Will the opposition support raising fuel excise?

ScreenHunter_2337 May. 08 14.19

By Leith van Onselen

If a sensible policy reform like raising the fuel excise can’t achieve broad political support, then I don’t know what will.

When quizzed about whether Labor would support the measure, Opposition leader, Bill Shorten, was non-committal, declaring reports about raising the fuel excise as “just another ‘kite’ being flown by the government to test public opinion” and stating that:

“This is the Abbott government yet again sending up rumours, sending up kites, sending up smoke signals,” Mr Shorten said.

“Labor’s not going to jump at every rumour and every bit of speculation about a new tax or an increased tax on excise. We will wait to see the detail.”

Shorten’s fence sitting is curious, since he has been quick to speak out about other proposed budgetary measures flagged by the Government. One the one hand, it could signal that there is hope for bipartisan support from Labor, although if it does support raising the fuel excise, then why not say so, therefore locking in a positive reform?

The Green’s position is even more curious. When quizzed about whether they support the measure, deputy leader Adam Bandt replied:

…the government should instead target the diesel fuel rebate, which exempts mining companies, farmers and mining companies from paying a 38c per litre road usage charge on certain fuels bought for specific off-road purposes.

“How can Tony Abbott justify making people pay more for petrol while giving wealthy miners subsidised fuel?”.

I would have thought that the Greens would jump at the chance to raise fuel excise. It is a defacto pollution tax after all, and raising the excise would discourage fuel consumption and act to reduce greenhouse gas emissions.

Regardless, as argued this morning, there are sound reasons for the Coalition to raise fuel excise, including broadening the tax base away from income tax, improving overall taxation efficiency, as well as the obvious environmental benefits. It would also go some way to closing the $5 billion Budget hole left by the Howard Government when it erroneously froze fuel excise indexation in 2001.

For the sake of the broader national interest, could all sides for once put politics aside and support this sensible Budget measure?

[email protected]


Latest posts by Leith van Onselen (see all)


  1. “For the sake of the broader national interest, could all sides for once put politics aside and support this sensible Budget measure?”

    I’d be non-committal if I was questioned about my support for an excise increase which is yet to be detailed or even confirmed.

    But if the Coalition does propose an increase then the Greens (and Labor too, but particularly the Greens) would be stupid not to support it.

    • Pfh007MEMBER

      “….would be stupid not to support it”

      I wish you had not said that.

      I was starting to feeling hope for some productive contributions to the economic reform debate from the opposition (as against the usual opposition strategy honed to perfection by Mr Abbott) but now that you have pointed our why they have no choice and cannot support it, I feel glum again. 🙂

      • “I wish you had not said that.”

        I did hesitate…perhaps I should have said they’d be stupid TO support it!

  2. This will hurt those revolting, disgusting bogans who are responsible for everything that’s bad in the world in their far flung suburbs the most won’t it?

    Specufestors have had about a 30% rise in their houses so far since the GFC and when all this money started being spent to prop up their house prices. It should be solely paid back by them and the banks.

    • migtronixMEMBER

      Agreed but there’s nothing wrong with incentiving some reform here. I’m not saying this, or just about any other from the current or last lot, measure would do that especially since we don’t do cars any more — but I know for 100% fact that there are energy feed-back systems that can make a car – any car – run for much longer on the same tank. Unfortunately the oil majors own big stakes in car manufacturers so incentive is 0!

  3. Would it matter? The Greens will support it, so it will pass the senate regardless of the ALP position.

  4. sydboy007MEMBER

    I’ve got no problem with Labor giving Abbott some political payback, but am hoping they do draw the line in a way that allows the more sensible budget proposals through.

    For sure, let the Government take a beating over changes to the fuel excise, but support it as it does make economic sense. Would begin to help reduce the massive subsidy to road freight over trains.

  5. “which exempts mining companies, farmers and mining companies”

    Sorry Adam, who were you talking about?

  6. The measures to be put forward by the LNP will include tax increases and cuts to social incomes. On the face of it, this will harm the economy and in the context of other forces could easily impel the economy into an otherwise avoidable contraction, a process that would inevitably also harm the budget in any case.

    What we have is a bubble in excuses and surprises. The LNP have tried to create a fiscal pretext they can use to justify doing a whole lot of things they said they would never do. This is a breach of faith with the electorate and a highly risky political and economic strategy.

    There is no reason at all why the Senate should accommodate any of it until they’ve seen the whole package.

    • migtronixMEMBER

      First we get a #fudget then hopefully a #libspill

      A week old and going @Lorax @3d

    • Pfh007MEMBER

      “..There is no reason at all why the Senate should accommodate any of it until they’ve seen the whole package…”

      Or anyone else for that matter.

      I am tuning out to budget speculation until it is time to warm the slippers and damage a bottle of red while Mr Hockey damages our sensibilities.

  7. Revenue raising consumption taxes should be broad based, so an increase in the GST rate or a broadening of its base should be preferred over a fuel excise increase. Business users of fuel get a credit for GST on fuel but (except for heavy vehicles and off road uses) don’t get a credit for excise.
    The current rate of excise is more than high enough to cover the cost of the negative externality of carbon emissions. Congestion externalities are location and time specific so cannot be addressed by fuel excise. Air pollution externalities are also location specific (only an issue in cities) so also not amenable to fuel excise. For light vehicles road wear and tear is negligble so a high rate of fuel excise can’t be justified as a road user charge either.

  8. I would have thought that the Greens would jump at the chance to raise fuel excise.

    Logically they should, but I think they’ll want to see a reduction in the rebate for mining companies before voting for it.

    Palmer will definitely block it, so they’ll need to get this through the Senate before July.

    • The Greens are there to bargain the best result for their constituency. Bandt is basically saying yeah but what about the bigger fish? Can we have some of that if we give you this one?

      What good would they be if they didn’t’ try to push their barrow a little further?

      • Pfh007MEMBER

        “..What good would they be if they didn’t’ try to push their barrow a little further?…”

        Part of the reason that Mr Abbott is prime minister today is Green barrow pushing. Though it is fair say few expected the Rudd government to shatter like a Violet Crumble the way it did.

  9. Setting fuel excise to a flat amount was nothing but a cynical and irresponsible purchase of votes by Howard. I remember the time well; everyone in Australia was bitching and moaning about fuel prices, even though it was caused by a temporary spike in oil prices; French truck drivers were blockading roads at the time for the same reason.

    Howard knew damn well that excise would have to be changed in future, but that was someone else’s problem.

    This form of tax is preferable to many others as it promotes desirable behaviour, and is avoidable through efficiency and substitution (just like the carbon tax, but I digress).

    It’s vastly preferable to taxing labour more, or increasing GST – the only way to avoid those taxes is less economic activity (or capital-misallocating tax rorts).

    For once, I agree with Abbott and Hockey’s sentiments, and hope that this particular item gets support across the board.