Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

I thank all honourable senators who have made a contribution to the debate on the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills. The increase in the luxury car tax rate from 25 per cent to 33 per cent to apply on and from 1 July 2008 is an important part of the government’s budget. The revenue raised from the increase in the luxury car tax will contribute to a strong cash surplus for 2008-09 of $21.7 billion or 1.8 per cent of GDP.

The measure is expected to raise over $500 million in additional revenue over the next four years. It is part of a substantial surplus, which acts as a buffer against global difficulties and gives us the flexibility we need in uncertain global times. We know that eight rate rises in just over three years have also hurt families badly and that the effects of these rate rises combined with global problems are also slowing our economy. That is why we have been responsibly addressing the domestic inflation that we inherited at a 16-year high, now made worse by global factors.

The luxury car tax increase will not increase the burden on working families. The measure also recognises that Australians who can afford luxury vehicles have a greater capacity to contribute to revenue and that if everyone pays their fair share of tax we can reduce the overall tax burden imposed on working families. While the government tried to get the amending legislation passed before the start date of 1 July 2008, the Senate referred it to the Senate Standing Committee on Economics for report not before 26 August 2008. That committee reported on 28 August with the recommendation that the Senate pass the luxury car tax amending bills.

I draw honourable senators’ attention to how the Senate economics committee report has discredited some of the myths of the luxury car tax. For example, it has been argued that luxury cars are more fuel efficient than other vehicles and so the luxury car tax effectively represents a tax on fuel efficiency and, ultimately, the environment. Like cars below the threshold, the fuel consumption of luxury vehicles varies considerably. Some luxury vehicles consume significantly less fuel than the average. The size of the engines fitted to luxury vehicles and their generally heavier weight means that most consume more fuel per kilometre than cars below the threshold. The Senate report shows that the median fuel consumption for cars under the luxury car tax threshold is less than nine litres to travel 100 kilometres while the median for models subject to the luxury car tax is more than 10 litres.

However, this means there is some scope to encourage the purchase of the most fuel efficient vehicles through the luxury car tax. This is reflected in the amendments to the bills that have been foreshadowed and that the government will move today. The amendments allow luxury cars with a fuel consumption of less than seven litres per 100 kilometres to use a threshold of $75,000 in 2008-09 instead of the $57,180 threshold applying to less fuel efficient vehicles. This means that the vast majority of cars currently available which meet the fuel consumption criteria will no longer have to pay any luxury car tax while others will pay significantly less. More broadly, the Treasurer will refer the Greens preferred approach of phasing out the luxury car tax and phasing in a tax on vehicle fuel inefficiency and consequent greenhouse gas emissions to the Henry tax review for consideration. The Treasurer will also refer luxury car tax and fringe benefits tax for car issues to the Henry review for consideration, which I understand are the concerns of Senator Xenophon. I note in this regard that the government has asked the Henry tax review to consider the interactions of the tax system with the Carbon Pollution Reduction Scheme.

Additionally, there have been comments about how vehicle safety, as well as large families and rural communities, will be affected by the luxury car tax increase. The report concludes that there are many comfortable, safe new vehicles, not to mention second-hand vehicles, available that are well priced under the current luxury car tax threshold, including vehicles with four-wheel drive and other features required by drivers in remote areas.

A dissenting view was put forward on behalf of coalition senators. Broadly, the dissenting view recommended that the luxury car tax increase be opposed in the Senate. I thank Senator Xenophon for his contribution to the debate on these bills. Senator Xenophon has raised concerns about the impact of the luxury car tax increase on contracts entered into before the budget where the vehicle could not be delivered before 1 July 2008. The government would like to indicate that it is open to this proposal. This issue has also been raised by several coalition senators. They have sought to bolster their case with arguments put forward by the car industry on the uncertainty associated with the fact that the bills were not passed before 1 July 2008. The 1 July 2008 start date was announced in the budget and set out in the amending legislation that was passed by the House of Representatives on 28 May. I note that some of the difficulties currently being faced by suppliers of luxury cars have occurred because the Senate chose to refer the amending bills to a committee rather than deal with them before 1 July.

The luxury car tax has broadly remained unchanged since its introduction in 2000. There have been few, if any, complaints raised in this chamber about its operation. This is probably because, as the Senate committee notes, the luxury car tax is a progressive tax which is relatively easy to collect. However, the opposition has decided to stand up for lower taxes for luxury cars rather than lower interest rates for working families who are doing it tough. The government now knows where the opposition stands on responsible budgeting. The government now knows that those opposite do not understand that there is an inflation challenge. We have had to take the tough decisions to fund long-term investment in the infrastructure, education and training, and health and hospital needs of our nation.

