The federal government today bypassed Senate opposition and implemented the revenue-raising increase in Australia’s fuel excise it proposed in its May Budget.
Announced by finance minister Mathias Cormann, the decision gives “practical effect” to the proposed excise hike to all fuels par aviation, by way of tariff proposals to be validated by parliament inside 12 months.
For those interested, the proposal to hike the fuel excise was the subject that caused federal treasurer Joe Hockey in August to remark that “the poorest people either don’t have cars or actually don’t drive very far in many cases.
From November 10, the rate of fuel duty will increase from 38.143 cents per litre to 38.6 cents per litre, the rate which would have applied if relevant legislation had been passed by Parliament prior to August 1.
It will mean the tax on fuel imposed on providers will rise by about half-a-cent per litre in two weeks time, a figure that will invariably be passed onto consumers at the bowser. The government insists these hikes will be only around 40 cents per week for an average household.
Indexation of duty will then return to biannual CPI indexation from February 1, 2015. The three-month delay will cost the government $35 million in lost revenue.
The government claims this move will generate additional net revenue of about $2.2 billion over the 2014-15 forward estimates and around $19 billion over the next decade through to 2024-25. All of this is flagged for developing greater road infrastructure.
The ALP, Greens and the Palmer United Party are opposed to increasing the fuel tax. The Greens’ justification was that the procured funds would go into road infrastructure rather than public transport.
The procedure chosen by the government to crash -through or crash on the excise hike is risky, because the Senate has to retroactively approve the biannual inflation-linked indexation within this 12-month window. If rejected, the government must pay back the funds to the organisations it taxed, meaning the fuel companies.
This essentially sets up a stand-off where the government more or less dares the ALP and Greens to impose a situation in which oil companies would receive a “windfall” – Cormann’s word – with no obligation to pass any of it back to consumers.
As reported in The Guardian, Cormann was asked whether this was effectively ignoring the will of the voters who had elected the Upper House.
He said the government was simply “using the powers and authorities” it has and pointed out the former Labor government had used the same powers to impose its ‘alcopops’ tax despite Senate opposition, establishing precedent.
“We continue to implement all of our Budget measures in an orderly and methodical way,” the government said today in a statement.
“Implementing this important structural fiscal reform will contribute significantly to our efforts to build a stronger, more prosperous economy and to repair the Budget.”
Today’s news comes three months after the ABC reported that the Abbott government had quietly shelved the proposal after realising it lacked the numbers to force it through the Upper House.
The Labor leader Bill Shorten said the move was an “outrageous” and “sneaky” tax on Australian motorists.
He said these were: “The petrol taxes Tony Abbott said would never happen under a government he led … he ambushes Australian motorists and the parliament of Australia … and through the backdoor [launches] a sneak attack on the motorists of Australia”.
CarAdvice is awaiting comment from the Australian Automobile Association (AAA), the peak organisation representing Australia’s motoring clubs.
Executive director Andrew McKellar earlier told the ABC that: “I think frankly it’s weak, it’s sneaky and it’s tricky – and I’ve to say as well I think it’s also quite a gutless move.”
“The government has not even put its original budget measure to the Senate at this stage, so the original budget proposal hasn’t even been tested.”