The Labor Party’s strategy of following Tony Abbott’s (aka “Dr No’s”) example in opposition, and opposing nearly all attempts at sensible reform, has backfired again, with Labor agreeing to support the Government’s bid to index fuel excise after it was revealed that the Greens would support the move. From The AFR:
Its only condition is that $1.1 billion be dedicated to fixing and building regional roads in the next two years.
In an about-face that will deliver the budget $23 billion in revenue over the next decade and $3 billion over four-year-forward estimates period, the shadow cabinet agreed Monday night to support the reintroduction of the twice-yearly indexation of excise to inflation. It will be put to the caucus on Tuesday morning.
The deal cuts out the Greens who were negotiating with the government to pass the measure in return for money being allocated towards public transport. The Greens have been asking for more than $1.1 billion, making Labor’s offer more attractive.
This is great news, and about bloody time that this policy has received tri-partisan support.
There are sound reasons for the Government 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-plus annual Budget hole left by the Howard Government when it erroneously froze fuel excise indexation in 2001.
In 2006, the Greens labelled the abolition of fuel tax indexation as the biggest Budget mistake of the Howard Government. So it was always curious why they opposed it on this occasion.
Ditto Labor, whose opposition to fuel excise indexation contradicted its previous support for emissions trading and/or a carbon tax. Fuel excise is a defacto pollution tax. What better way to reduce Australia’s dependence on fossil fuels then, you guessed it, taxing the use of fossil fuels? Moreover, opposing an increase in fuel excise, whilst lamenting climate change, was always totally incoherent.
More broadly, the whole fuel excise fiasco, along with Labor’s incoherent stance on pensions, shows that it does not know what it stands for. It will have to do much better, and start presenting a credible alternative, if it wishes to win the next election. Simply playing the role of “Dr No” will no longer cut it.
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