Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I move:

That the Tax Laws Amendment (Luxury Car Tax) Bill 2008, A New Tax System (Luxury Car Tax Imposition—General) Amendment Bill 2008, A New Tax System (Luxury Car Tax Imposition—Customs) Amendment Bill 2008 and A New Tax System (Luxury Car Tax Imposition—Excise) Amendment Bill 2008, be now read a second time.

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

The opposition remains opposed to this tax grab by the Labor Party. Before dealing with the specifics of the legislation, the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills, it should be remembered that this legislation was only before this place some four sitting days ago. The Labor Party, in typical style, are using their bullyboy tactics to bring it on again, in complete contempt of the procedures of the Senate and the fact that the Senate voted against this legislation only four sitting days ago. What they have clearly done in the interim is made all sorts of deals with senators of all sorts of persuasions in this place to try to get this badly thought out proposal through the Senate.

It is interesting that, when in opposition, Labor said the Senate had to be treated with respect; its decisions had to be respected. Of course, as is very much coming to light now, whatever Labor said in opposition is not to be trusted and it is a completely different situation now that they are in government. But I think everybody did expect the Labor Party, especially under Mr Rudd’s leadership, to engage in these sorts of bullyboy tactics, so the issue really is for us to consider the detail of this legislation.

We as the opposition are opposed to this legislation because we oppose increased taxes. That is a very principled position that we have put, and we believe that taxes should only be increased if there is a real case made out in support. The Australian Labor Party told us, in introducing this new tax, this surcharge on a tax, this 30 per cent increase in the luxury car tax, that we needed this to fight inflation. That was the mantra: we need this proposal to fight inflation. So the Senate Standing Committee on Economics looked at this proposal, and Senator Annette Hurley, the Labor committee chair, came back to this chamber with a report which, in paragraph 2.19, told the Senate and the world that this proposal will be—you guessed it—inflationary. So the one and only reason that the Labor Party could muster for the new luxury car tax surcharge was to fight inflation, yet Labor senators themselves, even Senator Doug Cameron, acknowledge that it will be inflationary.

Given that that is the fact of the matter, one would have thought the Australian Labor Party would have had the decency to withdraw the legislation in the face of the criticism provided by their own senators. But, as is so often the case with the Rudd government, the reasoning, the rationale, for a proposal does not match their real thinking. This was purely and simply a tax grab, a tax grab against the better interests of the Australian people—and, might I add, against the better interests of the Australian car industry.

All three Australian car producers and the Federation of Automotive Products Manufacturers in Australia are opposed to this proposal, the reason being that this will hurt the manufacturing sector in Australia big time—no ifs, no buts: it will hurt the manufacturing sector. Of course the Labor Party, in their high and mighty way, say that this is simply a tax measure.

Senator Kim Carr, the Minister for Innovation, Industry, Science and Research responsible for the automotive sector, has been deafeningly quiet in relation to this debate. He has not come into this debate to defend the manufacturing sector or defend the automotive sector. He has simply been absent. Of course we on this side do not mind that he has not come into the debate, because, if he had, chances are that it would have been even worse. He championed the CSIRO and they suffered $63 million worth of cuts. He championed ANSTO and they suffered $12 million worth of cuts. He reckons that he championed the Commercial Ready program—that was completely abolished. Everything in his area of responsibility is being hacked to pieces and this is just the latest episode in Senator Carr’s very poor management of the Innovation, Industry, Science and Research portfolio.

Let us deal with some of the reasons and rationale. When asked about this, Senator Carr says, ‘We are not in the business of giving millionaires handouts or assistance.’ So he believes that any Australian who today is driving a motor vehicle worth more than $57,180—that is the threshold—is somehow a millionaire. How very mistaken. He is just factually wrong. But how indicative of the terrible social dogma that he still carries around in between his ears. I would have thought that sort of politics of envy would have left the Labor Party, those now sitting on the government benches. They swept it under the carpet whilst in opposition. Now that they are in government it is all coming out again.

One of the most disappointing things about the last vote was that a former national secretary of the AMWU, now senator, Doug Cameron, voted for the increase in this tax. Senator Cameron knocked off Senator George Campbell in a vicious preselection fight in New South Wales because Senator George Campbell had not done enough for the automotive sector and the manufacturing sector. And so one of the very first votes in this place of this great white knight, who was going to fight for the jobs of workers in the automotive and manufacturing sector, is to do these workers in the eye. Make no mistake about it: all three of Australia’s car manufacturers that are left have said that this will damage them. That is code for reduced sales, which of course translates into fewer jobs. We all know that. The Labor Party know that. Senator Doug Cameron knows that. And yet one of the very first votes he is involved in is to do these workers in the eye.

This is a punitive tax in anybody’s language. When somebody buys a motor vehicle they pay stamp duty, and of course that varies according to the state but from a federal point of view there is the 10 per cent GST. After you go over the luxury car tax threshold of $57,180 there is the 25 per cent luxury car tax—10 per cent plus 25 per cent equals 35 per cent. Labor are now seeking to add another eight per cent to make it a 43 per cent tax in relation to motor vehicles that are over $57,180. In anybody’s language, that is a punitive tax. And what makes it so obscene is that if a family, say, wants a top of the range Toyota Tarago then they are looking at around the $60,000 or $60,000-plus mark. This is not a status symbol in anybody’s language. It is not the sort of car that self-made millionaires would drive around in. So people who are genuinely concerned about the safety and security of their family will be paying a luxury car tax. But those who happen to have sufficient money to buy a private plane, a private yacht or indeed a $200,000 Rolex watch do not pay one cent of luxury tax in any way, shape or form. This is now the new social equity under a Labor government, under Mr Rudd and his regime. It is unfair, it is punitive and we oppose the tax.

Since we have had this legislation before us, I understand that a number of agreements have been reached by the Labor Party and the minor parties in this place in relation to a whole host of things. When you examine what is being proposed, you see that the people they seek to champion will in fact be sold down the creek—and some of the amendments are absolutely contradictory. Allow me to go through just some of the examples for the Senate.

First of all, we are going to have, according to Family First, an amendment to exempt primary production business. That is very interesting because primary production, as I read it as defined by this amendment, will mean you have to be a registered primary producer under the Income Tax Assessment Act. So if you live in rural Australia and you happen to be a primary producer—and we all know how hard times are there and how cash-strapped and drought stricken those people are—you will have to borrow the money to pay the luxury car tax and then seek a rebate later on and get the money back a month or so later. What a silly, bureaucratic system. How stupid. Why not just exempt them right up-front? This is the sort of nonsense we get when the Labor Party try to cobble things together and make policy on the run.

