Interest groups emerge at budget time to take the government to task. Joe Hockey’s fuel excise increase finds the motorist lobby gearing up for a fight. By Sophie Morris.

Motor lobby to fight budget’s highway robbery

Treasurer Joe Hockey deliverers his post-budget address at the National Press Club on Wednesday.
Credit: Getty Images/AFP

As Joe Hockey dispatched his first budget to the printers, he made a phone call to a lobby group that had spent the previous few days threatening to raise hell.

The Australian Automobile Association’s chief executive, Andrew McKellar, took the call from the treasurer on the Friday four days before the budget. It went some way to mollifying him.

Yes, motorists would pay more for petrol, Hockey confirmed, but he urged McKellar to look at the budget as a whole before coming out guns blazing. The sop to motorists was that the extra cash would be spent on roads.

Still, there was enough outrage left for McKellar to front the cameras on Tuesday night and accuse the government of imposing a “tax grab that goes on forever”. Immediately, he was invoking his association’s membership: “This budget falls well short of what motorists want to see.”

The president of the NRMA, Wendy Machin, who was in Canberra for Hockey’s budget night dinner, was even more blunt, describing it as “highway robbery”.

Since first hearing rumours a week earlier of a possible fuel tax hike, the AAA had been threatening to wage war on the government with a massive mining tax-style public awareness campaign.

It was no idle threat. The NRMA fired the first shot two days before budget with a full-page advertisement in Sydney’s Sunday Telegraph, warning the tax rise would “hurt everyone”.

“The federal government is planning to increase the amount of petrol tax you pay,” it said. “The NRMA will fight this broken promise.”

Budget backlash

The government has been stung by the backlash to its “contribute and build” budget. Irate seniors’ groups are vowing to campaign in marginal seats ahead of the next election in a bid to reverse changes imposing $7 co-payments for GP visits, raising the pension age to 70 in 2035, and reducing the indexation of the pension in three years’ time.

Hockey also has angry premiers to deal with over big cuts to health and education, designed to force the states to make the case for a GST increase, and a senate that is threatening to block key budget measures, including possibly the fuel tax increase.

The reintroduction of inflation-linked indexation twice a year on the petrol excise is hardly the toughest blow in a budget that also hits students, the sick, middle-income families, the CSIRO, public servants and the unemployed – particularly those in their 20s who face six-month periods with no benefits at all –as well as imposing a three-year tax on the wealthy.

Indeed, the petrol excise change has been roundly applauded by economists as a sensible long-term structural reform that should have happened years ago. But it is politically risky. Some might say courageous.

Labor’s infrastructure and transport spokesman Anthony Albanese says a threat of war by the AAA carries some weight. “They are a potent force due to the fact they are in touch with their membership,” he says. “As transport minister, I didn’t always agree with them but I always respected them. They were always straightforward.”

The budget is peak season for lobbying, as rent-seekers and interest groups representing all facets of society vie for the government’s attention and cash.

Once the budget is delivered, they all line up, literally, to review it. The queue snakes down the press gallery corridor and the whole circus goes on for hours: furious nurses, disappointed carers, cranky seniors, incensed unions, happy farmers.

The dapper and bespectacled McKellar beat the rush. The AAA had dispatched a “placeholder” to secure a spot for him close to the front of the queue. As he was delivering his verdict, Hockey was still delivering the budget speech.

Motoring lobby

Lobbying has become a dirty word recently, tainted by corruption hearings in New South Wales. But it is also a legitimate exercise in democracy for groups representing the interests of citizens to raise their concerns with governments.

Some groups wield more clout than others. There are those with deep pockets, such as  the mining industry. Others boast close links with certain politicians and can call in favours.

For the AAA, its strength is in its sheer number of members and the fact that most voters are also drivers. As a federation, it represents state motoring bodies – such as the NRMA and RACV – who collectively claim some seven million members. They have the capacity to reach members via direct mailouts, social media and club magazines.

“Traditionally we have used every channel available to campaign,” says NRMA spokesman Peter Khoury. “It’s the sort of thing we have been doing since 1920 and we’ve got very good at it. These campaigns work.”

