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

I am pleased to be speaking today on the Passenger Movement Charge Amendment Bill 2008, a bill that will implement some of the announcements made in the budget a couple of weeks ago. I foreshadow that I will be moving a second reading amendment at the end of my brief remarks. A departure tax was first introduced for persons departing Australia for another country by the Departure Tax Act 1978. The rate was initially set at $10 and remained at that level until 1981, when it was increased to $20. The rate was reduced in 1988 from $20 to $10 and subsequently the rate was increased from $10 to $20 in 1991 and from $20 to $25 in 1994. The Departure Tax Amendment Act 1994 changed the name of the Departure Tax Act 1978 to the Passenger Movement Charge Act 1978 and increased the rate of charge from $25 to $27. The PMC was introduced in July 1995, replacing the departure tax. The PMC is levied under the Passenger Movement Charge Act 1978 and collected under the Passenger Movement Charge Collection Act 1978. The PMC was introduced as a cost recovery measure to recoup the notional cost of customs, immigration and quarantine processing of passengers entering and leaving Australia and the cost of issuing short-term visitor visas. However, in law, the PMC is a tax.

The Australian Customs Service administers the PMC legislation through arrangements with each transport carrier, and the arrangements are standardised for each type of carrier. The PMC was increased to $30 per passenger on 1 January 1999. However, in the 2001-02 budget the then government announced that it would increase the charge by $8 to $38 to offset the increased cost of inspecting passengers, mail and cargo at Australia’s international airports. Generally speaking the PMC is payable by all passengers departing Australia by air and sea. Section 5 of the collection act contains a number of exemptions, such as those for diplomats and children under 12 years. There are 12 categories of exemption in total, and the PMC is not levied on incoming passengers.

While initially a cost recovery measure, the PMC became more controversial over allegations that it has become yet another general revenue-raising measure. That the PMC had moved beyond cost recovery and was contributing to consolidated revenue was clear from the evidence given to the Senate Legal and Constitutional Affairs Legislation Committee on 28 May 2001 by an official of the Australian Customs Service. Mr Woodward said:

In round terms, our assessment of the over-recovery—and this is revealed in answers to questions that have been asked before, on notice—is something like an $80 million collection greater than the actual costs of customs, immigration and quarantine, but the passenger movement charge is a tax. It is not a pure cost recovery arrangement, and that indication of moving away from direct relativity came out when the $3 increase was made at just about Olympics time. So that is clearly on the public record.

It is not now clear whether the PMC is over-recovering costs. The PMC has not been increased since 2001. So its real—that is, inflation adjusted—value has fallen and costs would have risen over the same period. This bill is required to put into place the government’s budget measure increasing the passenger movement charge from $38 to $47. The measure is due to take effect on 1 July 2008 and applies only to tickets purchased on or after that date. The government will be seeking to have the bill passed through the Senate as quickly as possible to enable the change to take effect.

The increase in the passenger movement charge announced in the 2008-09 budget is designed to raise $459.3 million over four years, $106.3 million in 2008-09 alone. Budget papers state that the increase will contribute to offsetting the cost of a range of aviation security initiatives which until now have not been cost recovered. The passenger movement charge also recovers the costs of processing international passengers at international airports and maritime ports and the cost of issuing short-term visas overseas.

The opposition has attacked the government over this increase on two grounds: national security, as this tax grab is accompanied by a cut to Customs funding; and tourism, as this tax grab will increase the cost of tickets. While the measure is claimed to be offsetting the cost of aviation security initiatives, the new revenue that will flow accompanies cuts in real terms to Customs and other border security measures. This is really a revenue-raising exercise cynically dressed up as a border security measure.

This tourism tax increase accompanies other tourism and passenger related tax increases in this budget amounting to nearly $1 billion, while funding has been cut to Tourism Australia by nearly $6 million. This legislation will impact on the travelling public as it will increase the cost of airline tickets by $9. Consequently, there will be flow-on effects to airlines and tourism operators as holiday making in Australia becomes more expensive for overseas tourists. The shadow minister for tourism has maintained consultation with stakeholders throughout the budget process and has strong views on the subject.

Australian working families looking to take a break and have a holiday are unfortunately going to be slugged as of 1 July 2008 by this new tax, courtesy of the Rudd government’s first budget. The 2008-09 budget has revealed an increase in the charge from $38 to $47, a 24 per cent increase, which will force up the price of airline tickets for Australian holidaymakers and particularly Australian families. It is another inflationary tax hike to add to the growing pile, with taxes on premixed drinks and luxury cars announced pre budget.

The government has been especially tricky with respect to this measure. They have claimed in their promotional material that this tax, which will raise almost $460 million over the next four years, is necessary to offset the cost of a range of aviation security initiatives and the cost of processing international passengers at international airports. If this were true, we would see that money being put back into Customs. The fact is that Customs has seen its budget slashed this year by $51½ billion in real terms. It really is a raw deal for Customs. Next year alone, they will collect $106 million from this tax on the public, only to see it funnelled back into Treasury’s general revenue, as Customs have to continue protecting Australia’s borders with reduced funds. The opposition calls on the Rudd government to admit that this revenue will not be used to protect Australian travellers and that this is just another ALP tax hike. I move:

That all words after “That” be omitted with a view to substituting the following words:whilst not declining to give the bill a second reading, the House:

(1)

notes:

(a)

that the increase to the Passenger Movement Charge is an unfair slug on Australian working families;

(b)

that the Government has shown itself to be both tricky and cavalier in its attitude to Australia’s border security by cutting Australia’s Customs Budget by $51.5 million in real terms next year, while at the same time announcing a measure that will raise $459.3 million over four years, allegedly to offset ‘the cost of a range of aviation security initiatives’;

(c)

that  this tourism tax increase accompanies other tourism and passenger related tax increases in this Budget amounting to nearly $1 billion, while at the same time funding has also been cut to Tourism Australia by nearly $6 million; and

(2)

calls for the Government to refer to the Joint Standing Committee of Public Accounts and Audit for examination  the application of revenue derived from the Passenger Movement Charge, in particular the increases in revenue provided for in the Budget, and examine the potential to establish a new noise abatement fund from these revenues to provide relief for residents living within the 25-30 ANEI contours, to mitigate the ongoing burden of aircraft noise for people and families living in these areas”.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

John Forrest (Mallee, National Party, Shadow Parliamentary Secretary for Trade) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Mark Butler (Port Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Passenger Movement Charge Amendment Bill 2008 and to say a couple of things about it as a fiscal measure and also about the state of the tourism industry and some of the more shrill comments made by the member for Sturt. I have also heard the member for Moncrieff talk about tourism taxes. As always, the historical lesson from the member for Sturt, given with the eye to detail of a University of Maryland professor, was very helpful but it seriously understated, first of all, the lack of broad perspective from the previous government around tourism generally, as well as their increases in the passenger movement charge over the course of their government, leading up to the very significant changes to aviation security that flowed from the September 11 disaster.