Unfortunately, those opposite do not understand that you cannot keep spending without knowing where the money is coming from. Now they want to punch a $22 billion hole in the surplus that we need to fight inflation. We should not be surprised. Unfortunately those opposite are absolutely addicted to the type of reckless spending that has given Australia an inflation problem. They cannot resist a good $22 billion raid on the surplus. Old habits die hard. I take this opportunity to challenge those opposite to change their ways. I challenge them to say which programs would be cut to pay for their $22 billion raid on the surplus. I challenge them to, for once in their political lives, choose economic responsibility over short-term political opportunism. I challenge them to support this responsible measure and join us in the fight against inflation. The government must retain the integrity of the budget surplus through the luxury car tax to buffer against uncertain times, to put downward pressure on inflation and to address the legacy of the big-spending ways of those opposite.

Question put:

That these bills be now read a second time.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I move:

That consideration of the bills in Committee of the Whole be made an order of the day for the next day of sitting.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

We will support that motion. However, I would just like to make it clear that the Greens will be standing by the amendments that we have foreshadowed and that the government has inherently agreed to support here. Included in that will be a reference we are looking forward to: the Henry tax review looking at the Greens suggestion of a phase-out of the luxury car tax and the phase-in of a tax based on the fuel efficiency of vehicles. We are pleased that that is going to become part of the tax review and that, in this process of considering this legislation, we have made the first move towards the consideration of taxes in this nation on the basis of not only where the taxes are levied and who pays for them, but also where an environmental good or environmental amenity comes out of that. It is a very big breakthrough. We are looking forward to further amendments in this debate and a much better outcome as a result of both the government’s goodwill in this matter, which is manifest, and the amendments which have been flagged by the Greens. I have not seen any amendments from Senator Fielding and therefore we have nothing to consider. It is incumbent upon us, if we are going to get changes to legislation to achieve better outcomes, that they are made available to the Senate as specified and they are costed if necessary so that we can consider them. I am very pleased that this matter is now going into committee.

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

by leave—While this motion may well be carried or considered or determined by the Senate, I would suggest, with respect, that the pursuit of this particular motion would not necessarily be in the Senate’s best interest because the former motion that was passed in fact does not, in my submission, represent the will of the Senate.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

What are you saying, Eric?

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

What I am saying is that unfortunately one of the Liberal senators was missing for that division and if that senator had been present then the vote would have been negated and we would then not need to proceed to make this particular matter an order of the day for the next day of sitting.

I know, as many honourable senators in this place know, that unfortunately, with activities around this very large building, from time to time people do get waylaid, do not hear the bells, do not hear their pagers. It does become a matter of some embarrassment.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I’m not perfect on this!

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

I must say I am very fortunate, Senator Conroy. In 14 years—

John Hogg (President) Share this | Link to this | Hansard source

Senator Abetz, address your comments to the chair.

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

Mr President, I am sure that due to divine intervention it has been very fortuitous for me to claim that over 14 years I have never missed a division. Senator Conroy cannot make that claim and he knows that, with the best intentions in the world, honourable senators sometimes do miss divisions. Therefore, I am giving an indication that we will be seeking a recommittal of the previous vote. While we will not be opposing this particular motion, I think it is appropriate that we give notice to the Senate that we will be seeking a recommittal of the vote tomorrow because the missing senator at this stage cannot be located—hence looking around to see whether the particular senator has in fact returned to the chamber.

Government Senators:

Government senators interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Order!

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

Mr President, given those particular circumstances, we cannot recommit this evening. On behalf of the coalition, I apologise to the Senate for that inconvenience. I suggest we put the motion before the chair and we then deal with the matter of recommittal tomorrow morning.

John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

I find that a most extraordinary contribution on the question before the chair from the Deputy Leader of the Opposition in the Senate. Normally in these circumstances, if a senator is not present in the chamber and a suggestion is made by any senator in the chamber that the will of the Senate has not been reflected in a vote of the Senate, an explanation far more forthcoming than the one we have just heard from the Deputy Leader of the Opposition in the Senate is provided. It is true that the question before the chair is obviously in no way going to affect the recommittal of a previous vote if leave is granted for such a recommittal or standing orders of the Senate are suspended in a way which would allow for a recommittal to occur. Linking these two issues is not necessarily a matter that is of consequence. It is competent for the previous vote’s decision to be recommitted if that is the will of the Senate, regardless of whether the question before you, Mr President, is agreed or not. I think anyone who has an understanding of the way Senate procedures work would be aware that that is the case.

Now that I am so old, I can speak to the Senate as the second-longest serving senator in this place. And I have never heard in the time I have been here of a situation where we have not at least had the real situation in relation to a senator who missed a division identified before the chamber. That is something that in my experience in the chamber—which I admit is long—

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

Some would say too long.

John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

Many on the other side would say too long; that is true, Senator Abetz. But I have never heard of a situation where a proper and full explanation has not been provided. I found it quite extraordinary that the Deputy Leader of the Opposition would make such a contribution before the Senate without firstly identifying for the chamber who the senator was who missed the division. We have not been informed about that. Secondly, we have not been informed as to why that senator did not attend the chamber.

