Dutton drives home his pitch to commuters by dumping guzzler tax

Coalition leader Peter Dutton will build on his pitch to commuters by dumping Labor’s penalties on gas-guzzling vehicles as new research shows his cut to the petrol excise will provide the biggest boon for lower-income outer-suburban voters.

The analysis by economic research institute e61 also warned that the 25.4¢-per-litre cut to the fuel excise, which Dutton has pitched as a temporary measure, could be more difficult to retract than the last time the fuel excise was slashed under the Morrison government in 2022.

Peter Dutton has said the fuel excise cut would last for 12 months.Credit: James Brickwood

The promise to slash the price of petrol is the centrepiece of the Coalition’s plan to alleviate cost pressures on families, which it claims is a more immediate form of relief than Labor’s “top-up” tax cuts.

Adding a new plank to the opposition’s focus on the cost of commuting, Dutton will on Friday confirm his intention to drop penalties for car companies that breach Australia’s first vehicle efficiency standards, due to begin in July.

The opposition is citing industry estimates suggesting the government’s plan would hike the cost of a Toyota RAV4 by $9700, but Labor rejects those claims and says international experience showed the laws would not lead to higher prices. The electric-vehicle sector has said fewer zero-emissions cars would be imported if the Coalition scrapped the rules.

“This is a tax on families who need a reliable car and small businesses trying to grow. Instead of making life easier, Labor is making it harder and more expensive,” Dutton said in a statement.

“We want cleaner, cheaper cars on Australian roads as we head towards net zero by 2050, but forcing unfair penalties on carmakers and consumers is not the answer.”

The opposition’s vow to remove what it calls a “car tax” had been anticipated, given the Coalition opposed the penalties when they were passed, but the opposition is hoping the move will prove popular among undecided voters in the suburbs.

Dutton announced a fuel excise cut in his budget-in-reply speech last month, mirroring a policy in the final year of the Morrison government.

The chief executive of e61, Michael Brennan, said Morrison’s excise cut flowed through to lower prices within two weeks across Sydney’s western suburbs, while prices fell by less, and more slowly, in affluent neighbourhoods such as the eastern suburbs and northern beaches.

“This indicates that Peter Dutton’s proposed excise cut will have the greatest benefit to less affluent, outer suburban electorates,” he said.

The think tank’s economist, Aditya Maitra, said the benefits to households in poorer suburbs was not just because they tended to drive more often and longer distances, but also because of the petrol market dynamics in those areas.

While wholesale petrol costs fell immediately when the Morrison government cut the fuel excise by 22.1¢ per litre in 2022, Maitra said the pass-through to the bowser was slower, taking an average of two weeks.

“Western suburbs such as Blacktown saw faster and larger price reductions compared to more affluent areas such as the eastern suburbs,” he said.

Maitra said budget-conscious outer urban commuters would shop around for better prices, creating stronger incentives for stations in those areas to compete for business.

Outer suburbs also tend to have a greater mix of independent and non-branded petrol stations, intensifying competition.

But Maitra also warned that winding back the fuel excise cut after 12 months could be more difficult than in the past.

“Arguably, the economic rationale for a cut to the fuel excise was far stronger in 2022,” he said, because it was framed as a way to protect Australians from a short-term spike in global oil prices.

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