Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

Last night when I was speaking on the Tax Laws Amendment (Luxury Car Tax—Minor Amendments) Bill 2008, I drew attention to the fact that it was a piece of legislation that endeavoured to correct some of the flaws in the luxury car tax legislation. This is a fatally flawed piece of legislation. The changes that are being made in the bill, while they are an improvement, go nowhere towards fixing what is a ridiculous tax that has been imposed in an incompetent way. The flaws in this tax, which is badly developed, have arisen because of the bungled process. Deals done in the Senate at the last minute to get the legislation through were not properly considered and when the regulations came out it turned out that the concessions proposed to be granted were in fact largely ineffective.

If we go back a little into its history, this particular tax was a part of the $19 billion tax grab that was included in the Rudd Labor government’s first budget. This drove them into a situation where they became the biggest taxing government in Australian history. In spite of inheriting a $20 billion surplus and $60 billion in the Future Fund, the Rudd Labor government could not even develop a satisfactory budget without imposing another $19 billion worth of new taxes. In spite of $19 billion in new taxes, yesterday we heard the government admit that after only 12 months in office the budget is going to plummet into deficit. It was deficit day yesterday when Labor admitted that, in spite of the $20 billion they inherited in surplus and the $60 billion in the Future Fund, they cannot even balance their first budget. Their first budget is going to go into deficit. That is obviously a demonstration of Labor’s incompetence when it comes to financial management.

Whilst they cannot manage the budget in a macroeconomic sense, this legislation is proof positive that they also cannot manage it in a microeconomic sense. The detail associated with the luxury car tax was flawed. The luxury car tax set in place an additional complication in our taxation regime. As a result of the introduction of the luxury car tax, there will now be a total of six separate rates at which a car can be taxed. It brings back memories of the horrors of the tax system that existed under Labor with the wholesale sales tax rates, which they defended to the death, with multiple complexities of rates. Following this legislation and these amendments, some cars will be able to be taxed at zero per cent, other cars will be taxed at 25 per cent and other cars will be taxed at 33 per cent. All cars will attract a 10 per cent GST, but for some people that GST will be refunded. So in reality there will be six separate rates of car tax.

If you think that it is only luxury cars that are taxed at the top end, you need to think about the poor people who have large families and need a vehicle that can move a large family. Some of them are going to be paying 33 per cent in tax. In fact, including the 10 per cent GST, 43 per cent on a top-of-the-range Tarago will go to the government in tax. That is 43 per cent tax for a large family with all the extra costs that they have in ensuring that their family is able to meet their daily needs. If they need a large vehicle to carry their family around, Labor will tax them 43 per cent on top of the cost. But if you buy a Mercedes, Jaguar, Audi or BMW under Labor, a significant proportion of those imported luxury cars will not have a 43 per cent tax or a 33 per cent tax; they will have zero tax. There will be no tax at all on a Mercedes but, if you buy a people mover for your family, you will be up for 43 per cent. The reality is that this demonstrates something about Labor when it comes to fairness.

This was a poorly conceived tax and the concessions made to the Greens made it a whole lot worse. This legislation will provide for refunds and/or exemptions for those parties promised by Labor when they introduced the tax, namely primary producers who purchase four-wheel drives, eligible tourism operators and those who ordered a luxury car before the budget. Specifically, it will clarify and correct another one of the incredible bungles in the original legislation. If you purchased a car or a vehicle that was subject to the luxury car tax through a finance company or a lease plan, you do not qualify for the exemption. That in fact affected 60 per cent of the people who were purported to be eligible for this concession—farmers and tourism operators. Sixty per cent of those vehicles are purchased through leasing or finance arrangements. The bungle in the original legislation meant that most of the people who were supposed to get the concession did not in fact get it.

There are many other anomalies in relation to the concession that is granted on four-wheel drives. These are anomalies that are not being corrected by Labor in this legislation. Under the arrangements, a farmer who owns the land can get the concession on the luxury car tax for his four-wheel drive vehicle. But if he is a shearing or harvesting contractor working on the same farm he cannot get the concession. The concession is not available to those people, even though they may be working right alongside the farmer with an identical vehicle in an identical place.