It is important that someone on this side of the House, other than the minister, of course, gets up and supports this as a responsible fiscal measure, as one that would go some way—and only some way—to recovering many of the costs that flowed from September 11 and that are now imposed on the government, and says something about the broader tourism policy of this government. The purpose of the bill is to amend the act to increase the PMC by $9 to $47 with effect from 1 July 2008. That is an increase in the order of 23 per cent, and I will say a couple of things about that later. It will go some way to funding national aviation security initiatives, which are the responsibility of the Australian government. The year 2001 was the last time that the PMC was increased and also the time at which aviation security measures started to become significantly tightened in the wake of September 11. It is important to note that, since 2001, the Australian government has spent about $1.2 billion implementing a significant number of national aviation security measures. Up until the 2011-12 financial year, that sum is expected to be in the order of $2.2 billion. This increase over the next four years amounts to somewhere in the order of $459 million.

Broadly speaking, this increase is in line with changes in the consumer price index, the CPI, since 2001, which was the last time it was increased. The CPI to the March quarter of 2008 moved by about 21.2 per cent. This increase, which takes effect on 1 July 2008, is in the order of 23 per cent. Acknowledging that the CPI is likely to have moved by maybe one per cent by then, the increase proposed by the government is simply no more than a matter of indexation. Existing exemptions from the PMC will remain in place, such as those for passengers aged under 12 years of age. It is also important to note that there will be put in place measures to ensure that this is not retrospective. That is to say that any tickets sold before 1 July 2008, even if they are for flights that take place after 1 July 2008, will be exempt from the increase in the PMC. It is also important to note that this measure, in addition to being a measure that really only reflects the CPI changes since 2001, is also a percentage increase that pales in comparison to the percentage increases made by the last government, which the member for Sturt was honest enough to point out to the House. Those increases were in the order of 37 per cent, all prior to the significant addition to the security burden that flowed from September 11.

Those changes in aviation security, particularly in relation to international flights since September 11, are well known, but they are worth addressing briefly here. Aviation, as we unfortunately know, is and has been for some time a particularly attractive target for terrorists. This was the case before September 11, with disasters such as Lockerbie and more, but was particularly brought home with the tragedy and disaster of September 11 and, since then, with a number of foiled attempts by terrorists to inflict further damage to aviation. Those changes affect all aviation, including domestic and, increasingly, regional aviation security, but they are particularly important in the area of international aviation. Specific security requirements for international flights can be set by any country to which an aircraft is flying. We know particularly that the United States has tightened their security measures—that is, the security measures that apply to flights at the point of departure that end up at the United States.

The International Civil Aviation Organisation may also impose new security measures that bind Australia. A good example of those is measures relating to liquids that were put in place by that organisation in 2006 and that came into effect in Australia in March 2007. The increases in passenger screening requirements are probably the best known and most in-your-face, if you like, change to the security regime, but there have also been very significant changes to checked baggage screening since 2001. Since 2004, the screening of 100 per cent of checked baggage has been a requirement of all international flights leaving Australia. This increase goes some way towards the cost recovery for that. More recently, as I indicated, new measures have been in place since March 2007 for all carry-on baggage on international flights. They flowed from a terrorism attempt to bring down planes crossing the Atlantic by use of improvised bombs made from liquids taken on board. From now on, each container of liquids, aerosols or gels in your carry-on baggage on an international flight must be 100 millilitres or 100 grams, as the case may be, or less. All of the containers that carry those materials must be sealed in a transparent one-litre plastic bag. Those of us who have taken international flights since that time know what sort of security burden that has placed on the airports, which has been partly funded by the government. Less obvious, perhaps, to passengers have been measures flowing from the Wheeler review in 2005 to strengthen our air cargo security arrangements. All of these things have happened since the PMC was last set at the rate of $38 per passenger and have added very significant additional costs to the Australian government.

Members will be aware that aviation security is part of the general aviation policy review being overseen by the Minister for Infrastructure, Transport, Regional Development and Local Government. Submissions to the review close at the end of June, but we can be reasonably sure that, flowing from that review, measures will not be relaxed. Measures will remain in place in accordance with our international obligations at the very least.

I would like to briefly address the remarks made by the member for Sturt and outside this place by the member for Moncrieff about the impact this might have on tourism. This government does not raise taxes lightly, particularly on an industry like tourism, which finds itself in a very challenging environment, especially at an international level. The competition facing Australian tourism now is fierce, particularly with the proliferation of low-cost airlines and a range of other commercial arrangements that make places like Macau, China, Hong Kong and Vietnam very attractive destinations for tourists in our region. Long-haul destinations like Australia are hit hard by increases in fuel prices. Australia is also particularly susceptible to people’s justifiable concerns over the impact on climate change of taking long-haul plane flights. Finally, but certainly not least importantly, the strong Australian dollar is placing very serious pressure on the Australian tourism industry.

But those challenges are much bigger than an increase in the PMC that does little more than keep the PMC in line with indexation. That is why the minister for tourism has issued the national tourism strategy review. This is the first time in many years that the Australian government as the leader in this area has called the industry to work with it and state tourism organisations and state ministers to find some real and long-term strategies to deal with the challenges that I outlined—to come up with a coherent and consistent marketing strategy rather than the marketing plans that changed every year or two under the last government. Compare that with the focused marketing plan that New Zealand has had in place for probably nine years now. This government has a serious plan to deal with skill shortages. When we talk to tourism operators about challenges facing tourism, there is none more significant than the lack of skilled workers to provide services to tourists coming to our country. Lastly, there is product development.

This is a government that is serious about the future of tourism. This is a government that is serious about a fiscally responsible budget that looks at changes to charges like the PMC in line with indexation to only partly recover the additional costs that have been placed on the government because of additional aviation security requirements flowing from September 11. I commend the bill to the House.

Warren Truss (Wide Bay, National Party, Shadow Minister for Infrastructure and Transport and Local Government) Share this | Link to this | Hansard source

The Passenger Movement Charge Amendment Bill 2008 is another in the long line of tax rises forced upon the Australian people by the high-taxing Rudd government. Whilst the budget detailed tax cuts on some occasions, the reality is it will collect more revenue from Australian taxpayers than any other budget in our history. The budget is indeed a directionless mess, with some things going up and other things going down. What we are actually seeing, though, as a result of the new taxes that are being implemented, or the tax rises that are associated with this budget, is a strategy that seems to be working against what the government has been saying in its rhetoric about reducing the pressure on working families. In fact, the policies that the government has been rolling out are having the opposite effect. That is right: the Rudd government is about applying upward pressure on prices. It is doing so by slugging hardworking Australians with yet more taxes and charges.

