The federal government is set to temporarily halve the fuel excise, with the amount being reduced from 52.6 cents per litre to 26.3 cents per litre for three months from April 1.
The announcement was made by Prime Minister Anthony Albanese following a meeting of the National Cabinet on Monday.
The decision is aimed at providing hip pocket relief to citizens amid the ongoing conflict in the Middle East, which is causing fuel prices to soar.
The decision is estimated to cost the federal budget $2.55 billion but will save motorists around $19 on a 65 litre tank.
The government is also reducing the heavy vehicle road user charge to zero for three months, in addition to deferring the next scheduled increase in that charge by six months.
Truckies pay for fuel upfront but get reimbursed weeks or even months later.
A four stage national plan
All state and territory leaders have approved a larger National Fuel Security Plan, which includes this announcement.
Planning and preparation, maintaining Australia’s momentum, taking focused action and safeguarding vital services are the four phases of the plan.
Albanese stated that Australia is currently in phase two of the framework and expressed optimism that the nation won’t have to advance to more advanced levels of intervention.
The government will also table emergency laws in parliament to allow the government to underwrite the financial risk of importing more fuel, which is described as a vital safeguard.
The international oil market is still unstable.
The price of Brent crude oil has risen past US$115 per barrel as oil and natural gas shipments through the Strait of Hormuz have been disrupted, which is one of the most critical energy chokepoints in the world.
Australia also relies on 90% of its fuel imports, making it highly vulnerable to sustained disruptions in supply.
Treasurer Jim Chalmers stated that the relief package is not only essential but also temporary in nature.
Angus Taylor, the leader of the opposition, presented a four point test for the National Cabinet at a press conference prior to Monday’s meeting.
He called for a clear escalation plan, a national approach to supply distribution, increased fuel data transparency and a reduction in excise.
Excise cuts have been called a band aid solution by some economists, who contend that governments should instead concentrate on measures that reduce demand, like free public transportation.
Also Read: Iran Warned Its Neighbours Then Everything Started Falling Apart
The government has asked drivers to only purchase the fuel they require and encouraged Australians to take public transportation whenever possible.
The ACCC will also continue to monitor bowser prices to ensure that retailers are passing on the full saving to consumers.
Easter is just around the corner and, with the conflict showing no signs of abating, it is likely that the temporary tax break will be a welcome relief, although the underlying position of Australia’s fuel supply chain is always in view.