The doctor who needs to visit his country patients on dusty roads or on wet nights is not eligible for the concession, even though he may live in a remote country town. But we desperately need to get doctors and other professionals to work in regional Australia. There are one or two members sitting on the government benches at the moment who represent some regional towns. They also represent some of the towns where it is very difficult to get doctors and other professionals to work. Why are you flogging these people with a 43 per cent tax on their vehicle while allowing certain other people who live in Toorak or in the luxury suburbs in Brisbane to get their vehicle while paying no tax at all? If there were any Labor backbenchers who cared about regional Australia and were prepared to stand up for their communities, they would be outraged that the professionals in their country towns are flogged by a tax that people in the cities do not pay. Where is the justice in this? How has Labor managed to think through this sort of nonsense?

Under the arrangements that were put in place, a farmer who was leasing his LandCruiser instead of buying it would also have to pay the tax. That is being corrected by this legislation and that is a welcome move. In addition, we have issues associated with cars that were purchased before the budget but not delivered until after 1 July. This legislation will ensure that the tax increase will not apply to them. This will also confirm that eligible refunds under this provision will be paid directly to the people who are entitled to receive them.

There are many other anomalies in this legislation. For instance, if a person buys a BMW 3 Series, they will pay no tax at all. If they buy a Holden Commodore, they will be slugged with the full 33 per cent luxury car tax. If they buy a Jaguar X-Type, which is totally imported, the luxury car tax will not apply. But if they buy a top end Ford Falcon there will be $1,000 worth of extra tax.

This government have waxed lyrical about their new $6 billion car subsidy program. This is a $6 billion plan to try and encourage the Australian car industry to manufacture new models and be competitive. I am supportive of the Australian car industry. I wish it were more economically competitive and better focused. I wish that the government would adopt the same attitude to other Australian industries that they have to the car industry. When they inquire into future arrangements, they pick their mates to organise the outcome that they want rather than trust the Productivity Commission. The standards that this government have adopted in relation to the car industry are totally different from what they apply to so many other industries in Australia.

But in one area they are consistent: they are consistently inconsistent. Why are they putting a $6 billion subsidy into the Australian car industry and yet taxing Australian luxury cars but allowing imported Jaguars and Mercedes and Audis and BMWs to be imported tax free? If you buy an up-market Holden or Falcon you pay up to 43 per cent in tax; if you buy a Mercedes or a Jaguar you pay zero tax—you do not even pay the standard luxury car tax rate of 25 per cent; you pay nothing at all. That means the government are artificially subsidising the import of a range of foreign produced cars that are built by foreign workers. They are giving those people a subsidy, yet on the other hand Australian workers are producing cars that are taxed at a rate of 43 per cent.

Is it any wonder that the government need to give them a $6 billion subsidy when they are flogging them with a 43 per cent tax at the other end? This government is so inconsistent and this policy is so poorly thought through that this is the kind of rubbish that is being delivered. That is what results from the kinds of backroom deals that allowed this legislation to pass in the first place.

A large Australian-built Holden attracts the full tax, but if you buy Jaguars, Mercedes, Audis, BMWs et cetera—the cars that you are more likely to see double parked at Double Bay—you get those tax free; no tax at all; zero.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

Mr Bidgood interjecting

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

We have the honourable member opposite defending that situation. Let him go home and talk to the doctors in the remote towns in his electorate and tell them that it is fair for them to pay 43 per cent tax while the people parked at Double Bay can have their cars tax free.

The reality is that this government has not thought through its legislation. It is has bungled the process. The original legislation was fatally flawed. This new legislation, a great embarrassment to the government, has had to be brought in to fix just a few of the problems. We welcome the fact that those problems will be fixed and that a few of the bungles are being unravelled. For that reason, the opposition will support the bill. But if the government is serious about having a luxury car tax regime that is fair and equitable, it will recast the entire legislation and withdraw the whole of the luxury car tax and devise a scheme that is fair and equitable.

As others have said in this debate, we have had a luxury car tax now for quite some time, set at 25 per cent. Labor, as a part of its tax grab, decided to put an eight per cent surcharge on the luxury car tax. Now it has allowed a set of exemptions. Those exemptions are in areas where it is appropriate to make exemptions, but in addition to that it has actually taken off the existing 25 per cent luxury car tax that has been applying to the Mercedes, the Jaguars and the BMWs. It has taken that away. The inconsistency in what the government has done is absolutely mind-blowing. It needs to fix the legislation. It needs to fix the tax—lock, stock and barrel. The opposition will be supporting these amendments, but they do not go anywhere near far enough to resolve the problems, the injustices, that this legislation has created.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

After listening to the member for Wide Bay, I wondered what sort of response he would have if there were a bill which he fully supported. He would be almost orgasmic in his support, because the response we had here from the member for Wide Bay was quite extraordinary. It really is a bit rich for the National Party, or the Liberal-National Party—whatever they call themselves in Queensland today—to criticise us for a lack of commitment to rural and regional Australia. For the authors and architects of the Regional Partnerships rorts to say that somehow the luxury car tax is all our responsibility and something that we have imposed is to not look at or consider history, because in 1979 the Fraser coalition government imposed a form of additional tax on luxury cars.

