Budget 2014: Government considers raising the fuel excise

MOTORISTS will likely be slugged an extra $1 billion a year at the petrol pump on top of a deficit tax and a GP co-payment under the Liberal’s tough love Budget.

MOTORISTS could be slugged an extra $1 billion a year at the petrol pump on top of a deficit tax and a GP co-payment under the Liberal’s tough love Budget.

While Treasurer Joe Hockey’s office was not confirming the return of petrol excise indexation, which was frozen in 2001 at 38.14 cents a litre, it is understood the idea has been canvassed in planning for Tuesday’s budget.

Industry experts say indexation to inflation would raise an extra $1.1 billion a year in 2016/17, rising to $1.6 billion in 2017/18.

Annually, the hike would add $29.70 to the fuel bill for a Toyota Corolla hatch, $37.35 for a Holden Commodore V6 sedan and $47.70 for a Ford Territory SUV. (Based on official fuel rating average and annual average distance travelled of 15,000km).

Another option floated in government ranks is lifting the excise rate by up to three cents a litre, estimated to raise an extra $1.2 billion a year on top of the $18.5 billion already forecast.

Assistant Infrastructure Minister Jamie Briggs says there will be a range of measures in the budget which would be difficult to sell politically, but were needed to get back into the black.

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The Australian Automobile Association says any rise in fuel excise is unjustified.

“Motorists already pay too much tax,” AAA chief Andrew McKellar said.

“As well, only a fraction of the fuel excise was being returned to spending on transport infrastructure by the federal government.”

It’s been estimated about a third of the fuel excise revenue is currently spent on roads.

But the government is understood to be planning a $10 billion infrastructure package as part of the 2014/15 budget.

Mr Hockey met with Treasury secretary Martin Parkinson in Canberra on Thursday to discuss final budget preparations before it goes to the printers on Saturday.

“It’s an economic action strategy to repair Labor’s budget mess and build a strong and prosperous economy for a safe and secure Australia,” the treasurer said.

Dr Parkinson said he expected the budget would restore confidence in the Australian economy.

Former prime minister John Howard locked in the tax at 38.1 per cent during the GST debate more than two decades ago, scrapping the twice-yearly indexation.

Liberal MP Kelly O’Dwyer refused to comment on the possibility of an excise hike in next Tuesday’s Budget, when asked this morning.

“I’m not going to speculate on the measures that might be in the Budget, because I simply don’t know,” she told ABC TV.

But Ms O’Dwyer insisted tough decisions would have to be made.

“You do have to understand that nobody voluntarily performed open heart surgery unless it is necessary to do so,” she said.

When asked about a possible fuel excise rise, Bill Shorten said the government was yet again sending up “rumours, kites and smoke signals”.

“Labor won’t jump at every rumour and every bit of speculation about a new tax or an increased tax on excise. We will wait to see the detail,” the Opposition Leader told reporters on a visit to western Sydney.

Motorists angry ... the NRMA says motorists already contribute “handsomely” to the fuel excise.

But Mr Shorten said there are millions of families who are struggling to make their fortnightly pay packets last already.

“There are many families in Australia, too many families in Australia, too many pensioners in Australia who are now looking at the bills they get and if the bills have a lot of red writing on it, they probably have to pay that straightaway but any other bill they are trying to kick down the road until they have more money to make ends meet,” he added.

“For me what’s important in the Abbott government’s budget is are they helping or hindering families?

“Are they getting you to pay more tax or do they recognise that the job of a Government is to help Australians get ahead?”

The NRMA is calling on the government to today rule out any hike in the fuel excise, arguing motorists already contribute “handsomely”.

“We’re strongly urging the government to come clean today,” spokesman Peter Khoury said.

“We want to see the idea of the increase scrapped.

“The reality is they’re not a bottomless pit where governments can continually go to.”

Mr Khoury said the government will collect $15 billion this year from the excise.

“To expect them now to give more when we’re still only seeing around $5 billion spent on roads is unreasonable,” he said.

The idea to increase the current excise comes on the back of Cabinet’s decision to lock in a deficit levy to target high income earners.

Prime Minister Tony Abbott refused to publicly confirm the measure after the meeting yesterday, but said the government was elected to get the Budget under control.

“I’m going to be able to look people in the eye on Tuesday night and on Wednesday morning and beyond and say we are all in this together, we are all doing our bit,” the PM declared.

“We are all playing a part in the fiscal repair job that Australia needs if we are going to build our prosperity, build our strength as a nation in the years and decades to come.”

The Coalition will honour the commitment to repair the Budget, he said, but in ways that are fair.

Former treasurer Wayne Swan argued Labor would be willing to consider “sensible measures to get the budget in good shape” and get back to surplus.

But he said the Opposition would not support the deficit levy in these circumstances.

“We’re certainly not going to support the fiscal vandalism we’re seeing at the moment, which is all there to try and achieve a political objective not an economic objective,” Mr Swan told ABC radio.

Originally published as Budget 2014: Government considers raising the fuel excise