THE increase in fuel prices will create a stable form of income for the government to spend on roads but is likely to cost transport companies business and will increase freight costs.
Nowra-based transport company operator Ron Willett from Longford Southern Deliveries has managed to keep business going for 25 years despite rising costs.
This announcement, however, was likely to cost him business.
“The industry is getting to the point where you can’t survive without charging a fuel levy,” he said.
“At some point we consumers have to pay more.”
Mr Willett said people appreciated it had to happen, they just don’t appreciate it has to happen to them.
“The issue for us small transport companies is we find it very hard to recoup that money because we work as a third-party delivery company.
“We work for large freight companies based in Sydney.
“Those companies charge their customers a fuel surcharge and say they will pass on a percentage of that to us.
“But the bigger companies aren’t passing on that money.”
Mr Willett said his prices were based on rates that were a few years old.
He was concerned telling his clients those prices needed to increase would send people to his competition.
“As much as I hate doing it I’ve got a business to run,” he said.
“It’s a catch-22; you want to be competitive but there is no point doing it for nothing.
“People will go somewhere else, find someone cheaper but you pay for what you get.
“Often doing it cheaper means companies are cutting back on maintenance or drivers are doing double shifts.
“That is when you’re looking at safety issues.
“Fuel is like everything - the cost is going up.”
In 2001 former Prime Minister John Howard ended the twice yearly adjustment of the fuel excise according to inflation.
From August 1, the Abbott government will reintroduce it.
It is expected to add up four to five cents a litre within four years, which would be on top of the other factors that have been driving fuel prices up.