Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker—

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I understand that the shadow Treasurer is the one who should be responding.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

There is no point of order. The member for Dobell was in his place and stood, and I have called the member for Dobell.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I beg your pardon.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

It is a pity the shadow Treasurer was not able to make it here, because we were actually interested to see what the opposition’s position was on these bills. Like on so many of the reforms that we are putting through to make sure that this country is on a sound economic platform, we are still waiting to see what the opposition’s position is on these bills. Are they going to support them? Are they going to oppose them? Or are they going to neither oppose nor support them, consistent with their position on the business that we have brought before this place?

The 2008 budget delivered by Treasurer Wayne Swan put the mandate that the Australian people trusted with the Australian Labor Party to work. It sets out the government’s agenda very clearly, but it is careful in dealing with our present economic climate. We all must remember that we are dealing with the Howard government’s inflationary legacy, fuelled by reckless spending and characterised by largesse and short-termism. No-one can be a better example of that than the shadow Treasurer, who was able to gouge over $1 million from the Regional Partnership rorts—grants, sorry—to his own electorate to prop up a surf-lifesaving club at Bondi. In my electorate, where surf-lifesaving is a major issue, we have five surf-lifesaving clubs that are currently in a great state of disrepair, but were we able to get money? No, because the biggest grant from the Regional Partnerships went to the very regional Bondi. This is a clear example of the way in which the previous government acted. And what do they think of inflation? Again, we are never quite sure. Is it a charade? Is it a fairytale? Is it something to be taken seriously? I am sure we would have been illuminated a little further if the shadow Treasurer had bothered to turn up in this place this morning.

The Rudd government’s first budget has set a new benchmark by delivering on its election promises made prior to the last election. It is very important that it has delivered on all of its election promises. The government has delivered all of its election promises in my electorate in Dobell, and Australia wide. We all know John Howard’s record on keeping promises. Kevin Rudd, Wayne Swan and the new Australian government have clearly made a break from Mr Howard’s legacy of deceit. The Rudd government is a government that believes that all promises are core promises. The 2008 budget has put working families in the Central Coast at the centre of the Rudd government’s commitment to tackle inflation and lay the building blocks for a stronger and more modern Australia. At the centre of the budget is $55 billion in the Working Families Support Package that delivers on tax cuts it committed to during the election, and helps Australian families with child care and education costs. This is welcome news to the thousands of hardworking Central Coast families who last November said they wanted an Australian government that was on their side. They rejected the coalition’s Work Choices laws and policies of division and embraced a team that was more concerned with their issues, concerned with the bread-and-butter issues that Australians find the most important. And that is what this budget delivered, and this bill goes to some of those points.

The budget contained a $40 billion investment in Australia’s future to build new and improved roads, hospitals and schools. The budget is the first step towards a new, more modern Australia, with a first-class economic and social infrastructure. By making Australia’s finances more sustainable, we can now start investing in the schools, hospitals, roads, rail and communication projects that families on the Central Coast rely on every day, but were neglected by our predecessors for more than a decade. This has only been made possible because we have had the courage to take the tough decisions that may cause some pain, but in the longer term will make Australia stronger. Key initiatives of the Rudd government’s first budget include strong economic management, with a surplus of $21.7 billion. Contrast this to the opposition and where they are—or where we think they are—trying to gouge that surplus, trying to put a $22 billion hole into the surplus that we have worked so hard in this budget to achieve. We have abolished $7 billion worth of the Liberals’ reckless spending. We have our Working Families Support Package, worth $55 billion; unprecedented investment in Australia’s future—around $40 billion put aside for infrastructure, education and health improvements; $15.2 billion for sustainable water initiatives and to help tackle climate change; more than $22 billion for road and rail projects; and an investment of $2.4 billion for Australian seniors and carers.

I would like to take this opportunity to once again congratulate Wayne Swan on the budget. He has shown an extensive knowledge of the economic barriers that face working families in outer metropolitan communities. These are families that are looking for more than just the previous government’s bias towards handouts at election times. These are families who delivered us government, and we are intent on delivering for them. By investing in infrastructure, water, child care, GP super clinics and an education revolution, we are telling these families that they now have a government with them at the forefront of their minds.

I consider this budget not only a win for Australian working families but also a win for specific projects on the Central Coast and in my electorate of Dobell. In this budget we saw significant local roads funding. We are an area where a lot of work needs to be done on roads. The Central Coast is some 90 kilometres long and has a difficult geography, which means roads are at the centre of people being able to get around, to to get work and to be mobile. We were also promised a super GP clinic in the northern area of the Central Coast, and again this has been vital. We are down to less than 83 doctors in my electorate, and the average age of those doctors is 59, which means they will all soon be retiring. It is absolutely vital that the government, rather than playing the blame game in terms of public hospitals, have said, ‘We’re prepared to put money into a super GP clinic, take the pressure off the public hospitals, attract doctors to the area and make sure that the people of Dobell have a better ability to get access to the medical facilities that they require.’

Of course the budget also gave us $20 million to fix up the iconic Tuggerah Lakes, the jewel in the Central Coast’s crown. These lakes, through developments around the lakes and neglect by the previous government, have become more and more unhealthy. We have stepped up to the plate in this budget and said that we are prepared, over the next five years, to put up $20 million to make sure we can bring the environment and the beauty of Tuggerah Lakes back to the pristine condition that it once was in.

This is a decent budget, good for the people of the Central Coast, good for Australia. I started this speech about the whole of the budget and the benefits to working people because I hear that those opposite want to drive a Ferrari through our responsible budget. The Liberals have gotten into their convertibles and are driving away from economic credibility as fast as they can. There are a lot of people doing it tough out there. In my electorate, we have the lowest median household income in New South Wales. The majority of families in my electorate are not talking about luxury cars around the kitchen table; they are trying to stay afloat. Peter Costello’s and Malcolm Turnbull’s inflation legacy is hurting. I know those opposite call it a charade, but ask anyone in the street whether inflation is hurting them at the grocery checkout and they will tell you inflation is a lifestyle-changing reality. They would certainly tell you where to go if you told them it was a fairytale, as some have recently suggested.

The luxury car bill increases the luxury car tax from 25 per cent to 33 per cent from 1 July 2008. The government believes that Australians who can afford luxury vehicles have the capacity to contribute to revenue at a higher rate than other car buyers. It is estimated that around 10 per cent of all new car sales—around 100,000 sales—in 2007 were subject to luxury car tax. This new rate will apply to all taxable supplies and taxable importations of a luxury car after 1 July 2008.

There are no transitional provisions or any other changes such as to existing exemptions for disabled persons. The relevant legislation already allows contracts to be varied to take account of changes to certain indirect tax rates, including luxury car tax rates. The government has increased luxury car tax as part of its plans to make the tax system fairer. Additionally, the measure is expected to contribute to the necessary task of ensuring the budget relieves pressure on inflation. This measure is expected to raise $555 million over four years.

Since 1979, successive Australian governments have taxed luxury vehicles more heavily than other vehicles. It is not a new concept. The luxury car tax was introduced on 1 July 2000, when the goods and services tax, the GST, was introduced and the wholesale sales tax abolished. Since that time there has been no change to the luxury car tax rate. Luxury car tax applies to cars whose GST-inclusive value exceeds the luxury car tax threshold of $57,123 for 2007-08. The luxury car tax rate applies to the GST-exclusive value of the luxury car that exceeds the luxury car tax threshold.

A car which is specially fitted out for transporting a person with a disability, seated in a wheelchair, is excluded from the definition of ‘luxury car’ and is not subject to luxury car tax, provided the car is not GST-free under GST law. This concession is available to any person, including a carer that modifies a car they purchase for a person with a disability, seated in a wheelchair, before the time of taxable supply by the dealer—that is, before the sale of the car. GST and luxury car tax do not apply to the value of any modifications made to a car solely for the purpose of adapting the car for driving by, or transporting, a person with a disability. Again, this concession is available to any person, including a carer, that purchases a car and modifies it accordingly. However, if the value of the unmodified car exceeds the LCT threshold then the value of the unmodified car will be subject to LCT.

A disabled veteran or eligible person with a disability can purchase a car GST-free up to a value of the luxury car tax threshold. GST and luxury car tax is payable beyond that amount, which is currently $57,123. This treatment would apply to a vehicle that is not modified but has been purchased to meet the needs of a disabled person because of the vehicle’s size or height. To qualify for this concession the disabled veteran must intend to use the car for personal transportation for two years or until the car has travelled 40,000 kilometres. To qualify for this concession the eligible person with a disability must intend to use the car for their personal transportation to travel to and from gainful employment for two years or until the car has travelled 40,000 kilometres.

Where the cost of a conversion pack is included in the cost of the car, when the value of the car exceeds $57,123—inclusive of the conversion pack—then LCT would normally be payable on the amount above the threshold. However, if the conversion pack is used to make modifications before the taxable supply then the cost of the modifications, including the cost of the conversion pack, may not be subject to LCT. If the conversion pack is purchased after the car is purchased from the dealer and then used to convert the car, the conversion pack is LCT and GST free. There is no evidence that the luxury car tax will increase car prices more generally. Nor will it disadvantage people with disabilities. The tax laws already provide exemptions for people with a disability from the luxury car tax.

Treasury has also consulted with disability groups to ensure they are not adversely impacted by the measure. All we are getting is scaremongering from the opposition in terms of this particular prospect, and that is something that cannot be accepted. Of the 20 top-selling cars in Australia, less than four per cent of those sold are subject to luxury car tax, and for the lower end the increase is in the hundreds, not thousands, of dollars. The so-called ‘Tarago tax’ only applies to one Tarago model, and the price increase is just over one per cent. The entire Tarago category—including the four other models that are below the luxury car tax threshold—are less than half a per cent of the passenger vehicle market.

We have seen nothing but carping from Dr Nelson and his heir apparent, Mr Turnbull—who has decided to join us here today—since the budget. We have seen a team that has lost its way, that is not quite sure what it believes. We should not forget that Dr Nelson is the guy who told a rally, and a television camera, that he had never voted Liberal in his life. He then said he had in fact voted Liberal before. This is the same person who urged Kevin Rudd to be tough to China regarding Tibet and then attacked him when he did just that.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Member for Dobell, you are referring to people by their first name, including the Prime Minister, the Leader of the Opposition and the member for Wentworth. I would ask you to refer to members by their title.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

This is the same opposition leader who was speaking to Alan Jones a couple of weeks ago—

Don Randall (Canning, Liberal Party, Shadow Cabinet Secretary) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order on standing order 104 and relevance. This has nothing to do with the luxury car tax.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

There is no point of order. The member for Dobell has the call.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

This is the same opposition leader who was speaking to Alan Jones a couple of weeks ago about his plan to use the coalition’s Senate majority to block the government’s plan on curbing alcopop consumption amongst young people. He said:

... my electorate is on the upper north shore of Sydney. They don’t sell a heck of a lot of these sort of products in my electorate.

The opposition leader, by his own admission, is disconnected from the problem—

Don Randall (Canning, Liberal Party, Shadow Cabinet Secretary) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order on standing order 76. The fact is that he is not being relevant to this debate. This debate is about luxury car tax; it is not about Tibet and other issues.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Mr Ripoll interjecting

PK6 Randall, Don, MPMr Randall—I will sit down when the Speaker sits me down, not when you—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Canning will resume his seat. This is a cognate debate on taxation and measures in the budget. I call the member for Dobell.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Mr Ripoll interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Oxley will desist from interjecting across the chamber. The member for Dobell has the call.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

The Leader of the Opposition is disconnected from this problem. They might not sell a hell of a lot of alcopops on the North Shore of Sydney but they certainly do in my electorate of Dobell on the Central Coast. They also sell a heck of a lot of them in Western Sydney and Newcastle. I challenge the opposition leader to travel up the F3 on a Friday or Saturday night and see the consequences first-hand of cheap and available alcopops and what effect they have on our youth. He may ask people in the shopping centre whether luxury cars are on the top of their agenda.

Don Randall (Canning, Liberal Party, Shadow Cabinet Secretary) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order. Standing order 76 says that a member must speak only to the subject matter of the question under discussion. He is not doing it. This is a luxury car tax bill and he is talking about alcopops.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Canning raises a point of order. I am listening to the member for Dobell. He did mention driving a luxury vehicle up the highway, I think. He did refer to alcohol as well. I call the member for Dobell but I would remind him that this is a bill about the luxury car tax and it is drawing a long bow to include other taxation measures in this debate.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. In relation to the interjection, what we are talking about are issues that are important to Australian working families—

Christopher Pyne (Sturt, Liberal Party, Shadow Minister Assisting the Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order. Under both standing order 75, relevance and tedious repetition, and under standing order 76, I would draw this new member back to the debate. We are all concerned about working families—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Sturt has made his point of order—

Christopher Pyne (Sturt, Liberal Party, Shadow Minister Assisting the Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

I have not finished my point of order, Mr Deputy Speaker. The bill is actually about, quite clearly, the Tax Laws Amendment (Luxury Car Tax) Bill—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Sturt will resume his seat. I have ruled under the previous point of order that this is a debate about luxury car tax. I have allowed the debate to continue and I would remind the member for Dobell of the points that have been raised regarding the luxury car tax. I bring him back to the debate.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. The point that I was making was that in my electorate there are far more important issues than whether the luxury car tax has been increased. In fact, in my electorate the issues that working families are concerned about are issues that this budget that the Rudd government delivered faces squarely and puts in place plans for for the future. Unfortunately, the reason that we have had to go at some length into some of the other issues in the budget is because of the carping opposition, because we are not sure what they are actually supporting; we are not sure what they are opposing. At this stage it looks like what they are trying to do is rip a $22 billion hole in a budget that is designed to alleviate the problems that working families in my electorate and around Australia have.

In fact, what we have is an opposition that does not know whether it is coming or going. We have an opposition that does not know whether it is supporting initiatives by the government or opposing them. One of the things I was looking forward to was hearing the shadow Treasurer speaking to see what position the government was actually going to take. (Time expired)

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

The member for Dobell will not often have his wishes so instantly gratified. He is wanting to hear from the shadow Treasurer and here he is.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

Yes, and late.