Let me be clear about this—and I place this in the context of the passenger movement charge and its overall place in the budget. This new tax is part of the general approach of the Rudd government towards tax. The passenger movement charge cannot be considered in isolation but is part of the framework. It is part of a high-tax structure that is being built by the Rudd government regardless of its commitment to people in Australia who are affected by the high cost of living.

What is actually on the Rudd government’s tax agenda? It is obvious that there are to be more taxes. Indeed, the total increase in the tax grab in the recent budget is $2.9 billion per year, or $14.7 billion from the pockets of Australians from 2007-08 to 2011-12. What are these new taxes? There are several, such as the passenger movement charge that we are discussing today. There is also an increase in the tax on premixed drinks—this so called alcopop tax that is expected to raise $3.1 billion from the pockets of mainly young Australians over the next four years. We have been talking in this debate about the impact on the tourism industry. In fact, this tax increase on alcopops will also have an effect on visitors coming to Australia and the costs they incur. In defence of the tax, the government has been running an argument that it is about dealing with the problem of teenage binge drinking, but we all know now that that is nonsense. The government’s own forward estimates for this tax demonstrated that it is not expected to reduce teenage binge drinking at all. It is actually expected to increase government revenue, and that is what the tax is about.

Indeed, such an argument that it is a socially responsible tax is counterintuitive—it is not socially responsible; it will simply encourage drinkers to purchase spirits instead, and the early reports have demonstrated that that is precisely what is happening. Therefore it is quite possible that this tax will in fact make teenage drinking worse. My point is that this is a tax that has been presented falsely to the Australian people.

What about other taxes? The passenger movement charge is an attack by the Rudd government on Australia’s tourist industry, but that is not the only extra tax on movements that must be borne by the Australian people. That tax will apply to businesses and to a whole range of other Australian people but, where that tax is applied to a single sector, there is another tax that applies all over the place. That tax is the road user charge. This pernicious tax is about increasing the cost of diesel fuel for trucks and buses by increasing the effective diesel fuel excise from 19.63c per litre to 21c per litre based on the concept of a road user charge. Now it is going to be indexed on an annual road cost adjustment formula. In other words, the indexation of fuel excise is back.

The indexation of fuel excise, people may recall, was introduced by the Keating government and abolished by the Howard government in 2001. After a seven-year absence, it is back and it is pegged to a formula that will lock in a tax take that will rise faster than the consumer price index. Who will pay this tax? The answer, of course, is everyone. Trucks, members may recall, carry over 75 per cent of Australia’s domestic freight. That means that those who drive the nation’s 365,000 trucks, many of whom are struggling small business operators, will pay. So much for defending working families.

But Australia will also pay as a nation. As I said earlier, the passenger movement charge applies mainly to one sector of the Australian economy, but it will have flow-on implications. The road user charge applies everywhere since the increased cost it causes will be passed on to consumers and raise prices for everyone—from cornflakes to building materials, from medicines to school shoes; the everyday items that families need. This tax is therefore about increasing inflation. It is about making the cost of living for all Australians so much higher.

In spite of what this tax means, the Rudd government persists with it, introducing on the sly the required regulation under the Fuel Tax Act 2006. The government tabled this regulation in this place on 13 March this year to implement the tax from 1 January 2009. Fortunately for all Australians who purchase items from shops that carry goods carried by trucks, which is just about all of them, the opposition blocked this nasty inflationary tax in the other place on 14 May. But the Prime Minister has said in question time that he remains determined to persist with this tax that makes the task of average Australians to meet the costs of living that much harder.

As I mentioned, the passenger movement charge is a sector-specific tax, but the Rudd government is pursuing a tax agenda that applies everywhere. The road user charge will increase the price of virtually every item in the shops. What is particularly extraordinary is that the government is imposing this tax at a time when all Australians are struggling with higher petrol prices. We have already seen that the government’s ineffective response to the problem of rising petrol prices is basically built around Fuelwatch. The Fuelwatch scheme imposes price fixing and further regulation on small business—again, giving lie to the government’s claim that it is going to put a special effort into tearing down the red tape affecting small business. In reality, they are increasing it. The scheme, which will remove spot discounting, could actually increase the price of fuel for many Australian motorists. This is a double whammy on fuel prices in this country: increases in diesel fuel prices and increases in petrol prices.

This is already having a significant impact on the tourism industry. It is more difficult and costly for people to travel. They are concerned about the cost of fuel. In areas such as my own, where a large proportion of the tourists come by road, there is already an impact being felt in the marketplace. It is gross hypocrisy on the part of the Rudd government to be talking about encouraging industry while on the other hand increasing taxes. That is what the passenger movement charge is all about. This tax is part of an overall attack by the Rudd government on the business sector, on business travel and on the Australian economy, particularly through the tourist industry.

This crucial industry generates approximately $24 billion in export income for the national economy and provides employment for nearly half a million Australians. It is a service sector industry that is currently struggling, with flatlining visitor numbers as a result of the high Australian dollar and skyrocketing fuel prices. It has become less competitive. Australia is a remote location for international tourists. They have to travel a long way. For that reason, the cost of fuel has a bigger impact on flights to countries like Australia than it does on flights in Europe where most of the travel is over short distances. It also has an effect within the country, because the cost of getting around Australia as a large nation is high. That is making Australia a much less attractive market for international tourists.

This is just the wrong time to increase the passenger movement charge, to put a new tax on people coming to Australia and travelling in and out of our country. At a time when the tourist industry is facing particular difficulties, this is just the wrong time to be putting up a tax on all of those people who come to Australia. The latest budget initiative will belt the tourism industry with a suite of new taxes. The passenger movement charge is only one of them. It is estimated that the impact of the budget tax measures on the tourism industry alone will be $1 billion. At the same time, the government is cutting industry support. It is cutting $6 million out of the tourism corporation at a time when it needs more money to be able to promote Australia in more difficult economic circumstances.

As we heard from the previous speaker, the government’s only response to the additional cost burden that they are putting on the industry is another review. It is a review into tourism strategies this time. This is a classic excuse from a government that do not have a clue what to do about almost every policy issue. Now 100, maybe 200, reviews have been commissioned to give them some ideas. We had 1,000 experts in town to try and give us ideas. We have had endless committees of inquiry and review. One would have thought after 11½ years in opposition that, when the Labor Party came to government, they would have an agenda ready to go and would know what their plan was for industries like tourism. But in reality they clearly did not have a clue. They are now out there starting to develop policies, but it is far too late in the process and, in the interim, the industry is being hit with a whole range of additional taxes.

