Fuel tax indexation confirmed

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Australasian Transport News / June 24, 2015

Local councils across Australia will receive an extra $1.1 billion in road funding over the next two years, thanks to the reintroduction of indexation on fuel excise.

Infrastructure minister Warren Truss says the government will provide the additional funding to its Roads to Recovery scheme as part of a deal to ensure permanent fuel excise legislation is accepted by Parliament.

Moving forward, all of the money raised (a predicted $23 billion over the next decade) through increasing the fuel excise in line with inflation will be committed to roads infrastructure.

"This popular roads programme was introduced by the Howard Government. Since coming to government, we have expanded it and made it permanent to give local government and their communities the surety they need that local roads will be future-proofed," Truss says.

The Australian Trucking Association (ATA) has welcomed the news, saying indexation will provide transport operators with renewed clarity and security. Without legislation, truckers may have been left out of pocket by the previous legislation that allowed for excise increases only for 12 months from October last year.

Making the indexation permanent means truckers will still be able to claim back the fuel tax they have paid.

"The trucking industry is protected from the increase in fuel tax, because our fuel tax credits automatically increase by the same amount," ATA CEO Christopher Melham says.

"However, if legislation ratifying the tariff proposals is not passed before October 30, then trucking businesses will have to repay the extra fuel tax credits they received."

That could have been around $750 for an owner driver, or up to $41,900 for much larger trucking businesses.

Melham congratulated the Government and federal opposition for finding common ground on an important issue for the transport industry.

It’s an important issue also for local governments. Australian Local Government Association president Troy Pickard says tying the excise increase to local road funding will benefit communities around Australia.

"The bipartisan support for this initiative is a welcome indication of political support across the board for local government," he says. "The funding is particularly welcome at a time when councils have had to make tough decisions following the freeze to the indexation of financial assistance grants."