Economy

May 22, 2018

Will Turnbull’s tax cuts be eaten up before they’re even delivered?

Rising oil prices and low wages growth might become a dangerous political combination.

Glenn Dyer and Bernard Keane

Crikey business and media commentator / Politics editor

The Trump administration's posturing over Iran, at the behest of its friends in Israel and Saudi Arabia, isn't merely a subject for foreign policy blog debate. The proof: the re-imposition of sanctions on Iran and the threat of military conflict will put further pressure on oil prices that were already rising.

In fact rising petrol prices are rapidly consuming Malcolm Turnbull’s $10 a week tax cut for average earnings. According to figures from AMP Chief Economist, Dr Shane Oliver, the rise in global oil prices towards US$80 a barrel (they briefly topped that level late last week) has seen an $8 a week rise on average in the cost of petrol in Australia this year. And he reckons there is more to come, which could effectively push the average weekly cost past the $10.19 a week benefit from the tax cut, if it comes.

Free Trial

You've hit members-only content.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions

4 comments

Leave a comment

4 thoughts on “Will Turnbull’s tax cuts be eaten up before they’re even delivered?

  1. kyle Hargraves

    Yeah – but the difference is between the short term and the long term. In the short term prices may waft to a point were the frackers might, again, enter the market and that threshold has, more or less, been attained – or perhaps $15 shy (for a reasonable margin). However, it is not beyond OPEC to suppress the price to circa US$50 or indeed US45/barrel to flick the frackers from the market (yet again).

    In the longer term there is the viable proposition of electronic (and driver-less) cars; perhaps only 15 to 20 years away. By circa 2050 only marine and aviation needs will require oil in any quantity. Having written that, conjectures in the 80s as to world supply of oil were anticipated to expire about now.

  2. AR

    As noted by Kyle above, OPEC can stop this at any moment it chooses, with a flick of the tap wrist. Meanwhile it is fun to watch the infidel money pour in.
    (Nods & hugs to Venezuala, Nigeria & Alberta.)
    Better to let the West wet itself and the fukwit frakkers tool up again – the next deluge shoud finish that idiocy for good. Until the next time.
    Meanwhile this broad, sparsely populated continent with its choked cities of obese urbanoids has an over production on sugar cane and more sun than it has the brains to utilise, but screams about paying between half to 2/3 of euroid petrol prices. (When they hit winter in a couple of months and have to start heating to stay alive for the rest of the year plus an uncertain, climate changed Spring such as they had this year, the faeces might interface with the air movement device.)
    Poor Bugger, my Country.

  3. bref

    Where I am we’re already paying $1.49/litre. That electric VW combi sure is looking good. Ah the 70s…

  4. klewso

    It’ll be interesting to see how Turnbull P/L blame Labor.

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details

Sending...