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Of course the Treasurer should push up the petrol excise. When former prime minister John Howard froze it at 38.1 cents per litre back near the start of the century, the retail price was $1. It’s now $1.50, meaning the tax rate has slid from 38 per cent to 25 per cent.
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Petrol excise could rise
Motorists could be slugged with a petrol price rise of up to three cents a litre as the Abbott Government considers increasing fuel excise for the first time in more than 10 years. Nine News.
In an awkward staged photo opportunity with Treasury Secretary Martin Parkinson on Thursday, Mr Hockey said he didn’t think his budget measures would harm the economy, at least not at first.
"I don't think it will detract from growth at all in the short-term," was how he put it.
But as he is well aware, the economy is weaker than it looks. He told the Australian Financial Review on Wednesday that mining investment was winding down "a bit more quickly than expected". It will be at least two years until economic growth returns to where he would like it.
Thursday’s employment figures, hailed as strong by some market commentators, are extraordinarily weak.
Sure, the unemployment rate stayed steady at 5.8 per cent in April. Sure, an extra 14,000 people found jobs. But Australia’s population is climbing at the rate of 33,000 per month.
The most important measure - the one most trusted by the Bureau of Statistics - is the proportion of the working-age population in work. Leaving aside monthly fluctuations, it has been slipping since 2010. It’s now at close to its lowest point since 2005.
Only 61 per cent of the population aged 15 and over was in work in April. In November 2010 it was 62.5 per cent.
For young Australians the employment figures are unfathomably low. Only 1.8 million Australians aged between 15 and 24 were employed in April, the smallest number since February 2000. The proportion employed is close to the lowest since 1998.
The NSW unemployment rate is better than the national average at 5.4 per cent. The Victorian rate is worse at 6.4 per cent.
There should be a deficit tax and the petrol excise should climb, but it would be a mistake to think the economy is strong enough to stand too much.
VIDEO ANIMATION: Sweet Budget Time with Rocco & Denis
Peter Martin is economics editor of The Age.