Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Hansard source

I rise to speak on the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills. I am wearing a number of hats, most particularly my hat as a South Australian senator—and proudly so—but also as a former industry minister and a former finance minister. So I take a particular interest in a bill which proposes to increase by no less than 30 per cent the existing 25 per cent luxury car tax. I rise because I have had a long and profound interest in sustaining the Australian car industry. I do so from both an economic and a security point of view, as well as from the point of view of the manufacturing industry in Australia and the importance of jobs and employment in my home state of South Australia.

The fact is that the Australian car industry is focused on the two states of Victoria and South Australia. It is critical to our manufacturing base. As shadow defence minister, I think it is critical that Australia retains the capacity and capability to compete internationally in the Australian car industry. The Australian car industry, over many, many years, has developed a profile which is based on large rear-wheel-drive vehicles of six or eight cylinders. By the very nature of this country—the size of the country and the distances we have to travel—that is the sort of vehicle which Australian industry specialises in and, in my view, is the best in the world at producing: efficient, capable six-cylinder, rear-wheel-drive vehicles. That is reflected in the outstanding export success which our Australian car industry has. So I am a champion of that industry and that is reflected by the fact that—and I refer to Senator Heffernan’s speech—one of the Ford Territorys in the Senate basement car park is one I drive. I do so quite deliberately because I want to demonstrate my support for Australian workers, the Australians who make those vehicles, and the Australians in my home state of South Australia who supply components to Ford for those vehicles. I publicly criticised Mr Rudd last year when he proclaimed in the most politically correct fashion he possibly could that he was going to change his Australian car for a foreign-made hybrid vehicle. I thought that was an insult to the Australian workers who make such fantastic vehicles for Australia. That is the background to my remarks.

The coalition does oppose this tax increase. Our position is that we do oppose tax rises or new taxes unless the government of the day can make an absolutely overwhelming case that such a tax increase or new tax should be put in place. So the question in this case is: has the government made any case whatsoever for this very dramatic increase in the tax on vehicles above the threshold of $57,000? In our submission the government has made no such case whatsoever. There are two grounds on which you could make such a case. One would be a policy ground in relation to the car industry; the other might be in relation to fiscal policy overall. In relation to the car industry, no case has been made whatsoever, and the Australian car industry has united—that is, foreign importers and Australian manufacturers have united—to oppose this tax; and, frankly, any senator, from any party, from the states of South Australia or Victoria should be joining with the car industry to vote against this tax. I look forward to both Senator Xenophon from the state of South Australia and Senator Fielding from the state of Victoria showing their support for the Australian car industry by rejecting this tax. There is no case whatsoever from a car industry point of view. The existing 25 per cent tax, which is a massive hike on motor vehicles which are already taxed through the GST and various stamp duties and registration et cetera applied at state level, already distorts the Australian car market quite significantly, with manufacturers, both domestic and foreign, seeking to ensure that their vehicles are kept below the threshold, whatever that may be at the relevant time. At the moment it is $57,000 approximately. Various options are stripped out of vehicles in order to keep the vehicles below this threshold. So it is a major distortion of the market already, and it would be even more of a distortion were it to go to 33 per cent. There is absolutely no public policy ground for this very significant increase in the so-called luxury tax on motor vehicles.

Is there a case in relation to the fiscal policy and the budget? Again, as we have been saying repeatedly, there is absolutely no case for this tax grab based on fiscal policy. This government is probably the most fortunate government in the history of this country in terms of the fiscal policy settings that it inherited. No government has been in a situation like this one, inheriting a government that is absolutely debt free, that has no interest payments whatsoever in its budget, that has $60-odd billion in the Future Fund and that has the unfunded superannuation liabilities provided for through the Future Fund. This government is more fortunate than any in inheriting fiscal settings which provided for surpluses into the future.

The government’s argument in relation to those taxes that we are opposing is that it must have a $21½ billion surplus in the current financial year and that a $20 billion surplus apparently is irresponsible. There is no economist in the country who agrees with that argument. What clearly happened—and it is from my six years experience as finance minister that I can see this happening—was that Mr Swan and Mr Tanner came up with a list of savings which they wanted the Prime Minister to sign off on in order to produce a certain level of surplus which would go to their argument about inflation. Of course Mr Rudd then said, ‘I’m not going to sign off on any of these,’ so they did a mad scramble through Treasury to find a whole lot of tax measures that would make up for their deficiency caused by their failure to persuade their Prime Minister to sign off on their savings. So the failure of Mr Swan and Mr Tanner has led to this ridiculous tax increase.

I can see the Treasury bureaucrats now running into ERC and saying: ‘We have this 25 per cent luxury tax on cars. I guess if you wanted to you could whack it up to 33 per cent and then we could put in the budget a figure of $130 million a year of revenue.’ May I say—and I think this will be reflected in car sales—that that revenue figure is very dodgy in itself because of the behavioural impact on the purchase of these vehicles that will result from this tax. We may well not see the revenue effect in any event.

