NO.071

The Tasmanian Government has attempted to use the cover of the New Tax System to remove

State subsidies on petrol and diesel fuel.

The Tasmanian Government’s decision was implemented on the night of 30 June 2000

by Labor Treasurer, Dr David Crean. In a transparent attempt to blame the Federal

Government for the resulting increases in petrol prices, the Tasmanian Government removed

subsidies which it has paid since 1997. The decision of Dr Crean and the Labor Party will

lead to an increase in petrol prices of 1.95 cents per litre for Tasmanian motorists.

Diesel prices will cost 1.99 cents per litre more as a result of the withdrawal of the

subsidy.

Queensland Labor Premier, Mr Peter Beattie had foreshadowed a move to withdraw the

subsidy in that State. On 18 June 2000, he reversed his decision and pledged to continue

it.

The Victorian Premier confirmed on 27 June 2000 the decision of his Government to

continue its State subsidy.

Yesterday I received letters from Premier Court of Western Australia and Mr Reid,

Treasurer of Northern Territory pledging to continue the on-road diesel subsidy and

general fuel subsidy in that State and that Territory respectively.

New South Wales and South Australia did not at any stage threaten to withdraw State

subsidies.

This leaves Tasmania as the only State which is now proposing to withdraw its State

subsidy and force up petrol prices for its citizens.

The subsidy is paid from Federal funds under arrangements put in place following the

High Court case of Ha and Lim v NSW in 1997. Under the Intergovernmental Agreement

Tasmania, like any other State, is guaranteed Federal funds to maintain these subsidies.

Tasmania is attempting to take money for the payment of the subsidy whilst refusing to

pass the subsidy on. This is an attempt to get an unjustified financial windfall at the

expense of motorists.

I’ve written to the Tasmanian Treasurer, Dr David Crean today indicating that the

Commonwealth opposes his attempt to push up prices of petrol in Tasmania. Unless the

subsidy is reinstated the Commonwealth will deduct equivalent funds from Tasmania.

MELBOURNE

4 July 2000