Anthony Albanese will slash the fuel excise on petrol and diesel for three months, cutting prices by 26.3 cents per litre, and the road user charge for trucks.
The new arrangements will kick off next Wednesday and will remain in place for three months.
News.com.au revealed on Friday that the Prime Minister was weighing the move, and the Prime Minister emerged from national cabinet today with the big announcement.
“The halving of the fuel excise will reduce the cost of fuel by 26.3 cents per litre,” the Prime Minister said.
“We are making fuel cheaper today because we understand that Australians are under serious pressure.”
The Treasurer Jim Chalmers stressed the changes were temporary and targeted.
“What we’re announcing today will reduce the cost of a 65-litre tank by about $19. So it is a substantial cost-of-living relief. It is timely, it is temporary, and it is responsible,’’ Dr Chalmers said.
“The cost of what we are announcing today is $2.55 billion, depending, of course, on the amount of demand in the system over that three-month period.
“But the initial costing is $2.55 billion, and the revenue foregone by delaying the increase in the heavy vehicle road user charge is about another $53 million.”
The government will also temporarily cut the heavy vehicle road user charge to zero for three months to support the trucking industry amid rising fuel costs.
“Our government will reduce the heavy vehicle road user charge to zero for three months to help,” Mr Albanese said.
“We understand in particular that the heavy vehicle industry is under real pressure. For many trucking companies that are small, they rely upon a cash flow which is under pressure because they pay for their fuel.”
The Prime Minister also encouraged Australians to reduce fuel use, particularly for non-essential travel.
“We really also want to encourage Australians who can to take public transport to help save fuel for the areas and industries that need it,” he said, noting that some jurisdictions have already taken steps to reduce public transport fares,’’ he said.
However, the Prime Minister warned that the longer the overseas conflict continues, the greater the economic impact.
“The longer this war goes on, the worse the impacts will be,” he said. “We need to be very clear as well with Australians about what this could mean and how we are preparing to shield them from the worst effects.”
How the fuel plan will work
The new fuel emergency plan has four levels: Plan and Prepare, Keeping Australia Moving, Taking Targeted Action, and Protecting Critical Services for All Australians.
In a statement, the government said operational plans are being prepared to respond quickly should the situation deteriorate.
Level 1: Plan and Prepare focuses on normal operations. Fuel supply continues as usual, with governments monitoring global market conditions, supply arrivals, and minimum stockholding obligations. Australians can purchase fuel normally while the Commonwealth and state governments work with suppliers to gather information and monitor potential disruptions.
Level 2: Keeping Australia Moving This is where the government says Australia is right now. The government is taking precautionary measures to ensure fuel continues to flow where it’s needed most. Citizens are encouraged to buy only what they need and make voluntary choices to reduce usage. Measures include underwriting additional fuel cargoes and monitoring station and bulk fuel availability.
Level 3: Taking Targeted Action is triggered when ongoing supply disruptions require focused efforts. States will consider additional road usage changes to improve fuel efficiency (e.g. longer hours for trucking) Use relevant legislative provisions to secure petrol station and bulk supply, in accordance with a nationally consistent approach Implement a national approach for practical measures to reduce fuel demand.
Level 4: Protecting Critical Services comes into play during severe supply challenges. Fuel allocations will be prioritised for critical users, including emergency services, utilities, and key industries. Fuel will be allocated fairly across States and Territories to meet these priorities.
‘So it could happen?’: Karl grills Treasurer
Earlier today, Dr Chalmers refused to rule out temporarily cutting the fuel excise and the heavy road user charge for trucks as the government considers new crisis measures.
Speaking on the Today show, the Treasurer did not rule out the measures as national cabinet meets today, prompting host Karl Stefanovic to interject, “So it could happen?”.
“Do you categorically rule out the cuts to the fuel excise?,” he was asked.
“What we’ve said about that, Karl, is we’ve focused more on supply, more on distribution, more on the rip offs, more on cost of living, relief in other ways, but obviously, we always have contingencies and fall backs,” the Treasurer said.
“(But) this government always tries to do the right thing by people, and we always try and help with the cost of living in the most responsible way that we can weighing up a whole range of factors.”
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Road user charges
The heavy road user charge (RUC) is a fee paid by operators of heavy vehicles – typically trucks, buses, and coaches – to cover the costs of wear and tear they cause on public roads.
The fuel-based charge collected by the Commonwealth Government is calculated per litre of diesel used.
When asked specifically about the heavy vehicle road user charge, the Treasurer confirmed this was also an option.
“Well, that’s one of a number of considerations and contingencies we have,” the Treasurer told Stefanovic.
“The big focus for us has been securing the supply, getting the distribution right, and cracking down on the rip-offs while helping with the cost of living.”
MORE: How petrol price spike could hit home values
Fuel excise options
On Sunrise, the Treasurer said the government had not made any decisions on cutting the fuel excise but did not rule the measure out.
“We haven’t taken any decisions on that front,” he said.
“The government’s focus has been more on securing supply, getting distribution to the regions, cracking down on rip-offs and also helping with the cost of living in other ways.”
News.com.au revealed on Friday that the Prime Minister was war-gaming multiple options, including a bombshell temporary cut in fuel excise amid fears that petrol shortages are set to worsen.
Government sources have said that “everything is on the table” amid fears the crisis could worsen, and options are being developed for multiple scenarios.
The Treasurer said the government was continuing to assess a wide range of options.
“There are always contingencies. We keep them under more or less constant review,” he said. “We’re always trying to do what we responsibly can to alleviate some of the pressures on people.”
Pressed on whether cutting the fuel excise was now under active consideration, Dr Chalmers said the government remained focused on supply, distribution, cracking down on rip-offs.
“We try not to rule things in or out,” he said.
“We’ve got a long list of contingencies, a long list of fallbacks.”
Dr Chalmers said the priority of national cabinet discussions was to avoid “heavier handed” interventions such as fuel rationing, purchase limits or work-from-home directives.
“Our goal is to keep the country moving – to keep people moving, to keep farmers farming, the trucks on the road,” he said.
“Our ability to avoid those harsher measures really depends on how we manage supply and make sure people aren’t buying more fuel than they need.”
Public transport freebies
Victorian Premier Jacinta Allan has moved to ease pressure on households and fuel demand by announcing a month of free public transport.
But for now NSW is resisting the measure.
Ms Allan said while governments could not control global oil prices, they could deliver immediate cost-of-living relief and reduce pressure on petrol demand by encouraging commuters onto trains, trams and buses.
“What we can control and support is cost-of-living measures right now,” she said on Sunrise.
“That’s why I’m providing and announcing free public transport for a month that starts here in Victoria from tomorrow.”
The measure is expected to cost about $71 million in foregone fare revenue, but Ms Allan said the savings to households would be significant, with regular users expected to save about $220 over the month.
“People are worried about price increases and this is putting real pressure on household budgets,” she said.
“That’s money that can go back into the household budget to pay for groceries, maybe the mortgage or the rent.”
