[Peakoil] Your petrol pain means $240m gain - National - smh.com.au

[Antony Barry]

Your petrol pain means $240m gain


THE pain at the petrol pump for motorists may deliver a $240 million  
GST windfall for the states this year.

Economists, motoring groups and the NSW Opposition are calling for  
the money to be handed back to motorists by increased spending on  
roads, public transport or alternative fuels.

The NSW Government claims the windfall - of which it stands to pocket  
as much as $70 million this budget year - will be offset by falling  
GST on other consumer goods.

But it has little support from economists. There was "no evidence"  
that the windfall from petrol was being offset by weaker GST  
collections on other items, said the chief economist at AMP Capital  
Investors, Shane Oliver.

"My feeling would be that people are either running down their  
savings or increasing the level of debt just to finance consumption  
activity."

The president of the NRMA, Alan Evans, said motorists were "maxing  
out their credit cards" to pay for petrol. The states "certainly will  
get a boost from it, and they already have".

Mr Evans called for the money to be ploughed back into roads and  
public transport.

The NSW Government yesterday called on the Federal Government to  
boost the powers of the Australian Competition and Consumer  
Commission, give tax concessions for the use of public transport and  
promote alternative fuels.

The Prime Minister, John Howard, who today will listen to  
backbenchers nervous about petrol prices, said yesterday that petrol  
would never again be cheaper than about $1.15 a litre, but even that  
price were some way off.

"That's a hope more than an educated prediction," he said.

Mr Howard harked back to his days of pumping petrol at his father's  
Dulwich Hill service station to empathise with drivers. "I know  
people are feeling it. I learned from a very early age that when you  
fill your car up you actually look at that click, click, click," he  
said, referring to now obsolete bowser price counters.

Federal cabinet is considering proposals to increase the use of LPG,  
ethanol and biofuels, but Mr Howard said the scope to cut prices was  
"quite limited". The great bulk of petrol still came from oil, and  
until the world price dropped, petrol was "not going to come down in  
a big way here".

Calls by rural MPs for concessions or subsidies were understandable  
but the schemes would be inefficient and highly complicated to  
implement, he said.

The Opposition Leader, Kim Beazley, demanded the Government beef up  
the commission's powers to tackle price-fixing and again pushed his  
case for accelerated development of alternative fuels so that  
Australia could wean itself off Middle East oil.

Mr Beazley called for a mini-budget to address inflationary pressures  
such as capacity constraints which have concerned the Reserve Bank.

The NSW Transport Minister, John Watkins, said studies had found  
families in western Sydney were paying up to $400 a week to run their  
cars.

But the Opposition Leader, Peter Debnam, said the State Government  
should "get off its backside" and use its GST petrol windfall to  
start fixing the problems. "It's the same old story: they're saying  
everybody else must do something except the NSW Government," he said.

Mr Debnam, who recently converted his Ford Territory to run on 85 per  
cent ethanol, called for ethanol targets to be lifted to 10 per cent  
by 2010.

Mathew Jones, a spokesman for the NSW Treasurer, Michael Costa,  
denied the state was getting a windfall. "The amount of money  
consumers have to spend is finite … so the total amount of GST  
remains the same," he said.

Instead, NSW continued to be "ripped off" in the distribution of GST  
by the Federal Government.

State budget estimates forecast the rate of growth in GST collections  
to slow this year.

More than 15 billion litres of petrol were consumed last financial  
year, leaving aside business use. Last financial year motorists spent  
$18.8 billion, of which $1.88 billion was GST.

If pump prices stayed at $1.40 a litre this year, they would spend  
$21.2 billion and GST collections would rise by $240 million,  
assuming petrol consumption remained static.

More at http://www.smh.com.au/news/national/your-petrol-pain-240m- 
gain/2006/08/06/1154802756014.html