there was a case for maintaining the subsidy for the agriculture and fishery sectors.

Assistant Treasurer David Bradbury refused to answer questions about whether the rebate could be axed for miners.

"When it comes to pre-budget speculation we won't be engaging and entertaining these sorts of discussions," he told reporters.

However, Bradbury did admit Labor was facing an "enormous challenge" to return the budget to surplus, given reduced revenues.

"But it's important for us to return the budget to surplus so we can keep interest rates low and make sure that those people out there in world markets understand that we're a government that when we make tough fiscal strategies ... we're determined to deliver them."