The coalition government did that in 1979 and the luxury car tax was first introduced in the form it is currently in on 1 July 2000. We were not sitting here on this side of the House on 1 July 2000. If you look at history, it was the Howard coalition government which introduced the luxury car tax. But when you listen to the member for Wide Bay, it is almost like he has political amnesia on that point. The luxury car tax was first introduced when the GST was introduced, and for members of those parties opposite to lecture us about imposing tax is a bit rich when you consider it was they who imposed the GST upon the people of Australia with almost no compensation.

In addition to that, one would think when you listen to those opposite that in fact there are different tax rates for those who live in rural and regional areas and those who live in the cities. We heard the member for Mackellar talk about the Constitution today. I would suggest that those opposite have a look at the Constitution, because it talks about the fact that you cannot do these sorts of things. We on both sides of the House, conservative parties in different forms and the Labor Party in its current form, have been here since Federation. You would think that those opposite would have some sort of collective memory in relation to this but, no, they have not.

The member for Fadden said last night that our luxury car tax was rushed. It is the case that the Treasurer announced on 13 May this year, in the budget speech, that we would bring fairness and integrity to this area. That is when it was first announced that we would increase this tax from 25 per cent to 33 per cent. I can hardly say that is rushed in the circumstances.

The luxury car tax currently applies at a rate of 25 per cent for every dollar over the luxury car tax threshold. The rate of increase we are talking about here is to 33 per cent, with effect from 1 July 2008. The current luxury car tax threshold is $57,123. The threshold is indexed annually and there is a definition of luxury cars in section 25-1 of the act, and that excludes certain vehicles. If you listened to the member for Wide Bay talk, you would think that we had some intention of punishing low- and middle-income earners who buy cars to take their kids to school and get themselves to work and that we had some sort of pernicious attitude towards those who live in rural and regional areas. That is the attitude you would get from those opposite. Then at the end he said he supported the tax legislation before the House, the Tax Laws Amendment (Luxury Car Tax—Minor Amendments) Bill 2008. It is quite extraordinary.

Section 25-1 of the act excludes certain vehicles, including prescribed emergency vehicles, motor homes, campervans and commercial vehicles and, provided they are not GST free, vehicles that are specifically fitted out for transporting disabled people seated in wheelchairs. The exemptions to the luxury car tax in the legislation remain unchanged, and that is a fact. It is the case that both sides of politics have supported the luxury car tax, and it will apply in this bill to both domestically produced and imported vehicles.

The measure that the Treasurer announced in May is expected to raise about $555 million over four years. The actual tax change will result, as he said in his press release of 13 May 2008, in a car with a current price of $100,000, inclusive of goods and services tax and the luxury car tax, being subject to an additional $2,541 in luxury car tax. 2007 was a pretty good year for the car industry in Australia. There was a new record for the industry: for the first time, more than a million sales were achieved. It is the case that locally produced vehicles accounted for over 19 per cent of the total vehicle sales in 2007.

The member for Wide Bay should have particular regard to the second reading speech of the Treasurer, where he pointed out some facts which are directly at odds with so much of what the member for Wide Bay said. I will go through the speech because I think the member for Wide Bay needs to listen closely. The Treasurer, in this second reading speech, said:

It is estimated that around 10 per cent or around 100,000 of all new car sales made in Australia in 2007 were subject to luxury car tax. … Of the top 20 selling cars in 2007, which covers more than 50 per cent of the car market, less than four per cent of those sold are subject to luxury car tax. At the lower end, the increase is in the hundreds, not thousands, of dollars. The increase in the luxury car tax for the lowest cost Toyota Prado models are $39 and $98. For the Ford Territory Ghia, the increase is $496.