Do they think, ‘Rural Australia means farmers. There could only be primary producers out there, surely’? The problem is that the Labor Party’s primary industries minister has never set foot in the country areas of Australia. He represents a Sydney outer suburban seat. He has no idea, and of course that is clearly shown in this legislation.

In rural and regional Australia you do not only have farmers and primary producers who need four-wheel drives to gain their income. What about the Australia Post contractor, who has to get the mail through? What about the vet who has to drive onto the farm to access a cow or a horse that is down? What about the general practitioner, the doctor? What about the mechanic who has to service the tractor that has broken down in the middle of a paddock? All these people need four-wheel drives for the purpose of earning their income. Yet Family First—and I am surprised at this—and the government have done a deal to say: ‘No, blow the vet, the Australia Post contractor, the general practitioner and the agricultural contractor, who might be the local fencing contractor. Forget all of those. We think that in rural and regional Australia there are only farmers and nobody else.’ This is a very bad amendment.

We then have the tourism amendment that applies only to four-wheel drives. That is very interesting. The tourism sector buys about 8,000 so-called luxury cars each year and relies heavily on sedans, such as the Holden Statesman and top of the range Fords, to take tourists around, let us say, the Adelaide Hills for wine tourism or around my home state of Tasmania. These sedans are very important. Might I add that the sedans would be more fuel efficient than the four-wheel drives. Under this amendment, if they buy a sedan and they are registered in the tourist sector, they would not get an exemption but, if they converted to a four-wheel drive, which consumes more fuel, they would get the exemption. What sort of policy nonsense is that? Why would you favour the tourism sector that only has four-wheel drives and not help the tourism sector that needs two-wheel drives and sedans? There is no logic in it.

This is a desperate attempt by the government to cobble together a policy which was fatally flawed from the outset. The opposition will oppose this legislation not only on its second reading but also on its third reading. Having said that, we have a hunch that, unfortunately, this legislation will go to the committee stage. If it goes to the committee stage, we will actively involve ourselves in that stage and intervene to try to make this fatally flawed legislation less fatally flawed. But, unless this is thrown out completely, we will be voting against the legislation on the third reading as well.

I am interested to see the amendment that the Australian government cobbled together. It is interesting that Family First seem to have their amendment done by Senator Fielding. The closeness and cosiness of the relationship between Labor and the Greens has been shown, as the Green amendment is now in fact a government sponsored amendment, with an explanatory memorandum by Mr Swan, the Treasurer. That amendment will ensure that six Australian-made motor vehicle models will be subjected to this punitive higher tax but about 25—over two dozen—imported models will be exempted. I am sure all the international car makers tonight are cheering on Mr Rudd, the Prime Minister, and Senator Bob Brown, the Leader of the Australian Greens, and saying, ‘You beauty.’ The international car makers above all will be cheering on Senator Doug Cameron, the man who came into this place to fight for the workers in the automotive and manufacturing sector. They will be cheering those people on, but the poor workers in South Australia and Victoria, whose jobs are in jeopardy as we speak, without this extra impost, will be even more concerned and worried than before about their job prospects.

One other gross inequity of this legislation is its retrospectivity. What occurred was an absolute disgrace. The Treasurer announced that this would apply to any vehicle that was delivered after 1 July 2008, that any vehicle that had been ordered, signed up for or contracted for prior to budget night would not be exempted. So good ordinary Australian citizens, having done their sums, having worked out their calculations, have now been confronted with the prospect of this tax being applied retrospectively.

We as an opposition make no bones about the fact that we oppose retrospectivity, especially when it comes to taxation. Therefore, if this bill does go to the committee stage, we will be moving an amendment to delete this evil—and I describe it as an evil—of retrospectivity in taxation. No Australian should have to worry that a government might come along and whack an extra tax on their purchase after they have entered into a binding contract. That is fundamental first principal stuff, I would have thought, for any government, but of course not for the Australian Labor Party because they believe that anyone who can afford a car above $57,180 does not deserve to be protected by the basic considerations of the law.

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

It’s your tax.

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

Senator Conroy foolishly interjects and says, ‘It’s your tax.’ If it is our tax, why are we opposing it? We are opposing your eight per cent surcharge. And what is more Senator Carr had to correct an answer, Senator Conroy, when he made the same foolish assertion during question time.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Senator Abetz, direct your remarks through the chair, please.

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

It was the Hawke-Keating government that introduced that concept. So before you interject—

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

Senator Conroy interjecting—

The Acting Deputy President:

Senator Conroy! Senator Abetz, address your remarks through the chair.

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

I quite like Senator Conroy’s interjections because they put on the record his ignorance about this issue. The car manufacturers will be delighted to know that the person who represents the Treasurer in this place has no idea about the history or the impact of the luxury car tax.

Time is short, but my opposition colleagues and I will have a lot more to say in relation to this legislation if it reaches the committee stage. This is a punitive tax, it is an unfair tax and it will most of all impact on Australian workers and Australian car manufacturers at a time when we have just seen Mitsubishi close and General Motors and Ford struggling. But the one company that has a windfall is the multinational Toyota Motor Corporation, which has made record profits in recent times. This is the Australian Labor Party’s stewardship over the car industry. We believe that it is appalling. We believe that this impost needs to be opposed, and we will be doing so. (Time expired)

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills. The Rudd government’s decision to increase the luxury car tax from 25 per cent to 33 per cent on the end price of a vehicle appears to be yet another example of a measure imposed by this government that selectively disadvantages those living in regional areas of Australia. To explain why this is the case, I draw the attention of senators to the fact that statistics kept by the car industry show that 70 per cent of the vehicles subject to the luxury car tax are purchased below the $75,000 price line. This is relevant because the top selling luxury car is the Toyota LandCruiser, which costs $74,000 and is the workhorse of regional Australia. Some 6,000 of these vehicles are sold each year, compared to Australia-wide sales of just 17 Rolls Royces and 522 Porsche 911s, both of which would be more widely regarded as genuine luxury cars.

The point is that the Toyota LandCruiser, as I said, is a common-use vehicle all over regional and rural Australia, as are other four-wheel-drive vehicles such as the Mitsubishi Pajero, which costs $58,290 for the basic model, and the Nissan Patrol, which costs $58,000 for the basic model.

Senators should know that all three of these four-wheel-drive vehicles—which as I said, and will repeat, are in common use in regional Australia—attract the luxury car tax, which the Rudd government proposes to increase. Yet very often these so-called luxury cars do not even have carpets on the floor, much less leather upholstery—they instead have vinyl seat covers—and have none of the other standard fittings that would qualify them to be regarded as luxury cars.

