Federal fuel tax fans the election fire

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The Age: Federal fuel tax fans the election fire. October 28, 2014. Mark Kenny Chief Political Correpsondent

The government will use its administrative powers to increase the fuel tax says Finance Minister Mathias Cormann, costing average households an extra 40 cents a week.

Motorists might feel betrayed by Canberra’s regulatory two-step to increase federal fuel tax through the back door, but there are two political victims of this novel manouevre for whom the insult might feel personal: fellow state Liberal, Denis Napthine, and Greens leader, Christine Milne.

The former has been crunched whereas the latter has been left behind.

First to the hapless doctor. With his back against the wall in a do-or-die election in which he is already the underdog, Napthine has just been run over by an insensitive federal government juggernaut desperate to resolve its own problems. Liberal party solidarity be damned. In such circumstances, the difficulties of a state election apparently means nothing.

With a back-door move to increase federal fuel tax, Denis Napthine been mown down by a federal government juggernaut.

Abbott’s only sop to Victorians is that they will pay no more than any other Australians for petrol, that all of the money raised will go to better roads, and that the feds have committed $3 billion to East-West Link.

“The average Victorian family is going to benefit massively from the $3 billion that this Government is committing to the East-West Link under contracts that members opposite want to tear up,” Abbott said in Parliament.

The strength of Napthine’s attempted slap-down of the federal government reveals the extent of political sensitivity state governments feel towards the cost-of-living issues affecting voters.

Abbott’s quick fix on his deadlocked budget is Napthine’s running sore which threatens to weep all the way to polling day.

Labor will try to make sure of that.

Which is why Napthine said he preferred proper process by which he meant parliamentary procedure. Things such as an open vote in the legislature before a tax becomes law of the land.

The policy itself, if it can be divorced from the trickiness of its introduction, is sound.

Fixed at 38 .1 cents back in the early 2000s by John Howard as he managed the GST fall-out, the fuel excise had been declining as a revenue source and therefore as a cost/price signal in consumption terms. Fossil fuels were in effect, getting cheaper. And scarce federal revenue declining too. Restoring twice-yearly indexation merely holds that relativity constant. It is not an increase as such – a fact the feds could have explained a lot better than they have.

Into this space should have walked the Greens. Their exquisite opportunity was to do a deal with Abbott, offering him the numbers for his fuel tax hike in exchange for keeping the Renewable Energy Target at (or near) its intended level.

Yet Senator Milne chose to stay pure – there would be no dealing with Abbott, no horse trading across issues.

Milne enjoys solid support in her party-room, but some at least believe she could have played this better.

Asked what she could do now, one colleague quipped that the word “oops!” comes to mind.

It’s a fair bet Napthine said something stronger than “oops” when he learned of the fuel tax move on Tuesday morning.

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