Feds’ fuel excise cut ‘must stay’

ONE of Australia’s leading economists argues that the federal government should extend the fuel excise cut because the global price of crude oil remains high.

“Given the fact the petrol price globally is still high it would make sense for the excise cut to be extended for a little while longer,” CommSec chief economist Craig James said.

“If we’re talking about a global price for crude oil which was around about $60 or $70, rather than $90 or $100, it would be a different ball game.”

Across the three indices that track global crude oil prices, it was selling at an average of $US96 per barrel at the beginning of August. This figure is slightly down on the $US110 average cost per barrel at the end of March, when the previous government slashed the fuel excise by 50 per cent as a temporary measure – but it’s still massively more than global prices for the commodity over the past seven years.

“We need to see some leadership from the government,” Mr James said.

“If they are serious about the cost of living they’ve got to show it in terms of demonstrated measures.”

After September 28, the full cost of the fuel excise will come back into force, meaning motorists will have to pay an extra 22.1c a litre every time they fill up.

MPs including Nationals Darren Chester and David Gillespie, Liberal Bridget Archer and independent Dai Le have called for the cut to be extended, but the government has refused to budge.

A spokesman for Treasurer Jim Chalmers said Australians knew that hard decisions had to be made.

“We have been upfront and consistent, that the fuel excise reduction is too expensive to continue given the budget is absolutely heaving with a trillion dollars in Liberal debt,” he said.

While temporary budget initiatives “have to end at some point”, Mr James said, the government could look at continuing the fuel excise cut in a different way, such as vouchers for target groups.

Monitoring by the Australian Competition & Consumer Commission found that the fuel excise cut had “clearly been passed on to a large extent” within six weeks. It is unclear whether motorists can expect a similar lag after September 28, although an ACCC spokesman said they would examine any issues, and they had the power to compel operators to provide cost and profit information.

The Australian Automobile Association has not called for an extension of the fuel excise cut, but says 100 per cent of money it raises should be spent on transport projects. “Motorists deserve to get something back for the taxes they pay,” managing director Michael Bradley said.

The AAA says that over the past 10 years the fuel excise has raised $127.3bn, but just $68.4bn has been spent on land transport projects.

Mr Chalmers’ spokesman said revenue raised from taxes “benefits Australians in many ways including by funding vital services like Medicare, aged care and child care, funding infrastructure spending with the states and territories and helping to service the debt racked up by the former government”.

With more electric vehicles on the roads, the AAA has called for the fuel excise to be scrapped in favour of “a fairer and future-proof national road user charging system”.