‘Political Band-aid’: cutting Australia’s fuel excise could make petrol shortages worse, economists say

Economists are cautioning against calls for the Australian government to cut the fuel excise, arguing it could exacerbate petrol shortages and contribute to inflation. The calls for a cut have come from figures including mining billionaire Gina Rinehart, the Tasmanian premier, and Liberal opposition leaders in New South Wales and Victoria. They propose this as a measure to ease cost-of-living pressures. However, economists warn that reducing the excise could increase demand, potentially leading to shortages, and that some households would simply spend the savings elsewhere, adding to inflationary pressures. The Albanese government has not yet indicated whether it will consider the proposed cut.