The federal government has repeatedly ruled out extending the fuel excise cut – but one of Australia’s leading economists says it makes sense to keep it. And Aussies agree.

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

And a reader poll by News Corp Australia has revealed Australians agree, with 72 per cent saying the country is in a “cost of living crisis”.

“Given the fact 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. If they are serious about the cost of living they’ve got to show it in terms of demonstrated measures,” Mr James said.

After September 28, the full cost of the fuel excise will come back into force, meaning motorists will have to pay an extra 22.1 cents per 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 spokesperson for Treasurer Jim Chalmers said “Australians know that hard decisions have 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,” the spokeperson said.


Commsec Chief Economist Craig James. Poicture: Justin Brierty

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.

“The NSW government was successful in coming up with a voucher system to support cafes, restaurants and tourism businesses during Covid, that seemed to work quite well. Perhaps they need to think outside the square about the sorts of measures that might provide some success,” Mr James said.

Monitoring by the Australian Consumer and Competition (ACCC) found the fuel excise cut had “clearly been passed on to a large extent” with six weeks.

It is unclear whether motorists can expect a similar lag after September 28, although an ACCC spokesperson said they would examine any issues, and they had the power to compel operators to provide cost and profit information.


Treasurer Jim Chalmers. Picture: NCA NewsWire / Gary Ramage   AAA Managing Director Michael Bradley.

There were just “a handful” of retailers who appeared not to have passed on the full fuel excise cut to customers, the spokesperson said, and the ACCC was currently considering action.

The Australian Automobile Association (AAA) has not called for an extension of the fuel excise cut, but is arguing 100 per cent of money it raises should be spent on transport projects.

“Motorists deserve to get something back for the taxes they pay,” AAA Managing Director Michael Bradley said.

According to the AAA, over the past 10 years the fuel excise has raised $127.3 billion, but just $68.4 billion has been spent on land transport projects.

A motorist fills up, March 1990.

The price of petrol in Moorabbin, Victoria, recently. Picture: Tony Gough

The Treasurer’s spokesperson 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 (EVs) 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”.

Labor’s Powering Australia policy states a national EV strategy will consider “ways to address the policy implications of declining fuel excise”. But the Treasurer’s spokesperson did not respond when asked when this would be actioned.

Currently just over 0.3 per cent of cars on Australian roads are EVs, but it’s estimated this could be as high as 20 per cent by 2030.

Extracted in full from: Fuel excise cut: CommSec’s Craig James calls for extension for Australian drivers | Daily Telegraph

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