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2014/15 Federal Budget: What To Watch For Photo:
 
 
Trevor Collett | May, 13 2014 | 1 Comment

Federal Treasurer Joe Hockey will hand down his first federal budget this evening, with expected changes to the fuel excise, industry support programs and infrastructure spending.

Several budget leaks have been forthcoming in recent weeks to soften the ‘blow’ of new or increased levies, and it now seems almost certain that former Prime Minister John Howard’s fuel excise freeze is about to end.

The 38.1 cents per litre excise on fuel is tipped to be indexed to inflation and to increase bi-annually as it did prior to 2001 (in a similar way to tobacco and alcohol).

An immediate three cents per litre rise to the pump price is expected, with some (or all) of the additional revenue funnelled into the federal government’s infrastructure program.

Prime Minister Tony Abbot promised to be “the infrastructure Prime Minister” ahead of the 2013 federal election, and tonight’s budget is expected to at least uphold that promise with spending announcements for key road, rail and port projects.

Melbourne’s East West Link and Sydney’s WestConnex M4 extension will almost certainly be among the major road projects, while Sydney is also tipped to receive funding for several new road and rail projects designed to complement the recently-announced second major airport at Badgerys Creek.

Moves on industry assistance packages are unclear, although the recent refusal by the government to prop up Holden and SPC Ardmona with taxpayer money is perhaps an indication of future policy direction.

And while $17 million was supplied to the Cadbury chocolate factory in Hobart, the Commission Of Audit recommended that the grant be scrapped.


Industry Reaction

The Australian Automobile Association (AAA) voiced its disapproval of the proposed increases to fuel excise last week, labelling the plan a “back-door carbon tax”.

The Victorian Automobile Chamber Of Commerce (VACC) is also against the move, claiming the federal government was treating motorists like cash-cows and ‘milking’ them dry.

“Fuel excise currently generates more than $14 billion annually for the Federal Government and yet it wants more,” VACC Executive Director, David Purchase, said.

“Motorists cannot be expected to keep giving and they pay enough as it is through road tolls, insurance premiums, vehicle registration, licence fees and record fuel prices.”

Mr Purchase said that an increase in fuel excises would negatively impact on small business and families along with pushing up freight costs, which would follow-on to ‘shelf’ prices.

“We are also concerned about the reintroduction of fuel excise indexation. This automatic adjustment has no ceiling or expiry date, and does not take into account other economic challenges faced by small businesses,” Mr Purchase said.

Outside the automotive industry, impacts from proposed debt levies, changes to family tax benefits and cuts to the public service could also have an indirect impact on the likes of new car sales, but this impact may not be felt for some time.

Of course, exactly how many budget reforms actually see the light of day is entirely uncertain, as both the Greens and the Palmer United Party have indicated that passing budget legislation through the Senate won’t be easy.

Stay tuned to TMR for the wash-up of the 2014/15 federal budget.

MORE: Federal government news, budget news

 
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