In 2001, just prior to the 2001 Federal Election, the Howard Government made the short-sighted decision to freeze Australia’s fuel excise at 38.14 cents a litre, abandoning the twice yearly CPI increase that had long been a feature of Australia’s excise system.
Facing an assault over the rising cost of living, John Howard’s decision was a purely political play aimed firmly at getting re-elected. However, the Budget since paid the price, with the foregone excise revenue ballooning to around $5 billion per annum – a figure that grew over time as inflation took hold:
In 2015, the Coalition restored the twice yearly fuel excise indexation – a policy that was projected to deliver the budget $23 billion in revenue over the next decade and $3 billion over four-year-forward estimates period.