I wonder why the Rudd government has acted this way. Doesn’t it realise that the tourism sector is characterised by a large number of small businesses and is a key provider of jobs, especially in regional Australia? In my electorate of Wide Bay, for example, there are around 3,000 people employed in tourism. But small businesses in regional Australian are constituencies that the Rudd government does not care about.

The passenger movement charge is only one tax on the tourist industry that will make life difficult. Others, like the luxury car tax, will also have an impact on tourism. Many of the vehicles that are used extensively in the industry will be subject to the luxury car tax. For instance, Toyota LandCruisers are workhorses of the tourism industry in regional Australia. Some of these vehicles have eight seats and are not exempt from the luxury car tax. This component of the tourism industry—small group tourism—which deals with customers who demand high-quality vehicles, is the one area of regional tourism that is growing right now. These operators must operate vehicles that are roomy, modern and fitted with current safety features. These vehicles need to be replaced regularly. There are also many hire car operators that run vehicles at this end of the market. The luxury car tax is another one of the suite of new taxes that has been introduced by this government that is going to significantly affect tourism.

The passenger movement charge, as members may recall, was lifted in the high-taxing budget from $38 to $47 on everyone entering or leaving Australia. It will apply from 1 July this year and is a tax slug that will raise nearly half a billion dollars over the next four years. The tax was poorly explained in the budget as a measure to offset the cost of aviation security measures that the government claims have not been cost recovered to date. It is also meant to recover the cost of processing international passengers at international airports and maritime ports as well as the cost of issuing short-term visas overseas.

What is curious is the total failure of this high-taxing government to provide any detail of the costs of the measures the passenger movement charge is supposed to cover. This is all the more concerning since the passenger movement charge, according to the testimony of the then Department of Finance and Administration to the Senate Legal and Constitutional Committee on 28 May 2001, is a tax and not purely a cost-recovery arrangement. Those views were reaffirmed in Senate estimates hearings again this year. This is not a charge to recover costs at all; it is a tax. The money is not hypothecated to be used for any list of specific purposes; it is a tax. It goes into consolidated revenue. There is no evidence or information provided as to the appropriateness of this charge, if it is in fact intended to meet just the costs associated with security and processing of visitors arriving in this country. What assurances can the high-taxing Rudd government offer this place that the passenger movement charge will not overcollect and become a general revenue-raising measure?

I also note the somewhat anarchic way in which the passenger movement charge is being introduced. In its haste to belt more people with more taxes, Labor blundered by imposing the charge on budget night on all tickets presold to passengers intending to travel after 1 July this year. These tickets were sold by the airlines in good faith at a price that included the old $38 tax. Initially, the high-taxing government failed to provide an exemption for these tickets, resulting in a messy situation where airlines would have to foot the extra cost. In this day and age, people buy their tickets much further in advance than was possible in decades past and, with the advent of low fares, there is an increasing wish of people to buy their tickets early to take advantage of those low prices. And yet, in a blunder on budget night, these people were going to have to pay an extra tax if they were travelling after 1 July. I suspect they would have been unwilling to do so and there would have been a stand-off between the airlines and others as to who was responsible for this unexpected increase in the tax. Obviously, Labor failed to consult with the industry and stakeholders and demonstrated its administrative incompetence.

As a result of coalition and industry pressure, the government has back-flipped and tickets sold prior to 1 July 2008 for use after this time will be exempt from paying the extra tax. That is as it ought to be, that is how previous increases in this tax were applied and it is incredible that the current government did not even bother to look at past experience before announcing this measure. The new tax will of course remain for all tickets sold after 1 July this year and the Australian tourism industry, already struggling with rocketing fuel prices and a strong dollar, will continue to wear the pain being imposed by a government that seems to be making up the rules as it goes along.

What does the passenger movement charge display? It displays a Rudd government that does not consult with stakeholders and is administratively inept. It displays the view of the Rudd government that the tourism industry is just a cash cow. It is all about glamour and not about working families. It suggests that the Rudd government does not particularly care about the knock-on impacts of this tax along with others, such as the luxury car tax, on small business in regional Australia. More particularly, it displays the hypocrisy of the government. We see a government ripping over $3 billion from young Australians with a tax on premixed drinks that instead of reducing teen binge drinking will probably make it worse. We see a government ignoring the advice of its own Public Service and foisting upon Australia an ill-considered scheme to watch petrol prices—a scheme that will abolish spot discounting, impose further burdens on small business and possibly increase petrol prices as a result.

We have a government that is already so out of touch that, at a time when Australians are struggling with high petrol prices, it decides to push up the price of diesel as well, resulting in higher costs for everyday items needed by all Australians. We see a government intent on grabbing more money off tourists and travelling Australians with its hasty taxes on the tourist sector—taxes that will make the lives of many Australians dependent upon the tourist dollar that much harder. So much for this government promising to reduce the cost of living. By its own actions, it is doing precisely the opposite. This tax increase will have a significant effect on Australia’s tourist industry and the business sector, which needs to travel. It must be seen for what it is: simply another tax rise.

Scott Morrison (Cook, Liberal Party) Share this | Link to this | Hansard source

I am pleased to rise today in support of the amendment that has been proposed to the Passenger Movement Charge Amendment Bill 2008in particular, the matters relating to the issues that impact on my constituents in Cook. In Cook, we share more than half of the flights that go from Sydney airport. In Cook, we also have the highest proportion of Qantas employees living in the electorate than in any other electorate in the country. On both of those counts, I am pleased to rise in support of this amendment and to speak on the matters that are raised. A third point is that a significant portion of my time before entering this place was spent in the tourism industry, and I also rise to speak on their behalf today in terms of these measures.

The passenger movement charge, as previous speakers have said, is not a charge; it is a tax. It is a tax, as has been said not only by those who have spoken in this place but also by the ANAO and on the basis of legal advice that has been presented to various hearings over time. This is a tax; it is not a charge. The passenger movement charge increase of $9 announced by the government is a tax grab of almost $460 million over four years.

Previously in this debate, the member for Port Adelaide said:

This government does not raise taxes lightly …

I can only agree. They do it very heavily. They have done it very heavily on every opportunity they have had in this place, in the six months they have been in government, to raise taxes—$19 billion in a tax grab as part of this budget to fund $30 billion of new expenditure, making it the highest-spending and highest-taxing budget in our nation’s history. But of greatest concern is the statistic in the budget which says that it will put 134,000 Australians out of work.