This is a bad tax without any policy justification in relation to the car industry and without any justification with respect to the government’s fiscal position. So why on earth are Labor doing it? They are scrambling to find revenue to justify their case for being able to tax now in order to spend later. What we are seeing with their fiscal policy arrangements is clearly that they want to tax now to put it into their slush funds so that they can buy their way back into office in 2010. This is a tax now, spend later approach to fiscal policy. It also confirms that, for all the bluff and bluster, the Labor Party are no friend whatsoever of the Australian car industry. After all, it was the coalition government which sought to and successfully removed from the Australian car industry the worst possible impost that had ever been imposed on it, which was the wholesale sales tax.

The Australian car industry bore the burden of that wholesale sales tax more than any other industry. It completely distorted the manufacturing sector in this country, with the car industry paying the overwhelming proportion of that tax. The greatest beneficiary of the removal of the wholesale sales tax and its replacement with a GST—a move that the Labor Party, to their shame, opposed all the way—was the Australian car industry. It was the best thing that had ever been done for the Australian car industry, and the Labor Party opposed it at every step. May it be printed on their tombstone that they are no friend of the car industry. What they are trying to do with this luxury car tax confirms that, for all the bluster that we hear from them, they are no friends of the Australian car industry.

I turn my attention to the proposition that has come from the Australian Greens which they are postulating as a deal with the government, although Mr Swan suggests that no such deal has been entered into. We wait with bated breath for what the outcome of these discussions will be. But can I place clearly on the record our total opposition to the proposition that has come from the Greens and that we will be voting against it. This proposition from the Greens again reveals that they have absolutely no interest in the Australian car industry or in the Australians who work in that industry. This would be even a more manifest and destructive distortion of the Australian car industry than currently exists.

The Australian Greens are proposing that there be an exemption for vehicles up to a value of $75,000 that have a fuel consumption of seven litres or less per 100 kilometres but that all other vehicles from a value of $57,000 would continue to pay this horrendous increased luxury car tax. The immediate impact of that is to ensure that vehicles such as the following would not pay this new luxury car tax. Exempt from this tax, by dint of the Australian Greens and possibly the Australian Labor Party, would be vehicles like the Alfa Romeo 159 Sportswagon, the BMW X3, the Jaguar X-Type, the BMW 3 Series, the Mercedes-Benz C Class, the SAAB 9-3, the SAAB 9-3 Sport, and the Audi A4. So, as a result of what we are told is a deal between the Greens and the Labor Party, a whole range of very cute little European manufactured sports sedans would be exempt from this tax—in contrast with vehicles made by Australians which would be subject to this outrageous 33 per cent so-called luxury car tax. The vehicles, made by Australians in Victoria and South Australia, that would be subject to this tax include products of the Ford factory and the Holden factory in my state. The Holden Commodore, the Holden Caprice, the Holden Statesman, the Ford Territory, the Ford Fairlane, certain Ford Falcon models and the Ford LTD would all continue to be subject to this 33 per cent luxury car tax, while all these spiffy little European sports cars would be exempt from the tax.

This is an absolutely outrageous proposal. I hope that the Labor Party will have nothing to do with this. But what it does reveal is that the Australian Greens, who are of course running in the federal seat of Mayo in the state of South Australia in the by-election this weekend, have no regard for the people of Mayo or for anyone who either wants to support the Australian car industry by buying an Australian product or has need for a product of this kind or has need for an imported product like a Toyota LandCruiser or a Nissan Patrol for their work or for their pleasure—to tow horses, to tow boats.

Mayo contains some of the most scenic and beautiful country in the state of South Australia. There are many residents of the federal seat of Mayo who enjoy boating and horse-riding on weekends and need these sorts of vehicles—Ford Territories, Toyota LandCruisers, Nissan Patrols—if they are to pursue those commercial, work related or pleasure activities. The Australian Greens have declared today by this deal that they want those people to be hit by this tax. But if you are someone who likes to drive around the electorate in a little Audi sports car—‘Okay, you can have an exemption, but if you want to tow your horse or your boat around we are going to whack you with this tax.’

I hope the people of Mayo will pay very close attention to what the Australian Greens have now proposed. I hope that anybody who has any connection to the Australian car industry who lives in Mayo will note very carefully what the Australian Greens are now proposing. They want to protect jobs for Europeans in the factories of BMW and Audi. They have no regard for the people working in the factories of Ford, Holden and their component manufacturers.

The Greens’ proposed amendments are a disgrace. I hope and pray that the Labor Party will have nothing to do with them, but we wait, as I say, to see what the Labor Party comes up with. I hope very much and earnestly that all South Australians will take note of what is being proposed. I hope that Senator Xenophon, who has a big decision to make in representing the state of South Australia, also takes note. The Holden factory and all the component makers who make parts for Toyota, Ford and Holden in the state of South Australia will be watching with keen interest Senator Xenophon’s vote on this issue. I urge him to support Australian workers and the Australian car industry by voting down this legislation altogether.

This legislation is not warranted on any public policy grounds. It is certainly not warranted on fiscal grounds. There is no justification for it, and the Australian Greens’ propositions only compound the mischief that is inherent in this outrageous legislation, which I hope the Senate will reject.