Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Order! We have four bills to consider. We will firstly consider the Tax Laws Amendment (Luxury Car Tax) Bill 2008. I draw the attention of the committee that all of the bills in this package are classified under section 53 of the Constitution as bills imposing taxation for the purposes of proceedings in the Senate. As a result, all amendments to all of the bills must be moved in the form of requests.

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

I table a supplementary explanatory memorandum and a revised supplementary explanatory memorandum relating to the government request for an amendment to be moved to this bill. The memoranda were circulated in the chamber on 17 and 22 September 2008 respectively.

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

Mr Chairman, the opposition remains opposed to this legislation, as we made very clear in our second reading debate speeches. But what we did indicate to the Senate was that if we moved into the committee stage, we would be seeking to make a very bad piece of legislation slightly less bad—if I can put it that way. Having said that, we will be opposing this legislation on the third reading. The reason is that the Labor Party have only put forward one reason why this legislation is necessary—that is, to fight inflation. That is the one reason that they have given for this legislation. Senator Carr, of course, has come in here and said it is all about his socialist doctrines and politics of envy and that they are not in the business of giving millionaires tax breaks et cetera. That might be the case if you are talking about Lamborghinis and Bentleys, but, quite frankly, not when you are talking about motor vehicles that cost $57,180.

But the Labor Party have come into this place saying this is about fighting inflation. I say to my friends on the crossbenches, ‘In keeping the government honest, in keeping the government accountable, you have to ask yourself this one very simple question: will this legislation do that which the government asserts—that is, fight inflation?’ We all know the answer to that. Labor senators, in their report to the Senate on this very legislation, at paragraph 2.19, confirmed that this legislation will in fact be inflationary—acting in complete contradistinction to that which the Labor Party asserted in introducing the legislation. So to my friends on the crossbenches, who assert that their role is to keep government honest, to keep government accountable, I ask them: how do they justify providing support for this legislation when it flies in the face of the government’s own assertions about the legislation? Why would they be voting for it when it is inflationary? I do not think there is anybody in this chamber now that would doubt that this legislation is inflationary, yet the government continues its mantra that somehow it needs this bill to fight inflation.

It does not make sense; it does not make economic sense. We all know that. Sure, you might want an increased taxation regime because you believe in the politics of envy or whatever—that is fine—but the government do not present this legislation on that premise. They present it to this chamber on the basis of fighting inflation and fighting inflation alone. And yet, their own senators, their own chair of the Senate economics committee, acknowledge that this legislation will be inflationary. So for those who parade themselves to the Australian people as keeping the government accountable, I simply ask them this question: how do you allow a government to get away with something like that?

But what is also very disturbing about this is that this legislation will hurt the Australian car manufacturing sector. Make no bones about it, that is clear, and I think everybody is agreed on that. The three Australian motor vehicle manufacturers that are left agree that it will hurt their industry; it will hurt jobs in the Australian car industry. Indeed, the Federation of Automotive Product Manufacturers also believe it will hurt the Australian domestic market. So we have got it being inflationary, hurting Australian jobs, hurting Australian manufacturing, hurting innovation, and we got all of this before the Senate committee. You really do wonder what is left to promote this legislation to this Senate chamber. There is indeed nothing left.

Indeed, we have had a whole range of amendments suggested to us in relation to this legislation, some of which are, quite frankly, counterintuitive. I would say to my friend Senator Fielding in relation to his suggestion, and this is relevant to the opposition amendments, that in his first speech on the second reading of this legislation he expressed concern for the rural and regional communities—a very valid concern. But I think the government sold him a pup. He asked the government, as I understand it, to draw up some amendments, and now all he is concerned about are those families in rural and regional Australia that happen to be farmers, or primary producers, and somehow involved in the tourism industry, and then only if they have four-wheel drives. What about the families in rural and regional Australia whose breadwinner happens to be the local Australia Post contractor, or the local plumber, or the local vet, or the local general practitioner, who needs a four-wheel drive to get to and from their place of work? Those families clearly are not first families in the consideration of Family First. I cannot see the logic of carving out only primary producers but all those people who help primary producers being completely and utterly ignored. The plight of the primary producer is strong and it is very convincing. But can I say to Senator Fielding that the plight of the farmer is unfortunately shared by the plight of the local fencing contractor, or the local mechanic, or the local vet, who is also suffering because of the decline in rural and regional areas, especially where there is that terrible affliction of drought. So why would we say that only primary producers and tourism operators should get a benefit, and then only if they have four-wheel drives? It really does defy logic.