Tax increases contribute to inflationary pressures. You do not keep prices down by putting taxes up. But in this budget we have $19 billion worth of new revenue measures. In this particular measure, we are increasing the price of travel by $9, as announced in this measure. There was no mention by the government when in opposition, when they paraded around this country, of new taxes. There was no discussion about the new taxes they would be bringing down. There was a lot of discussion about how they were going to keep fuel prices down; there was a lot of discussion about how they were going to keep grocery prices down. Those opposite may think that this may never have been spoken in words, but there is no doubt in the community’s mind about what it was led to believe by the government when they were in opposition. They led people to believe that this would happen and, as the polls this week clearly showed, people believed them. People believed that they were going to do these things. But, equally, people did not believe and did not know that the government were going to bring in new taxes, because the government never said they would. But, at the first opportunity they have not to raise taxes, what do they do? They raise taxes.

In this measure in particular, there is no nexus, as previous speakers have said, between the charge and the expenditure. There is no nexus at all. The government claim that it is necessary to offset the cost of:

… a range of aviation security initiatives …

But the question I have is: what are they? I have searched for them. I cannot find what these measures are. How much do they cost? The Customs budget, as the member for Sturt said, has been slashed by $51.5 million in real terms, yet we are raising taxes for these measures by an amount in the vicinity of $459.3 million over four years. The previous government, as has been said, also increased the passenger movement charge, by $8 in 2001-02. But this is why we did it: to strengthen quarantine protection at Australia’s airports and to protect the country from foot-and-mouth disease and other risks, with all cargo and mail entering Australia to be inspected. There is the purpose. If you go to the budget papers of that year, you will find what the revenue measure was and also what the expenditure measure was. And what was the expenditure? It was $592.8 million over five years. The measure, as introduced in that budget, was to raise $72 million per year. So the measure was introduced for a purpose; it was not produced for the purpose of a tax grab, as is the case on this occasion.

This tax is a pernicious impost on our aviation and tourism sectors, which are already under pressure. Tax increases are designed to discourage consumption, so placing a tax on travel is, I therefore assume, designed to discourage business activity in the travel sector. As I mentioned, Qantas are a significant employer in my electorate. There are significant shareholdings in Qantas across the Australian community, and they are our national carrier, whom we cannot do without. Having worked closely in the industry, I know what can happen if your national carrier is not able to support the initiatives of your country as you are seeking to promote your country as a tourism destination. The New Zealand government found this out the hard way with the collapse of Air New Zealand, and they had to buy it back. We need to support our national carrier in the form of Qantas, and we need to be doing things that assist them in their efforts, not things that detract from their efforts.

Geoff Dixon has recently said that the issues faced by Qantas are ‘real and substantial’. Qantas are already reeling from fuel prices increases—which have been significant since their fuel surcharges were introduced a number of years ago—and also, most recently, from union action from the TWU. The Prime Minister’s front-line troops in the war against inflation and wage pressures, the TWU, are out there asking for a five per cent wage increase from Qantas as we speak. To highlight what this means for Qantas as they work through the challenges that they face, I will read to you a recent announcement. Tomorrow, I understand, we will learn what Qantas will be doing in terms of their international services as a result of fuel price increases and, I am sure, these new additional costs that they are forced to pass on to consumers. The Australian Financial Review of 29 May says:

The airline will cancel about 5 per cent of seats in its fleet by retiring one Boeing 737, grounding two 767s and accelerating the retirement by the end of the year of four 747s that serve Perth. Fast-growing discount business Jetstar will ground one Airbus A320 aircraft and cancel the delivery of one A321 plane ... Qantas will cease flying Gold Coast to Sydney and Ayers Rock to Melbourne, as well as trimming back Ayers Rock to Sydney services. Jetstar will ... exit the Sydney to Whitsunday Coast, Adelaide to Sunshine Coast and Brisbane to Hobart routes from July while reducing frequencies on some Adelaide, Avalon and Calms routes by August.

Furthermore, the Sydney Morning Herald of 31 May said that ‘JP Morgan’s research’ highlighted the threats faced by Qantas, ‘warning that the airline could post a $1 billion full-year loss if oil prices hit $US200 a barrel.’ Yet:

The airlines engineering union is still demanding a 5 per cent annual pay rise, while the airline is offering only 3 per cent.

…            …            …

Despite oil prices falling in recent days to below $US127 a barrel, there remain concerns that the continued surge in demand for oil in Asia, combined with any unforeseen disruptions in supply, could propel the price towards $US200 a barrel by the end of the year.

The Daily Telegraph of 30 May said:

QANTAS will have to lift airfares by another 5.5 per cent and cut more flights to offset the impact of current fuel prices, analysts said.

…            …            …

‘Obviously there will be job losses,’ chief executive Geoff Dixon said. ‘We do not have a specific target, however it will be in the low hundreds.’

This is the impact on Qantas, our national carrier. It will have an impact on their business; it has an impact on how they operate their business and, sadly, it is going to have an impact on some people who are currently working for Qantas.

As we move through this period of great difficulty, we should be assisting these industries to cope with these challenges, not imposing further taxes. In relation to the current union dispute, Mr Dixon described the union’s campaign—which has included claims that Qantas was using illegal strike breakers—as ‘1950s unionist stuff’. Geoff Dixon is well known as not necessarily being politically persuaded towards the coalition side of politics. That he is a fairly fair-minded individual in the political realm is well recognised. But he said:

I am pretty basically supportive of the unions ... but scab-labour strike-breakers? I feel like I am back in the 50s.

This is the environment we are now living in post November of last year.

To get back to the issue of the impact on tourism, and particularly in the Whitsundays: Mr O’Reilly, who is from the Whitsundays, said in an article in the Financial Review that the cuts by Qantas would be the final straw for many businesses struggling to recover from poor domestic tourism numbers resulting from rising fuel prices and interest rates, floods, damaging storms and the separation of Easter from the school holidays. This will close businesses in the Whitsundays. On current average load factors, the 1,770 seats lost will see 1,400 to 1,500 fewer people in the Whitsundays. These are the realities that the tourism industry and the aviation industry are confronting right now. What has been the government’s response to this? The government’s response has been to increase taxes on the tourism and aviation industries.

The current Minister for Tourism is an honest man. I say that with all sincerity, having worked with him when I was the managing director of Tourism Australia and he was the shadow minister for tourism. He is an honest man, and on 21 March, back when the previous government increased the passenger movement charge from $30 to $38, this is what the now Minister for Tourism, then shadow minister for transport and always member for Batman, said: ‘The government should use the money it was already making from the aviation industry before imposing further charges.’ The Minister for Tourism’s argument says it all.

