Motorists are being warned the price of fuel is about to jump 32 cents a litre as the government reaffirms it will end a key cost-of-living policy.
In a bitter blow for household budgets, Energy Minister Chris Bowen confirmed the halving of the fuel excise and giving back of the GST windfall would come to an end in the new financial year.
“We’ve been very clear, this was a temporary reduction in the excise that was always intended to be temporary,” he told reporters on Saturday.
“The Prime Minister and treasurer have been clear, they will always examine the latest information, but our intention is for it to come off at the end of the month.”
At the start of April, the federal government announced it would temporarily halve the fuel excise in a bid to offset soaring fuel prices.
This cost the federal budget around $2.55bn over the past three months.
It was initially halved, followed by an additional 10.9 per cent rebate after the states and territories agreed to forgo windfall GST revenue.
It has since reduced the price of fuel by about 32c per litre.
But this temporary cost-of-living relief will come to an end on June 30, meaning motorists’ wallets will almost immediately be impacted by higher fuel costs.
The temporary cutting of the fuel excise played a major role in falling headline inflation, which spiked to 4.6 per cent in March, before it subsequently dropped to 4.2 per cent, thanks to slowing transportation expenses.
The measure was brought in to combat surging fuel costs, as the critical Strait of Hormuz – where roughly 20 per cent of the world’s energy transferred through – was shut down by both the US and Iran navy.
This sent oil prices skyrocketing, from $US56 ($A80) per barrel in January, before temporarily touching $US120 (A$170) per barrel.
It has subsequently fallen to $US89 ($A126) a barrel due to peace talks between the US and Iran.
For every $10 increase in the price of oil, Australians pay an extra 10 cents at the fuel pump.
However, experts are divided on how long it will take for fuel to start travelling through the Strait of Hormuz and what it will mean for fuel prices when the two countries announce a peace deal.
Mr Bowen also took the opportunity to hit out at the opposition for “irrelevant scaremongering” as fuel supplies rose in Australia.
“First they said there would be shortages around Easter and then a couple of weeks ago the shadow minister said there would be shortages in June.
“We are now in June and we have record amounts of fuel in this country. While the government has been insuring fuel supplies, the Liberals have been scaremongering but they have gotten basic facts wrong.
“We have avoided rationing, we have avoided shortages, we have more fuel in Australia than we’ve had at any point in the past few years.”
“We will continue to work in the face of the international uncertainty and ongoing war in Iran to ensure we have as much fuel in Australia as we possibly can.”
