Blame the government for high fuel pump prices

Australians are becoming increasingly frustrated with the ever-rising cost of living. This, combined with a stagnant wage environment has led to some becoming more vocal in their anger, as seen in the recent calls to boycott fuel stations. Australians are angry, and rightly so.

The call for a nationwide boycott of petrol stations on October 26 has come about as a result of outrage over the excessive price of petrol and the seemingly lucrative profits shareholders and owners are making. While it’s positive to see people wanting to take action, their anger is misdirected.

What some may not consider is how much of this cost can be blamed on the government, and while the original call to action focused on the role of taxes, many are now calling for price ceilings to be imposed, or for fuel companies to be taxed more heavily. This is the wrong way to deal with the issue at hand, and won’t result in lower prices at the pump.

Price ceilings are inherently destructive and will lead to worse outcomes for consumers. And it’s a similar story with tax increases, which will simply be passed onto consumers. So, let’s talk about blaming the government.

Glaringly obvious is the outrageous amount of excise placed on fuel. Currently it stands at $0.412 per litre for both diesel and petrol. But don’t worry, it won’t stay there for long. In February this excise will be increased again. And again in August. Twice a year, every year, the fuel excise is increased in line with the Consumer Price Index (which is flawed in itself), because that’s only fair. Right?

There is also GST added to fuel – and the beauty is that it’s added to the cost after the levy, so all us lucky consumers get to pay tax on fuel tax. “Ah,” I hear you say, “but we must pay for the roads!” At this point it is worth looking at the 2018/19 Federal Budget, which outlines that in 2017/18, $16,515 million was collected in petrol and diesel excise (not including GST), yet only $5,895 million was spent on road infrastructure. That’s not even to mention the fact that roads are supposed to be the domain of state governments and are presumably paid for out of the fuel GST, along with registration and licensing costs.

It’s also worth considering the excessive red tape and regulation, compliance costs and minimum wage laws which add to the price of fuel in ways we might not think about. It’s excessively expensive to run a petrol station in Australia due to such laws, which are just a hidden cost which are ultimately paid for by consumers.

This year, Australian taxpayers are sending $320 million in aid to Indonesia, a country which has recently received eight new Apache helicopters at an estimated cost of just under $400 million. This kind of spending leads us to ask the question: why is our government so addicted to spending? Taxes and government expenditure should always and everywhere be questioned; excessive fuel excise is adding to the burden on everyday families in this country, and we must ask why.

So, it is absolutely justified to be frustrated with the cost of fuel in this country, but next time you’re filling up, remember that it is the federal government who are placing such an unnecessary burden on you. Fuel could be far more affordable if the government would, for once, get its hand out of your pocket.

Cian Hussey

Cian is a Research Analyst at the Mannkal Economic Education Foundation.
Cian Hussey

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1 Comment on "Blame the government for high fuel pump prices"

  1. Well said
    This message should be shouted from the rooftops to the public
    How can this be done?

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