EDITORIAL: Fuel excise cut optimism is quickly fading away
The fuel crisis has thrown the spotlight on how the nation has found itself in this position and what can be done to protect against a repeat in the future.
For a moment this week we had an encouraging ray of bright news.
Sadly it looks like it will be fleeting. The dark clouds of reality are already descending all around us.
For starters, it is clear the Federal Government’s decision on Monday to halve fuel excise to 26¢ per litre for three months starting on April 1 is but temporarily holding back the tide of fuel price increases.
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By continuing you agree to our Terms and Privacy Policy.By this time next week it is more than likely that unless United States President Donald Trump or who ever is calling the shots in Iran changes tack, the saving from the fuel excise cut will have been wiped out.
In a world in which uncertainty seems all-encompassing, the longer term picture remains similarly gloomy.
Westpac expects interest rates to rise three more times this year.
Westpac chief economist Luci Ellis said she expected the Reserve Bank of Australia to raise rates in May, June and August.
She warned the three month cut to the fuel excise would not stop inflation continuing to rise.
There is little optimism coming out of the latest RBA commentary.
Minutes of this month’s RBA meeting, revealed on Tuesday, said RBA monetary policy board members were already nervous about consistently higher oil prices feeding through to other parts of the economy when they raised the cash rate by 25 basis points to 4.1 per cent on March 17.
The RBA is worried that headline inflation will hit 5 per cent on an annual basis by June, reaching levels last seen in the September quarter of 2023 during its last period of aggressive interest rate hikes.
This would have the consumer price index at a level 0.75 percentage points higher than its February forecast, made less than a month before the US strikes on Iran sparked a wider conflict in the Middle East and a blockade of the Strait of Hormuz.
The fuel crisis has put the spotlight on how the nation has found itself in this position and what can be done to protect against a repeat in the future.
On that front too, a warning is sounding.
On Tuesday, Minerals Council of Australia chief Tania Constable blamed environmental activist “vandalism” for holding Australia back from energy sovereignty and said the Iran war-induced crisis should be a “wake up call”.
The head of the nation’s peak mining body called for urgent investment and expedited approvals for major oil and gas projects across Western Australia, the Northern Territory, Queensland and the Great Australian Bight.
She said the current fuel crisis had proved Australia needed to muscle up against global shocks so it wasn’t left vulnerable to volatile international markets — which included revving up domestic projects and standing up to climate activists.
We need to hear the alarm bells. We cannot just continue along as if everything will return to “normal” in the long term.
The country needs leaders who will take firm and positive steps to protect us from similar shocks hitting us in the future.
