The Opposition Leader’s answer to Jim Chalmers’ $5-a-week tax cuts for 2026 will grab even more attention than Labor’s budget tax surprise and cost less than half as much.
This is a bold political move that carries with it all the economic caveats and downsides as Howard’s excise cut in February 2001 when the Liberals were in dire straits facing the backlash of the GST.
But it also carries with it all the political pluses of cutting the cost of filling the family car.
In 2001, despite Peter Costello’s trenchant opposition to the plan, Howard insisted on the excise cut especially to appease people in regional Australia and, of course, to appeal to the suburban commuters, truckies and tradies.
The excise cut and the May budget concessions started the recovery of the Coalition and provided the platform for the later election victory.
Dutton has made no bones about wanting to attract voters in the suburbs and regions, and cutting petrol prices – one of the top concerns in the list of cost-of-living pressures – will be welcomed with open arms.
As opposed to the new tax cuts, the fuel excise will have an immediate effect and be limited to 12 months. That’s not enough to satisfy the demands for responsible spending and long-term economic management but Chalmers’ latest $17bn tax cuts and $34bn in new spending, with more than $100bn “off budget”, leaves Dutton wriggle room.
Cutting excise on fuel also means Dutton can respond in terms of tax cuts without having to develop a broad tax policy before the election.
As treasurer in 2001, Costello made it clear he did not support cutting the tax – but as prime minister, Howard, having gone through the trauma of introducing the GST, demonstrated that political survival trumped economic niceties.
Dutton is demonstrating a similarly ruthless political outlook.
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Peter Dutton has gone to the tried and true political playbook of his old mentor John Howard and offered to halve petrol excise for all motorists as “immediate relief” in response to Labor’s $5-a-week income tax cut next year.