SA Premier asks Prime Minister to slash fuel tax to slow price surge

SA’s Premier has asked the PM to do his bit to ease the pain of surging fuel prices by cutting taxes, as alarms sound over new supermarket shortages.

Premier Steven Marshall has urged the Federal Government to reduce its 44.2c/L fuel tax which without check could contribute to unleaded petrol prices of $2.50/L within weeks.

“We know how much increased fuel prices are hurting household budgets so we’re seeking some relief from the Federal Government,” Mr Marshall said after revealing he had written to Federal Treasurer Josh Frydenberg on the struggle motorists were facing.

The letter states: “There is a need for measures in the federal budget to combat rising fuel prices and ease cost of living pressures”.

Adelaide motorists have been shocked by the Ukraine-driven price increase which has seen average unleaded prices jump from $1.63/L to $2.20/L in the space of a month.

The RAA, which usually does not predict price increases to avoid encouraging gouging, believes with wholesale prices close to $2/L, the next attempted spike by petrol stations in Adelaide will be $2.50/L.

When prices hit the low in the market, which RAA expert Mark Borlace believes may be as high as $2.10/L, bowser bandits traditionally will try and spike prices by 40c/L.

“Two dollars and ten cents will become the new normal in the current market,” he said.

“Put the traditional spike on and it is driven up to $2.50c/L.”

Mr Marshall would not nominate a tax cut figure, nor how long it should be valid, saying that was a matter for drafting the federal budget.

He cited figures since coming to office in March 2018, of annual cuts to average power bills of $421, water bills of $191, the emergency services levy $184, and car registration $196.

SA Premier with PM Scott Morrison and SA Senator Simon Birmingham. Picture: NCA NewsWire / Brenton Edwards

A Labor Party spokeswoman said it had pledged no new taxes and no tax hikes if it won the March 19 election.

Mr Frydenberg and Opposition Leader Peter Malinauskas have been contacted for comment.

Independent Senator for South Australia Rex Patrick has called for a 50 per cent cut in fuel tax after consulting with regional leaders on the problem.

“The average motorist paid about $775 in fuel excise in 2021, based on approximately 35 litres a week in petrol consumption,” he said.

“The fuel price burden is especially acute in Australia’s regions and remote areas.”

The attack on fuel tax, which before the price increases in the last month was a tax of $35 per cent — comes as the RAA released data from its real-time fuel price app showing how regional SA is being strangled by much higher prices.

For the first time, data from over a year shows how regional South Australians are being ripped off.

Between the launch of the RAA app in March last year, and this week, regional motorists have been paying up to 15.5c/L more for unleaded petrol than Adelaide counterparts, even if they live just minutes from the city.

On average in Adelaide motorists pay $1.53/L for unleaded and $1.58/L for diesel, but in the worst of the regions, the Fleurieu and Kangaroo Island, the costs are $1.68/L for both types.

The only region to come close to Adelaide prices is the Barossa, where motorists pay just over the Adelaide unleaded price, $156/L and less for Diesel $1.57/L.

RAA spokesman Mark Borlace said for an average 60L tank of fuel the up to 15.5c/L mark-up represented almost $10 for each time the motorists filled up.

In contrast the trucking industry cites a maximum 9.5c/L for the most expensive operations to refuel petrol stations, those in the Far North.

Mr Borlace said country South Australians had to drive much larger distances than those in the city, farmers used far more, and often had to use much less fuel efficient cars.

The average motorist in Adelaide drives 12,000 but in the regions around 14,000, meaning the mark-up makes them pay more than $500 extra each year.

“There is a lack of volume and a lack of competition,” Mr Borlace said.

“Retailers are not actively chasing each other because they know they don’t have to.”

But some of these large centres close to Adelaide should really be selling for close to Adelaide prices.

Fuel means shop shortages loom

Truckers warn product shortages could again hit supermarkets without relief from fuel prices over $2/L.

And farmers have begun restricting non-essential work to save on fuel.

South Australian Road Transport Authority head Steve Shearer said the prices cannot be accommodated by the tight budgets of smaller transport companies, and needed fuel excise relief to survive.

“If fuel goes up 40c/L our running costs go up 40c/km, because we get one km for each litre in the big trucks,” he said.

“We all saw the empty shelves during Covid when trucks were disrupted at borders and that could happen very quickly again if significant numbers can’t afford to buy fuel.”

