Millions of dollars in taxpayer money could be given to fuel companies if the federal government goes ahead with its plan to index the fuel excise but the NRMA has vowed to vigorously oppose the plan.
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NRMA director for Western NSW Graham Blight said the government's plan to avoid getting the indexation passed through the senate by making it a proposal will backfire if it doesn't get through the upper house within 12 months.
The government plans to introduce the regulation on November 10, which will raise levy on fuel from 38.143 cents to 38.6 cents. It is predicted to cost the average household an extra 40 cents a week and will raise the government approximately $2.2 billion over the next four years.
However, there is strong opposition in the senate to the increase and if a deal can't be done within 12 months, the money will have to be refunded and will go to fuel companies rather than taxpayers.
"The government must be confident of getting a deal done otherwise this is a huge risk. There would be no point in making it regulatory if they aren't. Motorists would be furious if their money goes to a multinational oil company," Mr Blight said.
"The least they could do in that situation would be to give the money back to motorists, that's what the NRMA will be pushing for.
"I suspect the government is close to getting a deal done with the Greens."
Parkes MP Mark Coulton said he can understand his electorate and motorists being opposed to increases in the cost of fuel, especially because of the increased travel costs in regional areas.
However, he believes the government would find a way to get money back to motorists if it doesn't go through.
"I'm not comfortable with an increase in the fuel excise. I'm very aware that people in my electorate need cars and travel a long way but because of the state of the economy, we have to find ways to fix it and the thing that made it acceptable is that it is tied to road funding," Mr Coulton said.
"The precedent is there because the previous government used the same method of regulation for their alcopop tax.
"If we get to that point [that the increase doesn't go through in 12 months] then I am confident we would work something out.
"It wouldn't be acceptable for fuel companies to end up with money."
Mr Coulton didn't comment on the whether any negotiations are taking place, but said it would be within the best interests of the Greens to support the measure.
"I think there is politics being played here.
"The Greens have had a policy on excising fuel for years so I don't know why they would suddenly oppose it."
