Fuel excise relief to be extended by one month at reduced rate
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The news: The federal government has announced a one-month extension to the fuel excise reduction but at a less generous rate of 16 cents for July, compared to the 32-cent cut from April to June.
The heavy vehicle road user charge will also be discounted by 16 cents for July, compared to a total reduction to zero that has been in place for the past three months.
The extension for both measures spans from 1 July to 2 August.
The numbers: Cutting the fuel excise in half and scrapping the charge on heavy vehicles for three months came at a cost of $2.9 billion. About $2.5 billion of this charge was due to the fuel excise reduction.
The government did not specify a cost of the new fuel reduction extension, but these figures would indicate a cost to the budget of under $500 million for the month.
The states and territories have used GST revenue to fund a 5.7% portion of the fuel excise relief for the past three months and the federal government will be seeking support from the states for July, when National Cabinet meets on Monday.
The context: The federal government has been meeting weekly to determine the future of the fuel excise relief, which has been an expensive intervention for the budget bottom line amid the US-Iran war.
Sources previously told Capital Brief the recent deal struck between the US and Iran, and the reopening of the Strait of Hormuz, has been a significant part of the thinking over whether an extension would be delivered. There have been some concerns that providing cost of living relief that is untargeted could push inflation higher, however Reserve Bank governor Michele Bullock has not raised particular concerns about the fuel excise.
What they said: Prime Minister Anthony Albanese said the decision “recognises that despite the welcome and substantial drop in the price of petrol recently, we know people are still under pressure”.
“The 16 cents a litre extension to the fuel tax cut that we’ve announced today will reduce the cost of a 65L tank of fuel by around $11,” he said in a statement.
“We’ll continue to do what we can to shield Australians from the worst impacts of this conflict including securing additional fuel from our partners.”
Treasurer Jim Chalmers said in a statement that the “temporary support” would help with the cost of living.
“Despite the welcome and substantial drop in the price of petrol recently, we recognise people are still under pressure,” Chalmers said.
“This extra month of fuel discount will help Australian motorists and businesses with the cost of living as this support tapers off.”
The source: Anthony Albanese and Jim Chalmers media release
