Australian PM Howard under fire over AU$1.40/L pump prices

September 7, 2005

Australian Prime Minister John Howard has been criticised for refusing to cut the fuel excise tax as petrol prices reach up to $1.40 AUD per litre in parts of the country. The criticism by Queensland Premier Peter Beattie has been particularly vocal, claiming that the government simply does not want to lose the revenue the excise generates. The Queensland government subsidises fuel in the state with GST revenue.

"The reality is they cream off a huge amount every day. He can do something about it if he really wants to," Mr Beattie said.

Mr Howard responded by explaining the steep rise in petrol prices was due to current market trends and short-term repercussions of Hurricane Katrina. This was consistent with the statements by the Australian Competition and Consumer Commission, which explained the major reasons for the increase were Katrina and China's recent embargo on refined petrol exports.

The Prime Minister also estimated that the Federal government would lose billions in a cut of significant size. He estimated the government would lose at least $380 million for every one cent reduction, which would increase as drivers demanded a five to ten cent cut.