Scrapping fuel subsidy will cost Queensland business $320 million

The Queensland Government’s decision to scrap the state’s fuel subsidy program will hurt small businesses to the tune of $320 million and force them to increase the cost of goods and services, the Queensland Chamber of Commerce & Industry says.

The decision by the Bligh Government to scrap the 8.3c-per-litre subsidy came as it announced plans to sell $16 billion in public assets to help offset lower government revenues.

The QLD Government says scrapping the subsidy will save it at least $2.4 billion over the next four years, with Premier Anna Bligh saying the scheme is not affordable.

“I understand this will be tough for motorists but I can’t justify borrowing to keep a fuel subsidy we can no longer afford,” she told the Australian Financial Review.

But David Goodwin, director of the Queensland Chamber of Commerce & Industry, says that the decision will hurt businesses forced to travel long distances, and will cost business about $320 million.

“Our members say that Queensland is the most decentralised state in the country, and the cost to do business is pretty expensive. As far as we can see, it’s taking away a subsidy but we see it as they’re increasing the tax.”

Goodwin says that it is inevitable that businesses will have to pass on costs to consumers, who will also be hit by the 9% increase in fuel prices, and that the Government should have never allowed revenue problems to progress this far..

“They’re blaming the financial crisis but aren’t making tough decisions. We’ve seen it with them selling public assets, with registration charges going up, all these things are extra taxes. Expenses are in front of revenue – that is unsustainable, and that has been happening since before the crisis.”

“Many businesses have cut staff, some are going through four day weeks. These things are hard to do but they make sure they do them so we just can’t always pass on extra costs.”

Goodwin also spoke out against the Government’s decision to sell off billions of public assets. Premier Anna Bligh announced that Queensland Rail’s coal network, Queensland Motorways, the Port of Brisbane, the Abbot Point coal mine and Forestry Plantations will all be sold.

The sales will total $16 billion over the next three to five years and should result in $30 billion in savings for the Government. Bligh said yesterday that the assets would be better off in a privatised environment.

“The time has come for us to say some of our commercial activities can be done as well, indeed better, by the private sector and we can move them off the public purse,” she said.

But Goodwin says that the Government cannot rely on selling off public assets whenever they run into revenue difficulties.

“We can’t just say, “We’re losing money so let’s sell the assets”. Business doesn’t do it, households don’t do it, so the Government shouldn’t do it,” he says.