And there was mention of Toyota Taragos in the speech. The Treasurer correctly points out:

Of the five Toyota Tarago models, only one attracts the luxury car tax. Of the three largest selling people mover brands, this is the only model that will be impacted by the tax increase.

The explanatory memorandum concerning this bill says that around 105,000 new luxury cars are sold each year. Luxury cars which cost $100,000 or more are currently taxed at about $8,000 and under the new tax increase they will be taxed at about $10,500. As I said, the luxury car tax only applies to the portion of the motor vehicle cost above the $57,123 threshold.

The coalition have opposed so much of our budget measures, as I have said in this House before, that you would think they had the same mentality as the opposition in 1974 or 1975. They opposed our tax on ready-to-drink alcoholic beverages, the new excise on condensate, changes to the Medicare levy surcharge threshold and others. The truth is that those opposite wish that they were over on this side of the House. They almost have the attitude that the Australian people were really in some sort of stupor on 24 November last year when they voted for us to occupy the benches over here. The truth is that those opposite are yet to come to grips with the fact that they are in opposition. That is the reality.

The government have brought this legislation to the House. We have listened to what Senator Fielding and Senator Xenophon have to say and we have agreed to their amendments. Under what I describe as the Fielding amendment, there will be a refund of the increase in the luxury car tax to primary producers and eligible tourism operators purchasing eligible four-wheel drive and all-wheel drive vehicles. The cap for the refund will be $3,000 for one vehicle per year for primary producers and $3,000 per vehicle for eligible tourism operators. Under what I describe as the Xenophon amendment, there will be provision that vehicles purchased under a contract entered into before 7.30 pm on 13 May 2008 but delivered after 1 July 2008 will have the 25 per cent luxury car tax. It is a fact that when people buy cars they often arrange for finance subsequently. It is a fact of life.

We have listened to what the good senators have had to say and we have worked with them. We have adopted their amendments to ensure that our luxury car tax increase becomes law. Lest anyone says that we have abandoned the car industry, we have announced a $6.2 billion plan to make the car industry in this country more economically viable and environmentally sustainable by 2020. It is the Rudd Labor government that have done that, and it has been done in the context of ensuring that the tariffs in the area are reduced to five per cent.

Like many in this House, I strongly believe that free trade is the way to go in terms of relations between countries. As much as possible we need to ensure that our very competitive car industry, primary producers and those in the manufacturing industry get a fair deal when it comes to selling their produce overseas. We are part of a global community when it comes to the car industry and so many other industries. We will continue to pursue a free trade agenda because that is where the future lies in terms of innovation and global integration.

The Hansonite or McEwen type of protectionism solution is not the way to go. Quotas and high tariffs only result in the Australian economy suffering. In these circumstances I support this legislation. It will mean, through the extra $555 million, that the people in my area will receive the kinds of assistance that they need from government. If those opposite want to keep knocking down our tax measures one wonders how they expect us to pay for schools, roads, hospitals and the like. I say to those opposite that they need to look back and think about the lessons of history before they come into this House and start criticising us for taxes they initially imposed themselves. They need to come to grips with the fact, after 12 months, that they sit opposite. They have to recognise that fact. They are trying to bury Work Choices as quickly as they possibly can, but the truth of this matter is that they sit opposite because of Work Choices and they need to support the government’s agenda.

The luxury car tax is part of the government’s response, in terms of budget, which will have a huge impact in my electorate of Blair and a huge impact in terms of the viability of the Australian government’s finances, and that will have a big impact on the economy as we roll out our Economic Security Strategy. People in the 43,792 households in my electorate who receive money in the next few weeks will benefit by virtue of the federal government’s responsibility and action. I commend the bill to the House. I think it is a good tax for our economy and a good tax for the integrity and fairness of the Australian taxation system. I support the Treasurer in his endeavours to ensure that the luxury car tax legislation gets through this House.

Jamie Briggs (Mayo, Liberal Party) Share this | Link to this | Hansard source

Here we go again: Labor is back with big budget deficits and new taxes. ‘It is a good tax’. That is quite an amazing statement by the member for Blair. Two points I will pick up. The member for Blair raised the Whitlam government. How appropriate when we see, after 12 months, a budget going into deficit already. How appropriate that we see a budget with new taxes. Understand this, Mr Deputy Speaker: they inherited the best budget position in the history of the Commonwealth. They inherited a $22 billion budget surplus; they inherited no net government debt. In fact, they inherited $60 billion in savings because of the hard work that was done for 12 years by the Howard-Costello government. It is quite extraordinary to have a situation where, after 12 months, we are entering into deficit with new taxes, including a new tax on an industry which is already struggling. This tax is designed to damage the Australian car industry. The effect it will have is to damage the Australian car industry at a time when it is already struggling.

