The Editor,

Sydney Morning Herald.                                                 September 7, 2005.

 

Obviously stung by the contents of my letter to the editor yesterday, John Howard said today that his government can’t afford to cut the federal excise rate on fuel (‘PM won’t cut excise as petrol rockets’, Herald, September 7).

 

Of course, our little prime spinmeister is practising the same bait & switch routine as his treasurer, uncle Pete.

 

On the one hand he says that any increase in GST revenue occasioned through higher pump prices will be offset by a loss of GST due to people cutting their spending in other areas - too clever by half.

 

What our little trickster doesn’t mention is that approximately 60% of fuel consumption is down to business &, as we’ve already seen with Qantas, when business experiences an increase in its costs, it passes them on in the form of higher prices (& rarely gives them back). GST is of course payable on those price increases. So to argue that the GST impact of higher fuel prices is a ‘zero sum game’ is completely dishonest.

 

But, of course, Woodrow Winston argues that any net increase in GST doesn’t ‘stick’ to the federal government’s fingers anyway: it goes straight to the States. Here we go again: it’s not our fault - it’s those wicked State governments (with fuel prices up by an average of $0.05 per litre over the past 12 months, it would seem that an extra $110 million in GST has gone to the States, even though State taxes seem to keep rising & their expenditures seem to keep falling – another issue).

 

But what our prime minister doesn’t talk about is the extra fuel excise revenue enjoyed by the federal government due to increased fuel consumption.

 

Little Johnnie said today that to cut excise by $0.01 per litre would cost the federal government about $380 million annually. That means we are consuming around 38,000 million litres of excisable fuel annually.

 

The last published figures from the ABS confirmed that our fuel consumption for the 12 months to October, 2002 was 26,164 million litres. This means that our fuel consumption has been increasing by about 12.5% annually over the past 3 years.

 

On these numbers, the federal government has been picking-up an average of $1.4 billion in additional excise revenue each year, or $4.2 billion in total since 2002.

 

Now the prime meanster says that for any cut in the fuel excise tax to have any meaning to consumers, it would have to be of the order of $0.05 to $0.10 per litre & that this would cost ‘billions’.

 

Well, given that the federal government has picked-up at least $1.5 billion in additional excise tax revenue through increased consumption over the past year, what’s the problem? A cut of $0.05 per litre would cost about $1.9 billion annually. And if this is too much, why not introduce a temporary reduction ie: until such time that prices return to say $1.10 a litre: too hard?

 

On another aspect, the prime minister has also conveniently adopted the helpless hand-wringing demeanour of his hapless treasurer by blaming hurricane Katrina & insufficient oil production by those evil anti-democratic middle-eastern potentates, intent on destroying our values, for the rocketing price of fuel.

 

Little Johnnie & poor uncle Pete resolutely refuse to consider the possibility that the real problem might be with our friendly British & US oil companies.

 

As I mentioned in my letter yesterday, anyone with the scantest knowledge of the oil industry knows that the problem with fuel supply is not being driven by a shortage of oil, but rather a lack of refining capacity. And like New Orleans levees, the problem has been ignored for decades.

 

Since 1981, the number of refineries operating in the US has dropped from more than 300 to 149 & only one new refinery has been built since 1975. Meanwhile, fuel demand in the US has risen by 24% since 1975.

 

With refining capacity at close to 100%, the US now imports 10% of its fuel requirements from overseas refineries, thereby placing further pressure on supplies to the rest of the world. Hurricane Katrina has just aggravated an already huge problem, caused by the oil cartels choking supply to drive-up prices.

 

The proof of that lies in the fact that the oil cabal of ExxonMobil, Chevron Texaco, BP & Shell have taken more than US$250 billion in price increases since 2000, giving rise to US$80 billion in higher profits - & they still haven’t paid-out for the Exxon Valdez disaster 15 years ago.

 

Our federal government remains content to see its citizens ripped-off at the bowser, whilst pocketing windfall revenue gains driven by rising consumption. And it does nothing to reign-in the obvious profiteering of the international oil cartels.

 

At least in the US, where the price of fuel has historically been well below what we have paid, the latest price gouging of the oil cartels is finally being challenged: with calls by Senator Hillary Clinton for a US federal government investigation (Oil Firms Turn Katrina Into Profits).

 

It’s about time our putrid politicians stopped screwing the people they are supposed to be representing & started to earn their pay, particularly given their readiness to lecture the rest of the community on the subject.

 

Wittle Woodrow Wilson Winston, along with uncles Abbott & Costello, Darth Ruddock, Dame Downer, Verandah Sandstone, Brylcream Nelson & the bopsie Bishop twins, is always ready to tell us what a great government we’re so lucky to have.

 

Here’s an opportunity to stop playing games & prove it.