The fuel excise will be halved to 26.3 cents per litre for the next three months and the road user charge (RUC) reduced to zero for the same period, the national cabinet announced today.
The next scheduled increase for the charge has also been deferred for six months.
“We understand in particular that the heavy vehicle industry is under real pressure,” Prime Minister Anthony Albanese told reporters.
“This is about taking pressure off them.”
The National Road Transport Association (NatRoad) welcomed the announcements, describing the measures as an important step in supporting the nation’s freight and logistics sector during the Middle East conflict.
NatRoad CEO Warren Clark said the government’s actions demonstrated strong recognition of the critical role the trucking industry plays in keeping Australia moving.
“These are very welcome measures and a clear sign the government is listening to the concerns of our industry,” Clark said.
Clark said the announcements would help provide greater certainty for operators and support supply chains at a time of global instability.
“Improving coordination and securing fuel supply gives confidence to operators who are doing it tough right now,” he said. “At a time like this, stability in the system is incredibly important.”
However, Clark said the focus must now turn to ensuring trucking businesses have the support they need to manage ongoing cost pressures.
“These companies still have March’s fuel bill to pay. While these measures are an important step forward, many operators are still facing significant financial pressure on the ground,” he said.
“Fuel prices remain high, cash flow is tight, and businesses are working hard to stay on the road.”
Queensland Trucking Association CEO Gary Mahon is also urging operators to take a closer look, warning the reality may be far less reassuring.
Mahon says the headline measure – effectively removing the fuel tax credit (FTC) for the next quarter – risks creating more pressure on already stretched operators, not less.
Under the current system, operators can claim back the difference between the fuel excise and the road user charge – about 32.4 cents per litre – through the FTC. That rebate has been a critical cash flow buffer for fleets managing soaring diesel prices.
But under the new arrangement, that entitlement disappears for the next quarter.
Instead, the policy relies on the assumption that the terminal gate price (TGP) of diesel will drop by the same 32.4 cents.
Mahon says that’s a big assumption, and a risky one.
“If that price reduction doesn’t happen, or doesn’t hold, operators are immediately worse off,” he explained.
Even if the TGP does fall initially, any subsequent rise during the quarter effectively becomes a direct hit to operators’ bottom line because they no longer have the FTC safety net to claim it back.
“In simple terms, every cent the price goes up is money lost,” Mahon said.
Mahon also pointed out that even with a 32.4 cent reduction, operators are still paying roughly $1 more per litre than they were just three weeks ago.
For a medium-sized fleet using around 100,000 litres a week, that equates to an extra $100,000 in fuel costs every week.
“That cash still has to be found,” Mahon said.
Mahon described the next quarter as a “cash flow hump” that many operators simply aren’t equipped to get over, particularly with fuel bills needing to be paid upfront while revenue can take 30 to 90 days to come in.
Compounding the issue, fuel companies are tightening credit lines, leaving operators with fewer options to bridge the gap.
At the same time, Mahon said the removal of the FTC could weaken operators’ position in fuel surcharge negotiations, with some customers likely to argue that transport costs should now be lower.
“It’s not a silver bullet – it has to be treated with care,” Mahon said.
He believes alternative measures, particularly government-backed support to extend fuel credit terms, would have delivered more meaningful relief by easing immediate cash flow pressures.
Instead, Mahon fears the current approach risks being little more than a “political sugar hit” that doesn’t address the structural challenges facing the industry.
“Watch the terminal gate price closely and analyse it in the cold, hard light of day,” he said.
Truckie Trevor Warner agreed with Mahon’s assessment of today’s announcement.
“Reducing the road user charge would have been better for everybody …….not the excise,” he wrote in an online post.
“Consumers would not know the difference; now businesses have been screwed over for their Q4 BAS.”
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