The Albanese government will extend its three-month cut to the fuel excise until the end of July, albeit at a reduced rate, as it looks to avoid a sudden blow to motorists amid faltering US-Iranian talks to end a conflict that has roiled global oil markets.
The government temporarily cut 32¢ per litre from the excise at the height of the crisis in April, at a cost to the budget of around $2.5 billion, but it was due to end on June 30.
The one-month extension to the excise cut will be at a reduced rate of 16¢ a litre, which the government says will keep the cost of filling up below the longer-term average for July. The cut will begin on July 1 and end on August 2.
The government will also reduce the Heavy Vehicle Road User Charge by 16¢.
The US and Iran struck a deal on Friday to end the conflict, which has kept the critical Straits of Hormuz shipping channel closed to a significant proportion of the world’s oil traffic since late February.
However, the Iranians have since closed the Strait, citing Israeli attacks on Lebanon, prompting US President Donald Trump to threaten the imposition of tolls on the waterway if a final deal is not reached within 60 days.
Prime Minister Anthony Albanese said extending the excise was the “sensible thing to do” amid ongoing uncertainty in global oil markets.
“We know that families are still under pressure, and we also know that the impact of this conflict on the other side of the world will have a long economic tail to it,” Albanese told Sky News on Sunday.
“There’s still some uncertainty. The oil price has come down this week. We want to see that flow through, but it will take some time.”
Australian fuel prices have fallen by about 90¢ since the April peaks, and the government has been weighing whether to extend its expensive relief package as it manages the political fallout from a divisive federal budget and an insurgent One Nation party.
The extension to the fuel excise cut and the reduction in the Heavy Vehicle Road User Charge will cost the budget around $400 million, the government said – pushing the total cost of the four-month fuel relief package to almost $3 billion.
Treasurer Jim Chalmers said the extension was designed to address continued cost-of-living pressures.
“Despite the welcome and substantial drop in the price of petrol recently, we recognise people are still under pressure.
“This extra month of fuel discount will help Australian motorists and businesses with the cost of living as this support tapers off.”
Government underwriting of purchases of international oil cargoes has pushed Australia’s fuel stocks to near record levels since the beginning of the fuel crisis, when low reserves had raised the spectre of shortages.
Australia now has 44 days of petrol, 39 days of diesel and 32 days of jet fuel in reserve. Last week was the highest level of fuel held in Australia since new minimum stock rules came into force in 2023.
Opposition Leader Angus Taylor on Sunday said the excise cut needed to be offset by reduced spending elsewhere to avoid adding to inflationary pressures.
“They told Australians they had beaten inflation, but it is clear that inflation has beaten this government.
“At the end of the day, that’s what’s hurting families.”
Albanese told reporters on Saturday that there was still significant uncertainty in global oil markets.
“We welcome the de-escalation, [but that] doesn’t mean that [the Strait] immediately opens. There are sea mines there. There is a great deal of uncertainty about how long it will take before normal trade resumes,” he said.
“When you have a disruption to trade, you have an increase in price because it reflects the less volume that is available.
“We’re hopeful of a resumption of normal trade as soon as possible.”
Extracted in full from: https://www.afr.com/politics/federal/labor-extends-fuel-excise-cut-into-july-20260620-p608m1
