Bill Shorten has relented and allowed an increase in fuel excise, with the condition the money be spent on regional roads. Picture: Gary Ramage Source: News Corp Australia

Opposition Leader Bill Shorten, who once totally rejected the “tax on everything”, demanded a condition for support: That the Government spend $1.1 billion in fuel excise revenue on regional roads.

The offer indicates it is almost certain household transport costs will continue to rise twice a year with increases in fuel taxes which had been frozen for close to 15 years.

The Government has accepted the deal and will legislate to increase petrol taxes in February and August. The Government calculates a typical household using 50 litres of fuel a week will pay an extra 40 cents a week.

But the tax rise will raise an extra $23 billion over 10 years, all paid by ordinary motorists.

“While the impact on individual households is modest, this measure will provide a predictable and growing source of revenue, which will help the Government boost its investment in job creating and productivity enhancing road infrastructure,” said a statement from Finance Minister Mathias Cormann and Transport Minister Warren Truss.

The Government will provide an additional $1.105 billion in funding for the Roads to Recovery Program over the next two years as Labor asked.

“This means local governments across Australia will receive an extra $300 million in 2015-16, on top of the already doubled $700 million they are receiving this year. In 2016-17, local governments will receive an extra $805 million in addition to the $350 million they were already scheduled to receive,” said the ministers’ statement.

Today’s announcement was a pragmatic escape route for the Opposition which has rejected the tax rises implemented by regulation last year.

Mr Shorten said the money should be given to local councils in areas needing transport improvements and jobs to fight youth unemployment rates hitting as high as 20 per cent.

“The $1.1 billion boost to the Roads to Recovery program will stimulate regional economies, generating much needed jobs and a boost for vital local infrastructure,” he said in a statement.

“The Government has smashed confidence since it came to office and undermined the transition in our economy.”

But Mr Shorten will have to explain why Labor’s strong opposition to the “tax on everything” measure is suddenly acceptable.

“The Government broke a promise when they introduced this petrol tax (in the 2014 Budget),” said Mr Shorten to a claim he had been outfoxed on the matter.

“So first of all anyone who rewards the Government and says they have been clever by breaking a promise I think misunderstands the Australian people.”

However, he said the Opposition had limited options and faced an August deadline on the petrol tax rises.

Mr Shorten said the 2014 Budget froze local government assistance grants for three years, cutting $925 million from communities over three years.

“As a result of a trick to bypass the Senate on the excise indexation, the Abbott Government has threatened to return the additional fuel excise it has collected from Australian motorists over the last eight months back to oil companies,” he said.

“This was a difficult decision but the prospect of billions of dollars of being returned to oil companies was clearly unacceptable for Labor — we’d prefer this money be spent on roads in regional and outer suburban areas rather than handed back to multinational companies.”