I have a very long record in this place—as long-serving opposition senators would know—of always taking the view that the will of the Senate should be reflected in votes that are taken. I have never deviated from that principle the whole time I have been here—whether it was during the life of the Keating government, when I managed government business in this place; whether it was during the life of the Howard government, when for the vast period of that time I was Leader of the Opposition in this place—and I have not changed my mind now that the Rudd government has been elected to office. In relation to the coalition, the same principle, the same consistency, has unfortunately not applied. It has not applied and it should apply.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Name names! Who did it and when?

John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

I can later in my speech, Senator Conroy, share some of these experiences—if that is necessary—with members of the opposition. But I would suggest that the correct course of action here, in the first instance, is for us to hear from the senator concerned what the circumstances were surrounding their absence from the division. That ought to be provided to the Senate as a matter of urgency.

I would hope that, under the new leadership in opposition of Senator Minchin, the Liberal and National parties—the coalition—are going deal more consistently with these issues. I happen to believe that is in the long-term interests of the Senate. I believe it is in the long-term interests of both the Labor and the non-Labor parties in this place. It happens to be a good way for the Senate to work. Because everybody in this chamber knows that so much of what occurs in the good management of this place happens outside the chamber. So much depends on goodwill and on negotiations that are conducted with a reasonable spirit, but most importantly where commitments can be made and honoured.

This is a very significant budget measure. It has a huge impact on the government’s recent budget, and what the government is about to be asked to do is recommit a vote knocking over a budget measure when the opposition has not had the internal discipline even within its own party to vote on this matter. Do not forget—and no senator should underestimate the significance of this—

Honourable Senators:

Honourable senators interjecting—

John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

I want to say this: in the time that I have been a senator in this chamber, I have not seen a recommittal on a matter as serious as this.

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

That is not right!

John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

You say that it is not right by interjection, Senator Minchin, not from your seat. If you say that it is not right, you name a more significant issue where a senator or party has asked for a recommittal.

We all know the measure that the second reading vote related to—the Tax Laws Amendment (Luxury Car Tax) Bill 2008. And we all know what that measure did, which of course was to increase the luxury car tax rate from 25 per cent to 33 per cent to apply on and from this year. And we all know the impact on the budget here of $555 million. That is the hole that the opposition is blowing in the government’s budget, and they cannot even get their own senators into the chamber to vote on the matter. That is unprecedented. That is serious. How seriously do you think the Australian people should take an opposition that argues a case on an issue like this but cannot even exert the internal discipline to get its own senators into the chamber to vote on this sort of matter?

I believe that what the Senate faces here is something that is, effectively, unique in its history. At the end of the day I expect that there will be more goodwill around the chamber from those who have supported the bill than from those who have opposed it. There will be more consistency in approach. But this matter does warrant a more responsible, reasonable approach than the one we have heard from the Deputy Leader of the Opposition. I argue very seriously to the Leader of the Opposition and to opposition senators, through the chair, that what will be called for here is the usual explanation from the senator concerned. By the way, I want to say through you, Mr President, that I do not know who the senator is; I have no idea.

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

We have an idea.

John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

You might; I do not. I am on my feet and I do not—

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

She is red-faced—over there.

John Faulkner (NSW, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

I do not know who it is, and I mean that quite seriously. It may be a new senator in this Senate who is not aware of some of our procedures, and I think we have to take these things into account. But I would urge consistency in approach if and when leave is granted and the Senate moves through whatever mechanisms it determines and, as Senator Minchin is certainly aware and the Manager of Opposition Business is certainly aware, there is a way of dealing with these matters.

I would urge that the Leader of the Opposition ensure that those precedents are respected in relation to this matter, and I say that very seriously. I put to the Leader of the Opposition that that is a way forward. I cannot speak on this matter and I do not pretend to on behalf of the government, but I can say on behalf of the government that I know how consistently we have dealt with these matters in the past—absolutely consistently. We have never varied, and I personally have never varied and would not vary, from the principle of the will of the Senate being reflected in the decisions it makes. But here is something for every opposition senator to give some consideration to over the hours and days ahead: to remember these principles, to take account of them, to ensure the good management of this place and to ensure political process and parliamentary process is disciplined and principled, understanding that differences occur in this chamber.

I make those comments to the chamber and say in conclusion that I do not believe the question before the chair impacts in any way in terms of preventing the recommittal, and I say that in terms of whether the question before the chair is agreed to or not agreed to, because the question may not be agreed to if the will of the Senate is as Senator Abetz has indicated and as Senator Minchin intimates. That is certainly the case. So I do not think that the fate of this particular question before the chair is relevant to the recommittal. In fact, I do not believe that whether that question is put or not and is agreed to or not is relevant to the recommittal, but I do ask opposition senators to think about these comments and respect the principles behind them.

John Hogg (President) Share this | Link to this | Hansard source

Senator Boyce, do you wish to speak on the question before the chair?

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

I am seeking leave to make a personal explanation.

John Hogg (President) Share this | Link to this | Hansard source

You will get that opportunity. I am going to put the question that is before the chair, which is that the motion moved by Senator Conroy be agreed to.

Question agreed to.