Motorists should plan for an increase in oil prices from September, when the temporary cut to the fuel excise ends, Treasurer Jim Chalmers says.
- Mr Chalmers said growing government debt and other economic challenges made an extension of the excise cut unlikely
- The 22.1 cent per liter cut to petrol prices was introduced in the March budget and is set to end in September
- Experts have said oil prices would remain high as long as the Russia-Ukraine war continues
The fuel excise charged on each liter of fuel sold in Australia was cut by 22.1 cents per liter in the March budget.
Both sides of politics said the temporary six-month measure was necessary. It was hoped that fuel prices would be cheaper once it ended.
Mr Chalmers said it would be “incredibly hard” to continue the fuel tax relief indefinitely amid growing government debt and economic challenges like high inflation and falling real wages.
He had been asked if it was still due to end in September.
“The short answer is yes, most probably,” Mr Chalmers told a Guardian Australia podcast.
“[People] should assume that the petroleum price relief comes off in September.
“Obviously, we factor in the conditions as they evolve, and the budget and all of the rest of it.
The previous government announced a six-month cut to fuel excise in the March budget. The fuel excise had been 44.2 cents per liter.
The move was designed to help take the sting out of high oil prices driven by global oil constraints.
In June, the national average price for unleaded petrol hit its second-highest level in history, which was not far removed from the record price registered shortly before the federal budget.
The national average retail petroleum price was $2.11, according to the latest update from the Australian Institute of Petroleum.
Experts have said oil prices would remain high globally as long as the war in Ukraine continued.
That is because Russia is one of the world’s largest oil suppliers, and global oil supply chains are heavily disrupted as a result of the war.
Mr Chalmers said the challenge posed by inflation, which reached an annual rate of 5.1 per cent in the March quarter, was “incredibly serious” but he did not believe Australia would return to a 1970s-style wage-price spiral.
“If we can get through this difficult period — however long it goes for, six or twelve months, or whatever it might be — I think our opportunities still outweigh our challenges after that, but we need to get through this period first,” he said.
Mr Chalmers said Labor planned to meet his election commitments while also repairing the budget by dealing with wasteful government spending on contractors and consultants and raising more money in multinational taxes and from foreign investor charges.
“We’re not here to stuff around or to occupy the space, we’re here to be up-front with people about the challenges and also the opportunities, and to see if we can chart a course together,” he said.