But the motoring groups’ broad-based membership is also amorphous and relatively disengaged. They joined up for roadside assistance, rather than advocacy.

Nevertheless, a threat of an all-out campaign is enough to make already nervous government backbenchers even more jittery. Particularly as it could target marginal seats, where motorists in outer metropolitan areas commute to work.

Reversing Howard's freeze

The NRMA provided pre-budget modelling to The Daily Telegraph, showing an average motorist driving a Ford Falcon from Penrith, in the marginal Liberal seat of Lindsay, to the city and back every day would pay an extra $30.49 in the first year, rising to an extra $159.69 in the fifth year.

The excise rise is a slow-burner, in that the initial hit may feel mild – at only about 1 cent a litre in the first year – but it will compound every six months and tug anew at the hip pocket.

Expected to reap $2.2 billion over four years, it reverses a decision by John Howard to freeze the tax at 38.14 cents a litre in 2001, caving to pressure over petrol prices soon after the introduction of the GST and ahead of a federal election.

Howard’s move killed off a media campaign that was resonating in the battler suburbs of western Sydney. But it irked economists who argue it left a growing revenue gap, now worth more than $5 billion a year.

Until a week before the budget, speculation had focused on cuts to welfare and tax on the wealthy, so McKellar assumed it would be, for the AAA, a fairly routine affair. When a journalist called and told him an excise increase was on the cards, he summoned staff to the boardroom of the association’s Canberra office to nut out a game plan. McKellar spent much of the Wednesday and Thursday before the budget prowling parliament’s corridors, doing multiple media interviews, warning the government of a backlash.

At that stage, he had been unable to secure confirmation from the government. The following day he received the call from the big man himself.

Hockey took time out from his final preparations to tell McKellar there would be an increase in the tax, but the carrot accompanying the stick was that the extra funds would be dedicated to roads.

“Every dollar raised by the increase will be linked by law to the road-building budget,” Hockey said on Tuesday.

The NRMA’s Machin is not convinced, describing this promise as pathetic. “We are really, really cranky about this idea we should be grateful about the notion they are going to hypothecate 1 cent a litre for roads,” she later told Fairfax Media.

Senate opposition

On budget eve, McKellar was back on the hill, knocking on MPs’ doors, doing the rounds of the press gallery. But some doors remained closed. Since Hockey had confirmed the intention of pursuing the increase, the AAA’s next goal was to shore up senate opposition. Until July, that means Labor and the Greens.

Even before the budget, Albanese slammed the petrol tax increase as  “regressive” because high-income earners with fuel cards would not feel the pain in the same way as outer metropolitan commuters. He also successfully deflated the Coalition’s multibillion-dollar roads spending announcement by briefing gallery journalists that most of the funds would not be new.

There had been signs of division in the Greens over leader Christine Milne’s budget positioning and the party was meeting on Monday afternoon.

The AAA made calls in vain to Greens offices. At 6pm, Milne emerged to announce the party would wave the petrol tax change through, but oppose the “temporary deficit levy” on those earning above $180,000.

And with that, the future of the petrol tax rise seemed sealed, as the unlikely alliance of the Coalition and the Greens could pass it through the senate.

Yet nothing in politics is settled until it becomes law and the Greens have since signalled they may yet oppose it if the funds are earmarked for roads spending, rather than their preference for public transport.

For the AAA and its members, the battle is not yet over. They want to see firm guarantees the funds will be spent on roads and are still hopeful the senate may block the increase.

As McKellar spoke to MPs in the past week, he sensed a nervousness among government members. “I think they don’t want to see a situation where every six months motorists are reminded the price of fuel will go up next week and it’s the government putting that price up,” he says.

The motoring groups are still debating whether to make good on their threats of all-out war. Such a strategy would carry a high cost. As one lobbyist observed, once you go to war on a government, that relationship is very difficult to repair. But the AAA is still keeping that option open.

“The NRMA have already run one full-page advertisement in the Sunday Telegraph,” McKellar says. “Whether that’s the first instalment or there’s more to come, we reserve our position.”

This article was first published in the print edition of The Saturday Paper on May 17, 2014 as "Highway robbery". Subscribe here.

Sophie Morris
is The Saturday Paper’s chief political correspondent.