Federal Budget 2014: Why motorists deserve a better deal with a petrol tax

OPINION: The petrol tax in the Federal Budget is good but how it will be spent is bad. Joshua Dowling explains why.

MOTORISTS are alarmed by the increase in fuel tax in this week’s Federal Budget, but they’re upset at the wrong part of the deal.

The increase of an estimated 1 cent per litre per year (now that fuel tax will be pegged to inflation) is a proverbial drop in the ocean.

The problem is that we’re only getting less than a third of fuel tax funnelled back into better roads. And even then, the new roads will come will a toll gantry.

Some salient facts: Australia is the fourth cheapest country in the world for petrol (behind the US, Canada and Mexico) and the sixth cheapest for diesel.

We already have among the lowest tax on fuel in the developed world.

The fuel tax was pegged to inflation until 2001, when then Prime Minister John Howard froze it at 38.1 cents per litre to take some of the pain away from the introduction of the GST.

The extra 1 cent per litre announced this week equates to roughly an extra 50 cents to 75 cents on every refill for most cars, a fraction of the price premium that petrol stations charge for a bottle of water or a chocolate bar.

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Over a year, the 1 cent per litre price hike works out to be only $9.90 for the owner of a Toyota Corolla, an extra $12.45 for Holden Commodore drivers, and $15.90 for Ford Territory customers, based on the Census average distanced travelled of 15,000km per year.

Fuelling anger ... motorists getting a raw deal. Picture: Thinkstock

The bigger problem is how little fuel tax goes back into roads. Of the $14.9 billion raised last financial year, just $5.4 billion was spent on roads and freeways.

Of the forecast $15.2 billion in fuel tax revenue next financial year, just $4.8 billion will be spent on roads.

In the 2015-16 financial year revenue is forecast to go up to $15.8 billion, roads will get $7.3 billion.

The figure of $7.3 billion sounds like a lot of money but it’s marginal at best. The WestConnex freeway extension in Sydney’s inner west will cost $13 billion alone.

Once again the motorist is not only helping to underpin the economy, we’re paying twice. Most fuel tax goes into consolidated revenue while we drive under yet another toll point.

It’s like buying a dozen eggs and only getting four in the box. Motorists deserve a better deal.

The government says it will spend $80 billion in the coming years on roads, but half of the funding will come from “private operators”. That’s political-speak for toll companies.

If we must go down this path, why is there not a sunset clause on the toll, as has been the case on some roads in the past?

Once the toll operator makes their money back and banks some profit, the roads should be handed back to public ownership after 20 years.

If only the Federal Government could be persuaded that better roads not only save lives, they improve productivity and therefore would generate revenue in other areas.

Instead, it is loading the burden on motorists, yet again.

This reporter is on Twitter: @JoshuaDowling

Originally published as Federal Budget 2014: Why motorists deserve a better deal with a petrol tax