By Penny Langfield

Local governments in Queensland are steeling themselves for the fallout from the removal of the state’s fuel subsidy.

The 8.354-cents-a-litre fuel subsidy, introduced in 1997 under the Fuel Subsidy Act, will be scrapped from July 1 this year following an announcement made just prior to last week’s State Budget. The budget also contained another hard-hitting measure for local government: plans to drop the 40 per cent water and sewerage subsidy, which the Local Government

Association of Queensland (LGAQ) said would cost urban councils about $1 billion over the next ten years.

Shadow Minister for Local Government Howard Hobbs told GovernmentNews that “local governments have been hit for six” by these new financial losses.

Hobbs said the abolition of the Fuel Subsidy Scheme would hurt councils, particularly those in remote parts of the state.

“The further you go west to far-reaching councils it will affect them more, because they have bigger distances to travel,” he said.

“[There are] big councils out there, some are the size of Tasmania, and it will have a big impact on them because fuel is the only way they can get around.”

Road-making and maintenance funding would be hardest hit, according to Hobbs.

Delegates to the 2002 LGAQ Conference had resolved to advocate for the removal of the fuel subsidy provided any savings were used for roads and transport funding.

“In all fairness, the LGAQ did campaign the government to try and remove the subsidy, but spend that money on the roads,” said acting LGAQ president Bob Abbot.

But he said it was unlikely that the money would be wholly allocated to roads and would instead boost the state’s general revenue.

He said councils with small populations would feel the greatest impacts from the fuel subsidy removal.

Far-reaching regional councils were “singularly unimpressed” by the fuel subsidy removal, Abbot said.

“They’ve got to find that money out of their rates and there’s no option with that, it’s just got to come straight out of the general rate.”

Hobbs said resultant fuel increases would see price rises extend to other products and services in regional areas, including food.

“A flow-on effect, a cascading effect of increased fuel will most certainly flow through to the end consumers,” he said.

He predicted the tourism market could also suffer, with no fuel subsidy to entice visitors.

“It’s a valuable marketing tool for tourism and business, a symbol of being a low-tax state, but now that’s gone.”