The tourism industry pays its way. There were over $23 billion in earnings from overseas tourism last calendar year. That is up from $19.6 billion in 2005. I raise those figures because the last time we had a serious investment in and a strategy for tourism was when the member for North Sydney was the minister for tourism. When the member for North Sydney was the minister for tourism he brought forward a white paper which injected the single largest investment in the tourism industry and tourism promotion in the history of this country. As a result of that investment and the campaigns that followed—some of which attracted a lot of media attention, but I prefer to look at the facts rather than at opinions and people’s perceptions on the creativity of advertising campaigns—it has gone from $19.6 billion a year up to $23.3 billion a year. That is an increase of over $2 billion every year as a result of that investment.

Of that $23.3 billion, $15.4 billion is spent directly in Australia. In terms of GST alone, the tourism industry is already contributing $1.4 billion every year just from international tourists to the Australian economy. Yet the government thinks that it is a good idea to go and slug them again. The tourism industry, particularly small businesses, depends not just on international tourism. The international tourism provides relief and much needed yield. It provides the second part of their business. The core part of all businesses operating in tourism around this country is domestic tourism. The domestic tourism scene has unfortunately been very flat indeed. The tourism industry is under strain domestically, with fuel prices in particular putting pressure on small business. Fewer people are getting in their cars and going for day trips. The aviation cuts, which I mentioned previously, are also putting pressure on these small businesses.

The answer is not to increase taxes but to provide support for this industry—the sort of support that the previous government gave this industry through a massive injection of investment and capital and commitment. That is what I call on this government to do rather than cutting back on Tourism Australia’s budget by around $6 million next year. Just so you know what that means, that is on average more than Tourism Australia would spend in direct marketing programs in any one of their top 10 markets. It is not an insignificant cut. This tax is an impost on price-sensitive travellers.

Last year Australians aged over 15 took more than 4.7 million international trips, taking advantage of our higher dollar and spending on average 22 nights abroad. They largely went to New Zealand, the United States, Canada and the United Kingdom. The reason they were doing that was to go on holiday and visit friends and relatives. This is a positive thing for people to do, spending time with their families, visiting friends and relatives and seeing new things. They not only have to face this new tax of $9 extra when they make this decision, they have already been dealing with fuel levies that have been surging over the last three or four years. In May 2004 Qantas first introduced the fuel charge at $6 per domestic sector and $15 per international sector. At that time oil was US$44 a barrel. Today you pay a fuel levy of $26 for a domestic sector and between $100 and $170 for international sectors, and oil is now over $125 a barrel. It is difficult enough for those the government proclaims it has sympathy for to deal with what is already happening in our economy and to take the time and make the investment in order to spend time on a holiday with their family. Now they have to pay $9 extra every single time they want to do that.

Finally, this is a tax without a purpose. The nexus between the money raised out of this measure and where it is spent has been broken. This is the nail in the coffin for that nexus. It has been put to death by this measure. We have the pain of increased taxes without the benefit of accountability through a hypothecated increase in funding for security or other worthy measures. And it is these other worthy measures that I would like to draw attention to in my closing remarks. Additional respite for people and families living under a flight path is a worthy measure. That is something that I think we in this parliament could hopefully agree across the chamber is a worthy measure. Whether it is in the electorate of Cook, which represents more than half of the flights coming out of Sydney airport on any day of the week, or in the electorate of the member for Grayndler or of the member for Lowe or of the member for Wentworth, I think there is the opportunity for us to seriously agree that providing respite for people and families living under the flight path is a worthy measure. But not just in Sydney, I should stress. We could look at other cities. We could look at Adelaide in particular but we could also look at Perth, which has not been the subject of any particular measures on noise amelioration. We could look at Perth suburbs such as Cloverdale, Kewdale and Queens Park, as well as suburbs in other cities where people are affected.

There was a program called the Sydney Aircraft Noise Insulation Project, which commenced in November 1994. It was intended at the time to raise $183 million over 10 years. It was based on applying this money on the ANEF contours, which later became the ANEI contours when forecasts turned into indicators in May 1999. It meant there would be voluntary acquisition of properties affected above 40 ANEF; for public buildings, 25, and residence insulation, above 30. The program spent $347 million, all raised by 30 June 2006. The result was 4,300 homes, 17 schools, 21 childcare centres, seven nursing homes, 23 churches and 22 hospitals insulated. That was a very successful program financed by a noise levy, which was in the vicinity of $3.50 per passenger. The member for Grayndler thought it was such a good idea that he said in 2001:

It is my view that if the levy has to be raised under the user-pays principle or if it has to be extended out in its application ... then so be it. If you are going to subject people to this terror of noise, then give them proper compensation.

I would agree with the member for Grayndler, but I would ask this simple question. I would like to know where he was in cabinet when they decided to increase the passenger movement charge by $9 and not consider providing further noise insulation, not only for the residents of Cook who live in Kurnell or in other places in the electorate, but for his own constituents in the electorate of Grayndler and for those others affected by aircraft noise. The member and now minister has had a second chance and has now, I understand, extended his sympathy on aircraft noise to Fort Street High School, which I note was outside the 25 ANEI contour. I do not begrudge him this sympathy of extending that measure but, as I said in this place yesterday at question time, I do not understand why he is not prepared to extend that sympathy to other public buildings that have the same case as Fort Street High School and, more significantly, consider those residents who live in 25 ANEI and above and give them some form of support.

The Sydney Airport Community Forum is preparing a new proposal for the minister to provide gradated relief, potentially down to the 20 ANEI contour but I would hope down to the 25 ANEF or ANEI contour. The Joint Committee on Public Accounts and Audit must take a look at the PMC, the passenger movement charge, and the revenues that are derived and see how that can be used for this purpose. That is the meaning of the second item of the amendment that is before this House. As the Minister for Tourism, that lonely honest man of the Rudd government, said recently, ‘The government should use the money it already has.’ (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 am pleased to have the chance to speak to the Passenger Movement Charge Amendment Bill 2008 and in particular to support the amendment that was moved by the shadow minister from the coalition. The bill that is before the House today is, in summary, a slug on the tourism industry. I am not surprised that the Minister for Resources and Energy and Minister for Tourism has not made a contribution to this debate because it seems to me that the minister is fighting on many, many fronts at the moment.

There can be no doubt at the last federal election and on the election of Rudd government, the tourism industry expected in a very formal sense that the Labor Party was saying that having the tourism minister at the cabinet table was going to mark a profound positive impact for tourism. There was an expectation from industry that with Martin Ferguson, the member for Batman, at the cabinet table, there would be a voice for the tourism industry and it would be looked after. What we see today in the chamber is a very, very different story. I am disappointed that the Minister for Tourism has not felt it necessary to contribute because what we are debating today represents a slug on Australia’s tourism industry. We know that over the forward estimates the increase of taxation on the tourism industry will be $459.3 million. That is an extra nearly half a billion dollars being slugged from the tourism industry at a time when it simply does not need this additional taxation.

