The government has caved to pressure to slash taxes on petrol and diesel to help motorists facing skyrocketing fuel prices due to the war in the Middle East.

The fuel excise will be halved for three months as a temporary cost-of-living measure, taking 26.3 cents a litre off the price at the pump, Prime Minister Anthony Albanese announced after a meeting of national cabinet on Monday.

“The longer this war goes on, the worse the impacts will be,” he said.

“I and the government understand that people are really worried but we have a plan to get through this.”

Commonwealth, state and territory leaders adopted a new framework for responding to fuel shortages, which has four levels of action.

They are: plan and prepare, keeping Australia moving, taking targeted action and protecting critical services for all Australians.

The second level – keeping Australia moving – was currently in force, Mr Albanese said.

Along with cutting the fuel excise, the government will also cut the road-user charge, which affects heavy vehicles.

The two measures would work in tandem to provide cost-of-living relief, Treasurer Jim Chalmers said.

Together, the reduced tax and levy incomes would cost the budget $2.55 billion over the three-month period.

A scheduled increase to the heavy vehicle road user charge will also be delayed by six months, costing an additional $53 million in foregone revenue.

Earlier, Energy Minister Chris Bowen introduced emergency legislation to parliament to boost fuel stocks, stating the crisis served as a reminder that Australia was not immune from the impacts of war.

“The risk premium for purchasing discretionary cargoes is rising,” he told parliament.

“Work to scope deals and secure additional fuel is already under way.”

“That’s why today’s bill is so urgent. This bill creates a strategic reserve to secure the supply of strategic materials that are vital for Australia’s economy.”

The laws are expected to pass the lower house with bipartisan support on Monday and be debated in the Senate on Tuesday. 

Australia’s fuel stocks remain at normal levels, but fears of future shortages and price spikes caused by the ongoing blockage of the Strait of Hormuz have spurred users to bulk-buy petrol and diesel, leading to localised shortfalls.

ACT measures

The ACT Government’s Security and Emergency Management Cabinet will meet on Wednesday to plan how to manage local demand and to support Canberrans. Announcements are expected before Easter.

The government has established the ACT Fuel Coordination Team to share information and plan local responses. It is also a member of the national Fuel Supply Taskforce, which monitors fuel supply and distribution, shares data and information.

The government, in collaboration with the Commonwealth, NSW, fuel suppliers, and ACT retailers, is planning responses if conditions change.

“Rising fuel prices are putting pressure on households, community organisations and businesses, and we are working directly with different sectors to understand and ameliorate the impacts,” Chief Minister Andrew Barr said.

“The ACT, along with all jurisdictions, is committed to securing fuel supply for households and industry and taking sensible steps to manage demand where needed.”

Mr Barr encouraged Canberrans to use public or active transport; combine trips; carpool; or drive more efficiently, to save money.

“With fuel prices high, Canberrans will likely choose to reduce fuel use where it makes sense for them. Now is the time to look out for each other.”

ACT Greens want free public transport

The ACT Greens called for two months of free public transport, a measure Tasmania and Victoria have already adopted.

“Canberrans are at a loss with the rapid increase in the costs of fuel and questions over whether fuel will even be available at the pump,” transport spokesperson Andrew Braddock said.

“Free public transport will reduce fuel demand and save thousands of dollars for those who are struggling to put food on the table. In the middle of a fuel crisis, it’s the least the government can do.”

Last week, Mr Braddock unsuccessfully proposed a 25 per cent tax on gas exports to fund free public transport. Labor and the Canberra Liberals rejected his proposal.

“This was a sensible, climate conscious solution which would’ve brought immediate relief to all Canberrans,” Mr Braddock said. “Instead, the major parties ganged up to vote this down, putting the needs of Canberrans firmly behind their own.

“It’s time for the ACT Government to rise to this moment and join the growing number of states around Australia making public transport free during the fuel crisis.

“In uncertain times like these, ACT Labor shouldn’t be looking out for their mates in the fossil fuel industry. They should be empathising with Canberrans and working to ease their cost-of-living pressures.

“If we can afford fare-free Fridays, we can afford two months of free travel during this fuel crisis.

“Public transport in the ACT has been under-done for decades. It needs a significant amount of investment, and a commitment from the Government to get the network moving.

“We can start that here and now with free public transport for the period of the crisis, and permanently for students, seniors and other concession-holders who need ongoing cost of living relief.

“The Commonwealth should also be chipping in. If they can drag the chain on renewable energy, while signing us up to an illegal war in Iran, they can help pay for the consequences faced by Australians.”