This package was designed to support Australia's two remaining oil refineries (Ampol's Lytton refinery in Queensland and Viva Energy's Geelong refinery in Victoria) through the Fuel Security Services Payment (FSSP), which commenced on 1 July 2021 [2][3].
The specific structure of the package included:
- Up to $2.047 billion in Fuel Security Services Payment subsidies through to 2030 [4]
- Up to $302 million for refinery infrastructure upgrades [1]
- $50.7 million to implement stock holding obligations [1]
- Total potential cost: approximately $2.39 billion [1]
However, the claim about "1 cent per litre savings" requires careful unpacking.
According to the 2019 Liquid Fuel Security Review, if all of Australia's remaining refineries closed, international prices would increase by approximately 0.8 cents per litre due to reduced regional refining capacity [5].
According to The New Daily's analysis, the production subsidies were worth up to 1.8 cents per litre "when profit margins are low, decreasing to zero when margins exceed $10.20" [1].
Australia would run out of domestically-refined petrol within a month if global supply chains ground to a halt, according to government figures from 2019 [6].
While some experts (including ACCC Chair Rod Sims) expressed concern that subsidizing domestic refineries could disadvantage cheaper international importers and potentially increase prices, others like Tony Wood from the Grattan Institute noted it was hard to determine the actual price impact and said "it would be a 'long bow' to suggest importers will behave less competitively" [1].
Alternative Policy Options Considered:**
The government initially considered funding subsidies through an industry levy (tax) but scrapped that plan because it would have had a larger impact on bowser prices than the direct subsidy model [1].
Actual Consumer Impact Remains Uncertain:**
The New Daily article explicitly states "experts said the plan...won't make petrol any cheaper and could even boost prices by disadvantaging cheaper imported product" [1].
The article by Matthew Elmas includes commentary from multiple expert sources including The Australia Institute (a progressive think tank), the Grattan Institute, and the ACCC [1].
**Credibility Assessment:**
- The New Daily is a legitimate news organization with professional editorial standards
- The article cites authoritative sources (ACCC, Grattan Institute, government statements)
- However, the article's framing emphasizes criticisms ("Absurd," "could rise") rather than balanced presentation of trade-offs
- The article itself acknowledges that some experts (like Tony Wood) are less certain about price impacts
- The outlet's progressive alignment means it predictably emphasizes criticisms of Coalition policies
The article is factually accurate in its reporting of the subsidy amounts and expert views, but its framing is selectively critical rather than truly balanced.
**Did Labor do something similar?**
Search conducted: "Labor government fuel security refineries Australia policy"
Labor has not implemented an equivalent fuel security subsidy program for oil refineries during the periods available for comparison.
* * * *
The Fuel Security Services Payment is the Coalition's primary recent policy in this area.
However, there are relevant Labor policies to compare:
- Labor's energy policy emphasizes renewable energy and climate action rather than fossil fuel subsidies [8]
- The Albanese Labor government (which took office in 2022 after this subsidy was implemented) has not extended the FSSP but also has not immediately terminated it, suggesting bipartisan concern about fuel security [9]
- Both major parties have shown concern about fuel security, but Labor has pursued this through different mechanisms (emphasis on renewable energy, electric vehicles, fuel reserves)
**Comparison:** This appears to be a Coalition-specific policy approach to fuel security.
The Grattan Institute analyst quoted in the article criticized the Coalition for not funding electric vehicles, which would also enhance fuel security through demand reduction [1].
International energy experts across the political spectrum acknowledge that domestic refineries are economically non-competitive with cheaper imported fuel due to Asia's cheaper labor and better refining margins [1].
This represents significant taxpayer support ($2+ billion) to maintain domestic refining capacity primarily for national security rather than economic efficiency.
Furthermore, the Grattan Institute's Tony Wood argued that subsidizing refineries to produce higher-quality fuels is strategically questionable because "by the time they have fuel standards in place we'll have stopped using fuel cars" [1].
This suggests the subsidies may not represent good long-term value for taxpayer money.
**The Government's Justification:**
The Coalition argued that fuel security is a legitimate national security concern.
While this may seem hypothetical, fuel security was taken seriously enough that the Albanese Labor government has not terminated the program despite its preference for renewable energy.
Additionally, the subsidy structure was specifically designed to minimize permanent costs—payments only occur during loss-making periods, not as a permanent arrangement.
The maximum payment of 1.8 cents per litre would only occur when refining margins fell below profitable levels [1].
**Price Impact Remains Uncertain:**
While The New Daily's article suggests the subsidies "could increase" prices, this is speculative.
No evidence suggests the subsidies demonstrably increased petrol prices post-implementation.
**Missing Policy Alternative:**
The article highlights that the government did not fund electric vehicles or demand-side fuel security measures.
Labor has since moved in this direction with greater EV incentives, suggesting this is a legitimate policy choice point between the parties.
**Key context:** This is NOT unique to the Coalition—fossil fuel subsidies are common globally.
However, as a subsidy to maintain uncompetitive domestic industry capacity, it is more controversial and less common than direct fossil fuel production subsidies or fuel price caps.
The article correctly identifies the subsidy as controversial and arguably inefficient, but the framing that consumers will "save only 1 cent" is misleading because that's not what the policy was designed to do or what experts predicted would happen.
The article correctly identifies the subsidy as controversial and arguably inefficient, but the framing that consumers will "save only 1 cent" is misleading because that's not what the policy was designed to do or what experts predicted would happen.