{"id":575193,"date":"2026-03-31T00:09:13","date_gmt":"2026-03-31T00:09:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/575193\/"},"modified":"2026-03-31T00:09:13","modified_gmt":"2026-03-31T00:09:13","slug":"australias-fuel-tax-cut-could-give-way-to-more-interest-rate-pain","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/575193\/","title":{"rendered":"Australia\u2019s fuel tax cut could give way to more interest rate pain"},"content":{"rendered":"

Australians could face worse cost-of-living pressures over the coming months despite temporary relief through a cut to the fuel excise<\/a>.<\/p>\n

From Wednesday, petrol and diesel costs around the nation will be slashed by 26.3 cents a litre as the federal government moves to head off the worst effects of the war in the Middle East.<\/p>\n

That equates to $10.50 on a small 40-litre tank or $21 for Australia\u2019s best-selling new car \u2014 the Ford Ranger \u2014 which has an 80-litre tank.<\/p>\n

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Independent economist Saul Eslake said while the move would be welcome relief for motorists battling high fuel prices, it would likely lead to higher interest rates over the longer term<\/a>.<\/p>\n

The tax cut would leave drivers with more money in their pockets, which they would likely spend in other parts of the economy, driving up inflation, Eslake said.<\/p>\n

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\u201cWhat the government giveth in these circumstances, the Reserve Bank may taketh away,\u201d he told AAP.<\/p>\n

Treasurer Jim Chalmers has said the policy would likely reduce headline inflation by half a percentage point, but the Reserve Bank prefers to rely on underlying inflation, which often ignores fuel prices due to their volatile nature.<\/p>\n

Eslake said the fuel tax could also exacerbate existing shortages by driving up demand for cheaper petrol and diesel.<\/p>\n

\u201cYou would have thought that a part of any sensible response to a threat to supply is to try to reduce demand where you can. (This will) do the opposite,\u201d he said.<\/p>\n

Fellow economist Chris Richardson said while he understood the politics of cheaper petrol, the economics of the policy were poor.<\/p>\n

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\u201cThere will be joy at the new round of handouts. But they\u2019ll come with a sting in their tail. They\u2019ll keep inflation higher here for longer,\u201d he said.<\/p>\n

The Spirit of Tasmania ferry is one of the latest operators to pass on higher costs to customers, imposing a 15% fuel surcharge on all voyages between Geelong and Devonport.<\/p>\n

The company was facing an 80% rise in fuel prices, projected to hit its bottom line by more than $50 million, TT-Line chairman Ken Kanofski said in a statement.<\/p>\n

Asked about Australia\u2019s policy of cutting the fuel excise, New Zealand\u2019s Prime Minister Christopher Luxon blasted the idea.<\/p>\n

\u201cOur advice is pretty clear: it\u2019s poorly targeted, it actually benefits high-income households and it actually encourages fuel use when it\u2019s constrained,\u201d he told reporters in Wellington.<\/p>\n

Alongside the fuel excise cut, the government will also pause the road user charge for heavy vehicles, easing some financial pressure<\/a> on already-stretched supply chains.<\/p>\n

The two policies are expected to cost taxpayers $2.55 billion between April and June.<\/p>\n

NRMA spokesman Peter Khoury said despite the cut, petrol prices were likely to continue rising for as long as the war drags on.<\/p>\n

\u201cWe\u2019ve broken the record several times, we break it on a daily basis, so cutting the excise won\u2019t take long before those prices get back up, and that\u2019s going to be the challenge,\u201d he said.<\/p>\n

State leaders are planning to give up any windfall GST revenue from higher petrol prices and were due to discuss the idea at a meeting on Monday evening.<\/p>\n

This article was first published by AAP<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Australians could face worse cost-of-living pressures over the coming months despite temporary relief through a cut to the…\n","protected":false},"author":2,"featured_media":575194,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,63,27313,281768,130870,258948,44],"class_list":["post-575193","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-australia","tag-fuel-excise","tag-fuel-excise-cut","tag-fuel-prices","tag-middle-east-conflict","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/575193","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=575193"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/575193\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/575194"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=575193"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=575193"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=575193"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}