Albanese Government cuts petrol excise by 26c to drop fuel prices for three months

Petrol should become 26 cents-a-litre cheaper with a temporary cut to fuel excise as the Prime Minister urges Australians to “enjoy their Easter” and keep the economy ticking over amid the fuel crisis.

National Cabinet has agreed to a four-stage fuel security plan but its language is vague about when rationing might become mandatory and what the triggers are to shift between levels.

The Federal Government decided on Monday to halve fuel excise to 26 cents per litre for three months starting on April 1. The price cut is expected to be passed on over the next week and the consumer watchdog is keeping a close eye on retailers.

The States are also looking at how to drop the GST from petrol to further cut the price.

As well, the Commonwealth will temporarily reduce the heavy vehicle road user charge to zero, saving truckies 34 cents-a-litre on diesel, and delay a regular increase in the charge, with potential registration relief to come from the States.

The measures will cost the budget $2.6 billion.

Another $2 billion has been given to the Finance Minister to spend buying or underwriting fuel and fertiliser purchases if needed.

Treasurer Jim Chalmers said it was “all about taking some of the sting out of these higher petrol and diesel prices” for Australians under pressure.

But leading motoring group the NRMA warned cutting the fuel excise would barely touch the sides and ultimately leave less money to pay for much-needed road safety upgrades.

“What we fear is going to happen again, just based on looking at the increases over the last week, is that the 26 cent-per-litre cut will get eaten up in a few days,” NRMA spokesman Peter Khoury said, pointing out the diesel prices rose 30 cents over the past seven days.

“We don’t control oil prices and cutting the excise to try and subsidise world oil prices, we just think is going to be problematic.”

The relief for heavy vehicles comes as trucks are already parking up and the sector called for COVID-era measures to save it from total collapse.

National Road Transport Association boss Warren Clark called for the government to also bring back a moratorium on heavy vehicle finance repayments as truckies struggle to pay their mounting bills.

Opposition Leader Angus Taylor claimed victory, having demanded on Friday that the government halve the fuel excise.

“This is overdue relief that will take pressure off the cost of living and help keep supply chains moving ahead of Easter,” he said.

The move was welcomed by business groups as targeted and sensible.

“To keep the economy going, we need to ensure the transport industry keeps moving to get produce from paddock to plate, and goods from the wharf to warehouses,” Australian Chamber of Commerce and Industry chief Andrew McKellar said.

However, he warned making petrol cheaper risked further exacerbating the strong demand — as did economist Alan Duncan.

Professor Duncan said the better approach would be to give vulnerable households and businesses targeted support while actively managing demand through limiting purchases and prioritising fuel for key industries.

Such extreme measures aren’t envisaged until the fourth and highest level of the new fuel plan that National Cabinet agreed.

Under the new plan, the country is currently at level 2, dubbed “keeping Australia moving”.

Prime Minister Anthony Albanese said leaders would decide if or when a shift from the current status was required.

National Cabinet will make the decision to move up a level of severity based on whether supply disruptions become more serious and protracted.

“We are substantially away from that because of the supply issues. What we know is that every single ship that was due to come here up to this point … has arrived,” Mr Albanese said.

“We know in April of the 81 ships that were due, six haven’t come, but they’ve been more than replaced. There are nine in addition. So there’s more fuel arrived than was anticipated.”

“One of the things that we’re determined to do is to make sure that we do keep Australia moving... People should enjoy their Easter, and it’s important as well that we keep the economy going.”

Under the plan, Australians are urged now to buy only the fuel they need, and make “voluntary choices” to use less fuel and avoid the impact of higher prices.

At level 3, there would be “voluntary practical measures to limit fuel use” and governments would work together to ensure these are implemented nationally.

“All Australians are in this together, and we will need to play our part to help fuel get to where it’s needed most,” it states.

Mandatory restrictions and governments actively directing the distribution of fuel supplies don’t kick in until level 4, dubbed “Protecting critical services for all Australians”.

However, the plan also notes that “level 3 and 4 are under consideration and may change, depending on circumstances”.

WA Premier Roger Cook said the nation was “a long way from” level four.

But the Association of Mining and Exploration Companies boss Warren Pearce said fuel wholesalers needed to be made to ensure that everyone had access to fuel, not just their long-term or larger customers.

“Until the wholesalers commit to working with all the other distributors in our industry, this problem is not going to resolve itself,” he told this masthead.

“And if they continue to refuse to be transparent about their volumes and where the fuel is going, then I think it’s appropriate that government begins to intervene to require them to do so — and I think that action should now come sooner than later.”

In responding to the fuel crisis, the Government has also moved unexpectedly swiftly to set up a critical minerals strategic reserve, co-opting the long-promised facility to underwrite fuel purchases.

Energy Minister Chris Bowen said it would initially focus on antimony, gallium and rare earths.

New laws being pushed through Parliament will ensure Australia can help meet critical minerals demand, support offtake, stockpile critical minerals, and help to provide price certainty.

The resources sector applauded the swift move.

“This process can’t happen fast enough, as the world moves quickly to establish secure and

sustainable supply chains of critical minerals,” AMEC’s Mr Pearce said.

Minerals Council of Australia head Tania Constable agreed the reserve’s establishment “should enable the critical supply chains between Australia and its partners to grow and mature into long term commercial partnership” and make Australia a global supplier of choice.

What are the changes that the Federal Government announced to help with petrol prices?

• Halving of fuel excise to 26 cents per litre
• Heavy vehicle road user charge reduced to zero for three months
• Next scheduled increase in heavy vehicle road user charge deferred by six months
• National Cabinet to review and change Australia’s four-stage fuel security plan where necessary