There are of course some four-wheel-drives that really do fit into the definition of luxury cars. These include the Porsche Cayenne, the basic model of which costs $265,000, the Mercedes Benz M Class four wheel drive, which costs $167,245, and the Lexus 570 Sports luxury auto, which is an SUV that costs no less than $175,000. These cars have all the features that you would expect to find in a luxury vehicle, from genuine leather upholstery to all of the latest electronic fittings; however, you do not find these vehicles in common use in rural and regional Australia. In fact, these vehicles are to be found in the suburbs of the big cities of Australia—suburbs such as Double Bay in Sydney, Toorak and Camberwell in Melbourne, and Peppermint Grove, Cottesloe and Dalkeith in Perth.

As Mr Smith from the Motor Traders Association of New South Wales said in reference to my questions in the Economics Committee hearings in Sydney:

I do not know any dealers in the outback region who actually even sell those upper vehicles such as the Lexus and the Porsche.

Mr Smith was referring to high value four-wheel-drive vehicles.

The point that I want to emphasise is that the market for these high-priced genuine luxury cars is very small. Sales of them represent fewer than 2.5 per cent of the sales of so-called luxury cars, compared to 70 per cent of the market being represented by vehicles under $75,000, which are mostly sold in regional Australia and which are chiefly standard four-wheel-drive vehicles of the type I have described.

It seems quite clear that the luxury car tax is a selective penalty applying for the most part to people purchasing four-wheel-drive vehicles in rural and regional Australia. This is consistent with what appears to be the deliberate agenda of the Rudd government to penalise rural and regional communities and the people living in them.

In the short period that it has been in office, the Rudd government has cut programs for rural and regional Australia. It has abolished the hugely successful Regional Partnerships and Growing Regions programs, with no new money for regional projects proposed until late 2009, which, coincidentally, will be just before the next federal election. It has axed the Agriculture Advancing Australia program, including Advancing Agricultural Industries, FarmBis and Farm Help. It has axed the women’s representation in decision-making program. There have also been cuts to rural health services, regional arts programs and the Rural Financial Counselling Service. Most importantly considering that we have Minister Conroy here, it has cancelled the $900 million Optus and Elders joint venture, denying regional and rural Australians access to competitive high-speed broadband by the end of 2009. Given this record it would appear that the luxury car tax is no more than yet another penalty the Rudd government is applying to Australians living in regional areas.

I repeat that the so-called luxury four-wheel drive vehicles such as LandCruisers are vehicles that are used in country towns by small business and in mining, fishing and a myriad of other purposes for which a robust vehicle that can handle country roads and rough conditions is required. These are standard use vehicles just like ordinary sedan cars are in metropolitan areas. These vehicles represent some 70 per cent of the vehicles classified as luxury cars for the purposes of the luxury car tax and one must say that by any reasonable understanding of the meaning of the word ‘luxury’ these vehicles do not fit that definition. It seems clear to me that the Rudd government, as I said, is selectively penalising those living in rural and regional Australia by proposing this tax increase on what for them are standard use vehicles.

Another rather interesting question, which has been raised about this proposed increase in luxury car tax, is that it may be a discriminatory non-tariff trade barrier designed to protect locally made luxury vehicles from competition from imported cars. This possibility was raised in the Sydney Morning Herald in an article on 20 May this year by Mark Davis, who reported on evidence given by the European Union ambassador to Australia to the Bracks inquiry into the motor vehicle industry. Most of the real luxury cars to which the new tax will apply are imported from Europe. As I said, it was the EU ambassador to Australia at the Bracks inquiry into the Australian car industry who first raised the question of the luxury car tax being a non-tariff discriminatory trade barrier.

At the Sydney hearings of the Standing Committee on Economics inquiry into the luxury car tax I asked Mr Hofmann, CEO of Audi in Australia, whether the increase in the luxury car tax to 33 per cent could be regarded as a non-tariff trade barrier directed at European imported luxury cars. Mr Hofmann stated that there was certainly a strong opinion in that direction, which was a view reinforced by the Victorian Automobile Chamber of Commerce submission to the Bracks review which stated in the Hansard:

From the European Union’s perspective the luxury car tax should be seen as a non-tariff barrier, as it is discriminatory in its effect by mainly impacting on imported cars, particularly from Europe; and, as recognised by the Productivity Commission, provides a form of domestic assistance.

It is understandable that the European car importers could take such a view based on the fact that the majority of genuinely luxury cars are priced above the luxury car tax threshold and are imported especially from Germany and are disproportionately taxed compared to cheaper, locally made vehicles as well as other imported vehicles, as Senator Abetz has referred to. This is a very interesting issue. There is no doubt at all that these issues concerning whether the luxury car tax is a non-tariff trade barrier and is in fact a subsidy to the local car industry, together with the fact that there has been a delay in lowering tariffs on imported cars, raises questions about the Rudd government’s commitment to freer trade.

In conclusion, while this bill may on the surface appear to be a simple alteration to a rate of tax, during the inquiry held by the Senate Standing Committee on Economics it became clear that there was far more to this change than was evident at first reading. Quite obviously, this bill discriminates against rural, regional and remote Australians and I look forward to the contribution of Senator Bushby on this point. This tax ignores the needs and the day-to-day realities faced by people living in rural and regional Australia and it places an insulting level of luxury on a vehicle which is often a necessity in the country areas of Australia. There are many issues that this bill raises but the government has failed to provide answers to those issues and I therefore urge the Senate to reject this bill and, most importantly, do so because of the manner in which it extends the Rudd government’s well-established agenda of discrimination against those living in rural and regional areas.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I find it slightly surreal that I am standing here again to speak on this suite of bills so soon after I did the same thing some few short weeks ago. The fact is that the government had every opportunity to educate, lobby and negotiate on the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills prior to them being voted on at that time. The budget was handed down over four months ago—that is right: over four months ago. So between then and the vote some two weeks ago there was no shortage of time for the government to sit down with the opposition to work through our concerns and to discuss in a cooperative and meaningful manner our very legitimate worries about these bills—about their effect on the Australian car industry and the parts suppliers it supports and the grave effect on farmers, tourism operators, families and Australians who live in rural and regional parts of our great nation.

