Another federal election is just around the corner, and as we’ve expected, the politicians are making their pitches. Candidates are stepping into the spotlight, eager to share their visions for the future.
This election cycle, one particular commitment has struck a chord with drivers across the country, offering a welcome sign of relief for those feeling the pinch at the pump.
A day after the release of the 2025-2026 Federal Budget, Peter Dutton, the Opposition leader, made a bold pledge that could see significant fuel savings. He promised to halve the fuel excise tax if his party secures victory, a move that will fuel conversations and debates.
This tax, currently set at 50.8 cents per litre, is a substantial component of the cost of petrol, diesel, and ethanol blends such as E10 and E85.
He explained that from the moment he steps into the Prime Minister’s office, the fuel excise would drop to 25.4 cents per litre, and this reduction would last for an entire year.
The Coalition claimed that the average motorist who fills up with 55 litres of fuel weekly could save around $720 annually.
The government’s recent budget announcement revealed that fuel excise revenue is expected to dip by 2.5 per cent over the next three years, primarily due to the increasing adoption of electric and more fuel-efficient cars.
However, the opposition’s proposed 12-month excise cut would create a $6 billion shortfall, raising questions about the long-term sustainability of such a measure.
This isn’t the first time the fuel excise has been in the political spotlight. The now-opposition had previously cut the excise in half from 30 March 2022 to 28 September 2022, when fuel prices soared above $2 per litre in many metropolitan areas.
According to the Australian Institute of Petroleum, the average petrol price in the state capitals fell to roughly $1.75 per litre in October of the previous year. However, this has since risen to around $1.85 per litre.
Fuel costs are a significant burden for Australian households, with the Australian Automobile Association (AAA) reporting an average weekly spend of $91.89 on fuel alone. This makes it the second-biggest expense for local motorists.
In light of this, there have been calls for a revamp of the current system, with suggestions such as a pay-per-kilometre road user charge to replace or supplement the fuel excise.
Currently, 77 per cent of the fuel excise revenue is allocated to road transport infrastructure. Still, with changing vehicle technologies and usage patterns, the need for a revised approach is becoming increasingly apparent.
The AAA expressed disappointment at the lack of a clear plan for a more affordable and equitable system for funding Australia’s road network in the latest budget.
‘It is disappointing that Australians heard nothing tonight about the Government’s plan for a more affordable, sustainable, and equitable system for paying for our roads,’ AAA Managing Director Michael Bradley said.
As we await the official call for the federal election, which must occur no later than 17 May 2025, Australian motorists are left to ponder the potential impact of this election promise.
Could this be the relief they’ve been waiting for, or is it a short-term fix to a long-term challenge? Are there other measures you’d like to see introduced to ease the cost of motoring in Australia? We’d love to hear your thoughts on this election promise.
Also read: When will the next federal election be in Australia?
I love this ‘average motorist’ comment. Save $720 a year? Due to costs, and my restricting the amount of driving I do, (thanks to a trike), in the last 12 months, I have spent $825.60 on petrol! So won’t be saving much.