As a result, the opposition has proposed that there in effect be a two-tiered system of the luxury car tax. We do not think that there should be such a system, but if the majority of honourable senators are so minded then we are of the view that a two-tiered system may well lend itself to cover not just the primary producer, not just the tourism operator, but also the Australia Post contractor, also the plumber, also the vet, also the general practitioner and all the other people living in rural and regional Australia that suffer exactly the same issues and difficulties as the primary producers. That is why we are suggesting that the rate of the luxury car tax should be at 25 per cent from the current threshold of $57,180 through to $90,000. Then at $90,000 we have the new 33 per cent rate cutting in. We believe that the quite silly nonsense of the Prime Minister and the Treasurer getting up at question time trying to talk about this luxury car tax as applying to Porsches has been fully exposed by my colleague the leader of the National Party in this place, who said, ‘Show me a Lamborghini or a Bentley or a Rolls or whatever that you can buy for $57,180. She would be pretty clapped out or hot.’

It is great to see Senator Williams in the chamber because he supports this as well. If you believe in the luxury car tax then for those over the $90,000 mark we would suggest that what we need is, for want of a better term, a super luxury car tax. But to try to say that Mr and Mrs Average, who are concerned about their children and want a Toyota Tarago with the options, or somebody who wants a Commodore HSV with some options, buying in that range of up to $90,000 are somehow in the same category as someone who would buy a sports motor vehicle like a Porsche for four or five times that price is sophistry at its worst. It is twisting and it is designed to sell a false message to the Australian people.

We do not believe in the politics of envy on this side. We say that if you pay your GST and your luxury car tax then so be it. The more expensive the car, the higher proportion the 10 per cent and the 25 per cent rake in for the government in relation to each vehicle. But the point in relation to our amendment is very simply this: we will make no special exemption just for primary producers or just for tourism operators, deserving though they be. We want an exemption also for the mums and dads with their Toyota Taragos. We also want an exemption for all those other people in rural and regional Australia who quite properly need the sorts of four-wheel drives that Senator Fielding has been championing. I would suggest to honourable senators, especially on the crossbenches, that this would be a lot better and cleaner way of achieving a result for those who genuinely need a workhorse or a people mover in relation to their work and family needs in rural and regional Australia but also in other areas of Australia.

Let us not forget that there are many grey nomads these days who buy a well-equipped four-wheel drive to go around Australia. They are not millionaires. Some of them in fact have these four-wheel drives living in suburbia because they like to tow a caravan and, guess what, a Toyota Prius or a Hyundai Getz will not exactly do the job when you have got a big caravan. For safety you need a big car, and that is why they buy the heavier and well-appointed four-wheel drives. I also say that those who go recreational fishing cannot switch and change cars for the weekend. As a result, they have a four-wheel drive as their car of convenience throughout the year. Of course, they use it for their recreational purposes as well.

We believe the concerns of Family First can be fully addressed through this amendment. Then we would not have the situation of Senator Fielding having to champion only primary producers. Whilst I am sure he did receive all those emails that he read from, I wonder what he would say to the local plumber, fencing contractor, Australia Post contractor or vet—and the list goes on—as to why he chose not to benefit them in the same way that he would benefit the tourism industry and the primary producers.

Having said all that, there is still one fundamental flaw throughout this legislation, and that is the point on which I began. Labor asserts this legislation is needed to fight inflation. The crossbenchers say they are duty-bound to keep the government honest, so I invite them to keep the government honest by voting this legislation down in the third reading, because in supporting this legislation you will in fact be supporting a measure which is inflationary. No ifs, no buts—it is inflationary. It will do the exact opposite of that which the Labor Party asserted in its introduction. I seek leave to move opposition requests for amendments (1), (2) and (3) on sheet 5590 together.

Leave granted.

I move:

That the House of Representatives be requested to make the following amendments:

(1)    Schedule 1, item 1, page 3 (lines 7 to 15), omit the formula, substitute:

        (a)    if the *luxury car tax value is less than or equal to the *upper LCT threshold:

        (b)    if the luxury car tax value is greater than the upper LCT threshold, the sum of:

and

(2)    Schedule 1, item 2, page 3 (line 18), omit the formula, substitute:

        (a)    if the *luxury car tax value is less than or equal to the *upper LCT threshold:

        (b)    if the luxury car tax value is greater than the upper LCT threshold, the sum of:

and

(3)    Schedule 1, item 3, page 3 (lines 19 to 27), to be opposed.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

I want to respond briefly to Senator Abetz’s point about inflation and his point that the government senators and I, the chair of the economics committee, admitted in the committee report that there would be an increase in inflation as a result of this measure. There was indeed a section of the report on these bills under the heading ‘The impact on the LCT rate increase on car prices and the CPI’. One of the relevant points was:

As the LCT only applies to the value in excess of the threshold, the price increases for cars affected by the LCT are much less than the 8 per cent increase in the tax rate.

