Michael Janda

But it's not actually unleaded petrol where the big economic problems lie.

It is entirely in diesel.

And we've already seen the diesel price rise back above

pre-excise cut levels because the diesel shortage globally is much more acute.

To use some economist jargon you'd be familiar with, it's inelastic demand.

You can't just stop using diesel.

If you're a commuter with a petrol car, you can decide to catch the train to work.

If you're a truck driver, if you decide not to drive your truck to save diesel, well, you're not doing any work.

And it's the same for most users of diesel.

And arguably what the government should have done is cut the excise on diesel much more, perhaps to zero, and left the excise as it was on unleaded petrol.

And there's quite a few experts suggesting this because also the inflation pass-through from rising diesel costs is much more significant.

The flow-through from petrol prices is actually a destruction of demand from consumers because it mainly affects households.

the rising diesel prices are already being put through into fuel surcharges and increased prices on a range of transported consumer items and business items for the building sector as well.

So diesel is the problem, not petrol.

Well, the petrol price excise cut is all about retail politics of we're helping you out with your cost of living.

But the real economic benefit comes if you can keep a cap on diesel prices, and that will then keep a cap on that second order inflation that the Reserve Bank's really worried about.

So from an economics point of view, I think most analysts would agree that if you were going to cut excise,

would have been much better to focus the cuts on diesel and the commercial sector and leave motorists to reduce their demand as they can.

Yeah, as some experts in the cybersecurity field have put it, we've crossed the Rubicon where you've got an AI system that is finding errors.

I think one of the examples was a source code error in Linux that had been there for 27 years that no hackers had yet discovered.