The Coalition has proposed an automatic halving of fuel excise whenever Brent crude averages above US$100 a barrel for two weeks, funded by its plan to cut tobacco excise by 80 per cent. Announced by Opposition Leader Angus Taylor in Canberra on 20 September, the “Fuel Price Shield” would take around 27 cents a litre off the pump price, about $15 on a typical tank, and would switch off again when the eight-week average falls back under US$100 or after three months, whichever comes first. Treasurer Jim Chalmers dismissed it the same day as “uncapped and unfunded”, and said the government is not considering any further excise cut.
The trigger, not the cut, is the new idea
Australia has now had two fuel excise cuts in four years, both decided on the run. The 2022 cut was a budget-night measure; this year’s ran from 1 April to 2 August, taking excise from 52.6 cents to 20.6 cents a litre, then delivered only a 16 cent discount in its final extension because indexation lifted the underlying rate mid-stream. What the Coalition is proposing is different in kind: a published rule. A two-week Brent average above US$100 turns the relief on, an eight-week average below it (or a three-month clock) turns it off, and the government of the day has no discretion in between.
Saul Kavonic of MST Financial, no fan of excise cuts, made the point to the ABC that a predetermined threshold at least removes political discretion from the decision. That matters more to fuel retailers than to motorists. A discretionary cut arrives with a few days’ notice and leaves on a date that can move; a rule-based one can be seen coming in the daily Brent print, and its end date is arithmetic. Operators who have lived through the last two cuts will know which is easier to plan stock and price boards around.
What 27 cents does at the pump
Excise is collected when fuel leaves the terminal, so a cut flows to the pump as new stock arrives, not at midnight on the trigger date. Sites holding tanks bought at the full rate carry that cost until they sell through, which for a busy metro site is a day or two and for a low-volume regional site can be a week or more. The same lag runs in reverse when the cut ends. Nothing in the Coalition’s announcement addresses the transition; the April cut handled it by simply letting the market absorb it, and the price-monitoring bodies watched the pass-through.
At current prices the relief is material. Brent has been above US$100 since late July on the back of renewed conflict in the Middle East, and regional motorists quoted by the ABC are paying $2.60 to $2.70 a litre in North Queensland. Halving excise at that level takes the pump price back toward where it sat in autumn.
The tobacco side of the ledger
The Parliamentary Budget Office has costed the Coalition’s 80 per cent tobacco excise cut at $8 billion in additional revenue, on the assumption that a legal pack falling from $40 to $50 to roughly $16 to $26 pulls a large share of the illicit market back into taxed sales. That figure is doing the funding work for the fuel policy. It is also the contested one: the government’s position, put by Social Services Minister Tanya Plibersek, is that the cut would lift smoking and vaping rates, and the revenue estimate depends on behaviour that has not been tested at this scale in Australia.
For fuel and convenience retail the two halves of the policy land on the same counter. Legal tobacco volume through service stations has fallen for five years as excise rose and illicit supply filled the gap; a cut of this size is the first proposal from either side that would reverse that, and it is the reason the fuel measure is described as funded.
The politics
Mr Chalmers told Sunday Agenda the policy had “more to do with polling numbers than petrol prices”, a reference to the pressure One Nation’s own excise position is putting on the Coalition. Economist Chris Richardson called fuel tax cuts “a bad band-aid” that adds to inflation, while Westpac’s Luci Ellis argued the opposite from this year’s experience, noting the April cut stopped fuel-driven price rises flowing into other goods. Both sides of politics have now cut excise when prices spiked and criticised the other for doing so, which is the strongest sign the idea will be back regardless of who wins.
The policy is an opposition commitment with no legislative path before an election, so nothing changes at the pump this year. It does set a marker: the next time Brent holds above US$100, the question will be whether the government of the day acts, and on what rule.
As at 22 September 2026.