But let us start with the bill. These amendments are to fix mistakes in Labor’s own bill. We are debating today the Labor incompetence bill. It is an amendment designed to fix their own stuff-up in their own bill. The flaw that we are correcting is so serious that up to 60 per cent of the farmers and tourism operators Labor claim would be eligible for the rebate on the tax are not eligible. This is a mistake by Labor that we are spending time on in the House again today. The member for Blair said this was a well thought through plan when the Treasurer announced it in May. As I understand it, the Treasurer had not consulted with the car industry. The industry directly affected by this had not been consulted. How is that a well thought through plan? It is quite extraordinary. It really does point to the way that this government is managing this economy at an important time and it is very concerning.

I will give a little bit of history about this tax. The member for Blair claimed it was a tax introduced by the Fraser government—not a prime minister I have a lot of time for. In fact, it was not; it was a tax introduced by the Hawke government back in 1986—Labor in government, new taxes. We had the spectre of the Whitlam government raised in the previous speaker’s speech, and I think it is very appropriate that we had that government raised because that is where we are heading with higher taxes and big budget deficits. That is what Labor stands for: higher taxes and big budget deficits. They do not manage the economy well; they do not know how to make the tough decisions required to keep the budget in surplus. For 12 years the Howard-Costello government made the tough decisions to pay off Labor’s debt and to keep the government in surplus. Within 12 months that has disappeared. We saw yesterday the Prime Minister slowly and quietly mention into the Hansardhe sort of snuck it in there towards the end of one of the most boring speeches the parliament will ever record. After about 24 or 25 minutes, I think, he added in there a ‘temporary deficit’. A temporary deficit? Is this like the temporary deficit introduced in 1990 by the Hawke government, which lasted until 1996 when we had to pick up the pieces when we came to government? This is what it is about. There is no such thing as a temporary deficit with Labor. There will be higher taxes, and this bill is part of the higher taxes, and there will be big budget deficits. This is what Labor will do in government.

The member for Blair says that we have not accepted the loss of the election. We have accepted it all right. The Australian people voted for the Labor government. Labor are governing and the people are dealing with the consequences. And the consequences are that they are dealing with the incompetent management of our economy at a time when we cannot have incompetent management of our economy. They have introduced new taxes when they had a $22 billion budget surplus hand-delivered to them, and with savings unseen before in a Commonwealth budget. But we know what Labor is like; we know what they are about. They are about deficit budgets, they are about higher taxes. It is the same in my home state of South Australia, where the budget is a disaster. The mismanagement of the South Australian economy will damage South Australia for years to come.

Let us look at New South Wales: one of the most extraordinarily mismanaged, corrupt governments in the history of our Commonwealth—probably the worst government in the history of the Commonwealth—to the point where a major daily paper used their front page to say ‘Sack yourselves’. That is all because of the mismanagement of the economy. The New South Wales economy is dragging the Australian economy down, because it is in deficit and the government are putting new taxes on. Where is the familiar ring? The familiar ring is here, in this place, with this bill. It is another example of the mismanagement of this economy: higher taxes, big budget deficits. That is what Labor stands for: higher taxes, big budget deficits.

We saw it yesterday. The Prime Minister announced that we will have a temporary deficit—or, as the Treasurer would like to say, a ‘negative surplus’. It is only temporary though; it will only last the Australian people five, maybe 10 years and it will damage them for however much longer, and it will require us in government again to fix it. Someone with the competence of the Leader of the Opposition understands how to run an economy; he understands how to make the tough decisions—like the members Higgins and the former Prime Minister did for 12 years.

