Reintroduction of fuel indexation comes with extra road funding for local governments.
Local councils across Australia will receive an extra $1.1 billion in road funding over the next two years as part of a deal that reintroduces indexation on fuel excise.
Federal infrastructure minister Warren Truss says the Federal Government will provide the additional funding to its Roads to Recovery scheme as part of a deal to ensure permanent fuel excise legislation is accepted by Parliament.
All of the money raised (a predicted $23 billion over the next decade) through increasing the fuel excise in line with inflation will be committed to roads infrastructure.
Although it initially opposed indexation when the Government introduced it last year through regulation, the Labor Opposition will now support legislation to make the measure permanent.
Indexation will not affect the trucking industry, the Australian Trucking Association (ATA) says.
“The trucking industry is protected from the increase in fuel tax, because our fuel tax credits automatically increase by the same amount,” ATA CEO Christopher Melham says.
“However, if legislation ratifying the tariff proposals is not passed before October 30, then trucking businesses will have to repay the extra fuel tax credits they received.”
Melham congratulated the Government and Opposition for finding common ground on indexation.
It’s also an important issue for local governments. Australian Local Government Association (ALGA) president Troy Pickard says tying the excise increase to local road funding will benefit communities around Australia
“The bipartisan support for this initiative is a welcome indication of political support across the board for local government,” he says.
“The funding is particularly welcome at a time when councils have had to make tough decisions following the freeze to the indexation of financial assistance grants.”