Fuel security package puts fundamentals in place, but broader responses required

"The Federal Government's fuel security package announced today establishes the fundamentals for longer-term national fuel security, but broader responses will be required to navigate the economic challenges ahead. What has been proposed is a good start but still a long way from a total solution to the difficulties we face," said Innes Willox, Chief Executive of the national employer association, Australian Industry Group.

The Prime Minister today announced a $10.7 billion Fuel Security and Resilience Package, comprised of three elements:

• A government-owned strategic reserve of 1 billion litres of fuel, at a cost of $3.2 billion
• A plan to lift onshore privately-held fuel reserves to 50 days of consumption, supported through a financing facility for fuel and fertilisers, at a cost of $7.5 billion
• A feasibility study into the development of new local fuel refineries, at a cost of $10 million

"This package delivers us the fuel security fundamentals – expanded onshore stocks and a government-controlled emergency reserve. The global energy crisis has revealed Australia's lack of these basic fuel security mechanisms, and the Government should be commended for putting them in place now," Mr Willox said.

"However, we should not have allowed ourselves to get into this predicament in the first place. Further, as more waves of disruption from the energy crisis arrive in coming months, more than just the basics will be needed and we will continue to be vulnerable.

"This is not just about fuels – it flows through to other sectors like plastics, chemicals and energy that Australians and our businesses rely on every day. Price surges are already here and shortages are on the horizon. Industry is already suffering the ill-effects, with peak impacts expected around the middle of the year.

"Industry also seeks clarity regarding the future of the temporary measures – including the reduction in fuel excise – introduced in March. The crisis will not be resolved by the end of June, and temporary policy measures need to be made durable on budget night.

"Governments also need to think creatively on how industry can be supported during the peak of the crisis expected in the middle of the year. Long-term regulatory reform that enables greater flexibility will allow our manufacturing, construction, transport and farming sectors the best chance to successfully navigate the crisis and prosper into the future," Mr Willox said. 

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