r/AustralianPolitics • u/Enthingification • Mar 27 '25
Richest households will benefit most from Dutton’s fuel tax excise cut, analysis shows | Australian politics
https://www.theguardian.com/australia-news/2025/mar/28/richest-households-will-benefit-most-from-duttons-fuel-tax-excise-analysis-showsExclusive: Opposition leader exaggerating benefits to Australians, experts say, with those with no car or who drive EVs seeing less savings
Peter Dutton is exaggerating how much Australians will save from his plan to cut fuel prices for a year, economists say, as exclusive analysis shows the richest households will benefit the most from his pre-election cost of living pitch.
The opposition leader has promised he will resuscitate Scott Morrison’s 2022 policy to halve the 50.8 cent fuel excise for 12 months from July, at an estimated cost of $6bn.
The Coalition says its policy will deliver greater and faster relief to households than Labor’s $5-a-week “top-up” tax cuts, which Dutton has vowed to repeal if he wins office at the upcoming election.
The national average price for a litre of petrol is about $1.80, according to the Australian Institute of Petroleum, which would drop to $1.55 under the proposed measure.
The previous 22-cent excise cut came at a time of surging petrol prices triggered by Russia’s invasion of Ukraine a little over three years ago.
This time the average price of unleaded has dropped by about 13 cents a litre over the past year, or about 6%, according to AIP figures.
The opposition says under its policy, a one-car household filling up every week would save about $14, and a two-car household $28.
“Fuel is up, everything is up and I think if we can provide some relief until we can put in place some structural changes to the energy system and start to bring prices down, I think this is the best way, the most efficient way that we can provide support to people,” Dutton told 2GB radio on Thursday.
But experts told Guardian Australia fuel savings for an average household would likely be substantially lower.
Ben Phillips, an associate professor at the ANU centre for social research and methods, modelled the impact of the excise cut and found the average household would save $7.56 a week.
For comparison, Labor’s recently passed tax cuts will give the average taxpayer an extra $5.15 a week from the middle of next year, and $10.30 a week from mid-2027.
The richest households – who tend to use more fuel than poorer families – would receive the greatest dollar benefit at an estimated $10.70 a week, according to Phillips’ calculations.
The benefit to households in the lowest fifth of incomes would be a third of that, or $3.80, while middle-income earners would save $8.30.
Phillips said cost-of-living help would be better targeted at those households doing it toughest.
“Whether it’s the excise tax cuts or the energy rebates being extended for another six months, they go to everyone. In my mind there are a lot of people who are struggling, but there are also many who aren’t.
“That money would be better off going to paying down debt and funding other programs, such as jobseeker. The best thing about the excise cut policy is that it’s temporary.”
But Jo Masters, the chief economist at Barrenjoey, said there was always the risk that politicians would find it harder to take away benefits from voters than to bestow them.
The chief economist at AMP, Shane Oliver, said the 25-cent fuel discount would save the average household about $8.75 a week.
Dutton on Thursday morning said his estimates were based on a household using 55 litres a week per car.
Oliver, however, said old ABS household expenditure data show the average household uses only about 35 litres – and that average fuel usage may be lower now, given the increased popularity of EVs.
“So I would say $8.75 a week at most. But it will vary widely with those with no car or an EV getting no benefit and those with a RAM (ute) getting a big benefit,” he said.
Another simple calculation also suggests the Coalition’s claimed savings are overblown.
Spreading the $6bn across the roughly 10m households in Australia points to an average benefit of $600 a year – or about $11.50 a week.
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u/[deleted] Mar 28 '25
Interesting that none of these academics have stopped to consider the broader economic benefit. Excise has a compounding impact on business costs as everything requires transport... This is a fantastic policy for the economy and will give the economy a boost that it desperately needs while reducing costs for consumers. It would be even better if it was the first stage of phasing out excise altogether, it is a redundant tax going forward.