Treasurer Jim Chalmers rules out fuel excise cut as petrol prices soar

It comes as bowser pain spikes with examples of regional service stations shutting all together, refusing to pass on exorbitant prices.

Prices have jumped 50 cents a litre – from $1.69 to $2.19 – on average across Australia since the start of the Iran war – meaning an extra five cents a litre in GST is raked into government coffers.

Adding insult for consumers, GST is calculated on the excise tax – now 52.6 cents a litre, that Australians pay – meaning it’s a tax on a tax.

The average household is already stung an extra $17 a week in higher fuel prices, just as the Reserve Bank will add another $28 a week to the average Australian mortgage if it hikes rates on Tuesday.

Farmers are begging for fuel, saying they have been struggling to get access to and when they do “prices are simply becoming unrealistic”.

Mr Chalmers said this week the “conflict overseas shouldn’t be an excuse to profit off Australians”.

“We’re putting petrol companies on notice. We won’t cop big corporates treating Australian consumers like mugs.”

But the Treasurer, delivering his fifth Federal Budget in May, is accused of failing to help Australian motorists.

Shadow Treasurer Tim Wilson said: “The Treasurer’s claim that higher prices means he won’t collect more tax has been exposed as a con.

“The rate of excise is linked to inflation and the GST is on top of excise. The Treasurer is going to hit Australians with higher taxes just as they’re feeling the pinch.”

Former Prime Minister Scott Morrison cut fuel excise tax in 2022 for cost-of-living relief.

The 22 cent discount saved motorists as much as $25 a week.

Mr Chalmers rejected Mr Wilson’s criticism, saying GST money collected by the Federal Government is passed to states directly.

“We’re taking decisive action to help consumers get a fair go at the petrol pump, with more scrutiny and surveillance of the fuel sector, bigger penalties for misconduct, and action to shore up fuel supply,” Mr Chalmers office said in a statement.

He rejected cutting excise tax telling Sky: “It’s not something we’ve been considering. We have been working through a whole range of contingencies and scenarios obviously, when we’ve got this dramatic volatility.

‘We are helping Australians with the cost of living in other ways.”

National Farmers Federation president Hamish McIntyre warned fuel shortages risk farmers leaving “paddocks bare”.

“If farmers can’t access diesel, they can’t harvest crops, plant crops, or move food and fibre to market.

“We also have industries like dairy that need fuel to move product every single day.”

In small Snowy Valley town Batlow – famous for apples – its only service station closed its 24-hour pumps on Thursday after being unable to secure fuel at what the owner considered a reasonable price.

The owner said a wholesale price of $2.80 per litre forced him to retail at $3 – and “if I did that I’ll be the headline.

“I don’t want to be in the bad books so the best thing for me is to not sell fuel at all.

“I still have to pay the rent and the power and all the other bills for the business. I’m living month by month.”

Snowy Valleys Mayor Julia Ham said Energy Minister Chris Bowen, Mr Chalmers and Labor leaders should “come to Batlow and see what it’s like to not be able to fill your car”.

Mr Bowen relaxed petrol rules on Thursday, to allow a Queensland refinery to produce fuel with a higher level of sulphur.

It allows an extra 100 million litres to flow to regional and rural areas.

Mr Bowen said fuel standards would still be high compared to international standards.

The International Energy Agency also released 400 billion barrels of global oil reserves this week to keep a lid on prices that spiked as a result of the Iran war.

Shipping companies continue to be reluctant to send oil tankers through the Strait of Hormuz off Iran’s coast.

Cut-price drones have been used to attack three oil tankers in the region this week, despite US President Donald Trump’s assurance the Strait of Hormuz would remain open.

As many as 3000 ships have been stranded in waters off Iran since the war started.

However, Lloyds of London has insisted it would still provide insurance and the US was planning bomb attacks on Iran’s coastline to stop Iran launching drone attacks.

AMP economist Shane Oliver said he expected prices to remain high unless there was a “clean end” to the Iran war.

He said the government should be cutting spending instead of giving the petrol tax gouge back to reduce the pressure on inflation.

“Changing the GST rate may complicate things and it may also cause problems if the money was refunded through one-off tax cuts,” Mr Oliver said.

“What the Federal Government should be doing is cutting spending because it’s too high and that’s adding to inflation.”

Mr Oliver said with another interest rate hike likely next week, Mr Chalmers should be reining in spending.

The Iran war enters its 13th day on Friday, making it already longer than last year’s war with Iran.

Mr Oliver said he expected that the war would be over within four weeks as Mr Trump had flagged.

“He (Trump) has a meeting with Xi Jinping on March 31. A lot of what Trump has been doing in Venezuela and Iran has been about strengthening his hand and weakening China’s ahead of that meeting,” he said.

“But Trump may not be able to end the war because he can’t control the situation like he could with tariffs and the ICE actions in Minneapolis.”

Mr Oliver said markets would be eased if the war ended but traders would be waiting to see if Iran continued to threaten global oil shipping.

Extracted in full from:  https://www.dailytelegraph.com.au/news/national/treasurer-jim-chalmers-rules-out-fuel-excise-cut-as-petrol-prices-soar/news-story/6a609a5b0f7a05babaff2f3c5b99d5c4