MPs fought to spare diesel rebate from budget's axe

THE Abbott Government's first budget will hit rural and regional Australians, but government MPs say they fought hard to quarantine key issues from cuts.

While the budget has made deep cuts to Landcare, increased the fuel excise and introduced a $7 co-payment for GP and other medical services, several regional wins were made.

Deputy Prime Minister Warren Truss' pledge for a $1 billion Stronger Regions Fund was delivered, as was just over $300 million in community development grants promised before the election.

But perhaps the most significant achievement of the junior Coalition partner in the closed door pre-budget talks was preventing major cuts to the diesel fuel rebate.

The multi-billion dollar rebate helps farmers and miners pay for diesel used off-road, for machinery and generators across regional properties and mining sites.

It is understood after a leak from the government's razor gang in late April that the rebate was "firmly in its sights", both regional Liberal and Nationals backbenchers urged the frontbench to abandon any changes.

Government sources have confirmed that Mr Truss, with the backing of the Nationals party room, fought for the rebate to be increased over time in Tuesday's budget.

That meeting helped to secure a one cent increase in the rebate over the forward estimates, in line with the new rises in the fuel excise tax, to ensure farmers and miners were not further disadvantaged by the excise increase.

One Nationals MP said such a cut would have been "completely devastating" for rural property owners, and that the Deputy Prime Minister was able to talk the razor gang down from the proposal.

Several other government backbenchers have confirmed the push against the cut was backed by regional MPs in both Coalition party rooms, quarantining the rebate from changes.

"A week or two ago I thought it was all on, but we talked about it and Mr Truss agreed that it was too important to lose - a cut (to the rebate) flies in the face of what we're trying to do," a backbencher said.

However, the bush will still feel the effects of the fuel excise rises now put in place.

A number of government MPs including George Christensen and Ken O'Dowd said they were still disappointed by the tax increase, but that "something had to be done" to help rectify the budget.

"We fought hard for the fuel excise not to be increased, but we understood that we had to make changes, there wasn't any other option," Mr O'Dowd said.

Mr Christensen said that it was clear the fuel excise rise would hit regional areas, given the distances people have to travel.

"We travel longer distances, we have to drive everywhere - there is no doubt it will affect regional motorists," he said.

"But I think overall the budget has shared the burden pretty fairly, we were getting flogged about the debt levy before the budget, now we're getting flogged about the cuts.

"We could have said we can just let the budget blow out even further, and not done anything, but I think we've tried very hard to get the best outcomes."