Drivers can expect a modest rise of a few cents a litre at the petrol bowser when the government ends the fuel excise discount, but the transport industry warns rising costs for road freight businesses will be passed on to consumers when the heavy vehicle road user charge is reinstated.
Treasurer Jim Chalmers this week confirmed the end of excise relief, which began with a 50 per cent discount that knocked 32 cents off each litre of fuel from April to June before being reduced to a 16 cents saving in July.
Both the subsidy and a Heavy Vehicle Road User Charge discount – which was reduced to zero for three months before rising to 16.4 cents a litre in July – will expire at midnight on Sunday. The RUC is set to return to 32.4 cents a litre.
NRMA spokesperson Peter Khoury said while 17.1 cents a litre would be added to wholesale fuel prices from Monday, drivers may not see an immediate rise in costs as service stations continue to sell current stock.
Even after buying at the new rates, some stations may stagger the price increase to avoid a shock to customers.
“There is no definitive answer on exactly what’s going to happen on Monday because it depends on the service station,” he said.
As of Friday, the national average for unleaded petrol was $1.97 and diesel $2.39 a litre. The total excise will increase by one cent above the rate before the introduction of the subsidy due to a regular inflation adjustment every August.
Khoury did not anticipate a further spike. “We need the war to end in Iran, and most critically, we need the Strait [of Hormuz] to reopen. If those two factors occur, then we have confidence that the oil prices will fall again,” he said.
But transport industry groups – including the Australian Trucking Association; NatRoad; and the Australian Livestock and Rural Transporters Association – have appealed to the government to extend the RUC relief until January next year to help small businesses survive and boost food security.
NatRoad chief executive Warren Clark warned the hefty combination of fuel increases and the return of the full RUC would flow on to consumers.
“The industry sits on about a 3 per cent profit margin. So we’ve got fuel stations putting up the price as we speak … Industry cannot absorb that increase in fuel and not pass it on,” he said.
“It’s not discriminatory against certain goods, it’s across everything. So your cost of living is definitely going to go up.”
Scrapping the RUC until the end of the year would be a much-needed cash injection for some 70 per cent of national freight that was carried by small and medium-sized businesses, Clark said.
“This is 100 per cent geopolitics translating into economics.”
“There’s many small businesses literally on the wire that will go broke because they can’t afford to bankroll the increasing cost of fuel,” he said.
“The price of diesel is set by global markets. Canberra can’t control that,” he said. “But it can control the taxes it adds on top.”
The ALRTA, which estimates agriculture-linked road freight uses between 1.5 billion and 2.5 billion litres of diesel each year, said the government risked placing further pressure on national food security.
“The point we want to make is that we’ve got a segment of the road transport industry that is actually feeding Australia and exporting to other countries around the world,” said executive director Ben Maguire.
“If it’s not running at full optimisation – we’ve got harvests coming up in WA – there’s flow-on effects to the food production that are not being considered.”
Pradeep Philip, the lead partner at Deloitte Access Economics, said there would be “an environment of greater volatility and uncertainty” in the next few months across fuel, food, and other products.
“Where business in particular will be looking at is how fragile supply chains are. So this is 100 per cent geopolitics translating into economics.”
Food security was a global problem, including in Australia, due to the difficulty in obtaining fertilisers at the start of the conflict, although the implications for truckers were still hard to determine, he said.
While there was “no quick fix to either cost of living or fuel security”, there were structural questions in the medium term about how to reduce dependence on the Middle East and accelerate the transition to renewables across Asia, Philip said.
Jennifer Parker, an expert associate at the ANU National Security College, said Australia needed to build greater resilience across the entire maritime trading system critical to its economy.
The creation of a permanent maritime strategy branch in the Department of the Prime Minister and Cabinet could help to identify and reduce maritime vulnerabilities and co-ordinate a response, she said.
“If the only lesson Australia takes from the Middle East conflict is that we have a fuel security problem, we will have missed the bigger point,” Parker said.
“Our maritime vulnerabilities extend well beyond fuel to pharmaceuticals, chemicals and other critical goods, almost all of which reach Australia by sea.
“The ports, ships and seafarers that make that system function are themselves part of the vulnerability.”
Extracted in full from: https://www.afr.com/politics/federal/freight-industry-to-slug-consumers-as-fuel-subsidies-end-20260731-p60k9r
