Australia’s premier motoring lobby has backed spending some revenue from petrol excise on public transport, arguing the latter is a vital ingredient in reducing road congestion.

With the Australian Greens and the Abbott government negotiating a deal to reintroduce the twice-yearly indexation of excise to inflation, worth $23 billion over a decade, the AAA has dropped its trenchant opposition to the excise increase which was announced in the 2014 budget.

In meetings on Thursday with both the Greens and the office of Treasurer Joe Hockey, the AAA nominated three public transport projects it considered worthy of funding.

These were the $9 billion Metro Rail Tunnel in Melbourne, funding for which the Abbott government dumped upon its election, as well as the $5.3 billion Brisbane Inner Rail and the $2 billion Perth Light Rail.

“Australia’s motoring clubs understand that a mix of road and public transport projects are needed to help ease worsening road congestion and improve productivity and liveability,” Michael Bradley, AAA’s chief executive, said.

“In the absence of any alternative lists, the AAA has written to the government and the Greens outlining the priority public transport projects identified as being most capable of getting our cities moving again.”

When the budget measure was announced, the government promised to spend all the extra revenue on road projects. It subsequently dropped that pledge when it tried to negotiate a deal with former Greens leader Christine Milne.

New Greens leader, Richard Di Natale, has resumed negotiations and is prepared to do a deal so long as some of the proceeds were dedicated towards public transport.

Mr Bradley said the AAA would not accept taking funding which has already been allocated  towards a specific road project and redirecting it towards public transport.

But revenue not yet allocated could be used for light rail of other public transport projects.

“The AAA has commended both the government’s $50 billion road infrastructure package and the Treasurer’s repeated commitment that any increase in fuel excise will be ‘linked in law’ to road building, and as such, we expect any new projects will require an additional budget commitment,” Mr Bradley said.

“As the representative of more than seven million members, the AAA seeks to provide a useful starting point for discussions that will significantly affect the quality and cost of Australia’s transport network.”

Using momentum from this weeks deal to cut pensions by $2.4 billion, both the Greens and the government are confident of securing a deal on petrol and legislating it before October. A Greens source did warn “we won’t be a cheap date” on petrol.

The government introduced the tax increase by regulation but has 12 months to enshrine it in legislation of it will lapse and the money be refunded to oil companies.

Extracted in full from Australian Financial Review.