Mike Stevens | Jun 26, 2009

THE QUEENSLAND GOVERNMENT is to end its 8 cents-a-litre fuel subsidy on July 1, and with school holidays on the way, fuel prices could rise by as much as 10 cents late next week.

"The school holidays are usually a high demand period and when there's high demand the prices go up," Fuel Trac spokesman John Cowell told News Limited.

"But the prices won't go up too high because observers will be watching like a hawk to make sure people aren't getting ripped off.

Mr Cowell believes, however, that with the Queensland Government taking some political risk in making the move to cut the subsidy, it will be watching fuel retailers closely to ensure nice price gouging occurs.

Queensland Premier Anna Bligh said that a recent independent inquiry revealed that, due to NSW drivers crossing the border to purchase the cheaper subsidised fuel, Queensland motorists were not getting the appropriate benefits from the subsidy.

“We currently spend more than $500 million a year in our fuel subsidy program,'' Ms Bligh said.

"The proposal by the NSW Government to abolish their fuel subsidy scheme by July 1 will only make it more attractive for NSW motorists to cross the border and fill up their tanks,'' Ms Bligh said.

"Queensland taxpayers should not have to subsidise interstate motorists - it does not represent value for taxpayers' money.

"As part of this year's Budget, the Government has decided to end the fuel subsidy program as of July 1.''

The Premier said that if the subsidy were to remain in place, the Government would have needed to borrow the money to cover the costs.

Ms Bligh acknowledged that the loss of the subsidy is a sacrifice for motorists, but that the move will save Queensland taxpayers over $2.4 billion in the next four years. The priority for Queensland is to restore the Budget surplus it once enjoyed and to rebuild its Triple A credit rating, the Premier said.

"Paying off our debt faster is like paying off a home faster.

"This measure alone means we will save almost $300 million in interest payments over the next four years.

"The money saved will go into the things that are most important, running our hospitals, running our schools, police and other vital services," Ms Bligh said.

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