Why Can't the Government Do This 1909On Wed, 2 Aug 2006 13:34:43 +1000, "Peter Webb" That's great, if you're some country with a peey little land mbutt that you could throw a rock across. But we arent Lithuania, or...
They can, its just that it is a very stupid idea.
Every 1 cent change to petrol excise costs $280m pa in lost revenue.
The far better strategy would be to increase excise dramatically to the same levels in Western Europe (say by increasing the price of petrol another $1 a litre) and use the revenue to fund equivalent tax cuts, biased towards low income earners. This would make the changes cost neutral to consumers, but would have the effect of encouraging more rational use of the reserves - less 4WDs, more use of public transport, investment in alternative energy sources, etc. Then, when the oil does run out (only a few years away for Australia) we won't have such a severe economic shock when suddently the stuff is $5 a litre.
Australia has "pumped" its economy through the second lowest petrol prices in the developed world. This is all fine and dandy until the stuff runs out, and at that time we will be in a far worse position than almost any other developed country in the world. Keeping petrol cheap by world standards (which is what the Government is doing) is electorally popular, but a disastrous strategy in the medium term.