The government inherited the best budget position in the country’s history, yet they put a new tax on the car industry at the wrong time. Can you understand the consistency of handing the car industry $6 billion with one hand and applying a new tax with the other? It is a tax which wholly and solely hits the Australian car industry. I note the member for Makin is in the House. South Australia’s reliance on the car industry, particularly in the northern suburbs of Adelaide, is vital. Holden is a vital part of the South Australian economic fabric. This sort of tax will put pressure on them remaining viable in Australia. Can you imagine a government putting a tax on this industry at this time but on the other hand handing them $6 billion? The inconsistency is breathtaking. But it is what Labor do—big budget deficits and higher taxes. That is and always has been the Labor way. Those on the other side are the most remarkably trained spinners of all time—they are the Shane Warnes of the parliament. They come in here and they have been handed their Hawker Britton talking points in the morning—the hollow men in the PM’s office have worked hard overnight. High tax is good; budget deficits are okay. That is what we will hear from the other side—black is white, white is black; budget deficits are good and higher taxes are good—and we will hear how economically irresponsible we are for standing in the way of higher taxes. I will tell you, Mr Deputy Speaker: I will always stand for lower taxes; I will always stand for budget surpluses.

When there is economic growth—and the Treasurer’s own MYEFO statement says that the government expect the economy to grow by two per cent—under no circumstances should there be any room for a budget deficit. Under no circumstances should there be any room for a budget deficit when you are putting on a new tax, and that is what this is. We are debating an amendment bill about a new tax. It is quite an extraordinary bill. Have no doubt about the position of the budget when the new government came to office. They formed a budget in May this year with the best set of books that they could dream of. The Prime Minister must have woken up on 25 November, had his briefing from Dr Shergold and Dr Henry and said, ‘I’ve just walked into candy land.’

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Energy and Resources) Share this | Link to this | Hansard source

Won Lotto.

Jamie Briggs (Mayo, Liberal Party) Share this | Link to this | Hansard source

Just won Lotto. We have the best budget position of all time. How could we stuff this up? How possibly can we stuff this up within 12 months? Again, it is interesting that the member for Blair spoke about the Whitlam government—the similarities are breathtaking. It is not just us who say that they inherited the best budget position of all time. There is a point I noticed the Treasurer did not mention yesterday on ‘Deficit Day’, as it will become known in this place—not the ‘fundamental injustice day’ that we all remember so well. Yesterday was ‘Deficit Day’. The OECD said on page 144 of their Economic Outlook that the recent budget measures—these are the budget measures that the Labor Party are taking great pride in, the 10.4 billion pump priming of the economy—were ‘made possible by the significant fiscal leeway built in the previous years’. I will repeat that: ‘made possible by the significant fiscal leeway built in the previous years’. Who built that fiscal leeway? It was the member for Higgins and the former Prime Minister. This government within 12 months has turned it around with big budget deficits and new taxes. That is what Labor stands for—big budget deficits and new taxes. That is what this bill does. It is a disgrace—12 months in.

Peter Garrett (Kingsford Smith, Australian Labor Party, Minister for the Environment, Heritage and the Arts) Share this | Link to this | Hansard source

You’re repeating yourself now.

Jamie Briggs (Mayo, Liberal Party) Share this | Link to this | Hansard source

That is from the minister for no portfolio who sits there while the South Australian Lower Lakes die and does nothing about it—the ultimate hollow man, the ultimate sell-out. Talk about sell-outs—this bloke wrote the book on it or sung the song about it maybe. Talk about sell-outs—the Whitlam government spectre is back, inherited by the—

Jon Sullivan (Longman, Australian Labor Party) Share this | Link to this | Hansard source

We have a convention here that we refer to members by their electorates, but not this fellow.

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

The member for Longman in his interjection makes the point. The member for Mayo will refer to ministers and people in this place by their seat or their title.

Jamie Briggs (Mayo, Liberal Party) Share this | Link to this | Hansard source

I will leave it on this note. The Labor Party stands for higher taxes and big budget deficits.

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

I rise to speak in support of the Tax Laws Amendment (Luxury Car Tax—Minor Amendments) Bill 2008. Before I get on to the substance of the bill, can I respond to some of the assertions and comments made by the member for Mayo. He started off by talking about what the Rudd Labor government inherited when we came to office. Let me remind him just what we inherited. We inherited a Murray-Darling Basin in absolute crisis after 12 years of a coalition government that did absolutely nothing about securing Australia’s water supplies. I can talk about that in detail on another occasion because there are plenty of examples that I can use where the previous coalition government—

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

The member for Makin will heed the good advice he has given himself. You will talk about that on another occasion. I will remind you of the bill before the House.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

…            …            …

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

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

…            …            …

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

It went on to say:

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

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

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

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

Marin Burela from Ford said:

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

Max Yasuda from Toyota said:

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

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

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

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

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

Debate interrupted.