Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

The opposition opposes this tax grab. We oppose it for one simple reason: it is bad policy. As an opposition we oppose tax increases. We are the party for lower taxation, but apart from that fundamental principle this particular proposal is punitive and counterproductive to the stated aims of this tax grab. We were told this tax grab was needed to fight inflation. To oppose this is, according to the economic illiterates in Labor opposite, tantamount to economic vandalism. Let us analyse that assertion. I must say that tax increases to fight inflation is an interesting proposition. I thought price rises, which are necessitated by tax increases, were in themselves inflationary. Indeed, Labor senators in their majority report on this group of four bills—the Tax Laws Amendment (Luxury Car Tax) Bill 2008, A New Tax System (Luxury Car Tax Imposition—Excise) Amendment Bill 2008, A New Tax System (Luxury Car Tax Imposition—Customs) Amendment Bill 2008 and A New Tax System (Luxury Car Tax Imposition—General) Amendment Bill 2008freely acknowledged at paragraph 2.19 that this measure will be, you’ve guessed it, inflationary. So the one argument Labor put forward for this tax slug—the need to fight inflation—has been undermined, knocked out, by Labor senators themselves. They acknowledge it will be inflationary.

Having said that, I acknowledge the inflationary impact will be minimal. But if the argument is that we need this to fight inflation then surely this measure should be anti-inflationary and not inflationary, as the Senate Standing Committee on Economics determined. Might I add that Senator Hurley, the chair, and Senators Cameron, Furner and Pratt were part of the committee which came to that conclusion. So even Labor senators are rejecting the Team Rudd spin on this one. The spin and rhetoric of Labor simply do not match the facts. The evidence simply does not support the reason for this measure.

We have these assertions of economic tough times. We heard about it at question time again today. Interestingly, when Mr Costello made those warnings on behalf of the former government last year, Labor and the media in virtual harmony condemned him as scaremongering—it was untrue, was not going to happen, it did not exist. Yet, very interestingly, here we have the Labor Party now acknowledging that which the former government said Labor would be facing if they were elected to government. We of course had a proper plan to deal with these issues, unlike Labor, who have a very ad hoc approach to the economy. They are going to fight inflation by doing something inflationary—that is, increasing taxes.

I will not be holding my breath for Senator Conroy to apologise to Mr Costello and the former government for denouncing the concerns that were expressed by the former government last year as to the economic times that we might be facing. But we have been told by Labor that we are facing an inflation crisis. I think that is overstated and an exaggeration simply for their own political purposes. But the inflation issue is quite different to that which we have previously experienced. We are experiencing heightened inflation at a time of economic downturn. Now that is a double whammy only Labor could manufacture!

We are told the rejection of this proposal will hit the surplus. Yes, it will—marginally. But the surplus we needed to pay off Labor’s debt of $96 billion was opposed every inch of the way by all those opposite, including Senator Conroy, who of course was one of the people who led the charge so often on behalf of the then opposition. I remind honourable senators that it was only in April 2006 that Labor’s massive $96 billion debt was finally paid off. After we paid off that massive debt we then moved to establish future funds to ensure that our future liabilities were looked after and catered for as well. But once the basics are covered—debts are paid off, liabilities covered—my view in general is that surpluses should in fact be given back to the people. Labor’s empty rhetoric on the economic front is unsustainable, as pointed out by Labor senators themselves inquiring into this legislation.

It is not only bad policy as a result of its impact on the macroeconomic picture, namely that it is going to be inflationary, but it is also bad politics, because one of the other justifications has unfortunately been a reversion to something that I thought went out with the last millennium: the very distasteful throwback to the old class warfare concepts. Senator Carr, who is the minister for industry and who should be championing the cause of the motor vehicle sector in these very difficult times, simply says that the luxury car tax is okay because millionaires can afford to pay. Indeed, his words, I think, were, ‘We’re not in the business of giving money to millionaires.’ What that shows is a minister completely and utterly out of touch with the realities of the Australian motor vehicle manufacturing sector. That was highlighted when we asked a question of him in question time just recently. He got the luxury car tax threshold wrong and he got when the tax was actually introduced wrong. He had to come back after question time to correct the record. That shows his disregard for this issue as industry minister—somebody who should be very concerned about the impact of this measure on the motor vehicle sector.

The fact that Labor is willing to treat this simply as a Treasury matter, as a taxation measure, is emblematic of the way the government is treating this issue. The fact that this might actually impact on industry—on a sector that is doing it tough—that it might impact on jobs, that it might impact on a whole host of people who under no measure could be described as millionaires, is a matter of great regret. This proposal is bad policy because it will hit all three of the car manufacturers that are left in Australia manufacturing cars for Australians.

Senator Carr and the government said that they champion the cause of manufacturing. Everything they have done since they have come into government has hurt the manufacturing sector. The thousands of job losses that they have presided over bear testament to their mismanagement. All three car manufacturers are saying, ‘This will be detrimental to the Australian car manufacturing sector.’ Senator Carr dismisses it because it is something that only millionaires will have to deal with. No, it is not. That is the problem when you have such a blinkered, ideological view of matters economic—you do not understand the broad sweep of the consequences of what you are doing. This tax on so-called millionaires, which is very offensive to those people who actually need a people mover like a Toyota Tarago or a LandCruiser in rural and regional areas—