With the price of unleaded petrol now over $2 per litre, the government is signaling a cut in fuel excise but this is no solution to higher prices or reducing transport emissions.
Here’s why it’s a bad idea:
- Removing fuel excise entirely would initially cut fuel costs by 44 cents per litre but cost over $20 billion per year in revenue – money that currently helps fund road works.
- Lower fuel prices would encourage more consumption, reduce the incentive for smaller, more fuel efficient vehicles, for EV take-up, public transport, bike riding and other alternatives.
- Australia would be more dependent than ever on imported fuel
- Australia would still have only about 3 weeks supply of liquid fuel in the country
- Increased volatility and demand for fossil fuels will force the price up again so both the motorists and the budget are both worse off
- Road congestion will increase costing motorists billions in lost time and extra fuel
- Greenhouse gas and other pollution with adverse effects on health would continue unabated.
Here’s what might help solve the problem:
Spend $20 billion to help Australians with the cost of transport through:
- Increased subsidies or tax breaks for EV’s and recharging infrastructure
- Greater spending on freight rail
- Greater spending on public transport.
All these measures would make Australia more energy-independent, reduce air pollution and reduce greenhouse gas emissions.
However, this government has, time and time again, backed fossil fuels and short-term popularity over renewables and evidence so there is little chance that the 2022/3 budget will deliver what’s needed.
References
- Federal government is under pressure to cut fuel excise. But will it make any difference at the petrol pump? (ABC, March 2022)
- The Australian Institute of Petroleum (AIP) – price surveys
- Morrison government yet to release 2019 report on vulnerability of Australia’s fuel supplies (Guardian, March 2022)
- Scott Morrison flags tax relief as petrol hits record highs (SMH, Mar 2022)
- Image – SMH