Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

I am speaking on the bill before the House. The comments I am about to make will all be relevant. We inherited an infrastructure deficit in this country to the tune of tens of billions of dollars. Just in local government alone there is a $1.3 billion annual infrastructure maintenance deficit each year, let alone what happens in state and federal governments and let alone the deficit we inherited in infrastructure that was never built and should have been. We inherited an education standards deficit in this country, a health system that was in crisis, a broadband system that was worse than most other countries in the world and a housing affordability crisis. That is what we inherited, not what the member for Mayo would like people to pretend the Rudd government inherited—a healthy economy—on coming to office.

Let me just respond to a couple of other things that the member for Mayo raised. He made comments about the South Australian financial situation. It took the Rann Labor government, when they came into office in 2002, to restore a AAA credit rating to the South Australian government. Previous to that it did not have it. So, when he talks about economic responsibility, perhaps he ought to get his facts right. Can I make a final comment about another matter that he raised when he talked about the coalition government having to fix matters after Labor had been in government. I say to the member for Mayo: just like he stitched up the Australian workers with his personal involvement in the extreme Work Choices legislation, which he now says is dead, let us see how he stitches up and fixes up the other issues that he believes need to be fixed up if the coalition ever return to the government benches. They might say for now that things like Work Choices are dead, but looking at their actions and their past performance one would be foolish to believe that.

This is an important bill because the luxury car tax in itself is an important issue. It is important because it is relevant to the government’s tax-raising measures, and it is important because this bill will have an impact on the future of the Australian automotive industry. I am going to address both of those issues separately. It is interesting when you hear members opposite talk about how they are so concerned about the Australian automotive industry, but their rhetoric is not matched by their actions in respect of this bill. The luxury car tax is not a new measure. As the member for Blair pointed out, it was introduced by the coalition government in 1979, and the current 25 per cent tax that applies was set by the coalition government when the GST was introduced. If you accept that the coalition government introduced the tax in 1979, and if you accept that they had a chance to change, modify or remove it—do whatever they believed ought to be done with it when they set it at 25 per cent—you must also accept, presumably, that they believe it is a reasonable tax to impose. If they believe that a luxury car tax is an unfair tax, why did they not do anything about it in the 12 years they were in office?

The world faces some tough economic times ahead. Yesterday we heard the Prime Minister tell parliament just how serious the global economic outlook is and of the impact the global financial crisis is having on many other countries. Governments around the world are bracing themselves for serious economic downturns and are attempting to stabilise and strengthen their economies with whatever measures are available to them. The Rudd government understands the gravity of the situation here in Australia and has been acting decisively and responsibly. It acted prudently earlier on this year when, in May, it set the federal government’s budget. It acted prudently when it set aside a healthy budget surplus. When members opposite keep talking about the budget surplus that was only possible because of what the Rudd government inherited, I say to them: it was the Rudd government who set the budget in May. I say to them that the Rudd government could have done whatever it liked with that budget but, very responsibly, it set aside a surplus. It was not because the surplus we have is the same surplus that was inherited by the Rudd government; that surplus was used in the May budget and the Rudd government quite deliberately set aside a surplus. It is a surplus that can now be used to stimulate the Australian economy and help buffer Australia from the impacts of the global financial turmoil we are facing.

That surplus is contingent on the tax-raising measures contained in the budget, and that includes the luxury car tax increases proposed in this bill. It is a tax that is not unreasonable and is consistent with the general principles of taxation—that those who can afford to pay more tax in times of greater need should contribute more to the tax revenue of governments. Interestingly, the Senate committee made a point about that when it said that, given that tax reductions were provided in the May budget which commenced on 1 July, it would not be unreasonable under those circumstances and under the present conditions to increase the luxury car tax.

As I said earlier, when the members opposite were in government, they introduced the tax and now they are opposing it. Again, interestingly, if they were to come into this House and say, ‘We’re not opposing the tax; we’re not opposing the principles but perhaps it ought to be set at a different level,’ I could understand that, but I have not heard one single member from the coalition actually say that. But of course it should not surprise any of us that they are opposing this tax, because if there is one thing that members opposite are consistent about it is about being inconsistent. Their position on policy changes like the weather: they have a different position each day, and, depending on which coalition member you ask, there are likely to be several different positions on any one day.