Malcolm Turnbull (Wentworth, Liberal Party, Shadow Treasurer) Share this | Link to 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—

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order that goes to relevance. The shadow Treasurer is going on about extraneous issues to the bill. We have not even heard from him yet whether the opposition supports or opposes the bill. He has been going for close to 20 minutes so far and we still do not know what the opposition’s position is in relation to this bill.

Mal Washer (Moore, Liberal Party) Share this | Link to this | Hansard source

The member is in order and has the call.

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

It is good to know that the Treasurer has some acolytes. Perhaps the member for Dobell will be next with the elevator heels and the boilersuit, joining in the chorus, ‘The people are happy.’ No doubt they will all be there, with flip cards, in the stadium. ‘How do you feel about a higher tax on cars?’ the Treasurer and the member for Dobell will say. They will say, ‘We are happy in this fantasy.’ That is not Australia. It might be North Korea, or perhaps a new capital of a fantasy world inhabited by the government—‘Swan Yang’ perhaps, an extraordinary place. An air of unreality overwhelms this team opposite us.

The position with competition is that it delivers lowest prices. That is what competition does. We see that throughout all of our experience. This will reduce competition and it is part of an attitude, an approach—a culture, if you like—of this new government that is against free markets and against competition. Yesterday we heard the Prime Minister say how appalling it was that, at the moment, petrol prices could change during the day. Just think about that: it is ‘appalling that petrol prices could change during the day’. You have to go back to the Soviet Union, you have to go back to Gosplan and Brezhnev’s era, to think of governments which would actually want to set prices and say that price movements are wrong. What have these guys learned? Nothing. The reality is that our society is so much more prosperous today because of freer markets, because of competition and because of microeconomic reform. The Labor Party, when it was previously in government, made a contribution to that, and I did not deny it, but now it is rolling that back.

I have been very careful not to give the member for Dobell the news that he seeks too soon, because I want to keep him here. It is important that he listens to all of this. He is on the edge of his seat now. He wants to know what our attitude to this legislation is. Well, we think it is very bad legislation. We will not divide on these bills in the House; this will be carried on the voices, but we will ensure that the bills are referred to committee in the Senate, because we want to carefully investigate the implications of this new tax on the automobile industry generally and on the people that maintain, service and sell these cars. We want to see what its impact is going to be on other vehicles, vehicles less than $57,000 and second-hand vehicles. When we have completed that investigation, we will respond, and we may seek to amend or we may oppose, but we will let the government know what our attitude is then. We need to be fully informed—unlike the government, which is so uninformed about this. On the very day it is seeking to rush it through the House, the government is announcing that it is going to review the tax. It is saying: ‘Come on, come on, you have to pass this bill. Hurry up. It is really urgent. But don’t worry: we’re going to have a look at it and we might change it and do something completely different.’ How ridiculous—talk about needing to make your mind up! The government has not made its mind up. It is riven by indecision and confusion on the matter of tax.

In terms of the approach that an opposition takes to government’s revenue measures—and again I say this for the benefit of the member for Dobell, who has left his seat again, so he will not be able to distract you, Mr Deputy Speaker—we have regard to the fiscal consequences of every position we take. If we propose a tax be cut, if we propose new spending or if we propose a new tax not be imposed, we recognise that all of that has an impact on the budget. All of it does. We take into account the implications for the bottom line of the budget in our considerations. We cannot rewrite the budget. In opposition it is not our job to do that, and we do not have the access to the information or the means to do it. But we do have very careful regard to the fiscal implications, the impact on the surplus, of any courses of action that we recommend—be they reductions in tax or be they new taxes that we oppose. We take all that into account, and there may well be—and almost certainly will be—some measures which we will not oppose in either this House or the Senate because, on balance, we take the view that we do not want to recommend changes that would have a greater impact on the bottom line of the budget. All of that has to be taken into account. It is not just a question of the merit of particular measures within the fiscal envelope of the budget. We recognise there is an overall impact on the budget, and that is something that we plainly take into account.

In conclusion, this new tax is one to which the government is not fully committed. They have undermined this new measure by the announcement today that they are going to review it even before the bill has passed the House, let alone the Senate. They are clearly undecided, clearly uncertain and clearly confused about this, as they are about so many other areas of tax.

It is not a tax on the rich by any definition. It is a tax that will be paid by people, whatsoever their income may be, who choose to buy a vehicle, for whatever reason, over $57,000. We in Australia believe that people should be able to make choices, make the priorities they choose within their own resources. This tax reduces choice. It penalises people who make the choice to buy a vehicle over $57,000. It seeks in a clumsy and ham-fisted way to further the protectionist agenda of the government, the end of which, as the member for Batman knows better than most, can only be higher prices. This is a measure of a government only six months in office but already deeply confused and deeply divided on this vital issue of tax.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to have the opportunity to speak after the member for Wentworth, having now heard where the opposition stands on this issue. As with many other issues and many other points of contention in recent weeks, the opposition is clearly choosing to embrace this brave new era, this bold new policy option, of neither supporting nor opposing. They were neither supporting nor opposing changes to their Work Choices laws. We now hear that they will not be dividing on this issue but they think it is bad legislation.

The member for Wentworth went through a whole series of criticisms of this tax, and I would like to go through and respond to those criticisms one by one. But I make the obvious point that the member for Wentworth seems not to be aware of: this particular taxation measure is an increase to a rate of a tax that is already in existence, a tax that has been in existence since the former government put it in place back when the new tax system, the GST, was introduced in 2000. Prior to that, taxes on luxury cars have been commonplace in this country since 1978.

Taxing conspicuous consumption of this sort is a matter that has never previously been the subject of the sort of contention that we are now seeing. That raises all sorts of questions about the commitment of those on the other side to delivering a tax system that delivers equity. It is all right to have an efficient system. It is all right to have a system that delivers the revenue that governments need for the outcomes they need to deliver in communities. There needs to be equity in the system, and the member for Wentworth has completely failed to take account of the equity considerations.

So we are talking about a threshold that was already in place. There is no suggestion that the threshold is being changed, but the tax that will be applied to cars on values above that threshold is to be increased. It is a sensible measure that is driven by the need to be economically responsible. That is the pervasive theme of the budget that this government has handed down. It is about delivering economically an economy that we know will sustain itself into the future, running a surplus that ensures we are not fuelling inflation, that we are taking the heat out of the economy so that we are not driving up inflation, which ultimately will drive up interest rates. We all know that interest rates and petrol prices are probably the two biggest factors currently squeezing the household budget. So the No. 1 objective in this budget is to demonstrate that this is a government committed to sensible economic management. We have delivered that and this important measure is part of that.

To oppose this, if those on the other side choose to demonstrate their intestinal fortitude by doing that, would be to leave a further hole in the surplus. To oppose this is to mount a continued campaign, a raid on the surplus, and the opposition seems intent on doing that. I commented yesterday in this chamber that I thought those on the other side were pretty good at spending money when they were in government. In fact all the figures show that they were spending money at a rate faster than we have seen in recent history. They were pretty good at it in government. But their capacity to spend money in opposition is unrivalled. Whether it be raiding the surplus for the 5c cut to the fuel excise or forgoing important revenue measures such as this, what we are seeing on the other side is that the fig leaf of economic responsibility they have hidden behind for so long is now being removed, and I must say that what is left for us to gaze at is not a very pleasant sight.

The member for Wentworth came in and said that the government is confused on the issue of taxation. It seems to me that he is rather confused on a range of matters, and taxation is one of them. I was interested to go back and look at an article that related to the member for Wentworth’s tax plan that he released a couple of years ago. In this brave new era under the new opposition I am interested to know how many of the particular proposals that were contained in that series of proposals now form part of opposition policy—to the extent that they have any policy. At the time there were some very serious critics of the member for Wentworth’s proposals. In particular I note that the member for Higgins was foremost amongst those critics, and he is a person whom those on the other side are very quick to cite as a beacon of economic management—

Christopher Pyne (Sturt, Liberal Party, Shadow Minister Assisting the Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. Under standing order 76 a member must speak only on the subject matter of a question under discussion, and there are a number of exceptions that do not apply here. This debate is about the Tax Laws Amendment (Luxury Car Tax) Bill and the luxury car tax imposition, general, customs and excise bills, and the issue of past policy discussions within the former government and the attitude of the member for Higgins are hardly relevant to this debate. If the member has not got enough material to sustain a debate on luxury car taxes he should not enter into the debate, and I would ask you to draw him back to the subject.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Mr Deputy Speaker, on the point of order: like the member for Sturt, I also have a good appreciation of the standing orders, having served on the Procedure Committee for a number of years. This is a wide-ranging debate. So far as I am concerned, the member is speaking to the bill. I would also remind the member for Sturt that the shadow Treasurer made a very wide-ranging contribution during which no points of order were taken. I simply say that if that is the approach of the member for Sturt with respect to these debates, then the same approach can apply to the member for Groom during his contribution. I ask the member for Sturt, through the chair, to exercise a little bit of give and take in what is a wide-ranging debate.

Mal Washer (Moore, Liberal Party) Share this | Link to this | Hansard source

Would the minister resume his seat. I call on the member for Lindsay to continue.

David Bradbury (Lindsay, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. The point that I was directing my comments to was that in the member for Wentworth’s previous contributions to the public debate on taxation policy he has put forward a plan—in fact, as the member for Higgins described it, it was not one tax plan, it was 280 tax plans. My interest is: to what extent did those 280 tax plans address this ‘grievous injustice’ that is being caused by the existence of the luxury car tax? I say that because the luxury car tax is, as I mentioned, already in existence. This measure is designed to increase the levels at which that taxation is to be recovered by the revenue. It is an increase in the tax; it is not a new tax. So all the bleating coming from those on the other side raises the question: if it is such an unfair tax, if it is a tax that feeds into this growing sense of the politics of envy and the economics of envy, why did they introduce it? Why did they introduce this tax back in 2000 with the new tax system? Why did they introduce the first tax on luxury cars back in 1978, when the former member for Bennelong was the Treasurer? The answer is simple, and that is that there is consensus—or there has previously been consensus—that it is not unreasonable to tax conspicuous consumption of this sort.

I have not heard an argument from the other side that the threshold is pitched at an inappropriate level. There is no suggestion that it needs to be moved, and there certainly was no suggestion of that when they were in government or, presumably, they would have done that. However, we are finding more and more that all of these ‘great ideas’ they are bringing forward are ideas that they had the opportunity over 12 years to implement but chose not to get around to doing. Perhaps that is what it was—they just did not get around to it. Well, we are not in the business of getting around to doing the things that they failed to do. We are here to do a job, and that is to deliver an economy that will be run like a finely tuned car, an economy that will deliver for working families and all families and individuals across this country. The best way we can do that is by running a tight budget, by ensuring that we secure a $21 billion surplus. And we will fight every attempt from those on the other side to raid that surplus because, in doing so, we will be standing between them and the interests of working people in this country. We know that every time they go in and raid that surplus they will be putting more pressure on inflation. They will be putting upward pressure on interest rates. I am absolutely determined in representing the interests of the people in my electorate that we will do everything we can, to the extent that that is within the power of government, to minimise any inflationary implications of our policies to ensure that we are taking pressure off inflation and that we are not driving up interest rates.

Let me turn my attention to some of the specifics of this particular initiative and respond to the member for Wentworth’s arguments. In particular, let me begin with the ‘family size’ argument. I was enlightened by this. It is something I do not know a lot about because I have only got four children! With the birth of my twins a few years ago, my wife and I had the task of finding a new car because the sedan just simply would not fit the six of us. So we went out to do so, and I have to say that the luxury car tax, even at the existing threshold—which is not proposed to change—was not something that had any bearing on the decisions or the choices available to us. The so-called ‘Tarago tax’ only affects one particular Tarago, one particular people mover, and that is if you upgrade it to the very highest level. What about the Kia Carnival, which happened to be our family’s car of choice? That is well and truly below the threshold. And there are many other options. It is curious that it seems to be those who do not live with the same realities of everyday life as the people in suburbs around this country who are driving this notion that the only car a large family could ever buy would incur the luxury car tax. If that is the suggestion coming forward, let me debunk it here. It is ridiculous to suggest that.

Let me move on to the argument about the environmental issues, that this is a tax on those seeking to pursue the environmental option and have a car that is more environmentally friendly. In my experience, most people in my local community looking for an environmental option might look at a Prius or they might look at doing certain things to their car to make it less dependent on petrol or—and I hear this very often—they might look at a smaller car. They might go for a Daewoo Lanos or a Hyundai Excel. They might go for one of those cars that is a little bit less hungry on the juice, on the petrol. None of those cars are above the threshold that is in question here. In fact, the member for Wentworth comes in here and holds up the Prius. ‘The hybrid or the Hummer,’ he says, ‘will be taxed at the same rate.’ Well, if you went and bought a Prius you could buy it for less than that threshold. Unless you bought some fairly significant upgrades to the vehicle, you would be able to buy yourself a Prius without incurring the luxury car tax. These are the sorts of fallacious arguments that those on the other side are left to hide behind. They are opposed to this because they do not believe in it, but they are also too embarrassed to stand up and vote against it. I think that is the message from what the member for Wentworth has indicated.

Can I respond to this issue of free markets. It is just so interesting to see the member for Wentworth come forward and say, ‘Change of government at the last election: we now see Soviet-style intervention in the marketplace. Gone are the days of the free market!’—no doubt favouring the vision of the invisible hand of the marketplace turning the key in the ignition of some wealthy person’s Lamborghini. The issue here is that there is nothing strange about what is occurring or what is proposed in this legislation. If the member for Wentworth believes that a luxury car tax is an attack on the free market, that it is old-style socialism, then perhaps he might have taken the opportunity when he was last in government to raise that with his Prime Minister, the former member for Bennelong—the Prime Minister who presided over the introduction of the New Tax System and the GST which introduced this luxury car tax. Or perhaps he might have raised it with the former Prime Minister, the former member for Bennelong, who was the Treasurer in 1978 when the first tax on luxury cars was introduced.

