Following a cabinet meeting in Canberra this morning, the Australian federal government will halve the current fuel excise duty for at least three months as part of a national fuel security plan.
The prime minister announced the excise duty, currently 52.6 cents per liter, will be halved to 26.3 cents per liter for three months from April 1, 2026, responding to previous calls for the fee to be reduced or eliminated.
“We’re making fuel cheaper today because we understand Australians are under a lot of pressure,” Mr Albanese said in a press conference today. The change is expected to reduce the cost of a 65 liter tank by $19.
The plan also calls for the heavy vehicle user fee, which currently stands at 32.4 cents per liter of diesel for vehicles with a gross vehicle weight (GVM) of over 4.5 tonnes, to be reduced to zero for the same three-month period.
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“People should enjoy Easter and it is also important that we keep the economy going,” said the Prime Minister.
“This is an important time for tourism destinations and for jobs. They are counting on that.”
Treasurer Jim Chalmers said the move would cost the federal budget about $2.55 billion, adding that the war in the Middle East was causing “severe damage” to the global economy.
“The steps we are announcing are all about mitigating some of the higher petrol and diesel prices,” said Chalmers, while confirming the postponement of the next increase in road tolls by six months.
The moves come after agreement was reached at a cabinet meeting in Canberra this morning on a national fuel security plan to address ongoing fuel supply issues.
This means the government has adopted the second stage of the four-stage national fuel security plan, which Mr Albanese said aims to avoid competing strategies across states and territories.
Going beyond the first stage, viz “Plan and prepare.”Since the government monitors the impact of global factors, the second stage is necessary “Keep Australia moving.”‘, where fuel continues to flow, but with minor disturbances.
Albanese says he hopes to avoid the third phase, but the national cabinet does “Plan“.
This step would include taking targeted measures to maintain fuel supplies. In the final, fourth phase, the government would take action to ensure critical fuel consumers are protected and the economy stays running.
Mr Albanese convened the national cabinet meeting this morning to establish a coordinated response to the fuel crisis, which is impacting the prices and availability of diesel and petrol across the country.
It is the second Cabinet meeting since the start of the crisis, when the conflict in the Middle East led to a surge in demand and extreme price increases. In some areas, the price of gasoline is around $2.50 per liter and diesel is as high as $3.19 per liter.
Both the Prime Minister and Federal Energy Minister Chris Bowen have previously called for calm and assured motorists that the country would have a constant supply of fuel.
The new plan follows previous moves to shore up fuel supplies by taking over oil shipments, releasing emergency stocks and allowing lower-quality diesel imports into Australia to ease shortages.
Nevertheless, prices have continued to rise, with implications for Australians more broadly as higher transport and shipping costs impact consumer goods and supermarket prices.
Fuel prices are also rising in other parts of the world, including the UK and the US, where they have reached around US$4 per gallon (A$5.83 per gallon or A$1.54 per liter).
The U.S. has relaxed some emissions laws, allowing wider use of ethanol-containing fuels, releasing oil from its strategic reserves and easing restrictions on some supplies.
A proposed “tax holiday” would see the US fuel tax of 18.4 cents (27 cents) – similar to Australia’s fuel tax – put on hold. However, this plan has not yet been approved by the US Congress.
The UK government has been offering a tax break of five pence (A9.7c) per liter of petrol since 2022, which is currently valid until at least August this year. In the UK, prices have risen to their highest level in 18 months, where they are now above £1.50 per liter (A$2.90 per liter) for petrol and £1.77 per liter (A$3.43 per liter) for diesel.
Reports from the UK suggest fuel prices could rise further, with petrol prices there expected to hit £1.85 per liter ($3.58 per litre).
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