General News

17 March, 2022

Webster says she never called for a fuel excise cut

The Nationals MP said she had been taken out of context and does not support a fuel excise cut.

By Tony Curran

MEMBER for Mallee Anne Webster says she never called for the fuel excise to be cut or frozen, and does not support it.

The Nationals MP said she had been taken out of context and that while she did write to the Treasurer to ask if he was considering changes to the excise, it was not a call to action.

Headlines over calls to cut or freeze the excise have dominated the news as Australians face a record rise in fuel prices at the bowser.

“I asked him (the Treasurer) whether we as a government were looking at reducing the fuel excise given the increase in fuel costs for people at the bowser,” she said.

“It was a very simple question and they wrote back and said it is not on the table at this point in time.”

A spokesperson for the Treasurer’s office confirmed to The Horsham Times that the government “does not comment on Budget speculation,” a statement that the Prime Minister repeated during a press conference last Monday.

Dr Webster said that following her question to the Treasurer, she was approached by a media outlet to make a comment, but poor phone reception disrupted the interview.

“Suddenly I’m out supporting the fuel excise. No - I just asked the question,” she said.

“What I did say was that going around the electorate and while doing a couple of thousand kilometres or more this last week, I’ve filled up my car twice at $500 (total).

“I’m fully aware of the issues around the cost of fuel and to the question as to whether I supported a drop in the fuel excise, I said people have not talked to me about the fuel excise at all.”

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Of much greater concern to constituents is the state of the roads, Dr Webster said.

“And of course the fuel excise the government collects at 44 cents (per litre) including GST on the current price of fuel is a fund that pays for roads,” she said.

“If we take that away, or cut it in half even, that would be 22 cents taken off what was for me $2.22 a litre, which ultimately it won’t make that much difference.

“The question is, is that (reduction) valuable when it’s going to deplete the government's funding for roads and infrastructure by $10 billion? We have to look at the big picture.”

Australian motorists will pay about $11 billion in fuel excise tax this financial year.

Over the next four years, Australians will pay an estimated $49.3 billion.

While government revenue from the fuel excise does not equate to dollar for dollar funding for roads, the percentage of fuel excise revenue allocated to roads has been increasing, with 98 percent of fuel excise revenue spent on roads in 2021/22, up from 82 percent the previous financial year according to the Australian Automotive Association.

In terms of potential cash in the consumer’s pocket, the driver of a medium SUV with a tank capacity of 59 litres is likely paying $25.19 in excise for every $97 spent on petrol, at a rate of 164.2 cents per litre.

At 200 cents per litre, the excise paid is the same at $25.19 with a total refill cost of $118.

Excise cuts would be a 'very blunt instrument'

University of Melbourne Honorary Professor of Economics John Freebairn said any cuts to the excise would only shift the burden of cost to another area.

“That is a loss of government revenue, and that doesn’t come as manna from heaven,” he said.

“Ultimately that is going to have to be made up by other taxes, or by less expenditure on education and so on.”

He also said that cutting the excise to ease cost of living pressure was not an effective approach.

“People who consume lots of petrol for road transport are going to get a lot out of it, but people who don’t consume any petrol for road transport are not going to get a lot out of it,” he said.

“It’s a very blunt instrument relative to say, improving the job keeper rate or cutting the personal income tax rate at the bottom.”

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Hon. Prof. Freebairn also said that cutting the excise fails to address the root cause of the current inflation - the Russian war in Ukraine.

“How effective is it in reducing overall inflation? I think one of the things we expect to happen out of the Ukraine war and freezing of Russia is pressure on wheat prices,” he said.

“That is going to ultimately flow into higher bread prices. Why should we be holding back that sort of pressure on petrol but not on bread?”

While Russia is a major supplier of oil to the west, Australia only imports a small share of its oil from Russia, Dr Webster said.

“We are relying on other nations, whether it’s Brunei, the UAE, the US, Malaysia, New Zealand and Indonesia is where we also get the rest of our fuel from,” she said.

“Australia only had 1.5 percent of our total oil from Russia. And both Viva and Ampol have both said they will cease to purchase from Russia.”

However, Russia is one of the main suppliers of oil to the US, ranking third place with eight percent of total imports in the US’ top five sources of oil in 2021, based on gross imports by country of origin.

  “Because the US and others are not purchasing oil from Russia now, there is a reduction in the overall pool,” Dr Webster said.

“What Australia has been doing is that we have agreed that we would be part of a collective action of the international energy agency in putting some of (Australia's oil reserves into an international pool).

“And ultimately it will be up to the prime minister and cabinet to determine what percentage of the 1.7 million barrels of oil that we have currently in our strategic reserve in the US, we will contribute to that pool of crude oil that will mitigate some of the supply demand issues that we’re experiencing.

“So it’s a much bigger issue and when I wrote to the Treasurer it was because I had seen it (asked) on a television program … and I thought I wonder if this is going to be an issue then I need to know where this is coming from and is this something I should be fighting for in the interests of Mallee.

“The reality is that I haven’t had people ask me to do that at this point in time. I have people concerned that I’ve apparently come out and said that I am asking for the drop in the fuel excise when I actually just went to the Treasurer to ask the question.”

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