Petrol tax changes have been irresistible for politicians for half a century

Fuel taxes have been the plaything of Australian politicians on the make, up against it for revenue, or clean out of other ideas for almost half a century.

Peter Dutton is simply the latest to promise to tinker with fuel excise.

Opposition Leader Peter Dutton.Credit: Alex Ellinghausen

John Howard – who Dutton says has been his greatest political influence – introduced the tax in the first place. Oops. Howard was treasurer in the government of Malcolm Fraser.

That was in August, 1978.

Petrol was 21 cents a litre.

Howard, the economic rationalist, argued that Australians weren’t paying enough for their fuel at a time when world prices had quadrupled. Besides, his budget needed a boost.

His introduction of excise meant motorists would pay about 3.5 cents a litre extra.

Five years later, the Fraser government was gone and new treasurer Paul Keating jumped onto the excise train.

Keating announced an increase of 1.5 cents a litre in excise on motor spirit and distillate, though the rebate for diesel used in off-road industries and essential services wouldn’t change.

The sting was in the tail. Keating also announced six-monthly indexation of fuel excise would be introduced to counter “declining revenues”.

In early 2001, John Howard was prime minister and in terrible strife in the polls, with a federal election on the way.

Fuel to the flame ... John Howard in 1978, Paul Keating in 1983, Brendan Nelson in 2008 and Josh Frydenberg in 2022.Credit: Fairfax Archive, Alex Ellinghausen

Desperately, Howard killed the golden goose that fuel excise indexation had become.

First, he announced a reduction of 1.5 cents a litre in the fuel excise he had introduced 23 years previously.

And he would abolish all future half-yearly indexations of fuel excise to “introduce a welcome discipline on all future governments” (all of them until indexation was reintroduced by Tony Abbott in 2014).

With Howard gone in 2007, the next Liberal leader, the hapless Brendan Nelson, rediscovered fuel excise as a drowning man might clutch at a straw.

“Petrol is now hurting Australians in every walk of life in every part of the nation,” Nelson declared when delivering his budget-in-reply to the Rudd government’s economic statement of May 2008.

“There is only one way an Australian government can actually do anything decisive about the price of petrol. So tonight I propose a cut in fuel excise of 5 cents a litre. This is a modest but meaningful way of helping.”

Nelson never delivered. He was gone as opposition leader within six months.

Scott Morrison’s government went big on cutting fuel tax in its last dysfunctional months.

In the budget of late March, 2022, Morrison’s treasurer, Josh Frydenberg, announced fuel excise would be halved for six months.

Excise on both petrol and diesel would be cut to 22 cents a litre, down from 44 cents.

It didn’t help Morrison. Or Frydenberg. Less than two months later, the Morrison government was massively defeated. Frydenberg lost his seat.

And now, with an election due on May 3 and a new cost-of-living crisis dominating the political contest, a new Liberal leader, Peter Dutton, is proposing to halve fuel excise for a year if elected – reducing the rate from about 50c to 25c a litre.

He’d hope that nobody revives the words of the architect of fuel excise, John Howard, who once became very honest during a radio interview and declared that “you have to point out calmly what are the root causes of high petrol prices. And the root cause is the world price of crude oil. Nothing can alter that fact.”

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