We in the opposition are not unreasonable people. We would gladly have sat down and discussed amendments that we believe could allay some of our fears about the dire consequences these bills will have on Australian businesses and everyday Australians. But no attempt was made to talk to us about these concerns or to try to allay our fears. In that four-month period we did have the time and the opportunity for the Senate Economics Committee to conduct a full inquiry into the effect of these bills. We had the time to travel across the nation and take evidence from witnesses ranging from the Australian car manufacturing industry through to local car dealers, motorist representative organisations, car clubs and academics. This evidence, time and time again, highlighted the folly of this suite of bills. It highlighted how the bills are simply bad policy and, most of all, that their stated aim—to add to the budget bottom line—was not likely to be achieved in whole, or even at all, because of the behavioural effects of increasing prices in a highly competitive environment. This is already leading to reduced sales and a consequent reduction in the quantum of the luxury car tax raised.

Despite the almost unanimous presentation to the inquiry of very concerning evidence—which I might say was on the whole, inexplicably, dismissed or ignored in the findings of the government majority report of the committee—the government still failed to sit down with the opposition to discuss issues that clearly required more thought. These were issues we would gladly have discussed with the government and worked through, if given a chance. But, no, the government chose not to take up this opportunity. They did appear, belatedly, to have tried to negotiate with others in this place. But even then they failed to take seriously the fact that the Australian people at the last election expressed a clear desire for the government to be consultative and flexible in their legislation by returning a Senate of the current make-up. This approach by the government is in itself very surprising and counterintuitive, given the strong campaigning by the Labor Party before the last election calling for a return to just such a Senate make-up.

As a result of their lack of seriousness in their approach to these matters and their failure to accept the need to negotiate to deliver an outcome addressing the obvious flaws in their proposed legislation, they failed to get their legislation passed into law two weeks ago—and rightly so. If the government are serious about ensuring they get their legislation passed, they need to satisfy a majority of members of this place that their legislation is good legislation; that it contains a minimum number of flaws or, even better, none; and that such legislation will not impact unduly on Australians. In this they failed miserably when last presenting this suite of bills. But here they are back again, two weeks later. What is different now? Why is this government trying again? Because now they appear to have capitulated to the concerns of others in this place. They have acknowledged their error in trying to ram through legislation without accepting the legitimate role of this place as a house of review.

The government have caved in and compromised. However, the time lines in this are also interesting. In the period of four months between the budget and the first vote on these bills in this place, they refused to take the opportunity to negotiate on the worrying aspects of these bills, ignored almost unanimous and compelling evidence from many reliable sources and rammed their highly flawed bills through parliament. They had four months to get the legislation right but they did not get it right. And in the two weeks since the first vote the government have rushed through negotiations with some senators to try to deliver these bills in a manner that they hope will receive the approval of the majority of the Senate.

What do we have before us as a result? We have a mishmash of rushed amendments designed to do a deal to get the bills passed. These amendments are not carefully considered and crafted. They are not changes that will still deliver much of what the government is trying to achieve without the very negative and unsavoury consequences for Australian businesses and consumers that the original bills would have had. This is because these proposed amendments simply do nothing to address most of the problems these bills will create.

But there are answers that could solve this conundrum for the government. There is an approach that could help the government deliver its stated aim of raising considerable funds for the budget bottom line while at the same time significantly alleviating much of the negative baggage that the bills as they stand carry with them. It is obvious that the amendments proposed by the government as part of its deal to assuage the varying concerns of various senators in this place will lead to a significant reduction in the estimate of funds raised. So, in that respect, the approach of the government today in seeking to introduce a mishmash of convoluted exceptions to the luxury tax hike is in no qualitative way superior to the far preferable approach I refer to. This approach is the one foreshadowed by the opposition in the amendments it will introduce in the committee stage. This approach would be a far more elegant way of dealing with the disastrous effects of the proposed luxury car tax hike on purchases by farmers and tourism operators. It is an approach that would almost completely excise the onerous effect of this tax hike on the Australian car industry by introducing a second limit at which the higher rate of luxury tax cuts in. It is a shame that the opposition has had to do the government’s job for them. If the government had asked us we would have helped them, because the problems can be fixed.

It is probably appropriate at this point to restate what some of these problems are in the bills as they stand, as I did in my comments in this place some two weeks ago. As I noted then, the government has budgeted $555 million over four years for the savings from this measure. But the evidence from the Senate inquiry clearly demonstrated that this figure is purely conjectural at best and, in all likelihood, unlikely to be realised. The fact is that this figure is based on first-round effects only. It is calculated on the basis of a pure change in the rate and assumes very little, if any, elasticity in demand for the vehicles priced above the threshold. It takes no account of the effect on the local car industry, of the loss of jobs it is likely to cause in that industry and its support industries, of the inevitable reduction in investment in new showrooms and head offices by car sales businesses and the local industry and car importers, and of the consequences of these effects on government revenue. The reality is that buyers of cars around the threshold for this tax are highly price sensitive and there is a high level of price elasticity.

The sales evidence for July and August of this year clearly proves that the sales of cars above the threshold will dramatically fall as a result of this measure. The evidence we received at the Senate Standing Committee on Economics inquiry into the bills is that there is a point at which higher elasticity of demand firms into inelasticity. The evidence was variable on where this point was but suggested it was at least $125,000, maybe higher. Put simply, the higher the price of the car the more likely the purchasers are people who have means to pay the cost of the car plus whatever taxes might be put on it. For example, buyers of Aston Martins, Porsches and S-class Mercedes—cars that cost many hundreds of thousands of dollars—are more likely to be in a position to fork out the extra imposition proposed by these bills. This is probably even more so when looking at the purchasers of $1 million-plus Rolls Royces.

As I noted two weeks ago, and as referred to by my colleague Senator Eggleston, it is not in the Rolls Royce price range that the government will make the bulk of its money on this tax. The importers of Rolls Royces in Australia reported a total sales figure in Australia over 2007-08 of just 17 cars. Despite government rhetoric, this is not where the government intends to raise the funds it says it expects to. Between the threshold of $57,180 and around $75,000 is where the vast majority of the cars attracting this tax are sold, and it is where the vast majority of tax takings will be generated. Indeed, the facts show that almost 60 per cent of all vehicles incurring the luxury car tax are priced below $70,000, so this is the price range where the effect on sales figures of this tax hike needs to be examined.

The trends apparent from sales figures for July and August of this year and the advance orders being received by car retailers report a huge downturn in this very price range. Clearly, if the first or even second round effect of the proposed tax hike is a part of the cause of this trend, the tax hike itself is likely to be counterproductive. As such, the potential increase in the take by the government as a result could be far less than anticipated. As I noted two weeks ago, some car retailers even suggested during the Senate committee hearings that their figures and experience suggest it could even cost the government money as the sales of the cars within the threshold range fall to such a low that less tax is generated. But, again, as noted two weeks ago, the problems with the measures contained in this bill extend further than just the remote likelihood that the government will achieve its budgeted revenue out of this tax hike.