I have heard the former Prime Minister, the former member for Bennelong, called many things. In fact, on occasions, I might have been guilty of contributing by calling him the odd thing myself. I have a lot of respect for him, but one thing I would say about him is that I would never, ever call him an old-style socialist. There are plenty of things I would call him, but I would not call him that. But the member for Wentworth is armed with his 280 or so tax policy responses, which may or may not form part of the opposition’s tax policy when they get to the point of actually telling us what it is beyond a 5c reduction on the excise on petrol. We all know that will raid the surplus of $8 billion over the next four years. With the exception of that particular initiative, we really have no detail about whether or not those 280 other policy initiatives will form part of the opposition’s proposals or whether we just have to wait, like for most things, until they tell us between now and the next election.

The reality is that this tax measure is an important contribution to our overall economic strategy. It is an economic strategy that is focused on ensuring that we secure a significant surplus, a $21 billion surplus, which will take some of the heat out of the economy and, importantly, take some of the heat out of that part of the economy where people are not under the sorts of pressure that we are experiencing in many parts of this country. Yesterday we had many wide-ranging debates about the impact of petrol prices. The Leader of the Opposition came forward in his usual bleating way, standing up for those people suffering from fuel prices. I know that people are doing it tough with fuel prices, and I am very sympathetic to the difficulties that people, particularly in places like my electorate, are struggling with, and the challenge of rising fuel prices.

We had the Leader of the Opposition coming in yesterday, bleating about how hard it is on those people trying to fill up their tank. He did his tour of the country, and he almost broke down in tears about the poor old lady, who I have sympathy for, who was struggling to fill her tank up with $30. You cannot—or it is certainly difficult to—provide relief to people who are doing it tough, who are really confronting the challenges of everyday living and going from one day to the next ensuring that they have enough fuel in their tank, a roof over their head and some food on the table and deliver a budget that is true to the best interests without choosing to take some austerity measures.

And if we have to start to impose some austerity measures then I have no difficulties at all in supporting a measure that says that in the present climate, if you have the capacity to buy a car that is worth more than $57,000—which, in my language, is a lot of money—then that is a lot of money for a motor vehicle. I am not saying that there are not plenty of people who spend that money, but it is a considerable amount of money. To make that decision, to take that choice in the current climate, suggests to me that those people who do that are not the people living from hand to mouth on a day-to-day basis. It is not about the politics of envy; it is about saying that if people have the capacity to pursue conspicuous consumption in that way then perhaps those people should bear some more of the burden in managing our economy, in delivering the economic recipe that is required in order to have a budget that retains a strong surplus, takes pressure off inflation and keeps interest rates low.

This is just one measure, and we are still to see whether those on the other side do end up voting against it. They have announced a whole cavalcade of proposals that they intend to block, but the thing they have not said is where they intend to find the additional revenue to compensate for the revenue forgone on the revenue and savings measures that we have announced. Where do they intend to find the money? I know that, with the irresponsibility that opposition brings, they can choose not to address that issue. But if they do that then they will have to do that in the knowledge that members such as I will be going back to our electorates and marching around every corner of this country to shine a light on the economic irresponsibility of those opposite. To the extent that they once enjoyed some superiority on that point, we are determined to make sure that that never happens again. That is why this is a sensible measure, it is an economically responsible measure, and it is one that I have no difficulties at all in supporting. I am hopeful that it will receive the support of both houses in this place.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

I listened carefully to what the member for Lindsay said. I think he was talking about the same bill that I am about to talk about, the Tax Laws Amendment (Luxury Car Tax) Bill 2008. There was a great deal of rhetoric and some of those wonderful old catchphrases. And I must say, as someone who was a farmer during the days of the Hawke-Keating era and watched his livelihood obliterated by high interest rates, it gladdens the heart of this old farmer to hear the words coming from the Labor Party that all of that is a thing of the past. They are vitally interested in lowering inflation, when inflation ran at six per cent last time they were in government. They are vitally interested in keeping interest rates down, even though interest rates when they were last in power peaked at in excess of 22½ for farmers. They are vitally interested in fiscal responsibility and budget surpluses, even though when they left government last time their budget deficit was in the tens of billions of dollars—I think $12 or $15 billion, from memory, was the budget deficit we inherited.

I sit here and a smile hopefully that all this rhetoric we are hearing from the other side will actually change for the good for the long term and that never again will we see small businessmen and business women obliterated by a shocking lack of understanding of economics. Despite all that, I still have a lingering doubt. I still see signs of the Labor Party of the past. I still hear words that alert my inner senses when they talk about taxing conspicuous consumption. Is someone who lives at Gunnedah, Goondiwindi, Birdsville or somewhere in the outback or on a blacksoil plain and who buys a four-wheel drive vehicle worth more than $55,000 guilty of conspicuous consumption? It sounds like they are. Are they guilty of conspicuous consumption if they need that vehicle to get their children to school every school day and so that they can get out their front gate every working day if it rains, or if it is so dry that the bulldust is knee-deep? It sounds like they are. And if they are guilty of conspicuous consumption then there is only one thing a good Labor government can do and that is tax the living daylights out of them!

We were asked by the member for Lindsay what we believed about this bill. I will tell you one thing I believe in, and I know the opposition believes in: we believe in lowering taxes. That is our record. That is the record of the previous government in the 11½ years that we sat on that side of this parliament. We lowered taxes. We lowered taxes for ordinary Australians—not just for working families but for ordinary Australians. Whether they were self-funded retirees, single professional people or single unskilled people, Australians enjoyed a lowering of the tax rates. Already we have seen that process reversed under the new government as they speak about fiscal responsibility and the need to produce a balanced budget and how we need to take some heat out of that part of the economy that can afford it. That is code for saying that if anyone does well and buys a vehicle worth more than the threshold, a vehicle worth more than $57,000, no matter what the reason, whether it is aspiration, a luxury or a necessity, they are automatically dumped into the category of the people in the economy who can afford to pay it—good old Labor Party tax-’em-whenever-you-can-get-at-’em theories that have come home to rule in this budget.

We had a great deal of build-up to this budget, a lot of hype. A government renowned for spin spun about as hard as you could spin anything. In fact, if it were cotton or wool you would have had not just yards but miles. There was so much spin that you would have had enough yarn to go around the earth a couple of times. But, when the Treasurer actually stood up at the dispatch box and displayed the budget, we found that it was just the same good old Labor Party budget: a high-taxing, high-spending budget. They are the ones who, when they were last in power, took Australia to where we went with regard to the economy, perhaps at the beginning with good intentions. We saw what happened last time they were in power and we are fearful that that will happen again.

Whenever anyone from that side of the chamber speaks, I continually hear words about a new tax they are introducing—and this is a very significant increase in a tax, from 25 per cent to 33 per cent. I hear words flow out about how we have to be responsible, how we have to maintain a surplus and how we have to make sure we continue to fight inflation and keep interest rates low. Of course, that is what the previous government did. It is not what the previous Labor government did but it is what the previous coalition government did. The Labor government seem to think that that sort of aspiration, that sort of mantra, is a carte blanche to put the taxes up wherever they can, wherever they think they can get away with it politically.

This increase in the luxury car tax is a sign of a tax-hungry government, a sign of things to come, a cash-grab against 105,000 vehicles owned by 105,000 working Australians. Why you decide that these working Australians are part of the economy that can afford it, as the member for Lindsay said, and that they should be taxed for conspicuous consumption, is beyond me. I think it is fair enough to have a luxury car tax. I think it is fair enough that there will be vehicles that people see as something they need and that they are able to afford and that therefore there is a 25 per cent extra tax on them, but there is no justification on the basis of conspicuous consumption, as the member for Lindsay put it, to increase that tax so substantially.

Some issues have been raised about the way in which cars in this category will be taxed the same whether or not they are environmentally friendly. I have to correct the member for Lindsay, who seemed to think there were no hybrid cars in this category. In fact, there are, of course; there is hybrid technology. If we look forward into the future of where motor vehicle production is going, there will be cars in this category of both hybrid and diesel technology that will be forced to pay the increase in this tax. There will be families in Australia who will be forced to pay this increase in tax simply because they need the vehicles, want to buy vehicles that have the latest diesel technology or need the size or capability of a four-wheel drive to get to work or to take their children to school.

We have seen repeatedly this idea in the minds of the Labor Party that nothing exists outside capital cities. The Prime Minister is still yet to deny that he made a comment saying that once you get outside Brisbane you can hear the banjos playing. Apart from taking deep offence to that comment, I can say that when a working family in an area outside Brisbane decides to buy a four-wheel drive they do so, in more cases than not, on the basis that they need a reliable means of transport. To call them ‘that part of the economy that can afford to be taxed at a higher rate’ is an affront to them in a double sense; having insulted them by insinuating that they are some sort of hillbillies, you then hit their pocket as hard as you can.

We are going to see from this government more increases in more taxes. There is no doubt in my mind, having listened to the debate since the budget and to where this government is targeting its attacks, that it will be increasing the taxes to those that it deems as being able to afford it. The member for Lindsay said that we need to be able to help those who are living hand to mouth on a day-by-day basis. It would not be those people, he said, who are buying vehicles worth more than $57,000. I suggest that he take another look at that. I suggest that, if he does not want to leave his own state, he just drive west, go into the member for Calare’s seat and talk to a few farmers out there—people pulling sheep out of drying dams and staring at barren paddocks which should be ankle deep in wheat. Ask them if they are living hand to mouth. Ask them if they matter. Ask them if they are guilty of conspicuous consumption. Ask them if they mind being part of the economy that can afford being taxed some more for the vehicle they use to get their kids to school. I would like to be there when the member for Lindsay does that, because he seems to have some preconceived position that the only people living hand to mouth are in his electorate or in metropolitan electorates. I accept that there are those people, but they live everywhere in Australia. They live in the electorates of Groom, Calare and Kalgoorlie and in inner suburban seats, such as those held by the likes of the member for Grayndler.

But just because someone drives a vehicle worth more than $57,000 does not mean they are an automatic candidate to have their taxes increased. Some of the people in the member for Calare’s seat are so not guilty of conspicuous consumption that they have not even been able to pay income tax. They dream of paying income tax and of having an income high enough to pay income tax. Perhaps when they reach that threshold and move forward far enough with a string of good seasons—which I, like every farmer and ex-farmer, dream of seeing—they may be guilty of some conspicuous consumption and of enjoying life a little. We know what happens then if you have a Labor government; you are going to get taxed some more. You are going to be part of that part of the economy that can afford it. In a perverse sort of way—and I am sure the member for Calare agrees—I hope that happens. I hope these people one day are guilty of conspicuous consumption.

If that time coincides with a coalition government they will find something very different happening. They will find a government in place, unlike the government now in place, committed to lowering taxes and to taking the burden off those people who achieve, who aspire, who want to be more successful than they are now and who want their children to be more successful than they are now. They will not be looking over their shoulders every minute of the day wondering what tax they are going to face next just because they have succeeded.

One hundred and five thousand people, most likely 105,000 families—people who aspire to increase their wealth and aspire to a better standard of living—are going to pay more tax as a result of this bill. They are the culture of aspiration and the people that the previous government encouraged. We wanted everyone to increase their wellbeing. We as a government saw increases in real wages of 20 per cent. That is a pretty stark contrast to what we saw from the previous Labor government, where real wages fell, despite the efforts of the minister opposite, the Parliamentary Secretary for Defence Procurement. Having been part of a union in my past life, good luck to you; you have done a great job in that profession. Along with strong union movements, the best way to increase wages is to increase the economy, and that is what we did. We increased real wages. Then, having increased real wages, we lowered taxes. We are seeing here a reversal of one part of that trend already and, with other parts of this new government’s policies, we will probably see a reversal of the other. Already we have seen a budget handed down that is forecasting job losses—I cannot say that I have seen that before—which must have been a bit of a shock on budget night to the working families that this government claims to represent.

The luxury car tax bill is an indication of more to come from the Labor Party. Despite their best intentions—despite the practice that I know the Treasurer will have subjected himself to and despite the pretence of economic conservatism that they have embraced, along with the rest of their spin—deep down they are the same Labor Party. They are the same Labor Party that increases taxes wherever they think they can until they reach a point where they just have to increase taxes for everyone. We are in the middle of a very important debate about petrol, about the price of petrol, about whether or not the price of petrol should be lowered by 5c a litre and about whether or not government should accept some of the pain that drivers—and not just the drivers in this category—of motor vehicles in Australia will experience. We know that the Labor Party has form on fuel excise. We know when the budget got so stretched they introduced not a 5c a litre cut but a 5c a litre increase. That is where it ends up. This is a sign of things to come. It is a sign of a tax-hungry government who have pulled this one out of the air. They did not tell the electorate in the election campaign, ‘One hundred and five thousand of you who buy vehicles this year will be paying increased tax.’ This was not part of their election policy. They have decided that they now have to embark on a process where they tax those people who, in the words of the member for Lindsay, are ‘conspicuous consumers’. This will be something we will see a lot more of.

We are opposed to increasing taxes. As an opposition we are opposed fundamentally to that. This legislation is bad legislation. This tax grab is a bad tax grab. This issue has not been thought through. The Labor Party admitted that this morning. There are so many reviews running that I am amazed the Prime Minister has to set up another one, but apparently—or so I have read in the paper—he is going to review what impact this luxury tax will have. I will be interested to see what that says. I will be interested to see what the Senate says. This is bad legislation, this is a bad tax and this is a sign of things to come.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills. I think it is reasonable for us to ask what is going on in this government. Two weeks ago the Treasurer in his budget announced the new luxury car tax. Yet today, if we are to believe what we read in the Australian, it is going to be sent off to the Henry review anyway. We really need to ask ourselves: why we are here debating this? What is the extreme urgency to get this measure through parliament today when apparently it is going to be leisurely reviewed over the next 18 months anyway? Apparently there is a newfound concern within the government. We have seen over the last couple of days that they do not like taxes on a tax. Apparently they are going to review the GST on petrol excise and they are going to review this tax because it is a tax on a tax. They are very worried about taxes on taxes. I will wait with bated breath—and the opposition will wait with bated breath—for the government to start to review taxes on taxes when it comes to the GST on alcohol and the GST on duty imports.

