Transport Minister Warren Truss. Photo: Alex EllinghausenDeputy Prime Minister Warren Truss has promised the $2.4 billion raised by the reintroduced fuel excise will go specifically to road projects.
Treasurer Joe Hockey announced the return of the twice-yearly indexation of the fuel tax as part of the Federal Budget handed down last night.
After a speech to the Conservative Club in Brisbane’s City Hall on Wednesday morning, Mr Truss said legislation would be introduced to specifically set aside money raised from fuel excise indexation for road projects.
“All the money being raised from the indexation of fuel will be legislated to be spent on roads,” he said.
“So they will be getting better roads for the extra money they are paying for petrol.”
Mr Truss said that legislation – which will add one cent per litre to petrol prices – would be introduced “as soon as we can”.
The Greens have agreed to back the measure, meaning it should pass the Senate.
Mr Truss defended the Howard Government’s scrapping of the fuel excise indexation.
The Deputy Prime Minister said Mr Howard’s decision to freeze automatic indexation at 38.1 cents in 2001 was “right at the time”.
“There were issues associated with the way that the goods and services tax was applied to fuel,” Mr Truss said.
“That had caused a great deal of controversy and discontent in the community and the only way to fix it at that time was to get rid of the indexation altogether.”
Former prime minister John Howard, also in Brisbane on Wednesday morning, said his decision to remove fuel excise had to be seen in the economic context of 2001.
Mr Howard said in 2001 there was “real cynicism” in the Australian community, whether the fuel excise had been lowered enough to compensate for thought of introducing the GST to fuel.
He subsequently scrapped the staged increase – the indexation – of the fuel excuse duty to fuel.
“I defend that decision to this day in the context in which it was taken,” he said.
“You listen to what that wise old man said: ‘Context is everything’.”
The 2014-14 federal budget – the government’s case
Mr Truss on Wednesday morning laid out the government’s case for the hard savings – where $36 billion in government expenditure will be cut back over four years – introduced in Tuesday night’s budget.
He described the budget as “one of the most important reforming budgets Australia has seen”.
He said the budget was not about taking decisions that would show immediate results.
“We needed to take important decisions at the beginning of our term that will restructure our economy,” he said.
“Shifting the balance away from recurrent expenditure to investment in infrastructure and skills and the things that will drive productive growth for our country in the years to come.”
He said government expenditure by the previous Labor government had reduced $70 billion “in the bank” in 2007 to a projected gross debt of $667 billion 15 years later, in 2022.
Mr Truss said Australia now paid $1 billion in interest every month on its debt borrowings.
“That is enough to build a big new hospital every month,” he said.
“It would only take six months – at that rate, if we were not paying off interest – to complete our entire program on the Bruce Highway.”
Age Care changes
Tuesday night’s budget lifted the retirement age to 70 by 2035 and changed the way the aged car pension is increased each year.
From September 2017, it will be increased by the inflation rate, not by a percentage (27.7 per cent) of average male weekly earnings.
Mr Truss argued the change had to be made, because of rising aged care, hospital and health costs associated with an ageing population.
“By 2050 there will be only three people in the workforce for every person over 65.”
Infrastructure and road projects in Queensland
Mr Truss said additional private sector investment would boost the $50 billion infrastructure fund to $125 billion fund.
Over $14 billion of this $50 billion is for Queensland road projects, including Toowoomba’s Second Range Crossing, the Ipswich Motorway, and the Warrego Highway near Miles.
There are 45 new projects funded on the Bruce Highway, Mr Truss said.
“There will be 45 new projects, or programs of work funded on the Bruce Highway and that is in addition to the 16 ongoing projects which are currently underway.”
There is an extra round of “Roads to Recovery” funding projects for local councils.
He said the additional tax on higher income earners for three years would raise $3.1 billion.
Mr Truss said removing the cap on university fees would see some university course fees increase, but he said other university fees would drop.
“Now some fees may go up, but others will also fall and there will be competition among the universities to provide the most suitable training that individual want.”
He said the new $20 billion Medical Benevolent Fund – funded by $5 from each $7 co-payment trip to the doctor – would pay dividends to future health research.
“Australia has been a world leader in medical research and this will provide us with an un-paralleled opportunity to back our strengths.”
It will double Australia’s medical research funds, he said.
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