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

We have a very interesting situation here: we were told that this $400 million figure, which I will not accept, was based on certain assumptions, including growth in sales—that is what the Hansard will disclose—at a time when the industry is telling us that growth is going south. In other words, in the jargon of negative growth, it is shrinking. Treasury, to boost up a $400 million figure for the consumption of Senator Xenophon, is willing to assert, in a climate where we have a 20 per cent reduction in the sale of cars above the $57,180 luxury car tax threshold, that there will still be a growth experience.

What I would say to Senator Xenophon is this—and somebody might correct me if I am wrong: when the Hawke-Keating government tried to increase the luxury car tax from 30 per cent to 50 per cent, it was such a drain on revenue because people stopped buying the cars that the Hawke government was brought back to the table to amend the legislation back to 30 per cent, because when you have a tax increase you increase the commodity. Cost and demand will tell you that the higher the cost the less the demand and fewer are sold. And, in a climate of reducing luxury car tax category vehicles by 20 per cent, for them to base their $400 million figure on a projected gross is, quite frankly, unbelievable. But I have a question for the minister. Treasury says that they were unable to fully come to grips with the FCAI methodology. Did Treasury bother going back to FCAI to ask for an explanation of their methodology? If not, why not?