Analysis by Australia’s motoring groups has found only half of the money raised by the fuel excise has been reinvested in roads and public transport over the past decade, raising questions over whether the tax should be cut.

The federal government is considering whether to halve the 44 cent tax applied to every litre of petrol purchased, as Australians are hit with record prices at the bowser due to Russia’s invasion of Ukraine.

State leaders and MPs from within the government’s own ranks have pushed for a tax cut to be introduced in the coming federal budget to soften rocketing petrol prices.

But the nation’s peak motoring body, the Australian Automobile Association (AAA), says the nation’s transport infrastructure is already degrading and falling behind international standards due to years of underinvestment.

The group analysed 10 years of budget papers and government data from the Bureau of Infrastructure and Transport Economics and found just 53 per cent of the revenue raised by the petrol tax has been reinvested in public transport and roads, despite the tax supposedly being in place to pay for road transport.

While $127.3 billion was raised by the petrol tax over the decade, $68.4 billion was spent on Land Transport Expenditure, which includes roads, rails and cycle paths.

In the worst year, the 2012 financial year, just 31 per cent of the net $13.3 billion raised by the petrol tax was reinvested into transport.

Even during COVID-19, when extra money was committed to transport infrastructure as a stimulus measure, 70 per cent of the fuel excise actually wound up back in roads and public transport last financial year.

A mix of cars and trucks fill four lanes of peak hour traffic on freeway.
Roads have become more congested after a decade of underinvestment, according to motoring groups.(ABC News: Andrew O’Connor)

The petrol tax is intended to be a “cost recovery” charge to pay for road maintenance and other costs caused by road users.

In recent days, government ministers including Barnaby Joyce and Angus Taylor have warned against cutting the fuel excise, saying it is used to fund roads.

AAA’s Michael Bradley said that isn’t completely true.

“People expect the fuel taxes they pay to be re-spent on the network,” Mr Bradley said.

“Politicians think they do it, they say they do it, but when you look at the actual numbers they haven’t been that great at it in recent years.

“Now is the time to square the ledger.”

Australia’s roads getting worse by international standards

When the World Economic Forum assessed global transport infrastructure in 2019 it found Australia had slipped 20 places in four years, falling from 18th in the world in 2015 to 38th on its road and public transport networks.

he AAA and its members have launched an advertising blitz to save the fuel excise from cuts and to call on whoever wins the federal election to mandate that petrol tax revenue be fully reinvested in roads and public transport.

Mr Bradley says unless that happens, Australian roads will become less safe and more congested.

“Underspending on transport means that more people die on the road than need to, people have longer commutes than they need to, and regional Australia gets left behind and misses out on economic stimulus that it needs,” Mr Bradley said.

“We need to make up lost ground, we need every cent that’s being collected at the bowser to be spent on the network.

“People don’t like high petrol prices, people don’t like paying tax, but they can deal with it if they think they’re getting value for that spend.”

Mr Bradley warned further cutting revenue from the fuel excise would have “real repercussions” for people’s lives.

Meanwhile, a new report by the Grattan Institute has found the money that is spent on roads is frequently used to buy political favour, and not spent where it is needed most.

Researchers found at the last election, only one of the Coalition’s 71 transport promises had an approved business case and only two of Labor’s 61 promises.

They also found the federal government directed transport funding from its $4 billion Urban Congestion Fund to the most marginal seats, which received $83 million for transport on average, compared to $64 million for safe Coalition seats, and just $34 million for safe Labor seats.

That same fund has been subject to intense scrutiny after revelations that hundreds of millions of dollars were used to fund car parks in seats the Coalition wanted to keep or win ahead of the 2019 election.

Researchers found that, increasingly, transport funding is held to the months before an election, where it is used for campaigning.

The Grattan Institute has recommended that Infrastructure Australia’s assessment of proposed transport projects should be required to be made public before approval.

Similarly, the motor industry has called for transport funding for the states to be tied to measurable improvements in road safety.

The industry is also campaigning for the introduction of a carbon dioxide emissions standard for vehicles, arguing that it would not only lower emissions and encourage electric vehicle uptake, but would ultimately make fuel consumption cheaper for drivers as more efficient cars are introduced.

Extracted in full from: Only half of petrol tax is going back into roads say motoring groups, amid calls to cut fuel excise – ABC News