Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Hansard source

The Leader of the House, the member for Grayndler, has changed the arrangements with our side today and brought these luxury car tax bills on urgently with a view to dealing with them in one day. As a consequence, because of that unwarned, unflagged change in procedures, I was not able to be here when I would have sought to be here to speak immediately after the Treasurer. But I am here now. The member for Dobell is all ears, I see.

This is a government that is completely confused about tax. We have a situation today where, if the government has its way, we are going to rush through this increase in the tax on cars worth more than $57,000, but at the same time we read in the Australian newspaper that the Prime Minister has hit the brakes on the luxury car tax. So at the same time as this bill is apparently so urgently needed that it has to be rushed through the House, the government is having second thoughts and it is going to send this off for review by the in-house inquiry into tax headed by Ken Henry.

It is all very well for the member for Dobell to talk about who is coming and who is going. What is the story about this tax? We increase the tax by eight per cent from 25 per cent to 33 per cent and then what is going to happen? The Henry inquiry will be looking at it. What is going to happen next? Will it be coming down again? Will it be going up? I mean, make your mind up. If the government is going to change taxes of this kind, it has got to give a degree of certainty. And what it has told the whole industry today through the pages of the Australian is that it has no confidence in this change to the tax on cars worth more than $57,000. It is concerned about the reservations that are being expressed by the opposition, by the industry—questions about the impact on the value of other cars, second-hand cars and cars below the $57,000 price tag. It is concerned about the impact on the automotive sector. So in a state of confusion the government that used to be undecided is now not so sure. It says, ‘We’ll send this off to an inquiry; don’t worry, we are putting the tax up but we’ll have a look at it and maybe we’ll take it down later.’

It is this element of uncertainty that underpins all of the government’s approach to tax. It is one knee-jerk, ill-thought-out response. We saw it yesterday and last week in its comments about GST on excise. The opposition has proposed a very clear measure: cut the fuel excise by 5c. If you want to cut taxes on petrol, the only responsible way to do it is to cut the excise. So the government has been caught flat-footed by that and so its response is to say, ‘We’ll look at removing the GST on excise on petrol,’ which is close to but not equal to 5c a litre.

If you remove the excise on petrol, and you do it on the basis that you should not have a tax on a tax, which is a proposition that a lot of people are attracted to, then you would have to remove the GST on every other excise—on alcohol, on tobacco and on other things. When the member for Dobell has a look at the budget papers he will see that, in total, the taxes add up to around $30 billion a year—and that is just the federal taxes. In its efforts to provide an instant knee-jerk response to the opposition’s proposal to cut fuel excise by 5c, the government has come up with a proposal, the reasoning behind which would result in the states being short-changed by $3 billion at least. If that principle were taken further, the loss to the states would be even greater. We have already seen the Prime Minister’s claims to fix the Federation and to end the blame game thrown back in his face by the New South Wales Treasurer, Mr Costa, who, when he heard about the idea from the member for Prospect, the Assistant Treasurer, to cut the GST on excise, said, ‘That’s right, you reimburse me $400 million.’ And that is just for New South Wales. The government has not thought it through on excise and GST and it has not thought it through on the luxury car tax.

Let us be quite clear about this tax. The so-called luxury car tax—and it has been called that for a long time, obviously—is not a tax on luxury cars any longer. Of course it does impose a tax on cars that we would all agree are luxury cars—Rolls Royces, Porsches and very expensive cars—but the vast majority of the 105,000 cars that are sold in Australia for more than $57,000 are not Porsches, Bentleys, Rolls Royces or anything of the sort. A great many of them are cars that families need, not because they are wealthy and want to be able to buy the biggest and flashest car they can but because they have a lot of kids or they have businesses that need a car of that kind or they are in the tourism business or they are in the bush. A Land Cruiser in Toorak might be seen as being a luxury car by some, but I can tell you it is not a luxury if you are out in the bush. What we have here is not a tax on luxury cars but a tax on cars that are worth more than $57,000. Who pays it? The government is so addicted to this politics of envy. That is one of the single biggest changes since November last year—the politics of aspiration has been replaced with the politics of envy. It is so addicted to this policy that it wants to present it as hitting the people who buy Rolls Royces and Porsches. In fact, the tax hits a person of whatever income who chooses to buy a car worth more than $57,000.

Everybody has different priorities in life. Some people want to spend a lot of money on a house. Some people want to spend a lot of money on travel. Some people make a huge priority—as my late father did—of their children’s education. He was a man with very little money and income, living in a rented flat, who put a large part of his money into sending me to an independent school. That was his priority. He put a huge percentage of his income into that. That was his choice. That is what people are able to do in a free society. This tax hits people who choose, whatever their level of income, to buy a car worth more than $57,000. Just as when I was a kid going to an independent private school there were boys there whose parents were wealthy and the school fees were not a button off their waistcoat and there were kids there for whom school fees were a huge burden, as it was for my father. There are people on modest incomes who want to buy a car that is worth more than $57,000. It might be that they need to because they have a lot of kids, it might be that it is their business requirement because they are in the tourism business or they are in the bush, or it might be just because they would rather put more money into a car than into a house or into going on holidays or into buying clothes. People can order their priorities. Let us not kid ourselves: this is not a tax on the rich, this is not a tax on people on high incomes; this is a tax on people who choose to buy a car worth more than $57,000.

