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The rising cost of fuel is leading to calls for the government to step in. Global oil prices have skyrocketed, just two weeks out from a pre-election budget. Prime Minister Scott Morrison says the situation in Ukraine is to blame.
State premiers are demanding a temporary cut to the fuel excise to help struggling consumers. The excise raises about $20-billion a year for road and transport infrastructure. The fuel excise is a flat tax levied by the Australian government on petrol and diesel bought at the bowser. It's indexed to inflation.
Highlights
- Deloitte Access Economics partner Chris Richardson says excise tax accounts for about one-fifth of the fuel price.
- Prices are already more than $2.20 a litre and expected to rise to as much as $2.50
- For a more sustainable fix, experts say that will be about veering away from fossil fuels and the need to adopt electric vehicles.
But experts question how effective a cut to the excise's indexation would be.
Deloitte Access Economics partner Chris Richardson says there would be no benefit.
"Almost nothing. You know, a pause to indexation is going to save a cent every year out of something that's bouncing, you know, 10 and 20 cents in a week. That's all about the politicians showing that they feel people's pain - and there is genuine pain - but you cannot fix a pain caused by a war in Europe with a band-aid on a tax in Australia."
Opposition leader Anthony Albanese says petrol is going up, while wages stay the same.
However, Prime Minister Morrison says any decisions on this will come when the federal budget is handed down on the 29th of March.
"The Budget is in a couple of weeks, and that's when announcements are made about all matters in relation to the Budget. And I don't intend to engage in pre-budget speculation on this matter or any other matter. I've delivered three budgets of my own as treasurer and three as prime minister, and so there is always a lot of speculation before budgets, and so I'll leave the government's decisions for Budget to that night."