Another point was:

A simple calculation suggests the overall impact on the consumer price index will be negligible. Motor vehicle purchase has a weight of around 5 per cent in the CPI, so if the price of 10 per cent of cars sold were to increase by around 2 per cent as a result of the LCT rate increase, the total CPI might have a one-off increase of 0.01 per cent.

This negligible increase of 0.01 percent is interpreted by Senator Abetz as an increase in the inflation rate. I must say that is fairly typical of the way that Senator Abetz will take a piece of information and twist it around and verbal the person responsible. That is why I point it out, and it was a habit of Senator Abetz with a number of the witnesses at our hearings as well. So it is hard to take Senator Abetz’s statements at face value, and I think that is very relevant to this debate. In fact, the conclusion to the report in chapter 3 says:

The currently high inflation rate is a reason for tighter fiscal policy. Given that high income earners have got significant income tax cuts, and are probably benefiting more from the resources boom than are low income earners, the committee regards it as reasonable for them to bear the burden of higher prices for luxury imported goods, whose prices have in many cases fallen due to the stronger Australian dollar.

The committee findings were indeed that there would be a negligible effect on inflation and that these luxury car tax measures are well in line with government policy. I would urge the crossbench senators to take the rest of Senator Abetz’s commentary on this legislation in the same way as his commentary on its inflationary effect.

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

I stand in support of what Senator Abetz has said and also in support of amendments (1) to (3) on sheet 5590, which are the amendments moved by my colleague Senator Williams and Senator Abetz. It is quite obvious that those of us in everyday Australia do not want to have to walk into our local hotel, into our local club at night, line everybody up and say, ‘Are you a primary producer or are you not?’ So on one side of the room we will have all the shearers, the fencers, the contract harvesters, the tractor drivers—all those people who work on rural land, who own a Toyota or a HSV or a vehicle that gives them some sense of comfort in their life—and we will say to them, ‘By reason of an amendment that has come out of the Senate we deem you people to be not worthy of being exempted from this increase in the luxury car tax. We believe that you deserve an eight per cent penalty because you dare to be a shearer, because you dare to be a fencer, because you dare to be a contract tractor driver, because you dare to be a harvester. But you, on the other side, because you own some rural land, do not.’ I admit I am one, so I thank you very much for this amendment tonight, because it is an amendment for me. I am one. I would get the benefit from the amendment, but the people who work at my place would not. How bizarre is that? Where did that fount of wisdom come from? This is the sort of ridiculous concept we have.

We have road-tested this issue. It is quite simple. You say to people, ‘What do you want?’ They say, ‘I want my diesel LandCruiser that I use to drive my kids around—with the bull bar and the airbags and which deals with wildlife impacts. Sometimes I run into stock and I want to be able to get home safely, even if it’s wrecked. I want to get come alive.’ I say, ‘How much is that going to cost?’ They say, ‘Oh well, the 70 or 80 grand mark.’ I then say, ‘So if we made everything under that exempt would you be happy?’ They say, ‘Yeah. We think the whole thing is ridiculous, we think the whole thing is anathema, but if you are going to push me out of a plane at least push me out with that parachute.’ It is something that is so simple that we can sell.

But we have copped this peculiar thing where now we are going to have to sit back and say, ‘Sorry, I don’t think within the amendment you are defined as a tourist operator, and I will quote to you what a tourist operator is. Please sit down and grab yourself a cup of coffee because this will take half an hour.’ Or we will have to say, ‘I don’t know whether you really are a primary producer. You might be a primary producer, you may not, but if you are a primary producer you are going to have to claim a rebate.’ This is the sort of Kafkaesque type of approach to policy which is ridiculous in its obscurum per obscurius approach.

What is more, we can go down to the people of South Australia and Victoria and say, ‘Congratulations. Today your government put a reason to put you out of business. Today your government decided that they don’t want Caprices, they don’t want HSVs, they don’t want Statesmans. Those jobs can move overseas. This is the government of the day helping you out! They are putting you are out of work.’ This is definitely an impetus to buy another vehicle from another country. This is how it will be seen: as an attack on working family jobs and something that divides communities down the middle in a way that I thought we had left behind. People in regional areas have to go through the same afflictions, whether or not they happen to be lucky enough and blessed enough to own a piece of land. They still drive on the same roads, so help me. It is not that you are elevated into the heavens to be transported across the land by the conviction of gods because you happen to be a shearer. You have to drive on the roads like everybody else. You have to actually drive on the roads like everybody else if you happen to be a fencing contractor. You have to drive on the roads like everybody else if you happen to be the windmill mechanic, if you are putting new pots in windmills. You have to drive on the roads like everybody else if you are a contract muleser. But under this law you are not entitled to the exemption. Why? Because the powers that be have decided that one group in society is entitled to a certain deduction pertaining to a vital part of everybody’s life—that is, their right to transport—and that another group in society is not. This is partisan. No, this is parochialism to drive a wedge into a community.

