Fuel excise cut welcomed, but retailers still being ‘hit hard’

The Australian Government has halved the fuel excise for three months, reducing the cost of petrol and diesel by around 26 cents per litre, a measure recently called for by the Australian Retail Council (ARC), the country’s leading retail body.

But the ARC says that more needs to be done to protect the retail industry in an economy shaken by the ongoing conflict in the Middle East.

“The government’s decision to halve fuel excise and suspend the heavy vehicle road user charge will ease pressure across retail supply chains,” ARC CEO Rodwell said. “This is critical given more than half of retailers are experiencing increases in freight and shipping costs of more than 10 per cent.”

Rodwell said the cut will make a “meaningful difference” in the short term, but said the government must “stay alert” to the threats facing the industry.

“There is a clear need to improve supply chain resilience,” he added. “We also need to deepen efforts to reduce the overall cost of doing business. That includes tackling regulatory complexity, easing compliance burdens and improving productivity across the economy.”

From March 25 to 29, the ARC conducted a survey of 169 businesses nationwide to assess how the volatile economic situation is affecting the industry.

It found that 90 per cent of respondents reported that freight costs have risen, 50 per cent said supply chain challenges are having a serious or critical impact, and 58 per cent said conditions are leading to staff reductions.

“Retailers are being hit hard by the sharp increase in costs at the same time as consumer spending is constrained and business confidence is at a record low,” Rodwell said. “The fact that businesses plan to adjust staffing levels and are warning about viability if conditions persist, shows the scale of the challenge ahead for a $444 billion sector that represents just under one-fifth of the economy.

“Retailers are telling us they are facing an uncertain outlook, while facing an immediate and significant increase in the cost of doing business,” he continued. 

“When you combine these two factors, it leaves many business owners with very little room left to move.”

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