Treasurer Josh Frydenberg has confirmed a temporary cut to fuel excise in Tuesday’s budget, with drivers to see a drop in prices within days.
Treasurer Josh Frydenberg has confirmed the petrol excise will be slashed in tonight’s budget in a “temporary and targeted” way to deliver cost-of-living relief for motorists.
Speaking at the traditional pre-budget press conference as he arrived at Parliament House on Tuesday morning, Mr Frydenberg said the petrol tax changes would be outlined in his 7.30pm budget speech.
News.com.au understands the petrol excise changes will come into force from midnight but may take a few days to show up when you fill up your tank.
“If you’re a family who needs your car to get to and from work to drop your kids at school, if you’re a tradie is busy getting about a daily job, you are seeing the higher price for petrol and what it’s doing to your take-home pay,” Mr Frydenberg said.
“And so what we will be seeking to do in this budget is provide cost of living relief for those Australians that are paying higher prices at the bowser.”
The 44c/L excise could be cut by up to 20 cents, which would see a significant cut to the price of a full tank of petrol.
Australasian Convenience Petroleum Marketers spokesman Mark McKenzie has said it may take “a few days” for the cut to hit drivers, because petrol stations may need to first “clear the volume that’s in the ground”.
“For some service stations they’ll get daily deliveries, for others its two or three days,” Mr McKenzie told 3AW on Monday.
“Clearly we can’t control the global oil market so we don’t know whether that sort of dynamic will actually continue to push prices up,” he said.
NRMA spokesman Peter Khoury told news.com.au while there might be some brief delays, the savings should flow through within the week.
“I think it was pretty much overnight in the UK,’’ he said.
Mr Khoury said there were two big issues with the government’s move to slash the excise.
“First of all, if oil prices go back up, then obviously, the 20 cents is going to get eaten up,” he said.
“And the second is the profit margin. So that’s something the government’s going to have to watch really closely is that once it’s brought in.”
New Zealand recently announced a 25-cent cut for three months and also brought the changes into force from midnight the day they were announced, delivering savings of up to $17 for a 60-litre tank.
The fuel excise cut in Australia is expected to last for longer but not be as generous as New Zealand’s.
To avoid criticism it’s an ‘election-only’ fuel excise cut, the Treasurer is expected to announce the measure will stay in place for six months.
If Labor leader Anthony Albanese wins the election, the decision will leave behind a victory night booby trap – he has to end the temporary fuel tax if he wins the election.
News.com.au understands temporary fuel excise relief is locked and loaded in Tuesday’s budget.
The temporary cut to the 44-cent fuel excise will deliver immediate relief to motorists before the election, but the Treasurer has ruled out a freeze on automatic indexation.
Mr Frydenberg said any changes would be “temporary” and “targeted” to address cost-of-living pressure now by limiting the cut to a specified time frame.
For example, if the Morrison government was to cut the 44-cents-a-litre tax by 10 cents on budget night, such a cut would deliver a $6 saving to motorists at the bowser when they fill up a tank.
“Fuel prices have skyrocketed and of course for many families this is not a choice,” Mr Frydenberg told ABC TV on Sunday.
“They need their car to get to and from work, they need their car to drop their kids to school, these are costs that families are incurring and of course it’s putting real pressure on the households.”
Labor will back fuel excise relief
Speaking on the ABC’s Insiders program on Sunday, Labor’s treasury spokesman Jim Chalmers said he expected cuts to fuel excise in the budget.
Pending the detail, Dr Chalmers said the opposition would back a temporary cut to fuel excise.
“Petrol is a big part of the story, as everybody knows, but it’s not the only part of the story,” he said.
“We think that there is a place for cost-of-living relief in the childcare system. We think there’s a place for cost-of-living relief when it comes to power bills.
“The expectation I think is … we’re talking about some kind of temporary cut to fuel excise and we are unlikely to stand in the way of that.”
Fuel excise cut won’t be forever
In an exclusive interview with news.com.au last week, Mr Frydenberg officially ruled out a freeze to the automatic indexation of the fuel excise that comes into force in August, arguing that approach would not deliver substantial cost-of-living relief for families.
In 2001 when petrol neared $1 a litre ahead of the federal election, John Howard famously scrapped the indexation of the fuel excise, a move championed by then Nationals leader John Anderson.
However, he left the door open to a temporary cut to the fuel excise as petrol prices hit $2.20 a litre or more across the country.
“The main thing I would say is what we will do will be temporary and it will be targeted and that’s all I can say,” Mr Frydenberg told news.com.au
“A change in the fuel excise does affect people who purchase fuel.”
Asked about the option of a freeze on the automatic fuel excise that comes into force in August, the Treasurer told news.com.au that option would not deliver significant relief.
“That doesn’t make a significant change in price. That’s obviously what John Howard did, he froze excise,” Mr Frydenberg said.
“Like I said, that doesn’t make a significant change.”
$250 cash splash in budget
The Treasurer is also planning to rollout one-off cash bonuses of $250 in the federal budget next week to help with cost-of-living pressures.
News.com.au has confirmed that Services Australia is putting in place systems to pay the money within weeks as Prime Minister Scott Morrison prepares to call an election.
The one-off cash bonus will not be paid to parents on family payments but will be provided to other low income families that rely on income support including aged pensioners.
Government pensions and allowances are the most common main source of income for millions of retirees in Australia. It’s not clear if the payment will be delivered to anyone on part-pension or only those who qualify for a full pension.
Treasurer Josh Frydenberg said cost-of-living relief was his top priority and the assistance would be targeted at low-income earners.
“I understand that prices have been going up. And my focus right now is to address those cost-of-living pressures,” he said.
Extracted from News.com.au