Prime Minister Kevin Rudd has effectively breached an implied election promise that he would bring down rising fuel and grocery prices.
"We have done as much as we physically can to provide additional help to the family budget, recognising that the cost of everything is still going through the roof, the cost of food, cost of petrol, cost of rents, cost of childcare," Mr Rudd said in Adelaide yesterday.
The statement has angered rural MPs, with Nationals Leader Warren Truss accusing Mr Rudd of throwing in the towell after just six months in the job.
"I was astonished to see that less than six months after he assumed the job of running Australia, Mr Rudd now believes there is nothing more he can do," Mr Truss said.
"This astonishing admission comes only days after Mr Rudd stated that his dreadful first Budget would lead to a 'modest increase' in unemployment.
Mr Truss has written to Mr Rudd with a list of suggestions of what more can be done by the government to ease price pressures in those areas.
"Firstly, follow the Coalition's decisive lead and cut fuel excise by five cents a litre," Mr Truss said.
"Labor has a dreadful record on fuel excise – driving it up 500pc between 1983 and 1996 – but cutting it now will be a relief for household budgets as petrol prices go through the roof.
"Secondly, Labor should dump its plans to increase diesel fuel excise and registration charges for heavy vehicles.
"The Government has admitted these rises will flow straight through to consumers and drive up grocery prices for all families.
"Thirdly, halt the inflationary Budget tax binge that will send up the price of working people's Friday drinks, cars, private health insurance and energy."
Independent MP for the seat of New England, Tony Windsor, says that in theory the government has the capacity to cut more than 50c/litre worth of taxes off the current petrol price.
"In 2006 with reports indicating petrol prices could rise to over $2 per litre, I called on the Government of the day to review the tax system on petrol so rather than looking at how much money could be raised from petrol, how it could stimulate the economy," Mr Windsor said.
"Back then, the Government continued to say it could do nothing to stop it. It was incorrect then and it is incorrect now."
Mr Windsor explained that the Government adds an excise (tax) of 38c/l which raises about $13 billion per year. Of this approximately $2B or 15pc finds its way back onto our roads with the rest going to consolidated revenue for other purposes.
Add to that the GST which is about 15c/l and it means that more than 50c/l is currently Australian tax and has nothing to do with global oil prices.
Mr Windsor says that the government has the capacity - in theory at least - to reduce the petrol prices from $1.60 to $1.10/l but says the government does not appear to have the will.
Mr Windsor is calling for the Government to expand its review of the Australian Taxation system to now include the GST.
"Country people pay more for their petrol with additional freight costs and then pay GST on top of that extra amount too," he said.
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