Treasurer Joe Hockey says he's ignoring criticism from Labor that he's out of touch with ordinary Australians but concedes there may be proportional impacts.
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14 Aug 2014 - 7:44 AM  UPDATED 14 Aug 2014 - 2:01 PM

Joe Hockey's suggestion that poor people don't drive much has sparked an angry backlash from rural MPs within the government's ranks.

The treasurer's defence of planned increases to the fuel excise raised in the federal budget a few eyebrows when he claimed poor people wouldn't pay as much as the rich because they either don't own cars or don't drive far.

"They say you've got to have wealthier people or middle-income people pay more," he told the ABC on Wednesday.

"Well, change to the fuel excise does exactly that; the poorest people either don't have cars or actually don't drive very far in many cases."

That explanation hasn't washed with a number of backbench MPs, who have aired their concern that the controversial budget measure will hit rural communities hardest.

Rural MPs lash out

NSW Nationals senator John Williams says people in the bush need cars, a point echoed by Queensland Liberal National senator Ian Macdonald.

"You have to have a car whether you're rich or poor, you need a vehicle to be able to get from one place to the other," he told ABC Radio on Thursday.

"Regional Australians don't have the alternative of public transport of other means of getting there."

NSW Nationals senator John Cobb said nobody wanted to pay more for fuel, but the less you drive the less you pay.

Mr Hockey is sticking by his defence, saying richer households paid three times more in fuel taxes than the poorest because they normally owned more cars and drove further.

But he concedes there may be proportional impacts.

"That is the case with any indirect tax," he told ABC radio on Thursday.

However, Mr Hockey also argued that every dollar from plans to reintroduce twice-yearly indexation of the fuel excise would help to build new road, which would create jobs and boost productivity.

He branded Labor "hypocrites" over their attack that he's out of touch with ordinary Australians.

"Good luck to them," he told ABC Radio on Thursday. "I don't care about that commentary."

Hockey doesn't 'live in the real world'

Labor and the Greens oppose the controversial budget measure, saying it will hit low-income families the hardest because they'll have less to spare for the increased costs.

Opposition leader Bill Shorten said he was "amazed" to hear the treasurer say that poor people would not feel the impact of the return of twice-yearly hikes in the fuel excise, because they either did not have a car or did not drive far.

The Labor leader said Mr Hockey's comment was an attempt to justify putting a new tax on petrol and breaking an election promise.

"I don't know what planet Joe Hockey lives on, but it's not the real world," he told Fairfax radio in Perth on Thursday.

He said it was a rushed and unfair budget without consultation with people in key industries.

"It's clear that this budget has gone too far," he said.

"It's too unfair, it's hard for kids to go to university, a GP tax for sick people, ... a petrol tax (has) gone up, schools and hospital funding is going to be a big impact in the west," Mr Shorten said.

"I think they should go back and start again."

Consumer group One Big Switch argued poor people spend a higher proportion of their income on fuel and live further away, meaning they're hit twice.

A major survey in June showed the biggest average fuel bill in Sydney was in the south-western suburbs, while those in Melbourne's north-east and north-west paid the most for petrol on average.

Mr Hockey didn't disagree with this, saying that's why the government had decided to use the extra revenue from the fuel excise to build roads in these areas.

Senior minister Peter Dutton denied the government was out of touch.

"I don't think we are at all," he told ABC Radio.

"These are tough days, but the fact is that the government has a task to do, and I think Australians respect that fact."