Greens dig $2.2b Budget hole

The Greens have blown a $2.2 billion hole in the Federal Budget after leader Christine Milne got rolled by her party over increasing petrol tax.

Senator Milne had wanted to give conditional support to the indexation of the fuel excise but she surrendered to a majority view championed by deputy Adam Bandt who argued the party should not support an increase in taxes that affected low-income earners. Higher taxes on fossil fuels has long been one of the Greens' central philosophies.

Senator Milne signalled on Budget night the Greens would support indexation of fuel excise but later added the condition that its proceeds be spent on public transport, not roads as the Government proposed.

One Greens source said Senator Milne would have known her plan lacked majority support even before a partyroom meeting yesterday morning.

"She knew before she walked in that she was going to walk out with a different position," the source said.

When Senator Milne faced reporters, she said it was a "difficult issue for the Greens because we do want to move away from polluting fuels.

"Now that we have seen the legislation, it's completely clear that the Abbott Government's proposal is worse than a zero-sum game for pollution," she said.

"Investing all the money in roads, making congestion and pollution worse, and letting the big miners get off scot-free means we cannot support the Bill."

WA Green Rachel Siewert told _The West Australian _ it was "crap" to suggest she was the only one who supported Senator Milne's policy position, saying the party operated on consensus.

Parliamentary Budget Office modelling done for the Greens suggests governments will lose between $30 billion and $45 billion in forgone revenue between 2014-15 and 2030.

The Greens move is on top of Labor's decision to oppose more than $11 billion in welfare cuts including indexation changes to family tax benefits and axing the Seniors Supplement.

Treasurer Joe Hockey's forecast Budget deficit is now above $30 billion, with future deficits on track to be much bigger unless the Government comes up with new measures.

Deloitte Access Economics director Chris Richardson said the overall impact on the economy by the blocked measures would be minor.

The West Australian

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