Anthony Albanese attributed the surge in petrol prices to Russia’s invasion of Ukraine and fluctuations in the global oil market, suggesting the potential for governmental support for drivers dealing with rising fuel costs.
On a campaign tour in Tasmania, the Prime Minister was questioned about potentially reducing the fuel excise, especially with anticipations of even higher petrol prices.
This inquiry coincided with Reserve Bank Governor Michele Bullock’s statement that Australia’s inflation had surpassed its highest point and emphasised the significant rise in petrol prices since July.
Albanese responded, “We don’t formulate tax policies spontaneously. We have structured budgets and established processes for economic policymaking. We recognise the challenges with the cost of living, and it’s evident that the Ukraine situation by Russia has globally affected fuel and energy prices.”
Petrol prices in Australia have crossed $2 per litre, leading to an increase in annual headline inflation to 5.2% in August from 4.9% in July.
Significant petrol price variations are not part of the underlying inflation calculation, which omits items with substantial price shifts. However, these prices affect the metric in the mid-term as businesses transfer increased costs to customers.
Last year, Labor let a 22¢ reduction in the petrol excise lapse, indicating that a continued reduction might drain the federal budget by up to $3 billion in half a year.
The earlier Morrison government had announced a temporary 50% cut in fuel excise in a pre-election budget in March, aimed at addressing the escalating living costs.
Recently, Treasurer Jim Chalmers pointed out that the surge in petrol prices resulted from global supply constraints leading to a deficit, which affects all Australians financially.
The fuel excise was projected to contribute approximately $20.8 billion to this year’s federal budget. The excise was set at 38.143¢ per litre in 2001, paused by John Howard during GST-related disputes. It was only resumed in 2014 by Treasurer Joe Hockey, which added an extra $4.1 billion to the federal income over four years.
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