The deputy prime minister concedes motorists won’t like paying higher prices at the bowser but says excise changes will help boost infrastructure funding.
The federal minister in charge of Australia’s highways admits motorists will dislike paying higher petrol prices to fund major road projects.
From August 1, excise changes will see the price for a litre of fuel rise every six months in line with inflation.
With petrol prices set to climb by 1 cent a year, Deputy Prime Minister Warren Truss, who handles the infrastructure portfolio, concedes the change will be unpopular.
“I can understand that no one ever likes to pay more tax but we are in a situation where we have to make significant changes to our budget structure,” he told reporters in Brisbane on Wednesday.
The fuel excise has been locked at 38.1 cents per litre since the Howard coalition government froze automatic indexation in 2001.
Mr Truss said the reintroduction of twice-yearly indexation would help fund the biggest infrastructure spending in history.
The excise freeze 13 years ago was designed to alleviate anger about the GST applying to petrol, he added.
“The only way to fix it at that time was to get rid of the indexation altogether,” Mr Truss said.
Higher fuel excise will deliver $168 million in extra revenue in the 2014/15 financial year, taking total excise revenue to $17.6 billion.