We are seeing, with measures such as these—which apparently before they are even passed through this parliament will be reviewed by the head of Treasury—a government that really do not have a clue on tax policy. They are really just making it up as they go along. Their position appears to revolve around whichever public persona the Prime Minister is trying on on any given day. We really need to ask ourselves, when he wakes up in the morning: ‘Which Kevin do we have today? Do we have Kevin-the-caring?’ That is the Kevin who rails against the fundamental injustice of the most comprehensive tax reform that had occurred in this country for many decades. That was the tax reform that ushered in a new era of simplicity, the new tax system that was passed during the coalition years. This is the same Kevin—Kevin-the-caring—who was so concerned about the economic reforms of the Howard and Costello years that he labelled Australia a ‘brutopia’ under their rule. I note just in passing that the ‘brutopia’ phrase, like so much of the Prime Minister’s work, was directly plagiarised from somebody else. One day we might have ‘Caring Kevin’, worried about Australia’s brutopia and railing against fundamental injustice, or we might have—

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. We have indulged the member opposite in the use of the Prime Minister’s Christian name on a number of occasions, but it would be appreciated—and appropriate, I think—if he addressed him as the Prime Minister.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

In response to the point of order, the honourable member will refer to the Prime Minister by his title.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I was just noting that we have a Prime Minister who likes to try on different political personas. It is very difficult to know which persona he might be wearing on any given day. He could be the caring Prime Minister, worried about the Howard-Costello years and about how they turned Australia into a brutopia with the economic reforms that were so necessary to get this country moving, or we could have a conservative Prime Minister—that is, a conservative Prime Minister who now believes that the brutopia that 18 months ago he was so worried about actually never went far enough. That is the hairy-chested economic reformer that he has turned himself into. Now he says the coalition years, the years of brutopia, were wasted years and that if he had been in power things would have been different, economic reform would have gone further.

The reality is that what we see from this Prime Minister and his different personas, whether they be caring or economic conservative—and always what you see with this government, of course, is not what they tell you—is that he is more political charlatan than conviction politician. What you see is never what you get with the government. The reality is that we really have a clueless Prime Minister, a Prime Minister who has no strong convictions about how to run an economy, a Prime Minister who has absolutely no strong convictions about how to structure a tax system. And this is why we found the government veering all over the place on economic and tax policy. This is a government that have now taken to preaching about the benefits of competition while they are trying to impose a nationwide system that fines independent retailers for lowering the price of petrol. They are so pro-competition they are going to fine a small business in my electorate for reducing the price of petrol.

This is a government that has now taken to preaching about the virtues of a simplified taxation system, although, in opposition, it opposed all of the necessary tax reform measures that were pursued during the Howard-Costello years. So it preaches the virtues of simplified taxation while it continually takes some ad hoc measures that add complexity and confusion to the system. We have a government that has started to preach that it believes in free markets and lower taxes while it brings down a budget that increases government spending and, for the first time in many years, increases the tax take on hardworking Australians. We have a government that now apparently believes in aspirations. It believes that Australians should work hard to get ahead, while it has measures like this that stoke old-fashioned class envy.

This is the problem when the government is led by a man who has no political convictions, a man who has sat in this place for 10 years and left absolutely not one discernible ideological footprint. This is deeply problematic.

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order of relevance. There has been some discourse this morning about some of the speeches that have been made and the legislation that the speeches are intended to be directed to, and it would be of utility to the House if the member opposite came to address the matter at hand here—that is, the luxury car tax bill. We are hearing quite a wide-ranging and rather peripheral address on a range of issues. Addressing the subject matter would be useful.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The honourable member will address the matter before the chair.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker; I know you would have been listening to the debate previously, and you would have heard members’ contributions to this debate that have ranged very far and wide, particularly on the government side. But I do thank the member opposite for his guidance.

I think the reason why having a Prime Minister who has no political convictions, who apparently just likes to try on different political personas, is so problematic is that we also have a Prime Minister who insists on centralising all power within his own office. This is deeply problematic when you have no core beliefs of your own to guide you. This is why we get this split characteristic from the government. This is why you get confusion from the government about the direction in which it wants to head. This is a government that is now so disorganised that we have to make these decisions in the parliament at the very last minute. Of course all of us in this place know why. We all know that nothing moves within this new government without the imprimatur of the Prime Minister or his office. We all know that decisions are not taken without him actually taking them. This is a Prime Minister who insists always on having the final say about the whole raft of policies that are associated with being an effective Commonwealth government.

Leaving aside that that style is going to be extremely problematic in dealing with something as complex as the government of Australia, I want to move to why we are discussing this bill today. We have a government that is absolutely desperate to change the story. It is doing what it does best, which is, of course, prioritising spin, eschewing any substance. It is doing what it does best. It is trying to change what is a very bad story for this government, so it is rolling out its specialty—spin. For six months this new government has been able to float along—there is a reasonably compliant media. I think Australians, when they change government, are always willing to give the new government the benefit of the doubt. But this week, since the budget, we have found that this government actually has to govern. It has to do things beyond just symbolic measures; it has to make decisions. It has to try to improve the lives of the Australian people. There are no guiding principles for the government. It has a Prime Minister, a leader, who is a political charlatan. It has a Prime Minister with absolutely no convictions. It has a Prime Minister who just likes to try on different personas—be it hairy-chested economic reformer or caring Prime Minister worried about how far economic reform has gone. This is why it is very difficult to get an idea about the nature of this government, and we see that with the policy we are debating before the House today.

As I said, we are debating it because the government is very keen to change the story today. It is very keen to change the story about the fact that it has a Fuelwatch scheme that is aimed at implementing one of its election commitments, which is to bring down petrol prices in Australia. We have had the scheme—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! I ask the honourable member to come back to the question before the chair. The bill is rather narrow in what is before the chair and, though a wide-ranging debate, the honourable member has been there without mentioning the matter that is before the chair. I ask him to come back to it.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. What we are debating today, this increase in the luxury car tax, is a tax grab, and I really wanted to link it back—and I think this is very important—to the price of fuel. I think that is very germane when we are talking about increasing taxes on luxury cars, including hybrid cars I might add. The reason I would like to talk about this is that we have a government that promised the Australian people that they would bring down the price of fuel. They have now been called on that; they need to implement that promise. And, in doing so, they needed to come up with something to say, ‘Look, we’ve implemented this promise, we’ve tried to bring down the price of fuel.’ They have come up with this Fuelwatch idea. It is a plagiarised idea, like so many of this government’s ideas; it is an idea they have stolen from Western Australia. It has been tried in my home state for the past seven years. If you are a Western Australian, you have some idea about the effects of this policy. Certainly retailers and consumers in Western Australia know that this is a policy that has ultimately and spectacularly failed to bring down petrol prices in Perth and in Western Australia.

I want to outline to the House why we are debating this legislation today. It is because we have a government that is very keen to change the story from the fact that its Fuelwatch scheme—the grand plan that it has to implement its election promise to bring down fuel prices—has been roundly panned from within its own ranks. It has been panned by the Minister for Resources and Energy. What the energy minister had to say was that the scheme was uncompetitive—

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I ask you to ask the member to direct his remarks to the legislation the House is debating.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The honourable member will come back to the Tax Laws Amendment (Luxury Car Tax) Bill 2008, which is before the parliament. It is a narrowly defined bill and the honourable member is really going outside that limit. I ask him to come back to the bill.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

This has been a very free wheeling and wide ranging debate so far. Of course, the price of petrol is very germane to a tax that will increase the price of hybrid cars in Australia. I do think that these two things are very closely linked.

The government are just feigning concern about petrol prices. They often raise an issue that they are concerned about—and they raised these issues in the lead-up to the last election—and say that they will do something about the issue. They then come up with some sort of stunt, they make some gesture to show that they care and then they move on to the next thing without ever addressing the problem that they first identified. I think that style is going to wear very thin with the Australian people.

The reason we are debating these tax increases—and some other bills that are essentially being rammed through the parliament today—is that the energy minister has blown a hole in this scheme that the government is proposing to bring down the price of petrol. This will flow directly on to people who will go out to buy a hybrid car and find that that hybrid car is more expensive because of the policies of this government. I want to remind the House, because I think it is terribly important, of what the energy minister actually said about this Fuelwatch policy, a policy that will make hybrids more expensive—

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. It is the same point of order: we are still waiting for the member for Stirling to come to the question before the House in relation to the luxury car tax bills. Despite your previous guidance, we are yet to hear a single comment about it.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

You keep interrupting me. It is very hard for me to get to the point.

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

I think it is you, not us, having the difficulty getting to the point. It would be appreciated if that direction were reinforced and the member opposite would come to the point.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

I will ask the member for Stirling, without any help from the other members in the House, to come to the matter of the luxury car tax, which is the subject of the taxation legislation that is before the House at the moment.

Michael Keenan (Stirling, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

As I have said in the past, this is a tax that will, astonishingly and against all the pronouncements of the government and the things that they pretend to care about, increase the cost of some hybrid vehicles in Australia. We have had a lot of noise from the government about how important they think the environment is. They want Australians to produce a hybrid car.

But hybrid technology is very expensive. What we are finding with this bill is that the government will make it even more expensive for Australians to access that hybrid technology. Therefore, they will be driving around in cars that are powered solely by petrol. That petrol is getting more and more expensive. There is great concern about it within the community. This is concern that was stoked by the government in the lead-up to the last election and is echoed throughout the whole community. The problem the opposition has with this scheme that the government are proposing to address is that, even from within their own cabinet, they believe that it will make the problem worse.

This is quite extraordinary. We have a government that professes to care about petrol prices; meanwhile, it is going to impose a policy on the whole of Australia—it is already imposed in Western Australia—that will make it illegal for small retailers in some instances to lower the price of petrol. That would be fine if you could afford to access some of this hybrid technology. We have the luxury car tax bill, one of the many new taxes that are contained within the budget, that is going to make that harder for the average Australian. I think that is a shameful thing.

The coalition believes in lower taxes. It is part of our political DNA. We do not know what is contained within this government’s political DNA, because it is a government that rests solely on the whims of the Prime Minister. We have a Prime Minister who has never revealed to the Australian people what his political DNA is. What are his core beliefs? Is he a hairy-chested economic reformer or is he a soft and cuddly Prime Minister who is worried about Australia being a brutopia?

This is the problem, I think, and why we see them veering around on economic policy and veering around on tax policy. The government say publicly that they believe in aspiration, but then they troop in and talk about this bill as though buying a top-of-the-range Holden—a Calais or a Statesman—or a Tarago is somehow conspicuous consumption and is somehow an affront to their values. This is the problem when we have a government so centralised in the character of a man who has never actually been fully revealed to the Australian people.

This is a bad bill. It contains bad measures which will harm ordinary, decent, hardworking Australians. It has been dressed up as a bill that stokes the old class war. This is one of the things about the Labor Party: you always need to look at what they do and not what they say. It is not a government that prizes aspiration; it is a government that wants to point at people who have gone out and bought a Calais or a Tarrago, saying how outrageous it is that they are involved in this sort of conspicuous consumption. It is a bad measure and is one that I believe reveals the nature of this government. And that nature reveals a government that really has no core beliefs, a government that is veering around hopelessly on economic and tax policy and a government that will be condemned for bringing measures like this before the parliament by the Australian people. (Time expired)

Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | Link to this | Hansard source

I too rise on the opposition side to put on the record our strenuous objection to the way in which this process has been brought about by the Rudd Labor government. The introduction of the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and associated bills really demonstrates in a number of respects a bastardisation of the process when it comes to the way in which the Rudd Labor government is going about conducting itself.

As the shadow minister for tourism and small business, I have spoken to so many tourist groups and so many small businesses that are very angry at the way in which the Rudd Labor government has brought about the introduction of this new higher tax level without even consulting the tourism industry or the small business sector. It is extraordinary, because we see today in the Australian how this Labor government does not know whether it is Arthur or Martha. We heard the previous speaker talk about how the Prime Minister does not understand whether he is Arthur or Martha. No surprises then that, as a direct consequence of a prime minister who is so busy engaging in media spin, the government does not have any understanding of what its policy position is going to be. The case in point is illustrated in today’s Australian where we see that only two weeks ago or thereabouts the Labor government heralded its budget as being some great revelation, a budget that was going to change Australia to reform it to the Labor mould and a budget that was going to put downward pressure on inflation even though in reality most respected economic commentators recognise that this budget will actually put upward pressure on inflation.

The bill we are discussing today is directly a case in point. This new tax that is being introduced by the Labor government is going to put upward pressure on prices, and that apparently is anti-inflationary. That apparently is Labor’s solution to putting downward pressure on inflation, by increasing prices. We see it in so many instances. We also see upward pressure on prices as a result of what fundamentally, when you get to the brass tacks of this Labor budget, is a budget that is the traditional Labor Party budget: big-spending, big-taxing Labor. That is what they did throughout the first half of the 1990s. That is what they did from 1983 until 1990. It is big-spending, big-taxing Labor all over again. The difference this time, though, is that they have moved into government at a time when after 11 years the coalition put the Australian economy very firmly and very strongly on the record as one of the leading economies throughout the world. Labor left us with $96 billion of debt last time they were in office and we paid that off in full. We reduced taxes in the last seven budgets. And what do we get from the new Labor government? In their very first budget an increase in taxes. In fact, when you look at the increased taxes that the Labor government have introduced, you see that revenue over the forward estimates under the Labor government is anticipated to increase by $19.5 billion.

