Australians hoping for relief from fuel price cuts in time for Easter travel are set to be disappointed, with the industry predicting the effects of Labour’s temporary tax cuts will take days or weeks to reach some people around the country.
The halving of fuel duty, which starts on Wednesday until the end of June, means the government will now collect 26.3c per liter over the next three months instead of 52.6ca a litre.
Industries and households welcomed the announcement as petrol and diesel prices rose to record highs across the country.
But some remote areas can wait longer for price reductions than others.
The fuel industry body, the Australasian Convenience and Petroleum Marketers Association, said the impact of the tax hike for Australians would depend on how quickly petrol stations sold their high-priced fuel.
The price of petrol is paid at a large price, known as the gate price, before it is delivered to service stations around the country.
Rowan Lee, the association’s chief executive, said service stations would sell any fuel purchased with the full consumption tax first before passing on the cheaper fuel to drivers.
He said: “For some densely populated urban areas, it can be several days. “In remote areas where they [have] low volume, about a week or two. While the fuel is being filled, the reduced salts used in the fuel will be added and passed on to the motorists.”
A report by the Australian Competition and Consumer Commission on 2022, when petrol tax was finally reduced as Russia invaded Ukraine, showed that the tax cut was passed on to retail prices at most service stations after six weeks.
The ACCC will be closely monitoring petrol stations to ensure that those savings are passed on to consumers.
The industry accepts the fuel plan
Industry associations support the announcement, as well as a three-month break in heavy vehicle tariffs, as they warn of negative effects on the country’s supply chain.
The Australian Logistics Council, an umbrella group for companies across the supply chain including Amazon, Woolworths and Linfox, said fuel tax relief would help workers get to warehouses and reduce costs passed on by retailers to customers.
But Hermione Parsons, the council’s chief executive, warned that planning for future earthquakes was essential as Australia bought 90% of its diesel supplies.
“This is a complex global supply chain event and we are not in control of our primary fuel source,” he said.
“Freight rail is underutilized in Australia and we need to make the most of it… Australia, of all countries in the world, can also develop a renewable diesel industry.”
Farmers across the east coast were skeptical of the plan, with the president of NSW Farmers, Xavier Martin, worried that the reduction in the fuel spot would raise demand in areas with supply shortages.
“Farmers cannot move tractors according to plan,” he said.
The president of the National Farmers’ Federation, Hamish McIntyre, said the announcement lacked detail.
He said: “Reducing the price of fuel will provide relief to consumers, but it does little directly to farmers and we are worried about the impact of this policy on the demand for fuel.”
Emergency fuel allocation ‘under consideration’
In New South Wales, the Premier, Chris Minns, told reporters that emergency measures under the third and fourth phases of the government’s plans are “being considered” and include recommendations from the International Energy Agency, such as fuel distribution and encouraging working at home.
The NSW Treasurer, Daniel Mookhey, said the food distribution would come under phase four.
Minns said the countries were “considering” waiving any GST revenue but negotiations between the countries had not progressed beyond a tax agreement.
Minns said he expects the tax cuts to be immediately passed on to consumers on Wednesday.
The Minns government did not support the NSW opposition’s call for tax cuts in a letter to the premier last week but Guardian Australia has been told Minns did not oppose the move in the state cabinet.
Asked on Monday whether he was worried the cuts could worsen the deficit, the Prime Minister said consumers should “act responsibly” when prices fall.
“I take nothing from it, [reducing the excise] it will really help families,” he said: “Don’t buy more than you need to buy.
Victorian Premier Jacinta Allan said fuel security legislation would be introduced this week, mirroring Tasmania’s legislation. The proposal will force fuel retailers to provide data on the supply and distribution of fuel, giving Victorians more information and transparency.
Queensland Premier David Crisafulli has said he will not support any proposal to impose “blanket orders” to work at home during the fourth phase of the fuel security plan.
“There is no world where I support work from home jobs; that sends the wrong message entirely,” he said.
With reporting by Benita Kolovos and Andrew Messenger
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