Fuel plan a sensible step to tackle costs

The measures announced to provide some relief from spiralling fuel costs caused by the war in the Middle East were a sensible approach.

A virtual meeting of National Cabinet on Monday agreed to a fuel security plan and cost relief for motorists and heavy vehicle road users.

The Federal Government decided to halve fuel excise to 26 cents per litre for three months starting on April 1, and will also temporarily reduce the heavy vehicle road user charge to zero for the same three months and defer for six months the next scheduled increase in the heavy vehicle charge.

The States have agreed to consider how to ease the GST burden.

Under the new fuel security plan, the country is currently at level two, dubbed “keeping Australia moving”. Stage three would mean governments would work together to “implement a national approach for practical measures to reduce fuel demand”.

The highest stage, dubbed “protecting critical services for all Australians”, envisages governments actively directing fuel supplies and offering targeted public transport to help move key workforces and the people most in need.

Premier Roger Cook said the State was a “long way” from COVID-like restrictions.

Federal Treasurer Jim Chalmers said the measures would reduce the cost of a 65-litre tank by about $19 and would cost the Budget $2.55b, with the foregone revenue from delaying the increase to the heavy vehicle road user charge amounting to $53m.

He said the cuts would reduce headline inflation by around half a percentage point to the June quarter.

The measures are a welcome improvement on the piecemeal way the Albanese Government had responded for the first weeks of the conflict.
The nation had been desperately in need of some real leadership at the Federal level to offer a sense of reassurance that there was a national plan and that the Government was ahead of the game rather than just being reactive.

The fuel excise cut had been proposed by Opposition Leader Angus Taylor last week, so it is a good sign that Mr Albanese resisted the temptation to take a political stance against it.

The plan is temporary and measured and should ease the price pressures on everyday motorists and the transport industry, which should also take some pressure off supermarket prices.

Not taking action would have allowed the price spiral to continue unabated, and the cost to the economy would likely have been even higher than the cost of the measures.

Of course there is no guarantee that the cost reductions will not be eaten up if the conflict continues and supplies dry up even further.

But the Albanese Government has got on the front foot and there is a plan and it has been shared with the Australian people.

And that in itself could modify behaviours which were helping to put pressure on fuel supplies at the nation’s bowsers.