Treasury Laws Amendment (Fuel Excise Relief No. 2) Bill 2026
Dr RYAN (Kooyong) (12:55): On 1 April this year the government halved the fuel excise and suspended road use charges for heavy-vehicle operators. That was a direct response to disruption caused by the conflict in the Middle East. As we know, that initial relief is due to expire next week, on 30 June.
The government has now introduced this legislation to taper that relief, rather than abruptly withdrawing it. Under the Treasury Laws Amendment (Fuel Excise Relief No. 2) Bill 2026, the initial 50 per cent cut in the fuel excise of 30c per litre will drop to 16c per litre from 1 July and then phased out from 2 August. It's my view that tapering this relief is the right approach.
Since fuel prices peaked at the end of March, petrol prices in most capital cities have dropped by about 90c a litre. They're now below the levels they were at the time the conflict first began. But although petrol prices have eased considerably, diesel prices remain elevated.
They're still averaging about 20c a litre more than when the conflict broke out. We also have ongoing uncertainty about the resolution of that conflict. So an abrupt removal of excise relief would potentially impose a very significant shock on small businesses, transport operators, truck drivers, freight companies and the wider logistics industry, which is reliant on diesel to operate.
A phased withdrawal provides businesses with greater certainty, and it will allow time to adjust to prevailing market conditions, acknowledging the ongoing geopolitical uncertainty and the failure to secure a clear end to hostilities in the Middle East. But, having said that, I think we need to be sure that these measures have genuinely translated into lower prices for consumers and for businesses.
The measures in this bill will cost about $400 million, on top of the $2.9 billion in forgone revenue from the first three-month reduction in the excise. Australians deserve to know that the benefit will be reflected at the bowser and not absorbed elsewhere in the supply chain. Given that taxpayers themselves are funding this relief, parliament should be able to assess whether it has delivered the outcomes promised.
I would welcome greater transparency from the government on how much the excise cut actually translated into price reductions at the bowser. The crossbench sought that data yesterday, when we were first briefed on this legislation, but it has yet to be provided. Before we commit hundreds of millions of dollars in additional support, it doesn't seem unreasonable that we should have a clear understanding of how much relief actually reached houses, businesses and freight operators.
While the reduction in the fuel excise undoubtedly provided some relief, Australia has also been lucky in the last few months, particularly on the supply side. In the wake of the conflict, Australia was able to dramatically increase imports of crude oil from South Korea, jet fuel from Malaysia, and diesel and petrol from the US. Australian importers even bought 50 million litres of jet fuel from the US, which is a rare supply route.
Our supply chains held together remarkably well, with 92 fuel shipments arriving in Australia over this period. As a result, our reserves have been built up to 44 days worth of petrol, 39 days worth of diesel and 32 days worth of jet fuel. But the truth is that Australia has been protected from what could have been a much more severe supply shock.
Major fuel-consuming nations, including Japan and China, drew heavily on their strategic reserves. China significantly reduced its imports, easing pressure on global markets. The International Energy Agency coordinated releases of 400 million barrels of oil from emergency stockpiles, helping to stabilise supply and moderate price volatility.
Those measures were effective, but they were also quite extraordinary. I congratulate the Australian government—the Albanese government—on securing our energy security through this crisis. Emergency measures always carry with them a degree of uncertainty and a degree of anxiety.
Strategic reserves exist to cushion temporary disruptions, not to provide a permanent solution. Many of the stockpiles accumulated over decades have now been drawn down. Rebuilding them is going to take time, and that reality should serve as a reminder of the fragility of the global energy markets.
The combination of geopolitical conflict, constrained shipping routes and tightening supply can quickly expose vulnerabilities in countries that rely heavily on imported fuel. Unfortunately, at this point, Australia remains one of those countries. Despite recent measures from the government, the reality is that our domestic refining capacity is modest.
We remain highly dependent on imported refined fuels. We cannot assume that the same combination of favourable circumstances, strategic stockpile releases and alternative supply routes will be available the next time we have a major disruption of this sort. Energy security should not simply be a crisis response; it must be a long-term national security priority.
Record fuel prices have accelerated local interest in electric vehicles, with the Tesla Model Y becoming the first electric vehicle to top Australia's monthly vehicle sales charts when it became the country's bestselling car in May. That's not just a consumer trend; it's a reflection of Australians who are seeking protection from volatile global fuel markets.
For many households, EVs are no longer just an environmental choice. They are increasingly an energy security choice and a cost-of-living choice. But, at the same time, at the very moment that consumers and businesses are considering alternatives to imported fuel, some of the government's policy settings, which have actively supported the energy transition, are being wound back.
The fringe benefits tax exemption for electric vehicles is being narrowed from 1 April this year. I appreciate the government's desire to better target tax concessions, but we have to be very careful not to undermine one of the very few policies which has demonstrably accelerated the EV market and uptake in Australia. Some versions of the Tesla Model Y cost close to $90,000.
If we limit the FBT tax exemption to cars under $75,000 from 1 April 2027, as is planned, we risk discouraging uptake of some of the most popular EV brands in Australia. What's most frustrating is the clear and apparent cognitive dissonance in the government's policy settings. While this government has long been emphasising the need for energy security, it has kept in place longstanding fuel tax concessions for some of Australia's largest fossil fuel users.
I don't know how many times the crossbench has raised this issue in the House, but the Albanese government continues to provide over $10 billion every year in fuel tax credits which disproportionately benefit large, fossil-fuel-intensive industries. The diesel fuel tax credit is not a neutral tax concession; it is a $10 billion-plus annual incentive to industry to keep burning fossil fuels.
BHP alone reportedly received $622 million in fuel tax credits in 2024 and at the same time posted around $10 billion in profit. What has that subsidy brought? Did it bring decarbonisation?
No. Despite committing in its own climate strategy to trialling electric trucks from 2024 and rolling them out across its fleet in 2027-28, BHP has now spent more than $500 million on new diesel trucks and has put the brakes on its shift away from diesel trucking. It's not a coincidence; it is cause and effect.
According to analysis by Fortescue, the 51.6c-per-litre fuel tax credit halves the return on investment on electrification. BHP's own leaked documents confirm as much with its internal modelling flagging changes to diesel pricing or credit availability as a potential decarbonisation risk factor and its internal projections suggesting that BHP expects to cut it's emissions by only one per cent by 2030.
Australians taxpayers are subsidising very profitable companies to continue to burn imported fossil fuels. They are sending taxpayer money up in smoke. If we are serious about strengthening Australia's energy resilience, about reducing our exposure to global fuel shocks and about accelerating the transition to cleaner transport then we cannot continue to subsidise fossil fuel consumption, on one hand, while scaling back support for lower emissions alternatives on the other.
The lesson from recent months is clear. Temporary fuel excise relief may help households, and it might help businesses weather an energy crisis, and for this reason I do support the measured tapering the government has proposed in this bill. But long-term energy resilience will not come from emergency excise cuts.
It will come from building a transport system that is less dependent on imported fuels, that is electrified, that is energy efficient and that is insulated from global geopolitical shocks. That is the broader challenge before us: not simply how we choose to respond to the current fuel price crisis but how we prepare Australia for the next one.