Australia’s temporary fuel tax cut kicks in today but motorists have been warned it could be a hit and miss affair as the savings flow through the system.
The $2.5 billion fuel tax cut officially took effect at midnight on Wednesday with some smaller retailers including Reddy Express, passing the savings directly to motorists at selected stores.
It will last for three months amid predictions that the petrol crisis will peak in April as the fallout from the war against Iran continues.
Treasurer Jim Chalmers says he expects motorists could wait a few days – or even weeks – before the full value of the 26 cents fuel excise cut takes effect.
When asked how long motorists will have to wait, the Treasurer warned it take some time as servos sell existing stock.
“First of all, it’s really important to remember that the excise cut is levied to or applied to wholesale fuel sales,’’ he said.
“So the full 26 (cents) won’t show up at 12:01am. It is about replenishing the stocks in the tanks because it’s applied to the wholesale.
“Obviously the fuel in the tanks right now has been purchased at the higher rate and so people should expect it would take, you know, somewhere between maybe one and two weeks for the full benefit of the excise to flow through.”
“I want to manage expectations on that front because people shouldn’t rock up at five past midnight tonight and expect to see the full benefit passed on.”
The Treasurer said however that he had directed the consumer watchdog, the ACCC to ensure that the benefit is passed on.
“People shouldn’t be taking motorists for mugs when it comes to passing it on,’’ he said.
“And so the change kicks in at midnight, but people should expect to see it over the course of the next fortnight or so.”
There are fears that the cheaper petrol will simply fuel demand as the government warns against panic buying.
“In Treasury’s estimation would have an extremely small impact on demand; perhaps something like 2 per cent on demand,’’ the Treasurer said.
“So the higher prices we’re seeing right now, we think, will mean about a 10 per cent hit to demand in fuel. What we announced yesterday maybe 2 or 3 per cent.”
State premiers bicker over GST revenue
As the Federal Government delivers a fuel tax cut the states are bickering over how to spend a windfall gain in GST revenue.
NSW Premier Chris Minns had suggested that the states forgo the additional GST revenue tied to higher petrol prices, effectively cutting excise by a further 10c.
“The states are considering forgoing any win for GST revenue due to prices being elevated and extremely high,” Mr Minns said.
“All my colleagues across the states have indicated that that is appropriate.
“Nobody wants to profit while people are doing it so tough, particularly across the Easter period.”
But instead, the states squabbled over the issue this week, with Victoria insisting it wanted the cash to spend on cost of living measures including cheaper public transport.
That could scuttle the plan unless a compromise can be reached.
