Federal Budget: Fuel tax slash a ‘short-term relief’ to WA farmers and truckies but not long-term solution

The slashing of the fuel excise to give “temporary and targeted” relief as fuel as prices skyrocket has been met with mixed reviews across WA’s agricultural and transport sector. Treasurer Josh Frydenberg announced from midnight Tuesday March 29, the 44.2¢-a-litre fuel excise would be temporarily cut by 22¢ for six months in a bid to ease pressure on Australian households as the cost of fuel surges to more than $2.20/L. “The barrel of oil is up by 50 per cent since the start of the year — that’s flowing through to the bowser here at home,” he said. “We recognise that pressure.” The fuel excise is a flat levy applied to all petrol and diesel prices as a cost per litre and goes to fund the Commonwealth Government’s transport infrastructure spending. In 2021, the net revenue from the tax was more than $11 billion, but with changes in fuel efficiency technology and a shift to public transport and electric cars, the fuel excise only contributes around two per cent of the government’s total revenue. The move has been flagged to cut petrol and diesel prices by up to 20 per cent just weeks after trucking companies revealed they had been forced to introduce unprecedented fuel taxes to cover costs. The Australian Competition and Consumer Commission will monitor prices to ensure the reduction is passed onto consumers at the bowser, with hefty fines of up to $10 million for retailers failing to do so. The jump in diesel from $1.40 last February to $2.20 in recent weeks has hit transport operators particularly hard, adding tens of thousands to their weekly operating costs. Western Roads Federation chief executive Cam Dumesny said the decision would give truckies — who have seen operating costs surge 25 per cent since the pandemic — short-term relief, but was not a long-term solution. “The problem is the next price surge could just wipe it out in a heartbeat,” he said. “We had a 26c price rise in diesel in a week, that would make the excise cut null and void, it obliterates the benefit. “Any relief is welcomed, but we’ve got other issues — labour shortages, AdBlue, we’re facing too.” However it will not make a “scrap of difference” to WA growers’ on-farm operating costs, according to WAFarmers grains section president and Esperance grower Mic Fels. For more than 20 years ago, farmers have been able to get a tax refund on diesel fuel used on-farm and not on public roads through the fuel excise credit scheme. “So whatever is used by tractors or the header isn’t impacted (by this cut),” he said. However it may provide “short-term relief” for farmers paying for road freight to move livestock, grain and agricultural supplies. “We welcome any assistance in reducing cost of inputs, particularly in our freight costs, which are massive — we spend a lot of money on freight,” Mr Fels said. Prior to the Budget measure’s announcement, Mr Fels had expressed his position “strongly against” a cut to the excise, believing it would lead to issues down the track. A position he remains firm on. “It’s there for a good reason, for the roads, so the next thing down the track will be issues with the roads,” he said. 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. If the Morrison government was to cut the 44¢-a-litre tax by 10¢ on Budget day, such a cut would deliver a $6 saving to motorists at the bowser when they fill up a tank. Shadow treasurer Jim Chalmers said he the Opposition would back a temporary cut to fuel excise. Mr Dumesny suggested it was time for the State and Federal Governments to sit down and explore alternative energy sources to “take some of the risk out” of the system. “We are totally dependent on diesel, not just trucks but freight trains, regional power stations, all of our farm machinery depends on it — it is a critical commodity,” he said.