The facts, supported by the evidence, are that the tax hike will likely have perverse results on local car manufacturers, on incentives to fit and the availability of safety equipment and environmentally friendly technologies and will decrease the possibilities for those on lower incomes to access cars better equipped with safety and improved technology. The reality is that most cars around the threshold and up to $100,000 are bought by people who simply do not have the means to purchase a car in the $100,000-plus range and who have to be careful with their money. They love the safety features of these cars, and they love the efficient new environmentally friendly technology of these cars. But they do not have unlimited resources.

As such, they buy the best car that comes with the most features they desire and can afford. The price of these cars is vital to their purchasing decision. Adding to the price of cars within this price range will seriously impact upon the purchasing decisions of those who buy them. They will either have to buy a car without the full range of specifications they would prefer to have at a price comparable to the pre-tax hike figure or not buy the car at all. In making such a decision they may be forced to abandon the choice to purchase additional airbags or the latest dynamic stability control, or even be forced to purchase a non-hybrid version of the same or a different car.

Sure, the amendments proposed by the government today will exempt cars with high levels of fuel efficiency, but this does not necessarily equate to exemptions for all cars that are equipped with the latest environmental technologies—for example, the Lexus hybrid. It also does not equate to an exemption for purchasers of cars with innovative safety features, again, forcing Australians on a budget to pay the money they might otherwise have paid to add an innovative new safety option to the government, at their and their family’s ultimate risk. Even worse, these amendments do not exempt any Australian made cars. They amount to an exemption for top-end Alpha Romeos, BMWs and Saabs. So good on you if you can afford one of those—no luxury car tax hike for you. But, if you want to purchase a well-equipped Australian made Ford Territory, you get no exemption.

As I noted two weeks ago, it is a generally known rule in the business of car retailing, as confirmed by evidence at the committee hearings of this matter, that the base models that turn over the highest volume also have the lowest retail margins, and that the viability of many retail operations depends on the much higher margins that are applied to the higher spec models. The evidence also shows that car manufacturers in Australia rely on this principle—that is, that the top end sales of Calaises, Statesmans, Caprices, HSVs, fully loaded Toyota Orions, Ford G6Es, XR8s, Territorys and FPVs contribute more to the viability of car manufacturers per car than do the base models. This is where the government is seeking to attack local car manufacturers and retailers of locally made cars: right where they make the margin that makes them viable. I find this unbelievable. This is a government which, as one of its first acts, commissioned a review of the automobile manufacturing industry in this country and which has declared how it stands with that industry, how it is its best friend and that it will see it through the many challenges it faces. But these words, like most of those emanating from the mouths of this government’s representatives, are very hollow ones.

One only has to look at the evidence provided by the Australian car manufacturing industry itself, and I encourage every one of my colleagues in this place to do so before they cast their vote at the end of this debate. They make it absolutely clear that this tax hike will have disastrous consequences on the viability of the local car manufacturing industry and the retail car industry across our nation. For this reason above all others I find it inconceivable that any senator in this place could even consider this tax hike. In the face of severe challenges, the local Australian car manufacturing industry is doing a great job designing and producing quality innovative products, many of which are exported across the globe. But it does face many challenges. I simply cannot understand why the government would deliberately place another major hurdle in its path.

Two weeks ago, I noted in this place that the luxury car tax hike will also have a serious impact on the delivery of innovative safety options on new cars in Australia. History shows us that almost all innovations in safety equipment have been developed at significant cost by major luxury brands. These include ABS brakes, airbags, electronic stability control and traction control. The manufacturers of these high-end cars need to price their cars accordingly to cover the substantial development cost of innovative safety features. As such, when first developed these features are not readily available on mass market cars. However, as the technology is proven and as economies of scale kick in, these technologies do become available in what is termed the trickle-down effect. Progressively, less expensive cars gain them as an option and then as standard until over a period of years these features are available on even the least expensive vehicles. The relevance of this to these bills is that their passing would work to delay the trickle-down effect on the introduction of this technology, thereby delaying the benefit of them to Australians at given pricepoints.

There is no doubt that the luxury car tax is a tax on innovation, even as it stands. But to increase it further makes it even more likely that it will take longer before we see such innovations in Australia on lower and middle priced cars. Quite clearly, I am not saying that the passing of these bills would lead to less safe cars being built or imported into Australia. On the contrary, what I am saying and what the evidence at the hearings supported is that Australians buying cars to a price will sacrifice some of these new features in order to afford the car and the newly raised tax. Similarly, some manufacturers and importers will build and import cars without some of these features in order to remain competitive on price—all at a loss for Australian consumers.

I am also astounded that the Labor government, supposedly the custodian of social justice and equity, would want to make it harder for people who are less financially able to afford cars that are well equipped with innovative and improved safety features. I would have thought that a Labor government would be looking to bring the price of such vehicles down, so that more Australian working families could afford them. But no, here we have a government saying, ‘No, let only the rich have them.’ What happened to equity in the Labor Party? Are they really looking to create a world in which there are two classes, first, the very rich, who can afford the best of everything, and, second, the rest, who have to accept mediocrity in all aspects of their lives?

The simple fact is that the only rationale that the Rudd Labor government has for pursuing this tax hike is to hit the rich. The irony is that in increasing the tax they put those cars they refer to as luxury cars further out of the reach of many Australians. I am also astounded by the claim that the tax hike will somehow curb inflation, when the proposed luxury car tax will increase the price of 12 per cent of cars sold in Australia, including the most common luxury car, the Toyota LandCruiser wagon, and a whole range of locally made vehicles. This tax hike will put the price up for these cars. This is inflationary; it is not deflationary.

Contrary to the constant bleating by ministers in answer to just about every question posed to them, given the momentous and very serious economic ructions taking place in the international economy—particularly those originating in the United States—the most likely economic challenge we now face is that posed by a slowing economy, not an overheating one. In an overheating economy, withdrawing money from the economy through the retention of a significant surplus is one tool that might be employed to attempt to cool it to avoid inflationary pressures.

However, the same conclusion does not follow in a slowing economy. On the contrary, in view of the impending worldwide economic downturn, a responsible government is likely to need to look to employ both fiscal and monetary policy to stimulate the economy, not dampen it. This means giving more money back to the people—putting more money back into the economy—to increase economic activity. Through fiscal policy, this is achieved through either tax cuts or increased spending. Through monetary policy, it is achieved through interest rate reductions.