Australia’s tourism industry employs about 480,000 people and generates about $23 billion worth of exports, so it is worth while recognising that it is a very meaningful contributor to Australia’s economy and a big employer. It is with profound regret that I am speaking to this bill today. That is the reason that the coalition moved this amendment. We have a very strong belief that the way to generate further exports and the way to nurture and grow an industry like Australia’s tourism industry is to provide policy support for it. The bill before the House today does the exact opposite.

My concern is also that, not only do I know that Australia’s tourism industry is still reeling from the changes that this Labor government has put in place with respect to the industry—nearly $1 billion of new taxes coupled with a real cut in funding for Tourism Australia—but we also know that they are reeling because the tourism minister in the Rudd Labor government has done a complete backflip. There was a time when Martin Ferguson, the member for Batman, actually held the view that increases in the passenger movement charge were a bad thing. I refer to a speech that he made in this very chamber on the Customs Legislation Amendment Bill (No. 2) 2003. In that debate, the now Minister for Tourism made a couple of comments that I would like to repeat to the House. When he was being at that stage very critical of the Howard coalition government, he said:

However, what the government has persistently and conveniently failed to mention to the Australian community and the travelling public is that the passenger movement charge turns a very significant, healthy profit to the Commonwealth coffers. Even before the $8 increase in 2001, the government was already creaming off around $80 million per year and putting this into consolidated revenue.

Further on in the debate he said:

The issue now is that the government, in its seven years in office, has stepped far from the original intent of the passenger movement charge and uses it as a tax to pad consolidated revenue to the tune of some $80 million per year.

Finally, in defence of the then tourism industry, he said:

When it comes to ripping off the travelling public, undermining the tourism industry and job growth and development in Australia, my criticism today is not confined to the passenger movement charge.

But that was very much a central part of his thrust.

There may be some who would say that it is very rich of the coalition to now be critical of this government’s move on the passenger movement charge.

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

They would be wrong.

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

But they would be wrong, as the shadow minister said. I will explain to the minister who is at the table why that criticism would be wrong. The reason it is wrong is that although the coalition did historically increase the passenger movement charge, it made sure that any increases in the passenger movement charge flowed through in increased funding for Australia’s tourism industry. In fact, it was under the coalition that the Howard government provided the single biggest boost and the most policy support to Australia’s tourism industry, basically, in its history.

Under the white paper that the former minister for tourism, the member for North Sydney, introduced into the House, Commonwealth revenue—money that flowed directly to Tourism Australia to benefit Australia’s tourism industry and to help generate $23 billion worth of tourism exports—increased and uplifted Tourism Australia’s funding so that, for example, for the period from 2004 to 2005 we saw an increase from $135 million of Commonwealth support under the coalition for tourism to $218 million. But across the board there were very tangible and significant increases in support for Tourism Australia and for Australia’s tourism industry.

So, yes, we did increase the passenger movement charge, but we followed through with action that delivered in very real terms for the long-term benefit of Australia’s tourism industry. That stands in very stark contrast what has happened under the Rudd Labor government. The Rudd Labor government were critical at the time that the former coalition government increased the passenger movement charge; the now Minister for Tourism not only criticised that increase but he has now sat at the cabinet table under the Rudd Labor government and signed off on a $9 increase in the PMC—an extra nearly half a billion dollars of tourism tax—and he has said nothing. He has not even contributed to the debate today about what impact this will actually have on Australia’s export tourism industry or indeed, more broadly, on Australia’s tourism industry.

I say to the Rudd Labor government that it is time you took your hands out of the pocket of Australia’s tourism industry. If, however, there is a requirement for the Rudd Labor government to keep its hand in the pocket of Australian tourism, then at least follow through with real increases in funding. But the Rudd Labor government has done the opposite. We have actually seen a decrease in real terms of support for Australia’s tourism industry.

It should not be surprising that this has been the case because Labor has very strong form in this regard. Even yesterday, with the release of the Queensland state Labor government’s budget—and Queensland is in broad terms recognised if not as the premier state then at least as one of the key states when it comes to tourism—we saw that state Labor government cut tourism funding. Across the board we have seen many cuts by state Labor governments to tourism. Indeed, it is worth noting that, thanks in part to the increase in the passenger movement charge when the coalition was in power—money that was used, or hypothecated, if you like, to benefit Australia’s tourism industry—the coalition government put more money into tourism and more resources behind tourism than ever before, while state Labor and the minister at the table now, the Minister for Home Affairs, Mr Debus, who actually presided as part of the Carr and Iemma Labor governments in New South Wales, ran the other way. As the coalition stepped up to the plate and provided record funding, we saw the Carr and Iemma governments running in the other direction away from the tourism industry.

Let’s look at some of the figures in New South Wales. We see that tourism funding—this was at the time that the coalition was putting in record amounts—was $50 million in 2002 and $54 million in 2003, which is a reasonable increase in real terms. But this was when all the problems started. In 2004 it went back to $52 million, then in 2005 it stayed at $52 million—no real increase. Then in 2006 it was cut further to $50 million. So over the period of about four or five years we saw that funding for tourism in New South Wales was at best flatlined and in real terms significantly cut.

That is Labor’s record of support of the tourism industry. That is why the amendment that is before the House today recognises—and this is under point (c)—that this is in fact a tourism tax increase that is part of nearly $940 million of new taxes on Australia’s tourism industry at a time when Labor is also cutting support for the industry in real terms. It is simply not good enough that the Minister for Tourism has sat silently around that Rudd Labor cabinet table and said nothing about this passenger movement charge. I would ask the minister at the table: did he manage to move this increase in the PMC over the protests of the Minister for Tourism? Was there any contribution from the Minister for Tourism or did he simply just look the other way as the industry that he is responsible for was gouged of funding and then further gouged with nearly $1 billion of new taxes?

I know that Australia’s tourism industry is rightly very angry with the Rudd Labor government, because their lack of support for this industry is coming at a time when the industry is doing it particularly tough. With such a high Australian dollar we know that Australia’s tourism industry—to use the word of the CEO of TTF, Christopher Brown—has ‘flatlined’. Actually that was his optimistic scenario—flatlined—at a time when in this region we are seeing significant growth in tourism numbers. It is no surprise that Australia’s tourism industry has flatlined, because the withdrawal of support for tourism by state Labor has been compounded now by the rubbing of salt into tourism wounds by federal Labor with this tax grab, coupled with others, and combined with a cut in real terms in tourism funding. It is no surprise that the tourism industry is justifiably angry and upset.