We heard as recently as yesterday the reckless Treasurer that Australia now has, in the form of the member for Lilley, saying that the Labor Party were responsible because whenever they increased spending they cut coalition policies. My feeling is that if that were true that would be okay. But what we actually see in the government’s budget is that Labor cut $15.2 billion off coalition spending programs, and that is a good thing. But they increased spending by $30 billion. So this much-vaunted budget was going to cut spending and put downward pressure on inflation, and they stand up and say, ‘We have cut $15 billion of coalition spending.’ That is fine if you had left it at that. But what we actually see is that, although they have cut spending by $15 billion in terms of coalition initiatives, they have increased Labor spending by $30 billion. Likewise, we see that there is $19.5 billion of increased revenue because this Labor government is putting up taxes for the first time in many years. They are putting up taxes despite the fact that the Australian economy has basically never enjoyed so much economic sunshine. The first act of the Rudd Labor government is to put up taxes, and it is an absolute disgrace. It is a disgrace because of the unintended consequences—or perhaps they are intended; I am giving the benefit of the doubt to the Labor government—of these increased taxes.

Some examples are most strongly felt in Australia’s tourism export business. Tourism exports are a key part—

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

I raise a point of order, Mr Deputy Speaker. We do seem to be straying a trifle from the subject of tax law amendments on luxury car taxes. I appreciate that the generalities about higher taxes may be within the debate, but a discourse on the tourism industry seems to have stretched the point beyond the chair’s indulgence, I would suspect.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

The matter before the chair is the luxury car tax imposition bill. It is a narrow bill and I ask the honourable member for Moncrieff to address the bill.

Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | Link to this | Hansard source

I am very directly addressing the legislation and it is very clear that the Labor Party has no idea on tourism. Let me explain for the benefit of Labor members in the chamber or watching on TV the way in which the luxury car tax will impact very directly on tourism. The member for Denison should perhaps listen. He displays his ignorance by raising that point of order. Those operating in the tourism business rely on so-called luxury cars to run their businesses. Let me make it very clear. When tourists come to this country, for example to visit the Blue Mountains in New South Wales, they often like to take four-wheel drive tours of the national parks. They do those tours in four-wheel drives—four-wheel drives that are over the luxury car tax threshold. In no way is this on the margins of this bill. In no way is this not relevant to this bill. It really underscores how little the Labor Party understand tourism in this country that one of their own stands up and says: ‘What has luxury car tax got to do with tourism? We’re taking it a little bit far now, Mr Deputy Speaker.’ No, we are not taking it very far at all. This is front and centre of the debate, and the interjection by the Labor member at the table demonstrates that Labor simply do not understand the impact of their taxes. That is exactly why the opposition are taking this opportunity to put on record our concern over this whole process and that Labor do not even know the consequences of their actions. If that interjection illustrates one thing, it illustrates how important it is that the Labor government start to understand the consequences of their actions. That is the reason why we are going to refer this bill to a Senate committee.

It is very clear that Labor have no idea about the negative impacts of their policy changes. You can almost see them sitting around the table at ERC, saying: ‘We need to cut spending but we also need to raise taxes; what can we hit? I know: let’s package up the luxury car taxes in some way so that we can slug the rich’—the undeserving rich, as the Labor Party like to refer to them, not expecting or anticipating or, most importantly, understanding that, in making changes with the so-called luxury car tax, they have in fact had a negative impact on Australia’s tourism industry, which at the moment is facing some of the toughest conditions it has ever faced. With the Aussie dollar nearly at parity with the US dollar, with international destinations around the world competing more aggressively than ever, and with a budget that delivered a tax cut in real terms to our tourism marketing body, it is clear that Labor had no idea that increases in luxury car tax were also going to be a big negative on tourism exports. What Labor have done with this increase in luxury car tax is put a tax on exports. An increased tax on exports is the consequence of this policy decision.

I have been speaking to the peak tourism export body, the Australian Tourism Export Council, about their forecasts of the consequence of this increase in the luxury car tax. ATEC estimates that each year approximately 8,000 vehicles that operate directly in the tourism industry are going to be caught by this tax—vehicles such as those bought by car rental companies, hire car companies and tour operators that use vehicles that are captured by this increase to the luxury car tax. The vast bulk of these businesses are small to medium-sized Australian businesses. It is some of those 2.4 million small businesses, which employ 4.4 million people, that the Labor Party has now slugged with a new tax that is dressed up as a tax on the undeserving rich but that in reality is guaranteed to do one thing—and that is increase the amount of unemployment that Australia’s tourism export employers will have to deal with as a result of this higher tax increasing their costs.

Another thing that the Labor Party do not seem to understand is that, when they suddenly make a snap policy change—like this one with luxury car tax—without consulting industry, without giving any warning to industry and without taking into account the concerns of industry, there are other unintended consequences. Australia’s tourism operators put brochures out in the marketplace saying, ‘Come and take a tour with XYZ Tour Company; it will cost you $100 per person per day,’ based on the costs that they were then dealing with, the costs of their vehicle, their cost base and profit margins as they understood them to be. But, because the tricky Labor Party thought that they could just go about changing the luxury car tax threshold without any warning and without any consideration of consequences, these tour operators now have thousands of these brochures out there in the marketplace, with no ability to change their pricing structure, even though their cost base is being hiked up significantly thanks to this new Labor tax. That is the consequence now. So we have tour operators forced into a situation where they will simply not have the profit margin that they had, because they now have to cover this increase in their cost base.

Had the Labor government done the decent thing and perhaps taken the opportunity to consult with the industry and to consider the needs of industry, we would not be faced with this situation. It is very clear that Labor have no regard at all for those in Australia who are trying to export tourism and no regard at all for the fact that this is an approximately $22 billion industry and one of Australia’s key export industries. They are more than happy to whack a new tax—or an increased tax—on it as they have done with this luxury car tax. I find it particularly strange and particularly galling that they would go about hiking up this luxury car tax without any forewarning, when in fact their own ministers do not even support it. It was interesting when I reviewed the comments of the Minister for Small Business, Independent Contractors and the Service Economy, Dr Emerson. The federal member for Rankin is on the record with respect to luxury car tax. In this very chamber he spoke about the impact of GST and luxury car tax. He said:

… the luxury car tax will be charged on the GST—these results are untenable in the context of the Government’s stated goal of the tax reform process in general and the GST in particular.

The minister for small business held the view some time ago when the coalition was in government that the luxury car tax was untenable because it was levied on top of the GST.

It is clear that the small business minister, who I have no doubt raised these concerns within the ministry or cabinet, was steamrolled on this and was told, ‘Look, don’t worry about that; we will be able to package it as being an increased tax on the wealthy, on the undeserving rich.’ That would have been the line that he would have heard from the Labor Party. He would have been steamrolled on this, even though he knew, and was on the record as having said, that the luxury car tax is untenable.

So I urge the Rudd Labor government to please listen to what some of their ministers are saying, in the same way that the Rudd Labor government should listen to what the cabinet minister—the Minister for Resources and Energy and Minister for Tourism—said when he released a letter talking about Fuelwatch and its negative impact. Start listening to what the frontbench is saying, Prime Minister. For as long as this Labor Prime Minister refuses to listen to the feedback that he is getting from, for example, the minister for small business and from the Minister for Resources and Energy and Minister for Tourism then this government will forever lose its way on these kinds of policy issues.

We know that this new tax is going to raise $555 million over the forward estimates. It will raise $130 million additional revenue next year, $140 million in the year following and in the year after that and $145 million in the period after that. That is over half a billion dollars of new tax revenue as a result of these changes. There was no warning given to industry and no consideration or care given to the fact that it will have a significant detrimental impact on our key tourism exporters such as the tourism industry and no understanding of the consequences of this change, which is why these bills must go to a Senate committee.

Olivia Worth, General Manager, Public Affairs, with the Tourism and Transport Forum, TTF, another key tourism peak body, said that increased taxes were a concern. She said:

This is money that could be better spent by tourists on shops, restaurants and tourism attractions.

Australia is a long haul destination, and a relatively expensive place to visit—increased visa and travel charges add to the cost—

as, too, do increased hire car charges and tour operator charges.

Let me cite a very real life example of the kinds of companies that are now going to struggle thanks to this increase in luxury car tax. Australian Wild Escapes operate a fleet of 30 vehicles for luxury ecotours in the Blue Mountains region in New South Wales. They turn over, on average, four or five vehicles every year. It is going to cost them about an additional $30,000 or $40,000 as a result of these changes to the luxury car tax. Those that undertake these small tours go through parks like those in the Blue Mountains or places like the Daintree rainforest in Far North Queensland. I have no doubt the member for Denison would know that tour groups go through the majesty of Tasmania’s forests and gain an appreciation of how important it is to protect and preserve some of the old-growth forests. All of these tours are undertaken in high-quality vehicles, which are predominantly Toyota LandCruisers. To coin a phrase, these vehicles are the backbone for these tour operators. Now, because of this increased tax, we are going to see extra costs for Australian Wild Escapes, for example, of some $30,000 to $40,000 a year.

It is very clear that these bills need to be referred to a Senate committee. This matter needs to be comprehensively assessed. The impacts, both positive and negative—and I am being generous when I say positive—need to be assessed. The Labor Party needs to get its head around the fact that changing policy like this overnight without any consultation with industry has a very real and very negative impact. This Tarago tax, as those of us in the coalition refer to it because that is what it is, is not about luxury cars at all. It is about tour operators and it is about large families. More importantly, it is not about the vehicle that is being driven; it is about the process. It is about the fact that this Labor government is so caught up with spin and so caught up with how it presents itself that it will ram through policy decisions taken on the run, like this increase in the luxury car tax, without talking to industry, without considering the impact on those, for example, with a disabled child, without considering the impact on large families and without considering the impact on a very important part of Australia’s exports—that is, the tourism industry.

Can I say very directly to the Prime Minister but to all of the Labor frontbench: it is time you realised the consequences of your actions and it is time you stopped displaying your ignorance on matters relating to tourism. It is time that the Prime Minister started listening to his frontbench and understood that suddenly changing things overnight has very serious and dire consequences. In that respect, this government should embrace the coalition’s position and refer this matter to a committee. (Time expired)

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

It is a great privilege to be in the chamber here this morning with the member for Moncrieff and the member for McPherson. The three of us represent the Gold Coast, the sixth largest city in Australia. The Gold Coast is also home to more small to medium enterprises than any other commensurate city in the nation. I think we, the three members for the Gold Coast, speak as one voice when we stand appalled at what this government has done. I think we speak with one voice when we represent the largest concentration of small to medium business owners who will be impacted by this outrageous increase to a tax that has been ill-conceived, ill-thought through and rushed.

There is a maxim that forewarned is forearmed. I am a new member of parliament, in fact the only new Liberal for Queensland. Prior to parliament opening we actually had a parliamentarian school here. The 42 new members of parliament—34 Labor, seven Liberal and one National—met in this chamber to look at the mechanics of how parliament works.

The Government Whip came in. The new Opposition Whip also came in. The Government Whip spoke to us about how the mechanisms and mechanics of parliament work. He talked about the whips being fundamental in ensuring that the process of government is smooth. The whips ensure that lists of speakers are maintained and that there is enough time to look and debate bills. He said that the whips work cooperatively to ensure that parliament works. That concept of the whips working cooperatively to ensure that parliament works has stayed with me as I have watched and learnt the mechanisms of this House and how it functions. You can imagine my surprise when late last night a range of bills were put forward to be debated on the floor of the House the very next day. You can imagine my surprise when there was no consultation between the Government Whip and the Opposition Whip as to how best the bills were to be managed and on the time all parliamentarians had to look at the bills and to decide on an appropriate course of action.

I then went to the Bills Digest, which the Parliamentary Library produces. I have enormous respect for the researchers of the Parliamentary Library and their ability to look at a bill, dissect it and provide unbiased, non-partisan advice. I hold the Parliamentary Library in the highest regard. Yet Bills Digests were not available for these bills that were to be rushed through their second reading on the floor today and that we were only told about last night.

Appropriate shadow ministers had no opportunity to go through the Tax Laws Amendment (Luxury Car Tax) Bill 2008. Backbench committees had no opportunity to review. And yet when 42 new parliamentarians were here in this place, the Government Whip had the hide, the audacity and the blatant effrontery to look me and the member for Isaacs—who is suddenly engrossed in something else—in the face and say, ‘We the whips will work cooperatively to ensure that this place functions and works.’

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Order! Honourable member, before the chair is the Tax Laws Amendment (Luxury Car Tax) Bill 2008. I ask the honourable member to come to the matter before the chair.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

Thank you, Deputy Speaker Adams. The question is: what is the government seeking to hide by introducing this bill into this place in such a manner? I refer the House to the front page of the Australian. I quote from Dennis Shanahan:

THE Rudd Government is prepared to review the $555 million luxury car tax only two weeks after it was unveiled in the budget and even before the new tax laws are introduced into parliament.

The Government is to refer the luxury car tax to the review of the tax system being conducted by Treasury secretary Ken Henry, after calls from the automotive industry and the Government’s declaration that ‘taxes on taxes’ were an anomaly.

Clearly, something happened between when the minister spoke to the press and informed the nation on the front page of the Australian as to what their intent was for this bill and sometime last night when they snuck it through for the second reading speech this morning. Dennis Shanahan then spoke to industry:

Federal Chamber of Automotive Industries chief executive Andrew McKellar told The Australian last night the car industry believed it was ‘a tax on a tax which is on top of other taxes’.

It is surprising that he should be referring to this Labor government and its implementation of new taxes—indeed, there are $19 billion worth of new taxes over the forward estimates. The article continues:

The fact is when you buy a new car people are already paying GST, then they are getting slugged luxury car tax on top of that,’ Mr McKellar said. ‘We think this increase in the rate of the luxury car tax is completely unnecessary and should be reviewed in the Henry review.’

The government agreed with that. I am sure that the responsible minister made it very clear to Dennis Shanahan and the Australian that it would be reviewed—except something happened.