The new Leader of the Opposition was warning the government in February of this year that the international economic climate was likely to have a strong dampening effect on the Australian economy. The government ridiculed him at the time. Now the government admits that he was right and acknowledges the serious impact that the international economic climate is likely to have on our economy. But it has yet to change its rhetoric or admit that with its acknowledgment of that threat must come an entire reversal of its fiscal policy. If it accepts that the international economic crisis presents a threat to our economy, then it must look to measures that stimulate, not dampen. As such, the need to withdraw money from the economy to cool it no longer exists. On the contrary, it should now be looking to put money back into the economy to ensure that economic activity remains at levels sufficient to avoid job losses, business closures and bankruptcies. Accordingly, the approach of the opposition in opposing these bills is in effect doing what the government should be doing but will not or cannot admit that it should do. (Time expired)

Simon Birmingham (SA, Liberal Party) Share this | Link to this | Hansard source

It feels a little like deja vu, I must say. Only a couple of weeks after I stood in this place speaking to this legislation—legislation that the Senate duly voted down at that time—and, remarkably, here we are again. There was Senator Bushby again making a passionate speech against the passage of this legislation, joined by Senator Abetz, Senator Eggleston and others, who made very strong contributions as to why this tax impost should not be passed through the Senate. It is remarkable that, after the Senate exercised its democratic will just a few weeks ago, here we find the government wasting the time of the Senate by putting us through the very same debate yet again. Coming into this place, one has to ask whether it is a contempt of the Senate, a misjudgement by the government of its legislative program or indeed quite possibly a combination of both.

The government spent much time when it was on this side lecturing and hectoring about the Senate and the way that the former government handled the processes in the Senate. They argued that we showed some sort of contempt. There is nothing more contemptuous than bringing legislation in, putting it to a vote, having it voted down and then turning around and saying, ‘We’ve got nothing more important to do, so we’re going to put it straight back on the table again.’ That shows great contempt for the views of those Liberal, National and Family First senators who chose to vote against this and who had a clear view that this tax hike should not be passed. It is certainly contemptuous.

One also has to wonder whether it is a case of total mismanagement by the government of their legislative program. This time around they have cobbled together a whole raft of amendments to the legislation. They have put together a bit of an amendment to try to pacify this person and a bit of an amendment to try to pacify another person, to get a majority together in this place.

Quite clearly, what that shows is that the government did not do the necessary legwork the first time around. The government seems to have forgotten what the Senate is truly like. For all that the government is complaining about the role that the Liberal and National parties had when they had a majority in this place, the government seems to have totally forgotten what it is like managing a Senate where nobody has a majority. They seem to have totally forgotten that there is a need—not just a need but indeed a responsibility—to consult, to listen and to talk to senators in this place. They seem to have totally forgotten that there is a need to talk to the opposition about changes that we might accept to pass legislation, or to talk to the crossbench about changes they might accept to pass legislation. There is a need to work cooperatively.

Many uphold that that is the strength of the Senate. It is certainly what many people have praised about the new Senate structure. Whilst of course I would rather the Liberal and National parties still had a majority, I accept that there are some pluses perhaps for the country in the Senate having that strange balance of power situation. In doing so, I recognise that there is then a need for cooperation and conciliation between the parties sitting in here. It is amazing that the government fails so miserably to work to achieve that cooperation between the crossbench and the parties to put its legislation through. If it believes that its amendments that are being proposed this time around are acceptable just a couple of weeks later, you really do have to wonder why it could not manage the legislative program well enough a couple of weeks ago to get these amendments on the table and to get the result that it was seeking. Quite clearly, it is contemptuous. It is mismanagement. It is both.

We do have some amendments thrown on the table that obviously the government hopes will see the passage of this legislation this time around—a couple of weeks later. They have thrown a bone here and a bone there. They have put some amendments forward in the name of the government that I assume are amendments meant to pacify the Greens. They have thrown them a bone. There are some amendments put forward by Senator Fielding that may or may not have been developed in cooperation or conjunction with the government, so there is potentially a bone there. But when you look at the detail of these amendments, the important thing is that there is no meat on the bones. They have thrown these bones out but they are well chewed before they got to them. There is no meat on the bones of these amendments. In fact they do very little to improve the substance of the legislation that is before us.

The government-Greens proposal tries to provide some exemptions from this tax hike on fuel-efficient cars, but it sets a dollar cap on that. You can only have fuel-efficient cars up to $75,000 in value. That is your limit of fuel efficiency, then the tax hike kicks in again. As I have said in this place before when speaking about the solar rebate program, carbon emissions do not understand means testing. Carbon emissions are not means tested. They do not have threshold caps set to them. Indeed, in this instance, if the government is serious about supporting fuel-efficient vehicles and their place in the economy, and if the Australian Greens are serious about supporting fuel-efficient vehicles and their place in the economy, then they will provide an exemption from the luxury car tax increase for those fuel-efficient vehicles. They will make sure that it covers all potential vehicles on the market.

As Senator Bushby was saying before, much of the innovation that occurs in the automotive sector occurs in those vehicles at higher prices. Innovation is what we want to see in the automotive sector to get more fuel-efficient vehicles on the road—increasingly fuel-efficient vehicles on the road. To get that innovation we need to be incentivising it in all price brackets not just have a cop-out amendment that is designed to say, ‘Well, we have done something for fuel-efficient vehicles.’ Those at the cutting edge of development, those that will be the most efficient vehicles, the ones that provide the technology we rely on into the future, are not included in any exemption. They still get the full tax hike because this really is just about playing politics to claim to have done something to support fuel-efficient vehicles.

So there is the Greens-government proposed amendment, the bone that was thrown there. There is no meat on the bone there. It is a token amendment that ticks a box to say that they have done something for efficiency but in reality it does nothing at all that will provide long-term benefits for the development of fuel-efficient vehicles in the Australian economy.

Then we turn to Senator Fielding’s amendments, which we can only assume the government has either given a nod and a wink to or played some role in the development thereof. Senator Fielding’s amendments attempt to provide some exemptions to the increase for primary producers and for tourism operators. They are very worthy aims. They are aims I spoke about when speaking on this legislation a couple of weeks ago. I spoke about fuel-efficient vehicles. I spoke about primary producers and tourism operators, so I agree with all three of the aims of these amendments. It is not the objective that is the problem here from the Greens amendments or Senator Fielding’s amendments. It is the substance that is sorely lacking.

