The South Australian Road Transport Association (SARTA) has labelled the Coalition’s proposed fuel excise cut as “naïve” and that it would “irreparably harm” the sector.
Peter Dutton announced the Coalition’s plan to slash the current fuel excise for petrol and diesel in half in a bid to provide immediate cost-of-living benefits to families, however the road transport industry has largely opposed the cut, unless it comes with an improvement to the existing fuel tax credit scheme.
SARTA has now joined the Queensland Trucking Association and NatRoad in vocally denouncing the existing proposal/
It says operators will be forced to fund 80 per cent of the fuel excise cut, while the Coalition would pay for just 20 per cent of it.
“It is an absolute outrage that the Coalition, in chasing votes, wants to be seen to be making a grand cost of living gesture by halving the fuel excise but they want us to pay for most of it,” SARTA says in a social media post.
“The Coalition, as well as officials in Treasury and even some other groups, show that their grasp of the commercial reality of the trucking industry is dangerously simplistic and naïve.”
“The massive and very damaging mistake they are making is they are thinking about the way that fuel excise, the road user charge and the fuel tax credit scheme work in complete isolation.
“They are not thinking about those three components and how they operate within the context of the trucking industry’s economic world and its very real implications.”
“Only 75 to 80 per cent of heavy vehicle operators are price-takers, so they have zero capacity to secure freight increases. Heavy vehicle operators have responsibly been accruing the fuel tax credit of 20.3cpl with the ATO, which is the operator’s money and substantially covers their BAS obligations of typically 60 per cent.
“The abolition of the fuel tax credit would mean heavy vehicle operators would have to fund all of their BAS obligations from within their existing operating budgets.”
With average profit margins in the road transport sector sitting at roughly two per cent, SARTA says there is no room for operators to further cut costs and absorb added fees without impacting safety.
Therefore, the only reasonable action would be to pass this added cost onto the customer through increases rates.
SARTA says the policy, if enacted, will not only have a huge negative impact on the transport industry, but the added prices of transport will wipe out any cost-of-living benefits for the final consumer.
“The trouble is that most, or 80 per cent, of heavy vehicle operators aren’t in a position to secure increased rates, leaving them with a choice between closing their business or building a significant debt up with the ATO that will take years to recover from,” SARTA says.
“So, Dutton’s policy would actually devastate a lot of SME family businesses.”
NatRoad CEO Warren Clark looked back on the former Coalition government’s halving of the fuel excise, which threw “cashflow for small road freight businesses into crisis”.
“About 98 per cent of the road freight industry consists of small businesses. Average profit margins are just two per cent,” Clark says.
“Small trucking businesses lack the economic bargaining power to simply pass on higher costs. Fuel Tax Credits have a heavy impact on cashflow management.
“Under the former Coalition Government, the decision to halve fuel excise also meant the suspension of Fuel Tax Credits. This wiped out the benefits of the tax cut, throwing cashflow for small road freight businesses into crisis.”
In a release of its own, the Queensland Trucking Association outlined how slashing the fuel excise looked like a “win for all” on the surface, but is damaging to the road transport sector.
“When accounting for any decrease in the fuel excise, it is important to understand the relationship between the road user charge, the fuel excise and the impacts on fuel tax credits,” QTA CEO Gary Mahon says.
“A reduction in the fuel excise on paper appears to be a win for everyone, however this does not correlate with an associated reduction in fuel prices. History shows from 2022 when the fuel excise was reduced, the fuel price only marginally decreased.
“During the period in 2022 when the fuel excise was reduced, the heavy vehicle industry did not benefit due to the adverse impact on the cents per litre (cpl) claimable as fuel tax credits.
“As the heavy vehicle industry pays a road user charge, fuel tax credits are claimed on the cents per litre difference between the RUC and the fuel excise. The Excise is indexed twice each year, and the next rise will be in August. If the fuel excise is halved, this will result in no claimable fuel tax credits for the industry, unless there is a reduction in the RUC.
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