I suggest that the minister had an amygdala hijack and thought that he would rush it through along with a whole range of other bills this morning. Why? Generally, when something is rushed, there is something to hide. The Australian article continues:

Mr McKellar said the luxury car tax had not kept pace with the market and now ‘captured many more family cars than was intended, and this is another reason for it to be reviewed’.

Could it be that the front page of the Australian has also got headlines like ‘Rudd twisted ACCC fuel advice’, referring to the junior minister, Minister Bowen, coming out and misleading the House with respect to what the ACCC advice was, only to be put straight by the member for Wentworth? Could it be that this government was embarrassed by their response, embarrassed by the Adelaide declaration from the Prime Minister that there is nothing more he can do? Could it be that, to try and move the agenda and get petrol away from the spotlight, they have rushed this through—unconscionable conduct completely contrary to what the whip told the 42 new members of parliament about how this placed work—simply as a smokescreen?

Let us be absolutely candid on this tax. The luxury car tax was introduced on 1 July 2000 when the GST was introduced and the wholesale tax was abolished across the board. On cars at the time, wholesale tax was 22 per cent and rose to 45 per cent on the value of a car above the luxury threshold, that threshold being $55,720, wholesale tax inclusive. Thus, the original 25 per cent luxury car tax was designed to offset the removal of the wholesale tax and to ensure that there was no change. In fact, the price of more expensive cars, and cars in general, came down with the introduction of the GST. Since 2000, there has been no change to the luxury car tax rate, because it was not seen as a tax on a vehicle because that vehicle is expensive; it was seen as simply equalising out the loss of the wholesale tax—perhaps not dissimilar to the wine equalisation tax. I am surprised that the Rudd government has not gone after that in the same way they have with ready-to-drinks.

Essentially, there was no change to the wholesale tax rate in the introduction of the GST. The portion of a car’s price over $57,123 is now subject to a 25 per cent tax, in line with the original wholesale tax and no change in the GST. But suddenly there is a change. Suddenly the minister, with an amygdala hijack last night, changed everything. Rather than put it through a review, he thought he would dump it on the House and rush it through as a smokescreen for Labor’s incompetent handling of petrol. The revenue expected from this measure will be $130 million in the next financial year, through to $140 million in the outlying years. This incompetent government believes there will be no loss in revenue from the introduction of this extra tax—from 25 to 33 per cent. Indeed, it believes revenue will increase a further $5 million to $145 million in the outer year of the forward estimates. May I suggest this is a blatant grab for tax without any real thought. It does not take into consideration the loss of corporate tax receipts from companies that will begin to suffer because of the extra tax burden being put on purchases of these automobiles.

The government had 11 years in opposition—11 years to formulate a legislative agenda for when they won office. They are now in office. This parliament has sat for fewer than 30 days in the first six months. The Prime Minister has been overseas for almost a month during that time. This parliament’s sitting program for the first six months demonstrates quite clearly a lack of a legislative agenda. You would have thought, after 11 years of contemplating that agenda, contemplating their view of the world, that when they gained power they would not need to dump a whole heap of bills on the parliament late at night and introduce them and move the second readings in complete contradiction to what the Chief Government Whip told the 42 new members of parliament. Why did the Chief Government Whip not come out during the pollie school at the beginning of the year and say, ‘Look, if we want to screw things up, to hold up and to smokescreen the mistakes of our incompetent frontbench, we will do that’?

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. This is far from the subject matter of the bill. I think it is quite discourteous to the Chief Government Whip, who extended a courtesy to all members by providing education, to characterise that very generous act in this manner. But that is an observation. My point of order goes to relevance.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The honourable member for Fadden will address the bill that is before the House. It is a very narrow bill. There has been some broader debate on tax, but the honourable member will address the matter before the chair. I have not heard any personal reflection on the Chief Government Whip.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

The reality is that approximately 105,000 cars are sold in Australia over the current $57,123 amount. Approximately 90 per cent of them are imported. The majority of money made on selling cars is for the most part in the price of the new car, but this includes the servicing of vehicles. It does not take a rocket scientist to work out that increasing tax decreases purchasing power, which perhaps is what the Rudd government is looking for. If purchasing power is decreased, it follows by necessity that fewer cars are bought. If fewer cars are bought, fewer cars are serviced, fewer tyres are bought and fewer accessories for cars are bought, and this impacts on the workforce. If fewer cars are bought—less servicing, fewer accessories for cars, fewer tyres, less maintenance—it can only mean one thing: unemployment. It is well and truly reflected in the Treasury figures that 134,000 Australians will be unemployed because of this budget. This tax contributes, in part, to that number of 134,000 Australians. If you add in partners and a number of children, that makes almost half a million Australians. Working Australians—dare I use that much used term—will be turned into welfare Australians.

This will hurt dealers, salesmen, importers and servicing areas. It will hurt small business. The Gold Coast is a small-business capital of the nation. Many of those small businesses use a range of vehicles, including Taragos, which will now be taxed. Many constituents with disabled children or large families in the electorate of Fadden will now be disadvantaged because an extra tax has been placed on vehicles that they need to buy because they need the extra seat capacity, the extra room for accessories, the extra room to store equipment or the extra room simply to be able to make modifications to a vehicle in order to meet their needs. This is a slug on the very people that the government stood before—the Australian population—and said that it was there to protect and support. This is a fraud. This is a con. This is something that has been perpetrated on the Australian people. This is a tax which, in some part, is placed on people who can least afford it: the disadvantaged, those with a disability, who need modifications for vehicles. What do we say now to a family of three, four or five children, when one of the children has a disability and needs modifications made to a vehicle, in particular a large vehicle, to carry the whole family? Do we say, ‘I am sorry, you are going to have to pay an extra $3,000 or $4,000 for your vehicle because the government thought it would raise more money’? It did not want debate on the subject; it just pushed it through late at night for a second reading the next day and flagrantly demanded it be passed in the House that same day.

This whole budget reeks of the politics of envy. It reeks of trying to give what this government thinks is a kick in the guts to those who are apparently wealthy. But the question is: what is ‘wealthy’ to this government? FBT charges have gone up, so you can no longer provide meal vouchers and cards to your staff without paying FBT. Laptops can no longer be purchased for purposes other than work, so families will stop buying laptops FBT exempt for their children. Isn’t that a great advertisement for the education revolution?

Apparently, if you have a $57,000 car you are wealthy. Means testing for solar panels means that a household earning $100,000 is apparently wealthy. Apparently, the $100,000 Medicare levy threshold and the $110,000 childcare rebate threshold knock out the wealthy. The threshold of $150,000 for family tax benefit B and the baby bonus applies to the apparently wealthy, yet the upper tax bracket is $180,000. What is it, government? What is it that you class as the ‘wealthy’ number? Because it changes right across the bracket, from the top tax bracket of $180,000 to the solar panel rebate threshold of $100,000—and, of course, $50,000 is the cut-off for this new extra tax. What is the ‘wealthy’ number that you so vehemently want to punish? What is it about the politics of envy that leads this government to seek out those who, through incentives and hard work, have added to their earning capacity? What is it about these people that you want to punish?

What is it about small business that you want to punish? Companies in Fadden that use vehicles—and, get this, also produce solar panels, like Ecotech—are now being doubly hit. Their business is halving because this government has some problem with people working hard, using initiative, building on incentive and earning a reward from that. What is it? What do you not like about hardworking Australians who do well? What do you not like about small business in this country? Small business employs 50 per cent of Australians. What is it that you do not like about them? What is it that you do not like about the three Gold Coast seats of Fadden, Moncrieff and McPherson—the small-business capital of the nation? You want to punish that small-business capital with these ridiculous new charges, these ridiculous new taxes. Why is it that you spent 11 years in opposition and now have no legislative agenda and feel the need to rush something through? Because when you rush it through you are hiding something. What is that? What is it that is driving this government towards these ridiculous measures?

This bill must be referred to a Senate committee. It needs to be analysed. We cannot stand by in all good conscience and allow the government to railroad through new taxes. One minute they are telling the press, as per the front page of the Australian, that they will include this in the Henry review; the next minute they sneak it through and demand a debate in the morning. This cannot be allowed to occur. This must go to a Senate committee. This must be reviewed. And someone must stand up and fight for the people of Australia who will be disadvantaged by this. That is exactly what we on this side of the chamber will do.

Chris Pearce (Aston, Liberal Party) Share this | Link to this | Hansard source

I rise in the House today to add my voice to the chorus of concern about the way in which the new Rudd Labor government are treating the legislative process with such contempt. We have to really seriously ask the question: what is going on with the government? On the one hand we have a so-called tax review, which they keep telling us is a comprehensive tax review that is going to look at everything to do with tax and is going to be all things to all people. On the other hand they are sneaking through, catapulting through, all this new tax legislation that has come out of their first budget. That in itself is a very interesting point to note: we are actually here in the House of Representatives today talking about the introduction of a new tax.

Mr Deputy Speaker Andrews, as you would know, the first budget of the Rudd government is the first federal budget in years and years to introduce a new tax. Rudd Labor have introduced new taxes to the Australian people for the first time in years. So, on the one hand we have this so-called wonderful tax review that is going to look at everything and be all things to all people, and on the other hand we have the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills being rushed through the House. However, to my amazement I woke up this morning and went to my favourite newspaper, the Australian, to read on the front page a story with the headline ‘PM hits brakes on luxury car tax’. This is a story by the political editor, Dennis Shanahan, a very respected political editor. The piece says:

THE Rudd Government is prepared to review the $555 million luxury car tax only two weeks after it was unveiled in the budget and even before the new tax laws are introduced into parliament.

The article goes on to say:

The Government is to refer the luxury car tax to the review of the tax system being conducted by Treasury secretary Ken Henry, after calls from the automotive industry and the Government’s declaration that “taxes on taxes” were an anomaly.

So, here we have, on the one hand, the government feeding stories to the media saying they are going to refer this so-called luxury car tax to this wonderful tax review that they have established, and then on the other hand here they are forcing the legislative process, this bill, through the House—rushing it through the House without due debate and consideration. Really, Mr Deputy Speaker, you have to ask: what is happening? Again, as I said, the piece mentions ‘the government’s declaration that “taxes on taxes” were an anomaly.’ I will tell you what is an anomaly: the Rudd government. They are the problem that we have right now. You really do have to ask yourself what has brought all of this on. Why, all of a sudden, has this bill been rushed into the House of Representatives? Why has the opposition been told by the government, last night and again this morning, that this bill has to be finalised today, that it has to be passed? You have to ask yourself the question: what has brought all of this about?

I think the answer is obvious. What has brought all of this on, of course, is the ‘fuelgate’ crisis that the Rudd Labor government are in. This is all about ‘fuelgate’. This is all about the promise that Kevin Rudd made before the last election—that, if he were to become the Prime Minister of Australia, he would reduce the cost of petrol, he would reduce the cost of groceries and he would reduce home loan interest rates. All three of those—the price of petrol, the price of groceries and home loan interest rates—have gone up since Kevin Rudd became the Prime Minister of Australia. So the reason we are standing here in the House of Representatives this morning, being told that this is a piece of urgent legislation, being told that there will not be the normal legislative process and that it will have to be debated, voted on and passed today, is ‘fuelgate’. The Rudd Labor government are in damage control over what has happened with their promise to reduce the cost of petrol. Of course, we have this fandangle idea that the Rudd Labor government are going to introduce Fuelwatch—this so-called wonderful system that has worked so well in Western Australia.

I was surprised today to read in the Melbourne Herald Sun about new research that shows that Labor’s proposed Fuelwatch scheme may drive up the petrol price. The research compares prices recorded in Perth, where there is a FuelWatch system in place, with those recorded in Sydney and Melbourne. The report says:

A three-month survey reveals unleaded fuel was at least one cent a litre dearer in Perth than in eastern states.

During some weeks, the price soared even higher, with Perth drivers paying nearly $2 more to fill up the family car with 40 litres of fuel.

The survey found that the cost of petrol was actually dearer than in Sydney and Melbourne in all but three weekly periods.

So you had Kevin Rudd, before he was Prime Minister, saying, ‘Vote for me and I will reduce the cost of petrol, I will reduce the cost of groceries and home loan interest rates will come down.’ He became the Prime Minister and what has happened? Home loan interest rates went up, the cost of groceries went up and the cost of petrol went up, new taxes were introduced in the budget—like on cars et cetera—and his answer is that he will watch petrol; he will introduce some system. According to the survey that has been quoted in the Melbourne Herald Sun, it has actually resulted in the cost of fuel in Perth being more expensive for people than in Sydney or Melbourne.

So the reason that we find ourselves right here today talking about the luxury car tax as a result of the budget—

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

Mr Deputy Speaker Andrews, I rise on a point of order. Perhaps I rose the moment the member chose to return to the topic, but a discussion on the fuel issue is somewhat at right angles to the subject of the bill.

Kevin Andrews (Menzies, Liberal Party) Share this | Link to this | Hansard source

I call the honourable member and refer him to the bill.

Chris Pearce (Aston, Liberal Party) Share this | Link to this | Hansard source

Thank you very much, Mr Deputy Speaker. I appreciate the sensitivity that the member for Denison has on the issue. I understand that he is part of the problem. He is not part of the answer; he is part of the problem—the problem that was created by him and his colleagues before the last election. So I understand his sensitivity. But here we have the new budget that has introduced a whole raft of new taxes—taxes on so-called luxury cars; taxes on ready-to-drink alcoholic drinks, the so-called alcopops; new taxes on crude oil excise; changes to depreciation of computer software; and increases in taxes on passenger movement charges. We have this raft of new taxes.

When we used to talk about new taxes in this parliament, for years and years it used to be as a result of the introduction of new state Labor taxes, but now, of course, we are talking about the introduction of federal Labor taxes. What I think is particularly notable about the proposed tax increase in this bill is—and it is just like all those other taxes I have mentioned—that the Australian Labor Party, under Kevin Rudd and Wayne Swan, did not say anything about any of these new taxes to anybody in Australia before the last election. They snuck into office and now they expose what their obvious tax plans are.