In regards to Senator Fielding’s amendments, there are numerous holes, I am sad to say. We look at primary producers—and that is just it: it covers only primary producers. It covers only those in primary production businesses. There are plenty of people in rural and regional Australia who rely on having a four-wheel drive or all-wheel drive vehicle to get around—to undertake their business or to take their children to school safely, or to get to and from the hospital or the town, or to do their shopping or anything else of that sort. There are plenty of people in rural and regional Australia who rely on such vehicles who are not in primary production businesses. Lots of Australians would be cut out. This is an extraordinarily narrow definition if you are going to protect the interests of rural and regional Australia from this tax hike. Have no doubt about it, a large number of the vehicles that are hit by this tax hike are sold into rural and regional Australia. Proportionately, rural communities are some of the communities most hit by this $555 million tax slug. So we think about those people and communities who may not be in the primary production business.

We can see that there are many people going about other forms of business in rural communities, such as postal contractors, who actually need to get into remote areas. There is no exemption for them because theirs is not a primary production business. There are fencing contractors who need to get into primary production areas, rural areas and agricultural areas. There is no exemption for fencing contractors who may need to access these types of vehicles. They all get hit by this tax slug, even with Senator Fielding’s amendment. It is a well-intentioned amendment but, unfortunately, an amendment that just creates further inequities in the system. If we are going to fix this legislation, it needs to be in a far more comprehensive way than isolating primary production businesses so that people directly on farms earning on-farm income may get an exemption but everyone else in regional Australia misses out. There is nothing equitable about that—far from it.

On the tourism side of the ledger, Senator Fielding’s amendment attempts to exempt tourism operators. As I said, that is another wise and reasonable objective. I have had many representations from the tourism industry on this matter. I was at a function for the Australian Regional Tourism Network in the Barossa Valley only last week. It was their annual conference, where tourism operators from regional areas right around Australia gathered together and talked about their industry and some of the challenges they face at present. There are many challenges that the tourism industry faces at this present time. There are challenges relating to the increase in oil prices and transport costs for both the air sector and on-ground transport. There are challenges imposed by the government not only with this tax slug in the budget but also with the increase in the passenger movement charge—the ‘tax on tourists’, as it is.

The tourism industry is feeling some angst and in—as Senator Conroy reminds us constantly—these uncertain global economic times we know that discretionary expenditure on things such as tourism will be one of the first things to be hit. The tourism industry is worried and regional tourism operators are very worried. They made known to me, quite clearly, their concerns and their views that this tax measure has unfairly hit them.

Senator Fielding has quite wisely and rightly attempted to draft an amendment to cater for those tourism operators, but again, unfortunately, it does not go far enough. His amendment only covers four-wheel drive or all-wheel drive vehicles. That is fine for those tourism operators in areas of my home state like Kangaroo Island, the Flinders Ranges or outback South Australia—some of whom may be based near Senator Williams’s hometown of Jamestown, well on the way to the Flinders. There are some beautiful parts of SA there. Those operators may well be providing services in four-wheel drives, but that is only a small part of the tourism industry. Left out of that are the hire car operators who operate throughout cities and tourism operators who provide tours in wine districts.

In my home state of South Australia, tours to wine districts are a critical part of the tourism industry, but they are not done in four-wheel drives. They are done in quality vehicles—luxury vehicles, as some may say. Of course, people paying for a tourism experience, travelling around wine districts and contributing to regional tourism, expect a good experience. They do not expect to be picked up in a second-hand car, but they also do not expect to be picked up in a four-wheel-drive.

That is the problem with Senator Fielding’s amendment: it excludes, once again in the tourism sector, a whole raft of tourism operators, creating great inequity. Indeed, if anything, it potentially runs the risk that tourism operators operating other businesses will be drawn towards four-wheel drive or all-wheel drive vehicles as the solution, because with the way it is structured there is nothing to say that you have to be in a regional area to get that exemption—you just have to be a tourism operator. We may well have the hire car industry suddenly switching over to four-wheel drives, which is hardly a sensible outcome from this legislation. It is hardly a good thing for the tourism industry, the environment or our roads. Unfortunately, well intentioned as they are, the amendments of the Greens and of Senator Fielding leave many inequalities and inequities in this legislation.

It is not just those sectors, though, where there is inequality. There are others who have been totally overlooked by these amendments. There are others who will still be hit by this tax. There are large families, whom many have spoken about before in this place, who need a large vehicle to get all of the children around. They are hit by this tax. Families may need a specialised vehicle because they have a disabled child—they will be hit. Then we have those who for recreational purposes may need a four-wheel drive but are not primary producers and do not even live in regional areas. Many recreational fishers or indeed commercial fishers need four-wheel drives to be able to tow their fishing boats. Many in the recreational horse industry need four-wheel drives to be able to legally tow their horses, as do many in the commercial horse industry.

There are many practical implications here; there are many others who will be damaged, hurt, by this $555 million tax slug that the government has proposed. It is just not good enough for the government to say that these people should wear it and cop the tax. It is just not good enough for the Greens or Senator Fielding to say that the proposed amendments will do enough to cover these people. They will not. There will be thousands of hardworking Australians still forced to pay an unnecessary tax slug because of this measure.

As has been spoken of in this place before and as I emphasised in my address a couple of weeks ago, it is also a terrible decision for, and a terrible hit on, the Australian car industry. In my home state of South Australia we have already been hit, as Senator Carr would well know, with the loss of Mitsubishi from the manufacturing sector. We see Holden—

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

What about the tax on Ferraris? You just want to defend the Ferrari! Talk about the tax on Ferraris.

Simon Birmingham (SA, Liberal Party) Share this | Link to this | Hansard source

Senator Carr of course wants to focus on the Ferrari. Senator Carr, how about the 4,754 Statesmen and Caprices sold in Australia last year, all of them built in South Australia? You may want to talk about Ferraris; there are not that many Ferraris sold in Australia each year, Senator Carr.

