It was the petrol excise hit destined to cost families just 40c a week that nearly burned down Tony Abbott’s leadership.

Like an earthquake fault line, it was a political reversal that ran all the way back to John Howard’s fight to revive his own fortunes.

It was March 1, 2001, when John Howard abolished the automatic indexation of petrol excise in the wake of a savage backlash to the introduction of the GST and the fall of two Coalition state governments in Queensland and WA.

Three PMs later, it was his old protege Tony Abbott who boldly decided to reverse it.

It made perfect sense in economic terms. It would raise $4 billion from motorists over the next four years.

After a period of “soul searching’’ Howard had decided in 2001 to blow a hole in the Budget that’s still costing Treasurer Joe Hockey over $5 billion a year today.

The price of survival was a revenue shortfall that would happily just about wipe out Australia’s current deficit. Motorists hardly thanked the government. Most didn’t notice.

That was the thinking when the Abbott government tried to reintroduce the indexation of fuel excise to inflation to help repair the deficit last year.

Until the sales pitch went horribly wrong. When Hockey sought to sell the plan last year by arguing poor people didn’t drive very far, it was the moment the Abbott government really started to cark it.

“Now, I’ll give you one example: The change to fuel excise, the people that actually pay the most are higher income people, with an increase in fuel excise and yet the Labor Party and the Greens are opposing it,” Hockey said.

He went on: “The poorest people either don’t have cars or actually don’t drive very far in many cases.”

The very next day Hockey kept digging.

Instead of admitting his remarks were an insult to workers stuck in traffic every day, he doubled down.

“Based on Census data, households in relatively disadvantaged areas are less likely to own motor vehicles than those in relatively advantaged areas,’’ the statement said.

Belatedly, Hockey issued an emotional apology that his remarks had been misconstrued to suggest he had “evil intent’’.

“I am sorry for the hurt,’’ he said.

The petrol excise is a big political issue.

Not as sorry as the Prime Minister’s office and every Liberal marginal seat MP in the country.

Still, the government forged on with its plan.

Just months after Hockey’s mea culpa, the government smashed through Senate opposition to the petrol excise increase by ignoring it and introducing the measure through a tariff increase.

It allowed Finance Minister Mathias Cormann to start collecting the tax in November even though the Senate was opposed to it.

Labor had done the same with the alcopops tax.

But there were some trip-wires attached.

But hiking petrol prices with the assistance of the Greens isn’t exactly the policy win the Prime Minister will want to spruik in public

If the Abbott government can’t get the Senate to tick off on the tax hike this year they need to give the money back — to the petrol companies.

That was Cormann’s threat to the Greens: support the measure or big oil gets the cash. Behind the scenes, the debate caused big blow-ups in the Greens’ own party room.

Former Greens leader Christine Milne wouldn’t back the hike, even though it acted as a de facto carbon tax.

She wanted the money raised spent on public transport, not roads.

The big question is whether the new Greens leader Richard Di Natale will take the opportunity to do a deal.

Many in the Greens are not hopeful.

They fear the excise has become such a “legacy’’ issue for Milne, who still sits in the party room, that she will never agree to it. Queensland’s Larissa Waters, who is regarded as close to Milne. is expected to have trouble accepting a deal.

Others in the party room believe the Greens need to drive a tougher bargain with the government.

If they do, the government will get the cash.

But hiking petrol prices with the assistance of the Greens isn’t exactly the policy win the Prime Minister will want to spruik in public.

Extracted in full from the Daily Telegraph