By David Crowe
Australians will be given a cut in fuel excise for at least six months in a federal budget plan to reduce the rate by more than 10 cents a litre to help households with the soaring price of oil.
Prime Minister Scott Morrison and Treasurer Josh Frydenberg have agreed on the temporary cut in tomorrow night’s budget to convince voters there will be help with the cost of living in response to the global aftershocks from the Russian invasion of Ukraine.
People can expect petrol price relief in Tuesday night’s budget.Credit: Flavio Brancaleone
The excise, worth 44 cents per litre and due to rise later this year in line with inflation, will be cut by 10 to 20 cents but the government will limit the time for the one-off help.
Motorists pay $22 in excise when they do a 50-litre refill at the petrol bowser but would see this cut to $17 if the excise is reduced by 10 cents per litre.
Economists have warned against a change to the excise on petrol and diesel when the budget is in deficit and the impost is due to raise $20.8 billion next financial year before allowing for tax deductions for trucking companies and motorists who can claim the cost of their fuel.
“In the handbook of dumb things politicians can do, a leading chapter is hasty adjustments around petrol prices ... ahead of an election,” Deloitte Access Economics partner Chris Richardson said last month.
“The regret lasts a really long time.”
Mr Richardson estimates the recent 0.9 per cent rise in the fuel excise to 44.2¢ a litre would boost the federal budget by $100 million to $150 million.
Prime Minister Scott Morrison said the budget would deliver help on the cost of living now as well as economic measures for the long-term.
Asked about whether a cut to fuel excise was responsible, Mr Morrison said he “notes the speculation” but would not be drawn on the budget measure.
Asked if the budget strategy was to “buy” votes, Mr Morrison said the budget was about addressing the cost of living pressures being faced by families.
“It’s about the long-term plan that Australians need to grow their economy and deal with the uncertainties that are ahead,” he said while visiting the construction site of the Western Sydney Airport to outline the government’s infrastructure promises.
“I mean, we’ve steered the Australian economy through one of the most challenging and difficult times since the Great Depression and we’ve steered this country through a time of great international uncertainty, particularly in our region, the likes of which we haven’t seen since the Second World War.
“And to do that, you’ve got to have the experience, you’ve got to have the strength to take Australia through.”
Labor treasury spokesman accusing the government of “pretending to care” about fuel prices when the election was near and the Coalition had been in power for nine years.
“There’s a reasonable chance that there’ll be petrol excise cut. Of course, we’re unlikely to stand in the way of that,” Mr Chalmers said.
“Our issue is really that the government’s been in office for almost a decade now. They’ve come after people’s wages and job security and now on the eve of an election they want people to think that they actually care about cost of living pressures.
“They’re just pretending to care about these cost of living pressures because we’re on the eve of an election.”
Deputy Prime Minister Barnaby Joyce, a member of federal cabinet and a member of the expenditure review committee that makes key budget decisions, said he understood the argument for a cut to excise if others in government chose to make that call.
“Obviously, cost of living is central and if that’s the decision that they decide to make I understand precisely where it’s coming from,” he told reporters on Monday morning.