This issue will no doubt be with us for a very long time. The government will have to address the issue sooner rather than later.
FuelWatch effect not overstated: Rudd
By Colin Brinsden | May 26, 2008 PRIME Minister Kevin Rudd says he has "never overstated" the marginal impact the Government's FuelWatch scheme will have on the price of petrol.
The day after the Government said the upcoming taxation inquiry will consider dropping GST on fuel excise, Mr Rudd said FuelWatch would cut only around two cents from a litre of petrol over time.
"We have ... taken advice from a range of people about its potential impact at the bowser," Mr Rudd told Parliament.
"We have never overstated it.
"At the time of its launch we said an average of about two cents (lower) over time at the bowser."
Mr Rudd said FuelWatch would "help at the margins. We don't wish to understate it, we don't wish to overstate it".
The continued political stoush over the price of petrol comes as new data showed the national average petrol price rose by 4.3 cents per litre to a record 150.9 cents last week – the biggest weekly rise since December 2007.
Commonwealth Securities economist Savanth Sebastian said the average household is now forking out almost $211 a month on petrol, up almost $42 over the past eight months.
He said sustained higher fuel prices were likely to be felt across the economy, affecting companies as well as consumers.
"The interest rate hikes earlier in the year have added to the stress on the household budget and such sharp rises in recent fuel prices are likely to see consumer spending slow even further," he said.
Mr Rudd blamed soaring petrol prices on the international demand for oil, particularly from China and India.
On increasing supply, he said the Government would seek to join others in maximising leverage on organisations like OPEC.
Opposition Leader Brendan Nelson said petrol prices had jumped 13 cents a litre since Labor came to power, yet Mr Rudd was arguing the Government had done all it could to ease cost-of-living pressures.
"Don't Australians deserve better than a prime minister who is a quitter?" Dr Nelson said.
The Government said yesterday an upcoming review of taxation, headed by Treasury secretary Ken Henry, would look at dropping the 10 per cent GST on the fuel excise – seen as a tax on a tax – saving motorists 3.8 cents a litre at the petrol pump.
Dr Nelson said this was only being considered now "after a week of pressure on petrol from the Coalition".
"We don't need this kind of smoke and mirrors in relation to the GST on excise that might be delivered in about 18 months' time.
"For God's sake Mr Rudd, make a decision."
A survey released today showed strong public support for the Opposition Leader's proposal to cut fuel excise by five cents a litre.
Essential Research found 59 per cent of people in an online poll supported the move, compared with only 19 per cent who were against it.
New South Wales Premier Morris Iemma said he would also welcome dropping the 10 per cent GST on fuel excise if it offered genuine relief for the state's motorists.
But Mr Iemma said the Federal Government would also have to hold discussions with state governments, which would lose revenue from any GST cuts.
