Fuel Tax Halved and Free Public Transport Offered as War Pushes Up Prices in Australia

Australia’s federal government has reduced the fuel excise tax by 26.3 cents per litre for three months, aiming to ease financial strain on drivers. This follows sharp increases in global oil prices triggered by the ongoing conflict in the Middle East and the closure of the Strait of Hormuz. At the same time, two states—Victoria and Tasmania—have introduced free public transport measures to encourage reduced car usage.

Victoria, which includes Melbourne, will provide free train, tram, and bus rides throughout April. Tasmania plans to waive fares for coaches, buses, and ferries until June. These initiatives are part of a broader effort to alleviate the impact of surging fuel costs on households. The federal government’s tax cut is expected to save drivers approximately A$10 to A$20 per tank, with an estimated cost of A$2.55bn to taxpayers.

“This won’t solve every problem, but it’s an immediate step to help Victorians right now,” said Victoria Premier Jacinta Allan, announcing the free transit plan.

Tasmania’s Premier, Jeremy Rockliff, highlighted the measure as a way to protect residents from rising fuel expenses. He also noted that school buses will be free, saving weekly costs of about A$20 for users. However, other states have opted for different strategies. New South Wales transport minister John Graham warned that free public transport could drain daily millions, arguing it would be more costly in the long term.

South Australia is expanding senior travel cards while absorbing higher fuel costs. Queensland’s spokesperson mentioned its flat 50-cent fare introduced in February. Western Australia Premier Roger Cook joked about the state’s reduced fares, referencing the 1980s when fares were low enough to feature Rick Astley on the charts.

The Australian Institute of Petroleum reported that petrol prices climbed to A$2.38 per litre, up from A$2.09 a month prior. The government attributes the rise to international oil market volatility, not domestic supply issues. Meanwhile, the near-total blockage of the Strait of Hormuz, a critical oil route, has raised concerns about its potential economic repercussions.

Elsewhere, governments in Egypt, Ethiopia, and the Philippines have taken similar steps. Egypt’s authorities ordered early closures of shops and increased public transport fares, while Ethiopia placed non-essential staff on leave. The Philippines declared a national emergency, offering subsidies to drivers and implementing a four-day workweek for civil servants.