Peter Dutton’s pledge to halve the fuel excise for 12 months if the Coalition wins the next federal election on May 3 has triggered renewed concern and backlash from Australia’s trucking industry.
Many fear a repeat of the devastating financial fallout experienced under the Morrison Government in 2022.
The Opposition Leader’s budget-reply announcement, pitched as a cost-of-living relief measure, would see the fuel excise slashed from 50.8 cents per litre (cpl) to 25.4 cpl.
However, under the proposal, the fuel tax credit (FTC) – a critical mechanism used by heavy vehicle operators to manage business cash flow – would then be abolished for the duration of the cut.
At present, operators receive a FTC of 20.3 cpl, being the difference between the fuel excise of 50.8 cpl and the road user charge (FTC) of 30.5. If the RUC is more than the excise, the operator receives no rebate.
While this may appear as a win for the average motorist at the bowser, South Australian Road Transport Association Executive Officer Steve Shearer said it will create a damaging cash crisis for trucking businesses, especially the small-to-medium family-run operations that make up over 80 per cent of the industry.
Shearer said SARTA has discussed the Dutton announcement in detail with several Coalition MPs, including shadow ministers, and has made it clear that the vague assurances that Dutton would consult with the industry about the proposed 50 per cent fuel excise cut don’t go far enough.
“We are not prepared to risk the election of a Coalition government that has not committed unequivocally to ensure that the road freight sector is not harmed, as we were under Morrison’s debacle,” Shearer told SARTA members in a recent bulletin.
“Statements that road freight will “benefit too” are meaningless because the spin merchants will argue that the minor reduction in the Road User Charge (RUC) is somehow a benefit, which is utter misleading nonsense.”
Shearer said any thought the officials and Coalition decision-makers may have that the reduction in fuel prices by 25.4 cpl will cover the operators’ loss of the 20.3 cpl FTC is absurd.
“It shows a complete lack of understanding that the customer base will mercilessly demand the fuel price cut be fully passed on.”
Shearer said the opinions of large corporate operators, which Treasury and other officials occasionally seek, are largely irrelevant.
“Large corporate operators operate in a different economic and commercial world from that which the massive bulk of the industry, upon which they rely heavily, operates in.”
Shearer said there are only two options for an incoming Coalition government to avoid causing extensive economic harm to the trucking industry which will flow through to the broader economy.
The first is to reduce the RUC by the same amount (25.4 cpl) as the fuel excise, a call echoed by a number of other peak bodies.
“This is the only option that guarantees the 50 per cent cut in excise will be passed on to the customer, and hence the community.”
The other option is to legislate to stop customers taking the 25.4 cut in excise but the downside is that the customers and the community would not receive the benefit of the 50 per cut in excise.
“Whilst some operators may be able to increase their freight rates to recoup the lost FTC, they will be few and far between,” Shearer said.
“The Coalition must make a public unequivocal statement very soon during the election, not at the 11th hour, to the effect that they will adopt one of the above options.
“Or that they will work with the broader industry if elected to ensure that HV operators continue to receive the equivalent benefit of the FTC whilst the fuel excise is reduced.”
Queensland Trucking Association CEO Gary Mahon also warned that if the RUC isn’t halved under Dutton’s proposal, it will also cause freight prices to increase.
“Fuel pricing might dip a bit, but from the Morrison experience, it’s highly unlikely to dip to the same extent that the government has reduced the excise, so in effect our people are paying more and also not getting a fuel tax credit,” Mahon said.
NatRoad also said the industry can’t afford another FTC hit.
“About 98 per cent are small businesses and average profit margins are just 2 per cent; they lack the bargaining power to simply pass on costs,” said NatRoad CEO Warren Clark.
He said that unless FTCs are protected, the benefits of lower excise will not flow on.
“Instead, many in the industry that keeps Australia’s shelves supplied could face financial ruin.”