Pain at pump could backfire on Abbott

THE howling outrage over the soon-to-be introduced deficit tax will soon be drowned out if — as seems likely — mums and dads are forced to pay more for petrol after Tuesday’s Budget.

For the past 13 years, fuel excise has been frozen at 38.143 cents/litre. The excise on fuel was introduced by Labor Prime Minister Bob Hawke in 1983, and increases were linked to the consumer price index, effectively delivering bi-annual price hikes. After a party room revolt in August 2000, John Howard froze the level of excise as part of the tax trade-off that accompanied the introduction of the goods and service tax in 2001. It was regarded by economists as a populist measure but it probably helped Howard win the 2001 election more than the tough approach to illegal boat arrivals his government showed in the so-called Tampa incident. Unlocking the fuel excise and returning to a system with increases linked to the CPI would make a mockery of Prime Minister Tony Abbott’s hope to ensure an equality of sacrifice in the Budget’s attempts to fix Labor’s mess. Any rise in the fuel excise will hit every motorist and it doesn’t take a genius to understand that those on lower incomes will be harder hit proportionately than those with more money in their wallets. Fuel is a necessity, not a luxury. The hardship will not be spread around with any equity — it will not be fair for all parts of the community. Indeed, those in rural areas where there are no commuter trains, buses or ferries will really feel the extra pain. It is estimated that the freeze on fuel excise is costing the budget around $5 billion a year in lost revenue and that had the Howard freeze not been imposed, and the fuel tax had increased in line with inflation, it would now be more than 15 cent a litre higher. Treasurer Joe Hockey may opt to introduce a one-off ad hoc excise increase (3c a litre has been canvassed) to speedily raise revenue or he might reintroduce the former regime of February-and-August hikes in line with the CPI, or he may even deliver an immediate excise increase and then restart the bi-annual CPI excise hike cycle. Oil is currently selling for around US$100 a barrel and the global economy is depressed. Should the economy pick up, the oil price will rise to match the increased demand. Even if the outlook for the Australian economy improves, things will not get better for motorists at the pump. This measure seems to validate one of the popular criticisms of the Budget we still have not seen but are judging from well-placed leaks. That criticism is that the Budget reflects an urban eastern Australian perspective and it not reflective of the views of people who aren’t over-educated high earners living in leafy beachside suburbs. The degree of unrest within the Coalition about the Budget process accurately reflects the degree of anger being conveyed to MPs offices. Unless Abbott and his staff have tin ears, they will be well aware that supporters in the conservative heartland are unhappy. The anger over the deficit tax will be replaced by the fury over the fuel price hikes and will grow unless the government can present an extremely compelling argument for its budgetary measures on Tuesday. The “trust us” narrative is too thin to survive unless it is backed by solid evidence the measures proposed will deliver. After six years of Labor’s fatally flawed government the electorate is rightly wary of smooth-talking politicians promising deliverance and delivering perdition. Kevin Rudd’s performance was so woeful that his own party axed him before the public had a chance to dump him. From the outset, he broke major promises, he feted the self-anointed urban elites, he ignored middle Australia and showed an extraordinary arrogance toward his colleagues. A broken promise characterised Julia Gillard’s prime ministership. Although she enjoyed the support of the Greens and wooed a handful of renegade independents, her own performance descended into the hysterical. Abbott has won public support for keeping his election promise regarding stopping the arrival of illegal entrants but this Budget has the potential to not only determine how his government is viewed in the immediate future, but to undermine the critical difference between it and Labor — trust. The Budget will have to make a clear and simple argument for the tough measures it will contain and it will have to wear the opprobrium for its signalled broken promises. Honesty, not obfuscation, will win the day. VESTED INTEREST IN SAVING FISHERMEN With estimates of the number rock fishermen in NSW ranging from 50,000 to 80,000 there are obviously a considerable number of people who value very fresh fish. But they should ask themselves if it is smart to risk their lives for the experience of catching that fish when they could buy something pretty tasty, if not quite as fresh, from their fish shop for less than $25 a kilo. The number of rock fishermen who die each year is increasing as more people — particularly those who have recently arrived from Asia — decide to feel the raw ocean wind and live the moment. More than 80 people have died over the past 10 years trying to wrest their fish dinner from an unforgiving ocean. Many of those who died weren’t used to the unpredictable swells that pound the rocks but water police, charged with rescuing those who are manage to survive or recover the bodies of those who drown, say it is unfair to single out the inexperienced. Among those who have died are native Australians who have simply overestimated their ability to survive a fall and endure immersion. They may have been champion surfers in their day but they no longer have the resilience needed to sustain themselves after a fall on to the rocks. Simple life vests do save lives and would slash the costs of rescues. I would hesitate before making the wearing of life jackets compulsory for rock fishermen but unless common sense prevails it might be necessary — just as it was necessary to introduce laws to make seat belts compulsory in cars — if it can be shown they would reduce loss of life and save greater public expenditure.