Taxes are raised by governments in order to pay for government funded services and infrastructure. The Rudd government recently committed to a $10.4 billion Economic Security Strategy both to assist Australians doing it tough and to provide a stimulus to the Australian economy. That $10.4 billion Economic Security Strategy provides for $4.8 billion for an immediate down payment on long-term pension reform, $3.9 billion in support for low- and middle-income families, $1.5 billion to assist first home buyers and $187 million to create 56,000 new training places in the year 2008-09. From within those expenditures, single pensioners will be paid $1,400 before Christmas, couples will receive $2,100, people receiving the carer allowance will receive $1,000 and for families on tax benefit A there will be a one-off payment of $1,000 for each child.

That package is only possible because of the surplus the Rudd government provided for in the budget and only possible if all the tax-raising measures that provide and create that surplus are put into place. From the outset, members opposite have, on the one hand, said they support the Economic Security Strategy yet, on the other hand, they come into this place and say they want a 5c a litre reduction on the petrol excise. They opposed the alcopops tax. They opposed the gas condensate tax. Now they oppose the luxury car tax proposed in this bill. I say to members opposite: do they support the Economic Security Strategy or do they not? If they do support it, how do they expect it to be funded if they oppose every tax-raising measure that the government uses to create a budget surplus? It simply does not add up. If you oppose this tax then tell us just which parts of the economic security package you are prepared to do away with. Are you going to suggest that perhaps the $1,000 payments to the carers ought not to be paid? Or are you going to suggest that perhaps the $1,000 payment to the children of families on tax benefit A ought not to be paid? Just tell us where you would make the cuts to that economic security package if you are going to oppose the tax-raising measures?

We know from their own statements that when they were supposedly concerned about pensions they were prepared to leave out over two million pensioners under the coalition’s proposals to provide pension payment relief to people in this country. Under the coalition’s proposal there would have been 1.1 million age pension couples who would have received nothing. There would have been 732,000 disability support pension recipients who would have received nothing. There would have been 130,000 carer payment recipients in this country who would have received nothing. There would have been 32,000 wife and widow pension recipients who would have received nothing and 200,000 veterans and partner service pension recipients who would have received nothing. So much for them caring for the people that are doing it tough in this country and so much for their concern for the pensioners of this country! I suspect that, if you really gave them the choice between a luxury car tax and making cuts to one of those pension recipients, it would be the pension recipients who lost out. Coalition members cannot have it both ways. They cannot say on the one hand that they want the government to spend and on the other hand say they will not allow us to raise the funds we need in order to spend.

I now want to turn to the second issue associated with this bill, the issue of jobs. In recent days the mantra from the coalition has been all about Australian jobs. We heard it in question time yesterday; we heard it in question time the day before. Their actions, however, do not match their rhetoric and they certainly do not when one looks at their position on this bill.

This legislation will provide a much-needed boost to the local Australian automotive industry because it will very likely boost sales of locally made cars. In respect of that, I refer to a comment from Peter Vaughan of Business SA when the announcement to do with the luxury car tax was made. On 11 May he said:

Business SA has welcomed the Federal Government’s promise of tax reform ahead of Tuesday’s budget.

It says the decision to increase tax on luxury cars could be beneficial for South Australia’s car market, which mostly makes models outside the prestige market.

Business SA chief executive Peter Vaughan says that could boost sales for a lot of locally manufactured cars.

‘It may well of course lead to a greater demand for locally produced cars that are in the non-luxury class,’ he said.

‘That would certainly help our local producers, particularly Holdens in South Australia, so that may well be a welcomed initiative …

That is one of the very important impacts of this legislation: it will help the local producers. The Australian automotive industry is worth $7.7 billion to Australia’s economy. It employs over 60,000 Australians and undoubtedly sustains tens of thousands more. It contributes to Australia’s export dollars. It sustains much of the research and development in Australia’s manufacturing sector.

