There are fears of a ripple effect when the fuel excise cut ends, with concerns it will be “destructive” to the Australian economy.

There are concerns that when the fuel excise cut ends it will cause a ripple effect, with many people likely to reduce their spending on retail and restaurants because they cannot afford to drive anywhere.

The Albanese government has ruled out extending the fuel excise cut when it ends on September 29, but many are calling for it to continue for another six months.

National Retail Association chief executive Dominique Lamb told NCA NewsWire the group wanted an extension, noting the impact on supply chains.

“Our retailers are being impacted by a whole raft of increases across the board and of course supply chains is one of those which is directly impacted by the cost of fuel,” she said.

“Anything that the government can do in order to support those industries that are part of our ecosystem is incredibly important because you’ve got to remember in a country like Australia most of our freight is on roads.

“Fuel is an incredibly important resource, particularly when it comes to things like getting projects into our region.”

Ms Lamb said from a consumer point of view there was also a concern that if people could not afford fuel they would be less inclined to go out to spend money on retail and hospitality.

“There’s no doubt that consumers are starting to tighten their belts, especially when it comes to discretionary spend,” she said.

“Consumers are spending more on essential groceries and fuel, but the softening figures are coming from those discretionary items and other categories in that non-essential component of the market.

“So it is of concern to us because I think at the end of the day where there is consumer confidence, then they’re more likely to spend.”

Ms Lamb noted that when people were investing, such as buying or building more homes, there was also a spike in retail spend.

“What we’re seeing right now is people making different decisions because of course they’re being hit with inflation, interest rate rises, fuel costs, electricity and all of those things,” she said.

“There is definitely concern about consumers changing their habits and we’ve already had so many changes to habits post-Covid.

“It’s probably just something else we don’t need. We don’t want to see people restricting what they’re spending their money on, or where they’re going, or what they want to do.”

There are concerns that if people cannot afford fuel they will be less inclined to go out to spend money on retail and hospitality. Picture: NCA NewsWire/Luis Enrique Ascui

Warren Reynolds, the executive chairman of West Australian drive-through coffee franchise Muzz Buzz, said there was no doubt that rising fuel prices impacted customer behaviour.

“It’s there in black and white; as fuel prices rise, customer numbers drop off,” he said.

“People make calculated choices on how often they can afford to drive and exactly where they’re driving to and from.

“For some customers, this will mean travelling only for the absolute necessities and avoiding any unnecessary trips to retailers – whether it be visiting their favourite coffee shop or picking up something extra at the shopping centre. This is having a significant impact on businesses.”

The Australian Automobile Association (AAA) transport affordability index last month revealed households were spending more than $100 per week on fuel for the first time since the index began in 2016.

Mr Reynolds said the pressure on households would only worsen once the excise returned to its usual rate of 44.2 cents per litre.

“If households are already struggling with the current fuel prices, it makes no sense to add an extra 22 cents a litre at the end of the month,” he said.

“Allowing the excise to return to its usual rate is destructive to the overall economy.

“This is one way the federal government can continue to offer some immediate, short-term support, at least until economic conditions improve.”

AAA managing director Michael Bradley told NCA NewsWire the group never supported halving the fuel excise for six months.

“It reduced revenue available for infrastructure investment by $3bn while doing nothing to address the sustainability or fairness of Australian motoring taxation, nor the factors that continue to drive up prices, and there was no guarantee the cut would be passed onto motorists by fuel retailers,” he said.

“When excise is returned to its full rate, the government needs to commit 100 per cent of fuel taxes to build projects that get Australians and our economy moving again.

“Motorists deserve to get something back for the taxes they pay, so we are calling for every cent of the fuel taxes they pay to be spent on transport projects that make their commutes faster, their families safer and their communities stronger. “

Extracted in full from: Cost of living: Calls to extend the fuel excise cut another six months | — Australia’s leading news site