I am happy to take people on a Friday night of their choosing to the pub of their choosing in a regional town and see how they go explaining it. It would be interesting to watch how they would define the worth of one person over the worth of another. It would be interesting to note that Barnaby Joyce would get an exemption but—I am thinking of the guys back home—Mr Kennedy would not. Why? Because as a mechanic he would not be entitled to one. Only Barnaby Joyce would get one of those because he owns rural land and Mr Kennedy does not. That is a pretty incredible indictment on how we do business in this place. They both live in St George, but apparently that is irrelevant. We have to get to a point where we have something that people can understand.

I acknowledge that this whole idea of the concept of luxury is anathema. It is a peculiarity which has just started to grow. The people who agree to this and the people who vote for this are the harbingers of what happens next. They will lay down the doormat for the luxury tax on fridges and for the luxury tax on TVs for those people who will be the arbiter elegantiarum on all things in our life. They will deem: ‘That is the right shirt to wear; that one should have a luxury tax. You are entitled to that piece of jewellery; you are not entitled to that piece. You are entitled to that fridge; you are not entitled to that one. You can have that stove, but not that one.’ Why? ‘Because we are jealous of you, basically, and we just want to divide you up and collect a bit of money on the way through as we start driving wedges into society.’

What is the purpose of doing that? Why would you do it? Where does all this go? What is the rationale to this: to turn up to the motor vehicle industry—and I thought that Senator Carr would understand this—and overnight say, ‘Wham bam, here it is, tax that’? Of course, they will make the logical decision and say, ‘Oh well, we will vote without feet. We will develop a plant in China. We will develop another plant in the United States. But we’re not going over there, because those people are half crazy. They have just developed a 33 per cent tax because we dare to think outside the box, because we dare to be a little bit different, because we dare to develop their car manufacturing industry in their country. We are going to move somewhere else.’

I mean, surely people can see where this will go next—read the tea leaves about where this issue will end up next. The working families in these car manufacturing plants will stand up and say, ‘We would have had a future. The company would have further developed our plant. We would have kept our jobs. But one of the straws that broke the camel’s back was your tax.’ Then they will have a reason to take that on board in discerning who they should vote for. It is as simple as that. There are ways around this. There are ideas on the table that would allow us to deal with this. There have been propositions made by many people who have said that there are ways we can mitigate the effects of this. I really do think they should be strongly considered.

There is still time in this debate to strongly consider the effects of what we have before us and to make those moves to say, ‘Let us start with the safety principle first. Let us start by erring on the side of safety, and if we think we have been a little bit too safe—even if you disagree with me—then let us wind it down a bit.’ The amendment before us has been ably put up by Senator Williams, my colleague from Inverell. Being from Inverell, I think he would have a rough idea what it is all about. Being a person who has actually run a business, a person who has actually been a shearer and a person who has actually worked with his hands, I do not know whether Senator Williams would actually get this exemption—because he is not fortunate enough to own a block of land; he is not endowed with quite enough. He will have to stand on the side of the hotel for those who do not get the deduction. Those people are not going to be endowed with this benefit from the government, but others will.

But there is still the capacity now in this chamber for people to think about this and to take on board this amendment put up by Senator Williams and Senator Abetz and to make sure that this amendment is passed. Even though the concept of a luxury car tax, I think, is absolutely ridiculous in the extreme, it is a case of if you are going to be pushed out of a plane then it is better to be pushed out of the plane with a parachute. If people do not do this, then we will get down to the peculiarities of other amendments which start dividing up whole communities.

I would really like to know, at a later stage, if this is rejected: what is the moral position that says a farmer who owns land is a better person than a person who works on a farm who does not own land? I want to know: what is the philosophy, the guiding principle, that says this person, who looks exactly like that person, is entitled to a deduction that that person is not? If you add up the hours of the day that these people—the shearers, the vets, the Australia Post workers, the contract mulesers, contract crutchers, contract markers, and contract musterers—are spending on the land then you will probably find that they are spending far more of their lives on the land than the person who owns the land. Yet one group gets the deduction and one group does not.

It is the obligation of those who propose amendments that suggest that one person is entitled to this amendment and one person is not, to clearly lay down the moral position as to why this is so—why it is that these two groups are different groups of people who need to be differentiated in the way this government approaches them. It is an anachronism that should end up in the Hansard so we can all take it home and explain it to our constituents. I will be honest with you: I will absolutely make hay while the sun shines on this one. I will take this to every corner of my state and hit it around for all it is worth. If there is one thing I have picked up it is that I know what people respond to. It is things like this; this is the sort of thing that results in calls, because it will just annoy the living daylights out of people. It annoys the living daylights out of people when they feel that the government for unnecessary reasons is reaching into their pockets.

Progress reported.