Labor to reap $30b windfall from oil crisis, economist Chris Richardson predicts as households struggle with fuel costs

Labor will gain a $30 billion tax windfall from the oil crisis, a leading economist has predicted – but it came with a warning for the government.

The global fuel crisis has sent energy and commodity prices soaring, boosting Australia’s tax take in a boon for Treasurer Jim Chalmers.

Chris Richardson, a renowned budget analyst and independent economist, said the budget was a rare winner from the fuel crisis.

“It’s an uncomfortable fact … families are worse off when energy prices go up, but some Australian businesses selling to the world – selling gas (and) different types of coal – are better off and the government gets a slice of that,” Mr Richardson told Sky News.

“That combination is the world giving us a pay rise for what we sell them and (with) higher inflation, both of those deliver dollars to the tax man.”

Tax revenues were already beating expectations prior to the oil crisis as net migration exceeded prior forecasts and inflation was elevated.

The uptick in fuel prices will help Mr Chalmers as the nation battles a sea of red ink across its budget forecasts and about $1 trillion in debt.

“I think we’re looking at about $30b better off over the current four-year period,” Mr Richardson said.

“Most of that (is) in the financial year we start in a couple of months – $20b out of the $30b overall because it is a spike and much of this gain is temporary.”

The leading budget analyser also urged for spending restraint from the government as it enjoys the additional tax take.

“We need to be careful,” Mr Richardson said.

“The politics are always tricky in a phase where families are worse off and government is better off, but the government needs to be pretty careful around what it does with that windfall.”

Labor has halved the fuel excise, reducing the price by 26 cents per litre, while the states have announced their own excise cuts and some have introduced free public transport.

The cost-of-living efforts come as average diesel prices in NSW have grown from 182 cents per litre in February to 302 cents per litre since the beginning of April.

Unleaded 91 prices are up from 168 cents per litre in February to 219 cents per litre in April.

Fuel prices could jump further if the Strait of Hormuz is not reopened in the coming weeks.

Economists from AMP warned oil could lift to above US$150 per barrel, a significant jump from the current price of about US$102 per barrel.

This could force inflation above 6.6 per cent and mean more than 950,000 Australians are unemployed, according to Deloitte.

Australians are also dealing with price pains through back-to-back interest rate hikes in February and March, while more are anticipated throughout the year.

Westpac is forecasting three more interest rate increases this year, while NAB, Commonwealth Bank and ANZ are each predicting another hike in May.