What they did say before the last election in relation to this type of issue was that the Labor Party would set up a review into Australia’s automotive sector. That is what they said. They did not say that they would introduce a new tax; they said that they would set up a review—because, as we know, if there is one thing that Prime Minister Rudd loves it is a review. He absolutely dislikes making a decision, but if there is one thing that you can get Kevin Rudd as Prime Minister of Australia to do it is to announce a review. So they promised that they would have a look into the Australian automobile sector and, interestingly enough, the chairman that was appointed to that automotive review was the former Labor Victorian Premier, Steve Bracks.

What is even more interesting about that review is that their discussion paper—which was released on 31 March this year—actually canvassed the possibility of reducing luxury car tax, not increasing it. Here we have a Labor stalwart, in Steve Bracks, who has been given a ‘job for the boys’ as chair of the automotive review, and they release a discussion paper in late March that looks at the possibility of reducing luxury car tax, not increasing it. So the government are not even prepared to allow this so-called wonderful review to do its work, go through its inquiry and actually come up with any suggestions or recommendations. ‘No, we’re not going to allow that to happen anymore. What we’re going to do is step in, introduce this bill and rush it through the Australian parliament without due debate or consideration.’

I am talking about this bill today on behalf of the people of my electorate of Aston. What the people of Aston have said to me and what I find particularly offensive about this bill is its actual name: luxury car tax. To families and people in the electorate of Aston, buying and owning a Tarago is not a luxury but a necessity. It is a necessity so that they can do what they need to do to look after their families. They are families with children—families with disadvantaged children or people—who need to have such a vehicle in order to move them around. How offensive for this government to now turn around and say to the people of Aston and, indeed, the rest of the country that, because they need to buy a Tarago, a vehicle that might cost more than $57,000, they are wealthy people and they are investing in a luxury car. These people need these types of vehicles in order to get their families around their local community, to take them to school in the morning, pick them up, take them to their sports training events and take them off on the weekends. They have multiple children or, as I said, they might be unfortunate enough to have somebody who is disadvantaged or disabled within the family. They need these types of vehicles. They are a necessity.

Kevin Rudd and Wayne Swan ought to get out into the electorate of Aston and talk to some of these people that own Taragos and similar types of vehicles and say to them, ‘Do you think that you are driving a luxury vehicle?’ The people in my electorate do not think that they are driving a luxury vehicle. They are driving a vehicle of necessity. It is a vehicle that they need in order to undertake the daily travel requirements for themselves and their families. This is an offensive bill and it is a bad bill. It is a bill that, along with so much else, introduces new taxes into Australia—taxes that were not articulated to the people of Australia before the election. There was no discussion about all these new taxes. Kevin Rudd swanned around this country—pardon the pun—telling people: ‘Vote for me. I am an economic conservative. I will look after you.’ He then gets into office and introduces tax after tax after tax.

The opposition has proposed that this tax be referred to a Senate committee for inquiry. Surely that is a reasonable request. Surely that is a request that the government can meet. Is the government so concerned about ‘fuelgate’, so concerned about the crisis it has got itself into on the promise of reducing the cost of petrol and groceries and so concerned about this crisis it is in that it is not prepared to have this issue, an issue that is going to impact on so many people in my electorate, discussed? Many people across Australia need to have big cars in order to take their families and the kids around. Is it so unreasonable to ask the Australian government to have this bill referred to a Senate committee? Please allow people to come and talk to the parliament about why they need to buy these types of vehicles. They do not buy them because they have money to throw away. They do not buy them because they want to drive around in a luxury car. They buy them for the sake of their families. This tax will punish all of those people and all of those families. This is a result of Kevin Rudd and ‘fuelgate’ and being in trouble over promises that could never be kept. This is an abhorrent process. This is the wrong way to deal with the Australian parliament and the Australian people.

I plead with the Australian government: please stop, take a breath and admit that you are in some trouble on ‘fuelgate’. We all know that. You are in trouble with the price of groceries going up. You are in trouble with home loan interest rates going up. Admit you are in trouble. Say: ‘We won’t interfere with the crisis that we are in as a result of the luxury car tax. We will look at it as a separate exercise. We won’t try and muddy the waters. We will look at it as a stand-alone issue. We will refer it to a Senate committee and we will allow some Australian people to actually have a say.’ I think that is the right course of action, and I do not think it is an unreasonable course of action for the opposition to request.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

Following on from my colleague the member for Aston, seated behind me, those 10 years of economic sunshine now look like a distant memory. This year we have the new complexion, the wall-to-wall Labor governments and absolute panic at the first sign of economic trouble. This year we have seen a new government making decisions that have been based mostly around taking on the rich and punishing them because that would be good for the polls. We have had the Hawker Britton mentality suffused through this government to the point where the term ‘working families’ is an utter focus and that, in their minds, small issues can be swept through this rushed legislative agenda that we are witnessing today. Two weeks ago we saw a series of prebudget leaks to the point where budget day became a complete anticlimax because the whole thing had been run through the Australian media in a series of saccharine setups to ensure that it was all going to wash okay. Two weeks ago we heard about the increase in this poorly named luxury car tax without it being fully thought through and without thought for the implications for the Australian vehicle industry. These luxury car tax bills will pick up, as my colleague seated behind me has just mentioned, a number of vehicles manufactured in this country that you would hardly call luxury cars.

It is interesting that on the one hand we have this incredible prevarication on the other side—a fear of making a decision and a desperate desire to refer it to an 18-month committee. Let us remember this review of the tax system runs for 18 months and will report publicly as late as 2010, which will be too late to make that year’s budget cycle. You effectively have a government abrogating any decision making on these important issues in its first term, based on some assumption that it can just review its way through its first term. This is a government which, whilst in opposition for 12 years, had an opportunity to pull these ideas together into a coherent policy and a government that had an opportunity through its much vaunted 2020 Summit to pull together some great ideas. It seems that nothing has come of it. It is almost an admission from the other side that there is not only fear of making a decision but a fear to do it within a reasonable time frame. The 18-month delay on important tax issues is where some of the legislation and decisions are ending up. On the other hand, there is this juxtaposed rush on some of the issues that have been put to this House today to be forced through. It makes very little sense. Of course, you will read one story in the paper today—thought bubble No. 500 from the Prime Minister’s office—that this is going to be referred to the Henry review and then there will be an 18-month wait; but then of course up it pops on the program today for urgent discussion and decision.

What we really hoped for, as most Australians did, was just some fresh ideas to become reality. We expected that on some of those big areas there would be leadership. I know that there has been a certain desire, particularly from the less-discerning media outlets, to build up this new government—and there are a lot of people who do not want to tell voters that they might have made a wrong decision last November—but the longer we go on this year the more we are seeing not only a lack of fresh ideas but a rush on some for which there has been no legislative analysis or scrutiny whatsoever and on others a petrification, a driven popularity poll approach to making choices.

We need to take that back to the leader’s office. What we have here in this Prime Minister is a person who has traditionally allowed ideas to percolate through a bureaucracy to him as an options paper. That is the way he has always made decisions. He has never been a doctor at the bedside having to make that very tough call on what is right or wrong. There is no sense coming from this Prime Minister that he has a long-term ideological focus and an ideological destination for this country. It is the opposite. He is waiting for a conciliatory, consensus based approach where no-one really knows where they are going. But his background is such that he waits for it to percolate through a bureaucracy before he even dares move an inch—almost like that junior medical student with the white coat peeking over the shoulder of the consultant doctor who, when he has to make the choice between two life-threatening diseases, says, ‘I will do this.’

I have not seen any notion from this Prime Minister that the luxury car tax fitted into a broader tax based agenda that had to wait 18 months. Nor have I seen any notion that it is so urgent that it has to be forced through today. There is utter confusion. Why? Because this is a leader who has never really had to make an unpopular decision that is right for the long term. It is exactly the reverse; we have a person making the short-term ‘save my skin’ decisions for tomorrow’s headline. And we all know about yesterday’s headlines and how he is desperately scrambling to change the subject.

Obviously, Australians are smart enough not to allow that to happen. There is no urgency associated with this measure today, except probably the urgency to get it right—to properly scrutinise this bill; to make sure that it does not impact on Australians driving larger vehicles; and to ensure that it does not impact on our vehicle manufacturing industry in the southern states. I think they would take great umbrage to being told that some of the vehicles they are producing are luxury vehicles and deserve to be taxed at 33 per cent.

I think we all know the history that back in July 2000 this tax was introduced to compensate in some way for the removal of wholesale sales tax that led, potentially, to luxury cars becoming cheaper than they otherwise should have. So it was introduced and the 25 per cent level was determined then. The decision to jump now and apply the post-GST value to these vehicles so that they are caught up in the tax, but then apply the tax itself to the GST exclusive value, is just part of the untidiness of the legislation. Had we had an opportunity to do it properly, we could have made sure that what came out of it was an appropriate taxation measure, rather than what is being forced on the parliament today.

What is effectively happening today is that the government is becoming road kill—from ‘fool watch’ to Fuelwatch—and desperately trying to change the subject by pushing through other pieces of legislation that are half baked. That is a great shame for democracy. There is no precedent that you, the members on the other side, can put forward to show that we did the same thing, save for the tiniest of changes that needed to be made in the House of Representatives before urgent legislation was passed on to the Senate.

But I ask you to make your case as to why this piece of legislation must be pushed through this chamber today. That is yet to be heard. Of course, on the one hand there is the absolute fascination with reviews. And if it means putting ex-Labor premiers in charge of it, that is one thing, but then to ignore your own Labor-led review and push through legislation actually shows the dismissive attitude that you hold towards your own alphabet soup of reviews.

All of these things could have been done in opposition but were not. You have a responsibility to govern and you should do that with appropriately developed legislation that the average Australian would say makes our country a better place. Instead we have this half-baked, poorly conceived legislation pushing up a tax that is more inflationary. Do not forget the working families—that favourite government expression—who buy these vehicles and now find themselves with less money to apply to the kitchen-table test of deciding what to spend their limited resources on today. You are hitting large families in particular with an additional tax without properly thinking through the implications for many vehicles manufactured here in this country.

That is probably my strongest point. There are many Australian made vehicles that do not deserve to have this luxury car tax imposed but will nonetheless. There is also a significant disincentive for those facing the tax to opt out of important safety measures. Customers will opt out of important safety options such as electronic steering controls, extra airbags and other accessories simply because the vehicle got caught up in the luxury car tax.

Just as with RTDs, you said nothing about it at the last election. You went out and sampled the market with some cleverly timed leaks before the budget and then you jumped out to make what you term ‘luxury’ cars more expensive for your own working families. It is that sort of completely confused notion coming out of the government as to where you are heading, who you are taxing, what you are increasing expenditure on and how you are affecting the very people you are purporting to help. Confusion reigns.

The automotive sector inquiry was, I thought—apart from the people you put in charge of it—a perfectly reasonable situation, given that we have a very significant challenge in automotive manufacturing in this country. So the question is: why jump now into pushing taxes up on vehicles that are manufactured here? It raises serious concerns that you are not even prepared to respect the outcomes of your own reviews.

Whether or not you have a clue at all on tax policy is something that was very vague prior to the election. We were flat out finding superannuation policy from this government. We were flat out getting anything other than a carbon copy of the coalition’s tax policy. And now, of course, we have a Prime Minister trying to be caring on the one hand and an economic conservative on the other, but with no real ideological drive as to where he is trying to take the country.

Of course, these are just wasted months. These are opportunities that the government had to make clear, small but significant leadership decisions on legislation like this, and they have been passed up. I think there is a real sense coming out of the community when I speak to people living in my town who say, ‘I don’t really know what the Prime Minister is trying to do.’ We all saw the $30 million advertising campaign with the fair go ‘out the back door’, but what is he actually doing about it now that he has the opportunity? There is a Prime Minister here who is charging off in one direction, slapping on the taxes to make the budget balance, but at the same time trying to maintain static out of his media office that he is a responsible economic conservative looking after working Australians.

I can tell the government of the great fear in the community now, particularly from seniors, who find that after 10 years of economic success they are suddenly being told: ‘That was yesterday. You miss out on the dividend because we cannot make tough decisions anymore that would make sure that economic dividends reach seniors and pensioners.’ The government has completely abrogated its responsibility to seniors because the popularity polls told it to focus on this ‘working Australian’ term. That is the government’s choice. But to be bringing out the legislation that takes the government directly into the headlights of the families that were hoping things would be a little easier deserves to be exposed. Right now, the government is preaching competition but actually working against it with the Fuelwatch scheme. Those who are deciding whether to purchase a new car are confronted with the new luxury tax. On the one hand, Australians are saying, ‘Should we actually upgrade and buy a larger car?’ Large families in particular are making that very decision. But, on the other hand, households are facing the imposition of Fuelwatch. It is all symptomatic. It is all part of the general pattern that is emerging from this government, that Fuelwatch is being imposed nationwide like some sort of North Korean communist command and control scheme. It is good to see that the Assistant Treasurer is in the chamber today, because he is absolutely riveted to Fuelwatch. No matter what happens to this scheme, we know that he will be riveted to it and will potentially be going down with it.

We have heard today already the distortion of the ACCC report for the government’s own benefit, but let us just inject a bit of common sense. The average Australian family contemplating buying a larger Australian vehicle now knows that, under this government, it will be paying an increased tax of 33 per cent on luxury cars. That could be for an Australian made mass-produced vehicle that no-one would consider to be a luxury car. Of course, that is a small detail that can be simply glossed over by the government. Additionally, in my state of Queensland, I find the Fuelwatch system that is so fervently resisted both by automobile associations and by the Labor state government is about to be imposed. People with common sense would say, ‘The benefits would be that I know what the price of fuel will be tomorrow.’ The great concern is that this cheap fuel may no longer be an option because people will not be prepared to put sealed bids in for lowest prices. For those that do, they are unable to modify their choice through the day.

