Dutton revives Morrison petrol policy in counterbid to Albanese tax cuts

March 26, 2025 journo

Opposition Leader Peter Dutton will unveil a $6 billion cut to fuel excise in a move to confront Labor over the cost of living for millions of voters as he considers whether to promise an ambitious tax package to counter the $536 personal tax cut in the federal budget.

Dutton is also signalling plans for a new housing supply policy and a new target to cut the migration intake as part of his budget reply speech on Thursday night while fending off Labor accusations that he stands for higher taxes because he opposes the “top-up” tax cut in the federal budget.

He is also tipped to reveal plans to deliver “Australian gas for Australians” to drive down energy prices, declaring he will fast-track key projects such as the Narrabri gas field in northern NSW as long as the gas flows to the domestic market rather than being shipped offshore.

But the Coalition has been unsure about whether to match or exceed the $17.1 billion tax cut the government unveiled on Tuesday night after Liberal and Nationals MPs hastily abandoned official talking points that said tax cuts were not on their agenda.

In a separate budget fight, parliament erupted over a $20,000 tax break for small businesses that can claim an instant deduction on new assets, leading to an agreement late on Wednesday to extend the benefits for one more year.

Dutton will outline the cut to fuel excise in his budget reply speech with an estimate that a household with one vehicle filling up once a week will save around $14 a week.

The surprise move revives an election pitch from former prime minister Scott Morrison three years ago, when he slashed the excise in a bid to cling to power.

The benefit is greater and more immediate than the “top-up” tax cut in the budget, which is worth $5 a week in its first year (starting from July 2026) and $10 a week in its second year (from July 2027) and later years.

“If elected, we will halve fuel excise for 12 months,” Dutton said in a statement.

“We will deliver this cost-of-living relief immediately – whereas people have to wait 15 months for Labor’s 70 cent-a-day tax tweak.”

Opposition Leader Peter Dutton in Parliament House on Wednesday.Credit: Alex Ellinghausen

The Coalition policy would cut the excise from 50.8¢ to 25.4¢ per litre for one year only, sacrificing $6 billion in tax revenue for that year, although the financial benefits to households depend on assumptions about how much fuel they use.

While the Coalition benefit lasts for one year, the Labor tax cut continues until any future government changes tax rates.

Morrison took a plan to cut fuel excise to the last election, unveiling a 50 per cent cut to fuel excise in the March 2022 budget. Labor opposed the plan in opposition and let it lapse after winning the election. The average price of unleaded petrol in Sydney and Melbourne was $2.15 a litre at that time.

Today, the average price in both cities is $1.64 a litre.

The dispute over personal tax rates dominated parliament on Wednesday after Prime Minister Anthony Albanese set up a vote on the $17.1 billion cut and Dutton led the Coalition to oppose the budget centrepiece.

Treasurer Jim Chalmers seized on the vote as proof that Dutton wanted workers to pay higher taxes, while arguing that the election should be fought on whether the Coalition would cut important government programs.

“It will be a simple choice between Labor cutting taxes and helping with the cost of living and Peter
Dutton’s secret cuts which will make Australians worse off,” Chalmers said of the election.

“Because he seems to want to cut everything except income taxes for workers.”

Dutton dismissed the tax cut as a “cruel hoax” because workers would have to wait 15 months for a benefit worth only $5 each week, but he held out the promise of greater help for households in his budget reply address in parliament at 7.30pm on Thursday night.

“We will clean up Labor’s mess, and we will make sure that we get our country back on track – and we’ll help families, not hurt them,” he said.

Dutton and his senior ministers were scheduled to meet on Wednesday night to finalise his response to the budget. The shadow cabinet members are considering policies to slow the growth of power prices by reversing offshore gas for local use, clamping down on the inflow of migrants, and housing policies to make mortgage lending easier and hike housing supply.

In a sign of the speed of the shift in the tax debate, the Coalition talking points on Tuesday, hours before the budget, instructed MPs to say “right now is not the right time” for income tax cuts.

The talking points reflected a decision from earlier in the year, reported in this masthead, to not offer tax cuts at this election.

But the Coalition is now giving serious consideration to offering bigger cuts than Labor, according to several senior MPs not authorised to speak about the plans. These cuts are not guaranteed to be announced in Dutton’s budget-in-reply speech, and one MP cautioned that any income tax plans would be held until the election campaign.

One of Dutton’s key allies in parliament, shadow assistant treasurer Luke Howarth, said voters should expect major policies from the opposition leader in the budget reply speech.

“He’s the sort of guy that won’t die wondering,” Howarth told Sky News.

The Labor tax cut starts at up to $268 in its first year and doubles to $536 in the second and subsequent years. It operates by reducing the tax rate on taxable income between $18,000 and $45,000 a year, first by cutting it from 16 to 15 per cent and then by cutting it in the second year to 14 per cent.

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