Forget the fuel excise, let’s find the oil in Australia

The focus on the fuel excise is diverting attention away from the fact that we should be trying to find oil in Australia and refining it here so that we can guarantee the supply of petrol.

We should be refining oil in Australia to guarantee a supply of petrol.

The idea of cutting the fuel excise is neither a good idea nor a bad idea, it’s just a silly ‘utterly beside the point’ idea.

The only ‘cut’ that would be worth it – in terms both of your wallet and your vote , and indeed in at least ‘pretending’ to actually do some tax reform – would be to eliminate the excise entirely.

Doing that, would also fully remove the ‘tax-on-a-tax’ – the 4.4c of GST that is paid by the driver on the 44c of excise on each litre of petrol/diesel.

A 10c cut, say, on the excise would be utterly silly.

It would be swallowed up in a day, either running through the petrol price cycle or in a permanent adjustment of who gets what along the supply chain from crude oil price to the retailer.

And in which case, by the bye, you’d be back to paying that extra 4.4c of GST in full as well.

You would save zip, while the federal government would be out of pocket by a couple of billion dollars a year.

Now I have to say, writing the first sentence did trouble me somewhat.

It went against one conclusion I’ve come to over half-century watching the ‘fiscal sausage’ being made by the politicians, the bureaucrats, the ‘experts’, the lobbyists, the special interest groups.

We should be refining oil in Australia to guarantee a supply of petrol.

With the 15m or so taxpayers usually nowhere to be seen, or ‘considered’ – except in years like this one, a rapidly shortening number of months out from an election.

That is to say, my conclusion, bluntly, is to not look a tax cut gift-horse in the mouth.

No matter how cynical, no matter how silly, no matter how tiny, it is, the dollars are always better in your pockets than in the coffers in Canberra.

Even if, even if, they don’t actually end up in your pockets, but in the pockets of somebody else in the petrol supply food chain who manages to snaffle them first.

As the late Kerry Packer famously said directly to the faces of the pollies themselves - including one particular young pollie who would subsequently be Australia’s best treasurer; the only one in 120 years who gave us budget surpluses and tax cuts nearly every year: maybe, he was listening and took it to heart.

“As a government, I can tell you, you’re not spending it that well that we should be donating extra.”

But, the truth of the matter is that there just isn’t enough dollars (refundable to taxpayers) in the fuel excise – other than eliminating it in full; and even that would be of limited benefit to business.

Business already either gets refunded the entire 44c a litre excise – but not the 4.4c extra GST paid on that excise - for ‘off-road’ fuel use, or 17c for ‘on-road’ (transportation) use.

So cutting it would be of zero benefit (or, true, fiscal cost) to the first group and much reduced benefit to the second group.

Yes, it could theoretically benefit non-business drivers; but frankly the amounts would be trivial in the weekly budget scheme of things; dollar-for-dollar you’d be better off with a personal tax cut.

Or, a direct payment of some sort from Canberra – like Peter Costello’s $300 ‘cheques in the mail’.

The focus on the fuel excise is also considerably more than annoying in diverting attention – and demands for real Aussie-benefitting action – away from the two big issues that really matter.

One, let’s go back to urgent, serious, efforts to find and develop the damn (oil) stuff here.

Let’s go back to a future where we then refined that damn stuff here.

That’s the only way to guarantee we actually get petrol.

It’s also the way to ensure we can price it as we see fit.

Originally published as Forget the fuel excise, let’s find the oil in Australia