Fuel excise needed to grow nation, says Infrastructure sec

By Harley Dennett

August 18, 2014

Treasurer Joe Hockey scored all the headlines, but the Infrastructure secretary has set out to explain why the fuel excise fits the reform agenda Australia needs to build for its much larger future.

Department of Infrastructure and Regional Development secretary Mike Mrdak this month told the Australian and New Zealand School of Government conference that the Commonwealth’s budget initiatives were a step toward correcting the structural funding problems the country faces in building for a nation quickly ballooning to 36 million people in a coming decades.

The fuel excise “gives us a glimpse into the difficulties of the government at the moment”, Mrdak told the conference:

“The government was taking a conscious decision to make revenue streams for funding new infrastructure because the proposal is that the excise indexation will be fully hypothecated to transport infrastructure projects.

“The political debate around that and in the Senate over the last few weeks has highlighted that we don’t really have an honest debate in Australia about our infrastructure challenges, when people simply revert to ‘this is a tax’ when in fact it’s trying to find a way through some of our most difficult areas of how we create space in our balance sheet.”

Mrdak pointed to projections that show Australia faces a unique growth challenge in the medium term: cities of 7 million people, aviation demand will double, a 60% increase in road freight traffic demand, a 90% increase in demand for rail freight, and a 100% increase in bulk movements in Australian ports.

“We know the future in many ways, it’s not inconsistent with what we’ve seen in the past, so why aren’t we planning for it better?

“Either governments have to create space in their budgets [to pay for expanded infrastructure], or users of the infrastructure are going to have to pay.”

Read an extract from Mike Mrdak’s speech at The Crane

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