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Tuesday, 4 October 1983
Page: 1324

Question No. 86

Mr McVeigh asked the Minister representing the Minister for Resources and Energy, upon notice, on 4 May 1983:

Did the Government undertake during the 1983 election campaign to reduce fuel excise by 3 cents per litre: if so, when will the reduction be made.

Mr Barry Jones —The Minister for Resources and Energy has provided the following answer to the honourable member's question:

During the election campaign, the Government undertook to cancel the previous Government's 1 January increase of $3.23 a barrel in the price of Bass Straight crude because we believe the OPEC market price, on which the Australian price was based, did not reflect a realistic market price. The subsequent $US5 a barrel reduction in price by OPEC confirmed our judgment.

The full effect of the OPEC price cut of $US5 a barrel was included in the reduction in the import parity price which came into effect on 1 April 1983. However, as a result of the 10 per cent devaluation forced on the Government, the price cut was less than that which would otherwise have applied to Australian oil since import parity pricing sets the price of Australian produced oil at a level equal to the cost of replacing that oil with imported oil of a similar quality. Since devaluation increases the cost of importing oil, it also increases the import parity price. Had no devaluation occurred the Australian price would have fallen by about $5 a barrel. As a consequence of devaluation the Government was only able to cut the price of Australian oil by about $2 a barrel.