Wholesale diesel prices are close to $2/L because of the invasion of Ukraine and experts expect retail diesel prices of $2.50/L within weeks.

Citing one medium-sized Adelaide trucking business, Mr Shearer said it had been hit with a 20 per cent, 40c/L price increase in bulk fuel the last week.

He said the crisis was compounding an already difficult fuel excise situation for trucking companies.

Strathalbyn Poll Hereford farmer Peter Manuel. Picture: Brenton Edwards

Truckies are given back the entire fuel rebate of 42c/L, minus “road user charge” which punishes them for the extra toll they take on road surfaces. Rising costs mean the two figures will meet with three years.

But with the rebate unlikely to change, Mr Shearer said the two figures would cancel each other out within three years because of inflation in roadworks and maintenance.

Mr Shearer said the current fuel tax rebate for truckers was 17.8 per cent, but this did not benefit people buying in the regions instead of the city.

In some parts of Australia farmers are reportedly cutting back on non-essential operations if fuel can be saved, in the hope prices will come down later this year.

Strathalbyn farmer and Food Producers and Landowners Action Group founder Peter Manuel, said.

He said while farmers were given a fuel excise rebate from the Federal Government, this did not change any of the massive fuel mark-up by retailers.

“There is a rebate but it is a lot less effective in the country where the prices are so much higher,’’ Mr Manuel said.

“We don’t need any mark up on any costs at the moment. It is getting more and more difficult to run any farm.”

Mr Shearer said there was no way fuel price increases of up to 15.5c/L in regions such as the Fleurieu and Kangaroo Island could be justified when the maximum cost of trucking fuel, to the Far North was 9.5c/L.

“Even to Ceduna the cost per litre to get there is 6.25c/L,’’ Mr Shearer said.

“You can truck fuel to the very remote Marla for a cost of 9.5c/L.”

Don’t stop visiting, SA’s regions plead

Advocates for the regions have appealed for intrastate tourists to keep visiting despite high fuel prices.

And the RAA said current hyper-inflated prices meant shopping around could unearth cheaper prices than many in Adelaide.

RAA fuel expert Mark Borlace urged motorists to plan ahead and search for the best regional prices if possible before they travelled.

“If they use the RAA fuel app before they go they can still find good deals outside of Adelaide, anywhere that a town has good competition,’’ he said.

“The app covers prices from border to border to border all over the state.”

For example the three petrol stations in Port Wakefield were all selling fuel for less than $2.03/L, while those in northern Adelaide were mainly around $2.21/L.

Likewise the prices in Victor Harbor were all under $2.06/L, far less than Adelaide.

But the Fleurieu and Kangaroos Inland region did record the highest prices — averaged over a year — in the state.

Both unleaded, $1.68/L and diesel $1.68/L were well above Adelaide average of $1.53/L and $1.58/L.

Victor Harbor Mayor Dr Moira Jenkins said high fuel prices would have an impact on visitor numbers but urged people to keep coming back.

“Keep coming on the day trips, because there are many things you can do in Victor without using a tank of fuel,’’ she said.

Dr Jenkins also qualified the region’s status as the most expensive because of the high fuel prices in some remote areas.

On Kangaroo Island on Saturday Kingscote’s two petrol stations were selling unleaded for $2.32/L, far higher than Victor Harbor.

“They have to get the petrol across on the ferry of course, so that will increase the average, but yes Victor Harbor often has higher prices than Adelaide,’’ Dr Jenkins said.

South Australian Tourism Commission chief executive Rodney Harrex said it was still too early to notice significant impacts, and forward bookings were strong across the state.

“New data for December 2021 shows that visitor expenditure in SA was at 98 per cent of pre Covid levels,’’ he said.

“There are so many reasons to keep seeing SA and we’re confident the pent up travel demand will keep people travelling.”

Barossa Mayor Bim Lange said the area was lucky to have good competition with several outlets keeping prices down when they could.

Barossa had the best of any prices outside Adelaide, costing on average only 3c/L more than the capital for unleaded and one cent per litre less for diesel.

“Cockatoo Valley is always cheaper than anywhere, Tanunda and Nuriootpa are more but also Angaston is often cheaper,’’ Mr Lange said.

“Averaging across the whole area we have good competition and some good prices.

“It isn’t just a farming and tourist area. We have a lot of people commuting down to the northern suburbs and that means local outlets have to be somewhat competition with northern Adelaide.”

Originally published as SA Premier asks Prime Minister to slash fuel tax to slow price surge