As with all automotive manufacturers around the world, the Australian automotive manufacturers are going through some exceptionally tough times. New vehicle sales have slumped, and I understand that in October they slumped by about 11 per cent, reflecting the global economic situation and the credit squeeze.

The Rudd government understands the importance of the automotive industry to the Australian economy. That is why earlier this year the Rudd government announced the $6.2 billion automotive plan for Australia, and I refer to the press release put out by Senator Kim Carr in respect of the $6.2 billion automotive plan, because it sums it up as well as I could in my own words. The release said:

… a $6.2 billion plan to make the automotive industry more economically and environmentally sustainable by 2020.

The Green Car Plan will feature an expanded $1.3 billion Green Car Innovation Fund which will provide Australian car companies with the opportunity to receive Government funding to design and sell environmentally friendly cars.

The Innovation Fund will see the Australian Government match industry investment in green cars on a $1 dollar to $3 dollar basis over a 10 year period from 2009.

…            …            …

The 13-year New Car Plan for a Greener Future is about manufacturing competitive, low-emission, fuel-efficient vehicles in Australia. It will create well-paid, highly-skilled green jobs for the future.

The plan is expected to generate $16 billion in investment in the Australian automotive industry over the life of the plan.

…            …            …

… a better-targeted, greener, $3.4 billion assistance program, the Automotive Transformation Scheme, running from 2011 to 2020 …

It went on to say:

$116.3 million to promote structural adjustment through consolidation in the components sector and to facilitate labour market adjustment;

$20 million from 2009-10 to help suppliers improve their capabilities and their integration in complex national and global supply chains.

In respect of that plan, let me quote some of the responses from industry. Mark Reuss from Holden said:

This announcement provides certainty for the industry, its 64,000 employees and hundreds of direct and indirect suppliers. Through the Government’s commitment to doing what is right, local manufacturers will embark on a decade of innovation.

Marin Burela from Ford said:

The Federal Government’s new car plan represents a significant and comprehensive package, with a number of key elements that have the potential to drive a paradigm shift in Australian automotive manufacturing.

Max Yasuda from Toyota said:

The Government’s policy settings will assist the industry to evolve to meet this competition and build a solid base for future development.

It is a good plan and a plan that was welcomed by the industry.

In my home state of South Australia I am acutely aware of the importance of the GMH plant to the economy of South Australia and to the thousands of families who are dependent on a viable and sustainable automotive industry. Three and a half thousand South Australians are employed at the GMH plant at Elizabeth and thousands more in associated industries. Many hundreds of those families and workers at the GMH plant at Elizabeth live in my electorate of Makin; I speak to them every day. I visited the GMH plant with Senator Kim Carr only two weeks ago, and we met with both GMH executives and representatives of the many automotive suppliers in South Australia. They welcomed the Rudd government’s automotive plan. They also shared their concerns with us about the effects of the global financial crisis on the automotive sector and particularly on GMH operations in Australia.

This proposal, the luxury car tax, will assist automotive manufacturers in Australia because it is very, very likely that people will choose their product ahead of an imported car as a result of this tax—and that is a good thing, because it will sustain jobs in this country. We know that in the last 30 years sales of Australian manufactured cars have dropped from about 80 per cent 30 years ago to around 20 per cent today. We know that the automotive sector in this country is important to the future economy of our country, but we also know that if it is going to be sustainable then we need to do whatever we can to ensure that it can compete with the rest of the world, and this is one measure which I believe will do that.

To those people who talk about this tax as taking away choice—and I noticed that the Leader of the Opposition in his remarks on this bill talked about how this would remove choice—let me say that this is all about choice. You can choose whether you buy a luxury car or not. You can choose whether you want to pay the tax or not. What is more interesting and perhaps not surprising is that, when it comes to this bill, the Leader of the Opposition’s view is consistent with the position that we have seen in recent years from the opposition when it comes to excessive CEO salaries and bonus payments. On those matters the opposition are absolutely silent, because we know which side of the community they support and we know who buys the luxury cars in this country. This bill is about tax raising. It is also about enabling the government to deliver its Economic Security Strategy. I commend the bill to the House. (Time expired)

Debate interrupted.

See this speech in context