The hypocrisy of this government with respect to this tax is startling. Not only is the rhetoric of this government false, for the reasons I have described, but also are the claims that this government is concerned about the environment. It is a government that, above all, seeks to have a clean and green Australia. It paraded its commitment to environmentalism as a key part of its platform. Under this tax both the hybrid and the Hummer will be hit just the same. Efficient fuel technologies, hybrid technologies, are not cheap. They obviously save money on the petrol side of things, but they cost money and add cost to a car. There are a number of vehicles of this hybrid category in the expensive car bracket because they have expensive fuel efficient technology. Their owners save money because they use less petrol. If you have a Prius, it will use a little bit less than half as much petrol as a comparable car of the same size and weight, but it costs more to buy. We should be encouraging people to buy fuel efficient vehicles. You would think we would be. We should be promoting fuel efficiency. The government talks about it all the time. It is saying that, whether you buy a car in this category which is fuel efficient or a gas guzzler or whether it does five litres or 25 litres per hundred kilometres, you pay the same additional tax; everybody gets penalised.

Of course we wonder too about the real motives behind this tax. We can see that it flies in the face of its commitment to environmentalism—there is no discrimination there. It pays no regard to the different needs and circumstances of people who want to buy cars of this kind. It does not penalise people on high incomes. A person on a high income who chooses to buy a cheap car or get the bus does not have to pay it; a person on a modest income who wants to buy a car worth $60,000 or $70,000 does have to pay it.

Then we ask ourselves: ‘Is this just a way of providing further protection to the Australian car industry?’ Some of the great benefits to all Australians have been lower tariffs, freer trade, the ability for us to compete in the world with exports and, of course, lower prices from competitive imports. We have already seen this government reject the express advice of the Treasury to have an inquiry into the Australian car industry done by the Productivity Commission—the government’s very hard-headed, very well-regarded, independent economic think tank. Instead, the government set up an inquiry headed by former Victorian Premier Steve Bracks and packed with a whole bunch of Labor mates, who share the protectionist agenda of Senator Kim Carr. Having already seen that, we ask if this is another part of their protectionist agenda. Is this another part of a move not simply to have higher vehicle prices for Australians by putting on a higher tax but to also reduce the competition that comes from imports and keeps prices low?

This attitude to competition and to markets is another characteristic of this government, and it is directly connected to this legislation. In the past, we have seen Labor governments, such as the Hawke and Keating governments, which had a commitment—imperfectly realised, to be fair—to freer markets and to a more competitive Australia. When we were in opposition back then, our side of politics supported those measures that were pro-competition and we were supportive of economic reform. When they were in opposition, John Howard, Andrew Peacock and John Hewson were, in that sense, collaborators in economic reform, and of course John Howard was able to continue and enlarge upon that when he was in government. We believe in freedom, we believe in free markets and we believe that competition will get consumers the best deal. There is so much evidence of that. Who would want to go back to a day, for example, when telecommunications were only provided by one government owned utility? It is obvious that we have benefited as a nation greatly from economic reform and greater competition.

This bill is designed to reduce competition in the automobile industry. It is designed to make the products—in particular, the imported products that form the bulk of this category—more expensive, thereby undermining competition. In that sense it is directly connected to the same philosophy that underpins the government’s absurd Fuelwatch proposal. We do not object to greater transparency and more information. We do not object to that part of Fuelwatch which involves putting petrol prices up on the internet and providing an email service. One may well ask how necessary it is given that there are a number of private sector initiatives such as motormouth.com.au, and no doubt others, that do a similar thing.

But, by and large, with the government’s approach to greater information and transparency—that part of Fuelwatch—we have no problems. Our problem is with the element that is anticompetitive. And of course that is exactly the problem that the member for Batman—the Minister for Resources and Energy and the Minister for Tourism—who is sitting opposite me, had with it too. The part of Fuelwatch that involves service stations having to set their price a day before and then hold that price for 24 hours is a price-fixing mechanism—it fixes or sets the price and it cannot be moved during the day. As the member for Batman said in his correspondence, that will result in less competition because it prevents market participants from responding to competition—it prevents them from competing.

Imagine if we were to say that shares on the stock market could not change during the day, or that commodities could not change during the day, or that fruit and vegetable prices could not change during the day; it would be completely absurd. That underlines the lack of commitment and the lack of belief that this new Labor government has in markets and in competition. If Paul Keating or Bob Hawke were sitting here today, they would be just appalled by what this new Rudd government is doing here because this is not a Labor government that is committed to lower prices and to competition, recognising that that is how consumers get the best deal. It is a government that has got an old style socialist approach to these matters.

I mentioned yesterday that I was concerned at this tendency. The Treasurer told us a few days ago that the people are happy. He reminded all of us of Kim Jong Il. That is what every out-of-touch dictator says, generally just before they are overthrown: ‘The people are happy.’ You can just imagine it. This is the concern with the luxury car tax—

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