We are seeing the implications of this in so many different ways. Only a couple of days ago, as the member for Cook says—and he is a man who has a great knowledge of the tourism industry, particularly given his former role as managing director of Tourism Australia—we have seen concern in the tourism industry. It is no surprise that we have seen cuts in aviation capacity across Australia. Our key carrier, Qantas, and Australia’s other carrier, Virgin Blue, which is also anticipated to be likely to reduce services in the near future, are both battling very strong headwinds. The very strong headwinds of course are the price of oil or jet fuel. In this respect, at a time when this industry is doing it particularly hard and when we are seeing reductions in capacity, we see this leering Rudd Labor government looking and almost salivating at the prospect of being able to slug nearly $1 billion of new taxes on tourism and thinking that it will be okay because we will be able to sell it out there in the electorate as being a tax on tourists.

We know that this Labor government is traditional Labor—big taxing, big spending. Despite all the protests, despite the assurances from the Prime Minister that he is an economic conservative, we know that federal Labor is no different from state Labor and, just as state Labor has now racked up $92 billion of debt at a state level, it is only a matter of time before these economic incompetents that now sit on the Treasury bench destroy the Australian economy in the same way. This bill before the House today is simply another nail in the coffin. At a time when this industry is doing it so tough and when it needs policy support, and at a time when this industry was relying on the Rudd Labor government who promised so very much prior to the last federal election and who stood up with their chests out and said, ‘We will give tourism voice at the cabinet table,’ what do we see? Within six months we see this kind of bill being put through with nearly half a billion dollars of additional taxes. In that respect, this bill is very much going to be to the detriment of the tourism industry. It is a bill that should not, in my view and the view of the coalition, be before the House. It is going to do the opposite to what is anticipated. Its net effect is going to be to put extra pressure on Australia’s families and on the tourism industry and, in the long term, it will be another nail in the coffin of the Rudd Labor government, which has turned its back on tourism.

Bob Debus (Macquarie, Australian Labor Party, Minister for Home Affairs) Share this | Link to this | Hansard source

I thank members for their contribution to the debate, noticing that many of them seem to have neglected to notice that it was necessary for the new Australian government to curtail government expenditure in the face of the extraordinary growth in expenditures for which those opposite had been responsible in the immediately preceding years. The purpose of this Passenger Movement Charge Amendment Bill 2008 is to amend the Passenger Movement Charge Act 1978 to increase the rate of passenger movement charge by $9 to $47 with effect from 1 July this year, and I mention that it is this year because there seemed to be some confusion about that circumstance during the debate. The increase was indeed announced by the Treasurer in the recent budget and it will partially—and I emphasise ‘partially’—fund the national security aviation initiatives that are presently being funded by the Australian government.

Since 2001 the Australian government has spent approximately $1.2 billion implementing the necessary aviation security measures. The passenger movement charge, which is imposed on the departure of a person from Australia, is collected by airlines and shipping companies at the time of ticket sales and then remitted to the Commonwealth. National security aviation initiatives implemented since 2001-02 are expected to cost $2,249 million up until 2011-12. Presently those costs are not recovered as part of the passenger movement charge. The passenger movement charge was last increased in 2001-02 by $8 to offset at that time the increased cost of inspecting passengers and mail and cargo in our international airports.

It is entirely well known that since 2001 government has implemented a significant number of aviation security measures. I have a brief list of them here. There have been a range of measures in relation to enhanced aviation security, including the upgrading of security at airports, implementation of the air security officer program, application of security regulation regimes in all airports, promoting industry awareness and compliance, trained officers on domestic and international flights, improved data access for border control agencies, expanding the detector dog program, improving the security and crime information exchange arrangements for aviation, funding counterterrorism first response teams, community policing at airports, enhanced CCTV monitoring, funding trial X-ray inspection technology, the deployment of explosive trace detection equipment, increased funding for air cargo security, the purchase of mobile X-ray screening vans—and there is much more. As I said, by 2011-12 this will cost government $2.49 billion and it is reasonable and indeed it is economically efficient to suggest that some of those costs should be offset by those who are actually using our aviation facilities. I point out, as it seems to be a matter neglected by those on the other side, that border protection and security measures at airports are absolutely crucial for the safety and security of tourists and therefore for our reputation as a safe destination. It is totally necessary that we should have implemented the security measures that I have described and others, and it is reasonable that those costs should, to some degree—and that is all we are speaking of: some degree—be offset by the passenger movement charge.

I should also make the point that, in the light of all available information, the $9 increase recommended by the Department of Finance and Deregulation (Quorum formed) has been accepted by the government as being broadly consistent with the amount that the passenger management charge would have grown had it been indexed. That is to say, we are not engaged here in what the member for Sturt described as overrecovery of costs; this is a direct reflection of the Department of Finance and Deregulation’s calculation of what the increase would have been if the charge had been indexed over the period since it was last increased by the last government.

There has also been the suggestion in connection with the foreshadowed amendment that somehow or other the Customs department is being subjected to unreasonable cost cutting while at the same time we are seeing this increase in the passenger movement charge. In fact, the Customs budget is around $1 billion this year and, like all agencies within this fiscally responsible government, it has been asked to achieve some efficiency savings. Those savings are nothing like the $51 million that the honourable member for Sturt has mentioned. In any event, and importantly, the efficiency dividend that will apply to Customs has been significantly offset by the injection, following an election promise by the government, of $16 million to provide for increased capacity of Customs to inspect cargoes at four important regional ports: Darwin, Newcastle, Launceston and Townsville.

I am completely confident that the efficiency savings required of Customs—as they have been required across government by an entirely fiscally responsible budget—will in no way undermine the capacity of Customs to work effectively to protect our border and to be as efficient as ever where it matters at the ports and the airports of our nation, protecting us effectively as they do on so many fronts from illegal activity.

I foreshadow that the government will not support the amendment moved by the opposition. We do not accept for a moment that the passenger movement charge is an unfair tax. It merely represents an appropriate indexation of an already existing tax. That in turn is to offset in part the absolutely necessary payments that are being made to improve aviation security, the cost of which is inevitably increasing.

As to the suggestion that the bill should be referred to a joint standing committee, I point out that by no stretch of the imagination can this bill be said to have any relationship whatsoever to a question of noise abatement. I think it is pretty plain that what the opposition is really about in this circumstance is seeking some way to delay an entirely proper tax bill associated with the budget and to do so for no good reason at all. I commend the bill.

Question put:

That the words proposed to be omitted (Mr Pyne’s amendment) stand part of the question.