We have asked the simple question to the Assistant Treasurer: in what other sector would a system like Fuelwatch work? In what other sector do we elect to fix prices? In what other sector do we try and add rigidity to the market so that the competition actually cannot occur for 24 hours at a time? Of course, the great question that we cannot get an answer to is: what happens if a small independent petrol provider, having fixed their price, wishes to drop the fuel price through the day? Is this federal government going to set up the regulations by which that small operator would be punished and fined? There is no answer to that because all the government has done is to adopt FuelWatch, a scheme that came in in January 2001 in Western Australia. Since then, we have seen nothing more than high fuel prices. The analysis of whether it is FuelWatch that is responsible for the high fuel costs in WA or whether the introduction of Coles and Woolies, who appeared around 2003-04, had any impact in Perth is difficult to tease out. I think that, from a policy point of view, you would apply the precautionary principle. Where it could be much worse for working Australians while, on the other hand, there could probably be a slightly smaller cycle over a longer period, wouldn’t the precautionary principle dictate that the government might just hold fire on this genius Fuelwatch idea that its own state governments are opposing? Wouldn’t the precautionary principle dictate that the government might just do a little bit more research—and wasn’t that recommended in the ACCC report? No, that will not happen because we have a government in panic mode. Having exploited on the path to the Lodge that general perception that a new federal government could make things better for working families, you realise that, now you are in the headlights, you have to do something. The government wants it to look like something works. With almost religious fervour, government backbenchers have to march in behind the Fuelwatch scheme.

It is a tremendous allegory for what you are doing with the luxury car tax itself. It seemed popular. The luxury car tax has a great ring to it, but the government did not really think about the small print. It did not think about the quiet, unassuming families who need to buy a larger vehicle which happens to fall in that price range. The government did not even consider the minor but common-sense amendments that could have applied to ensure that we could purchase those vehicles without a 33 per cent tax. Haven’t things changed! Remember the old days under Labor when every budget involved more taxes. Of course, we have had 10 years under the coalition where, predominantly through saving and responsible economic management, budgets were a time of investing surpluses productively. Hasn’t that time come to an end! We had almost forgotten that budgets became a time when you said: ‘What’s going to happen to my alcohol? What’s going to happen to my smokes? What’s going to happen to the price of a family vehicle?’ They were the budgets of the 1980s. We would all sit around the television and wonder what was going to be taxed next. Hasn’t it come full circle? It did not take this government very long to fit straight back into that traditional Labor pattern. There may well have been a complete and utter loss of the legislative agenda this week, and one can always say: ‘It is a government with training wheels on. That is to be understood.’

The great shame is that, with further weeks left in this financial year, there is still an opportunity to consider this legislation appropriately in detail but it has been passed up. Secondly, the government is effectively forcing this legislation off to a Senate committee with the great risk that it cannot even get back to this chamber this financial year. That will have significant implications for a number of these Treasury bills. At some stage I think most Australians simply asked that you would make some tough decisions, that you would examine forensically some of this legislation and think about the impact upon the very families that you are purporting to help. Of course, for the less-discerning media, many of these announcements and in particular this legislation seemed fairly attractive. There seemed to be virtually no argument that one should support it. Only pre budget, when it appeared that Australian made vehicles would be caught up in this higher tax, did the government go into damage control. We have seen exactly the same thing with Fuelwatch: you are holding your ranks for a certain period of time before some piece of common sense leaks out of cabinet and undermines the government position. We have seen a silenced minister who had the courage at least to speak on behalf of working families who loved buying their fuel on ‘cheap Tuesday’. I am not about to say exactly what happens on cheap Tuesday with and without Fuelwatch, but I think most people looking at this legislation will say, ‘You cannot give us a guarantee that fuel prices will not go up under a system that locks in and fixes prices.’

We know what it is like to live in China. We know what happened in Russia. We have heard about what came out of the command and control economies. But what was never clear out of those economies was that you could have anything better than a complete free market, allowing competitors to price in an open and unregulated market. It is a lesson that is very, very tough to learn for those on the other side that profess to being economic conservatives.

My great fear is that the great losers in this are the metropolitan electorates with families and those who have to commute large distances, like my electorate of Bowman, where the average commute to the city is about 40 minutes in peak hour and 60 per cent of people leave home for work each day. They will be watching closely. They know the prices and they know the cycles, and we can see the response in the market, with large queues in my electorate buying on Tuesday nights and Wednesday mornings. We will be watching closely and my electorate will be looking at what happened in Western Australia. They will be looking at the prices in Western Australia, the 5c a litre more that it costs there. They know it is very hard to beat the competition. They also know the importance of the independents in the market and they know that when buying their vehicles they want to be absolutely certain they can buy an Australian vehicle without the imposition of this luxury car tax. (Time expired)

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

I would like to speak to the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and I will be moving an amendment in the consideration in detail stage. But before addressing this particular bill I would like to pick up on a couple of comments that were made by the member for Bowman and the member for Aston in relation to new taxes. They were making the point that it is many years since governments have introduced new taxes, and condemning the current government for doing so in terms of the luxury car tax. I would remind those two members—and this is related to this issue, particularly the cost of running cars—that it is only a few years ago that the former government endorsed a discriminatory approach in relation to the goods and services tax that country motorists pay as compared to their city cousins. I would remind those members that that was done by removing the Fuel Sales Grants Scheme that was put in place, at the time the GST was put in place, as a measure to compensate for the higher price at the bowser for country motorists as compared to their city cousins. In some cases, as those members would be well aware, that can be as high as 3c a litre. So there is a case to answer from the opposition as to what they actually did. I think that is one of the first discriminatory taxation issues that I have seen where country people, who do not have the options of public transport or smaller distances to travel, were severely disadvantaged by a change in policy. I do not see the current government rushing in to fix up that particular problem either, but the amendment that I will be introducing today follows on from that discrimination.

I am very pleased the Assistant Treasurer is here because he is a man who actually knows, from his former life, what country roads are like. I have had the privilege of sitting in a vehicle with him on some of those quite nasty country roads. He would be well aware that country people in many communities do not see a four-wheel-drive vehicle as being a luxury. In fact, in some circumstances, if country people bought vehicles that were below the $57,000 so-called luxury tax level they would be absolute fools, and the costs to their budgets would be enormous. So I urge the government and the Assistant Treasurer to have a good look at what message this is sending to those motorists who do not have the luxuries of sealed surfaces and paid toll roads to drive their vehicles on. But they do have kangaroos; they do have potholes; they do have wash-outs, water and mud. They have a whole range of activities for which they have to travel long distances and they have to carry their families in a vehicle that they think will be reasonably safe if an incident or an accident occurs. So I think that imposing a level of $57,000 as a threshold for luxury needs to be reviewed.

The fact that the government introduced this tax amendment in the budget and, within a few weeks, have of their own volition decided to have the initiative reviewed by Treasury in the tax review that is going to take place says to me that this has been too rushed and that some of the issues that have been articulated by some of the members, particularly those on the opposition side, are issues of real substance that deserve to be debated and heard. Otherwise, if it was a clear-cut and clearly thought through amendment to the luxury car tax act, why would it be referred off to something that is going to take about 18 months? Why would that be happening? That is something that only the government members can answer, but I think it is something that the public would like to know.

As I mentioned earlier, country people do not have the luxury of sealed surfaces. There is a reason for that, but in terms of the taxation that they pay for road use they are disproportionately hurt once again, because they do not have the option, the luxury, of using public transport so that it is the public transport that hits the kangaroo or the pothole or the wash-out or the mud. They do not have the luxury of using public transport because it does not exist. People in our major cities do have that luxury. They have the luxury of options. They may well determine that the option of a luxury vehicle is something that they will pay for, in which case they are probably quite willing to pay a luxury vehicle tax. But many country people do not have the luxury of that choice.

I would just like to spend a moment on what people pay and what they get back in the form of other tax. Motorists generally—and country people are part thereof—pay about $14 billion per year in fuel excise and they have something like $2.5 billion or $2.6 billion returned to the road system via expenditure from the federal government. Something like 83 or 84 per cent of what road users pay goes into other forms of expenditure rather than the maintenance or the development of roads. I think all governments should look at that very closely, particularly if this taxation review is going to be of any substance. Fuel taxation has to be there, as has the GST. Those particular issues have to be debated in terms of any major taxation reform that can take place. If we leave either of those out and say that we are comfortable with the revenue stream that is coming from those, it is really not a reform of anything or a review of any substance in terms of the tax act.

The amendment that I will move is quite simple. As I said, I would imagine that the Assistant Treasurer, having travelled on some of those roads, would be quite sympathetic—but we will see when it comes to the time for debate. The amendment that I will be moving in the consideration in detail stage is to include as an exemption a four-wheel drive vehicle that is registered in a rural area. In his speech the Treasurer said—it was not a lengthy speech, only a bit over a page:

Certain types of cars are exempt from the tax. This includes most commercial vehicles, most second hand cars, motor homes, campervans, and prescribed emergency vehicles. We are not changing these arrangements.

The Treasurer and the Assistant Treasurer would be well aware that many four-wheel drive vehicles cost more than $57,000. In fact, to be under $57,000 you have to be very much at the low range of the vehicles that are available. If the government is hell-bent on introducing this luxury car tax and if it will not exempt four-wheel drives—and as I said, they are not a luxury on country roads; they are a necessity and so this is a tax on a necessity of life in some of those circumstances—the very least it should be doing is looking at the threshold and raising it so that four-wheel drive vehicles are exempt from payment of the tax.

Personally, if someone wants to put in a whole range of add-ons to a vehicle and make it into a luxury vehicle, I would not disagree with them paying a bit more. It is obvious that they can afford a bit more if they are putting all the bits and pieces into a car that make it up to $100,000 with nice leather seats and all the knick-knacks that people can get in their vehicles. My vehicles are very basic vehicles and I am sure that even the most basic LandCruiser at the moment would be over $57,000. I am not the John Laws of the parliament, but a LandCruiser is a commonly-used vehicle in regional Australia. To have a basic LandCruiser suddenly being described as a luxury vehicle is quite offensive, I think, to those many people who have put their lives in the hands of those who designed that particular vehicle, and the same would apply to many other four-wheel drives—Nissan, Land Rover et cetera. So I would ask that the government, firstly, support the amendment. I am pleased to see the member for Kennedy here, because I hope the member for Kennedy might second my amendment. He is probably one of the most articulate defenders of country people in the parliament and I am very pleased to have his endorsement. I know that he is well aware of the circumstances of some of our country roads, as is the Assistant Treasurer.

There is another issue that I would like to briefly touch on. It is to do with the overarching fuel debate. I advise the Assistant Treasurer that I will not take long on this; I know there is some urgency in terms of some of the things that are being delivered. But in terms of the fuel debate and the carbon footprint and emissions debate that are also taking place at a parallel course within this place, there are a number of public policy issues that seem to me to be quite contradictory and really need to be addressed. One is the issue of biofuels. It has not been mentioned of late, but there is a lot of mention in this parliament of the cost of fuel to the nation and the impact that it may have in terms of inflation, whether we should be charging tax—GST or excise.

In this whole fuel debate very few people are looking at solutions. In fact, if the government comes in with an overarching carbon taxation arrangement or some sort of emissions trading system under which the very footprint of freight will be charged to someone in terms of the carbon burnt, what is that going to mean in relation to the cost of living within this nation? I do not know the answer to that, but I would urge the Assistant Treasurer to sit down and really think some of these things through. I will give him an example: currently we grow a lot of wheat in this country. We grow about 1.75 per cent of the world’s grain. Some people think it is a lot more than that, but it is not. Currently we export 80 per cent of that grain to feed the starving millions, and there is a moral debate paralleling all of this as well. If a carbon footprint is brought in, what is that going to mean for not only the exportation of the starch, which is carbon, but also the various transport movements, and who will pay?

If you are a Walgett wheat farmer, for instance, you will have a footprint in the paddock, another one getting it to the silo, another one getting it from the train to the port and then another one getting it from the port to the Middle East. At least in theory, some of that money will buy another ship to bring oil back from the Middle East, so it will have a carbon footprint of some nature coming back. It will then eventually get back to the Walgett wheat grower, who will presumably use that to go around in circles again to produce grain to sell to the starving millions to buy oil so he can drive his tractor. What is all that going to mean not only as to who pays for emissions but also for the cost of those transportation movements? And, if it is going to be of some cost, why have we not looked at the biofuel debate as a centralised way of cutting a number of corners? Why export grain to buy oil—two corrupt markets—with a carbon cost, theoretically, into the future?

If we are going to go offshore and buy the energy, why not convert grain to energy without a number of transportation movements and utilise that energy domestically? Why do we always have to enter this market that is governed by other forces? Why are we not starting to think about ways of circumventing the problem? There is an argument that energy prices will go up. Are there more efficient ways of producing energy at a lower cost than we have looked at in the past? There is an argument—a legitimate argument—that we should not use food for fuel. What does that mean for the future when we move into biomass as a provider of ethanol, where it is not a food product? It is actually fermented starch from a plant, a grass. It is a grass which may well have a much more positive carbon footprint than some of the existing systems that we are dealing with.

So I urge the Assistant Treasurer—and I am delighted to see the Treasurer is here now—to, in embracing these bigger issues, start to do some modelling as to what it all means. It is not as simple as this piece of legislation seems to be saying: ‘Oh, just whack a luxury tax on; it’ll be right. Let’s whack a carbon tax on; it’ll all be right.’ What are the issues that we are trying to solve? If carbon is a problem, we should be looking at ways of sequestering it, obviously, but not releasing it in the first place would be helpful. Are there things that we can do in terms of our existing and more natural systems, agriculture being one, that we should be looking at in a firm way within this place? Those issues are probably more important than this particular one we are dealing with today. I think it is important that, as a parliament, we start to debate these issues. Otherwise we will get into a knee-jerk reaction—as this bill is—at a very important time in the future.

Chris Bowen (Prospect, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That the question be now put.

Question put.