Peter Dutton’s proposal to halve the petrol excise for 12 months is a bold, populist manoeuvre in the Liberals’ armoury as we head for the Federal elections of May 3. It offers immediate relief on the surface—but it is far from a silver bullet for Australia’s long standing economic challenges. There are evident pros and some risk associated with Coalition’s plan.
Immediate and tangible relief:
Cutting the excise from roughly 50.8 cents to 25.4 cents per litre means that motorists could see savings of around $14 per week for a typical one car household. In a time when every dollar counts, this clear, visible benefit at the pump resonates deeply with families facing rising living costs. It’s a straightforward measure that cuts through the often-murky complexities of tax policy and delivers instant, quantifiable relief.
Political clarity and messaging:
The policy’s simplicity is its greatest strength. In a political landscape cluttered with complicated reforms and long-term projections, offering an immediate price drop is an easy sell to the electorate. When voters see a tangible reduction at the pump, the message is crystal clear—the opposition is taking direct action to ease their daily financial burdens.
The cons
Fiscal sustainability and inflation risks:
However, the immediate relief comes at a steep price. The excise cut is estimated to cost approximately $6 billion over the course of a year. The loss of revenue raises serious questions about fiscal sustainability.
Whether this deficit is financed through borrowing or cuts elsewhere, the trade-off could have knock-on effects, including higher debt levels or reduced funding for essential services.
Moreover, injecting extra cash into household budgets can spur consumer spending that may ultimately feed inflation—especially when the discount is temporary. The inevitable reversion to the full excise rate could then trigger a sudden price spike, leaving consumers with a painful rebound.
Equity concerns:
While the policy is pitched as a lifeline for struggling families, its benefits are not evenly distributed. Higher-income households, which tend to drive more, will benefit disproportionately from a per-litre discount. Estimates suggest that the richest households might save significantly more than those in the lowest income quintile—possibly as little as $3.80 per week for the latter. Additionally, this measure offers no benefit to households that drive electric vehicles or use alternative transport, thereby limiting its overall impact in a rapidly evolving transport landscape.
Short-term fix vs. long-term reform:
Arguably the most critical issue is that this policy is inherently a short-term fix. In contrast, Labor’s income tax cuts—although modest in weekly benefit—are permanent, structural changes designed to relieve pressure over the long term. A one year discount on fuel excise does little to address the underlying issues in energy pricing, fiscal policy, or the broader cost of living crisis. Without accompanying long-term reforms, this measure risks being a superficial patch that merely postpones more difficult decisions.
Balancing perspective
There is no doubt that, in the short term, the fuel excise cut provides a politically attractive option—delivering quick, visible relief at a time when voters are feeling the pinch. It can act as a temporary balm for households facing immediate financial pressures. Yet, when we scrutinise the policy through an intellectual lens, its shortcomings become clear. Fiscal sustainability is jeopardised, the benefits are unevenly distributed, and the lack of structural reform means that this measure does not offer a lasting solution.
In balancing these views, one might argue that while immediate relief is necessary in moments of acute economic stress, it should not become an end in itself.
A responsible government would recognise that temporary measures must be part of a broader strategy that addresses long-term economic stability and equitable growth. Without such a strategy, the fuel excise cut risks becoming a band aid solution that could ultimately undermine fiscal prudence and leave the most vulnerable even worse off when the discount expires.
In sum, while Dutton’s fuel excise cut might win votes by offering a quick fix, a more sustainable approach would integrate immediate relief with comprehensive reforms that secure long term economic stability and fairness for all Australians.
*Tony Anamourlis, is a lawyer who specialises in tax structuring, estate planning, multinational transactions, advising on diverse taxation laws and frequently commenting on global tax issues in major publications.