As has already been indicated, the opposition will be moving its own amendment to impose a threshold that would cover the issues of four-wheel drives, a threshold of $90,000 for this tax hike. Senator Carr, that would mean the tax would cover your Ferraris, but it would exempt the Statesmen and Caprices built in my state of South Australia and the Ford Fairlanes which have been built in your state of Victoria and which I understand Ford is planning to discontinue production of—no surprise, of course, knowing that this government wishes put this tax hike on luxury cars and Australian made vehicles like this. This decision of the government hurts the Australian automotive industry. They have railed against it and they expect us to do our bit to support this industry. I find it remarkable that the Minister for Innovation, Industry, Science and Research somehow thinks this policy, which hits a sector that he claims to support aggressively yet obviously delivers so little to, is good policy. That is why we on this side are determined to make sure we stand up for the interests of the industry and of the many thousands of Australians who are hit by this and who would be left out even from the effect of the amendments that are proposed by the minor parties. It is why in all honesty we should be ashamed that the government has put this tax hike back on the table so soon after the Senate quite rightly rejected it. I hope the Senate will reject it again.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

We always hear, don’t we, that somehow the Labor Party knows where you can buy a Ferrari for $57,180? The only way you can buy a Ferrari for $57,180 is if it is hot—if it is dodgy; if it has been stolen. That is the sort of policy that we currently have with this: something that has been manipulated and turned around. These people know where to buy Porsches for about $57,180 because they are so dodgy. This is a dodgy policy from a dodgy premise but it is also an attack on manufacturing workers at Australian manufacturing and car plants—an attack on Australian working families. It is an attack on those who are in a precarious position by reason of the stresses manufacturing plants are under. In their infinite wisdom, the Labor Party have decided that they are going to help the show by putting another tax on it. They are going to be responsible for putting Australian manufacturing workers out of a job. That will be the effect of this. If they believe in market principles and price signals then the price signal is to stop you buying. So what are people going to buy? They are going to buy cheap imported Chinese and Indian cars or, if they do not care about the price, they will buy European cars. But it will be Australian cars and Australian manufacturing workers that are dealt such a cruel blow by this.

In the government’s insistence on trying to put this through, they have come up with a horse designed by committee which has become a camel. That is the sort of legislation that is being put before us. They are corralling the Greens and corralling other sectors. There are exemptions for environmentally friendly cars. There are rebates for people who have rural property. Possibly I will get one because I am a primary producer, but the person who comes to do the contract farming on my place will not. The person who builds a fence on my place will not. The mechanic who comes to my place will not.

A saying that goes round now is that the only tractor you need on a farm these days is a contractor. They are the people that the Labor Party think do not exist. So a big thankyou from absentee landlords like myself to you good people for helping us out, but you have left out the people who actually do the majority of work on so many places. You cannot go into a town and start dividing people up—‘You are in; you are out.’ You cannot walk down the streets of a place like St George and say, ‘You over here will get an exemption for buying that Toyota wagon to put your family in but you over there will not.’ It is a ridiculous concept. And these are the sorts of things that are coming forward.

This legislation is based on a ridiculous premise that we will now have arbiters elegantiae who will determine what luxury is. We look forward to the Henry review—what an absolute document of wonder that will be!—to discern other things that are luxuries. The government have already said they will be looking at jewellery and artwork. I look forward to the day when somebody on the other side will be discerning whether my fridge is a luxury fridge or just a regular old Kelvinator. Some bastion of information will sit down and ponder the universe as to what is and what is not luxury and tax me accordingly. That is the sort of ridiculous scenario that will descend on us.

The government have thought about it for a long while! The legislation failed about a week ago and it is back here today, like a lost dog looking for a bone. It is back here wandering around the chamber, and we are going to see if it struggles through this time. The legislation, Labor’s idea of structural policy, is evolving into bathos. It has hairs all over it. Why can’t we do what is reasonable and just kick it out? It is too confusing. Why didn’t the Labor Party at least have the decency to look at the sorts of cars that Australia produces and at least exempt them—to at least keep out of it the Australian workers who are going to have their jobs threatened by this?

Maybe they have not been reading the mail lately, but a fair few stresses are coming onto the manufacturing workers in the manufacturing plants of Victoria and South Australia. They will be absolutely fascinated to know that tonight the Labor Party has created basically an upside-down tariff—a reason for Australians to buy a product made by workers overseas. They will be thrilled to bits with the logic.

Then there is this concept of luxury. I truly believe that if we walked down the street and asked people, ‘Do you believe that your Statesman is a car of luxury? Do you believe that your Toyota LandCruiser wagon is a sign that you are up there with those people who have been terribly fortunate in life—the people who occupy the BRW 200?’ I wonder if these people feel that they are in possession of an item of luxury.

The reality is that the motor car, for so many people, is the one article that they can extend themselves to that means so much. How many times do you drive past a house and see the car in absolutely immaculate condition? They might live in a house where they are actually struggling a little bit, in a street which might not be at the best end of town, but they concentrate on that vehicle because it means so much to them. It is something that personifies just a little bit of a corner of their life where they have something that they are proud of. It might be the highest-range Monaro, but for the government those sorts of vehicles might be a luxury. I think the people who are listening tonight would be saying, ‘It is nice to own one but I don’t see it as a luxury.’

It is an arbitrary tax, where the government have plucked a figure out of the air: ‘It’s going to be 33 per cent.’ That is a fair hit to put on someone because they dare to want something that, for all intents and purposes, may be just a bit nicer. Government senators may come in and say, ‘We are looking at the top of the range’. They always talk about Ferraris and Porsches. You know their argument is lacking when they keep referring to something that is a stellar orbit from the price where this tax cuts in—it is a million miles away. But they do not say, ‘You are helping all the people who won’t own Holdens. You are supporting all the people who won’t own Fords. You are supporting all those terrible people who want to own Toyotas.’ No, they have to go for the ridiculous notion of being mischievous and they mislead and suggest to the Australian people that this is a tax that comes in at a quarter of a million dollars or $150,000 for a period of elasticity.

This comes in where the demand for the motor vehicle is very elastic, where people respond to price. People do respond to price. That means that when you put the price up they buy another product, so they will buy a product from another country and they will be putting an Australian worker out of a job. They will be forced to do this because of politics of envy. And it is not just politics of envy but a misguided and completely implausible premise in a piece of legislation that now has so many junctures and amendments that it has become an absolute farce—all for the purpose of saying, and this is what it is all about: ‘We won. We got that through.’ The policy, if it ever gets through, will be the archetypal grandpa’s axe: the head will have changed, the handle will have changed, but somebody somewhere will be able to say, ‘That was successful. That was good government tonight. We managed to really deliver to Australians a sign of how we will manage the economic times that are in front of us and how we will deal with the precarious nature of what is before us, because we brought into parliament something that had been shot to pieces to prove a point.’

We should be using this time tonight to debate other things that are far more important, like how we are going to deal with the effects of the threat to superannuation by reason of the international turmoil; how we are going to deal with the effects on the people who are going to be losing their job because of this international turmoil; how we are going to deal with the effects on the people in the western suburbs of the major capitals who are probably looking at negative equity on their homes—how we are going to deal with those issues. The Labor Party is going to deal with those issues by putting another tax on their vehicle. That is how they are going to do it. And if they live down south they are going— (Time expired)

Debate interrupted.