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

The fact that we are back in here this evening to debate the Tax Laws Amendment (Luxury Car Tax—Minor Amendments) Bill 2008 is indicative of the fact that the Labor government got it badly wrong in relation to the luxury car tax surcharge legislation, which was part of its ill-considered budget measures in May of this year. Honourable senators may well recall the defeat of the luxury car tax legislation first up and then the government cobbling together a deal with the minor parties to ensure that it was passed. It was that cobbling together of a deal that has now caused them further problems which have required them to come back with amending legislation.

The luxury car tax surcharge legislation was in fact one of the first bits of legislation that was all Labor’s own work. As with everything that is all Labor’s own work, they could not get it right. Why did they not get it right? Firstly, they were more concerned about doing a deal than getting it right. Secondly, they thought they knew it all and that they did not have to consult with industry or departmental officials. That became blatantly obvious as a result of questions asked at Senate estimates as to consultations with the various departments. Indeed, during the committee stage of the legislation, I asked a number of questions as to with whom the government had consulted. When I asked whether such and such had been consulted, be it the union, the manufacturers, the tourism sector, Treasury or Tax, the answer was, ‘No, no, no.’ There was never any consultation.

The government supported those amendments, the majority of which we opposed. In their second reading speech, the government told us that the changes were needed as a result of a number of amendments from non-government senators. Talk about passing the buck! If Labor had not voted for those amendments, we would not be in the position tonight of having to re-amend the legislation. Of course, when we went through the committee stages discussing the technical details—and I wanted answers but the Senate was treated with a great degree of contempt and no answers were provided—we got this final smart alec comment from the minister sitting opposite, Senator Conroy.

Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary for Disabilities, Carers and the Voluntary Sector) Share this | Link to this | Hansard source

That’s a surprise!

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

It is a surprise, isn’t it, Senator Bernardi. When I was asking questions, Senator Conroy interjected in the most sarcastic manner possible: ‘Could we put you on the High Court?’ The simple fact is that we are back in here tonight because Senator Conroy could not deal with the technical issues. So, when technical and detailed questions are asked in the future, do not worry about the smart alec responses to try to sidestep the need to answer the details; just answer the detail, drill into the detail, consider the detail and give us answers on the detail—and then you might not have the humiliation and the humble pie that you will be eating for supper this evening.

Another aspect of this luxury car tax was our prediction that sales would plummet and that this would have a very real impact on the motor vehicle sector. Senator Carr—funny that I should mention his name by accident. You see, the opposition are treating this as an industry bill but Labor see it as a money-raising bill. That is why they have Treasury represented here, rather than industry, and Senator Carr has been missing in action. I made the prediction that this tax would see a huge reduction in the sale of motor vehicles, and of course I was ridiculed. Indeed, Treasury were willing to tell us that they were of the view that the tax increase would not change consumer behaviour. This is the same Treasury that have modelled the emissions trading scheme and are telling us to believe them in relation to everything. But we now have the graphs in relation to the luxury car tax. I have a graph in front of me that shows that, as of May-June this year, the sale of these vehicles has absolutely plummeted—it has literally been in freefall. In very rough terms, we have seen a 30-plus per cent reduction in sales. We can completely throw out the budget predictions that were around in May and also the MYEFO predictions that we got just last month. When we asked about those predictions, the government said they were standing firm by their predictions.

I say this about the Labor government: they cannot even get their predictions right on a very small area of the economy—the luxury car tax on the motor vehicle industry—within six months of its introduction. Yet they say, ‘Believe us in relation to our modelling on the emissions trading scheme 50 years into the future’! I have got to say that the track record of Labor ain’t that flash that it would give me confidence that the modelling and predictions that they are putting to us are so robust as to warrant support and belief. We have a classic case here this evening with the luxury car tax.

If it is the Labor government’s view that a tax surcharge will not change consumer behaviour, why did they see it as necessary to reduce the taxation burden in relation to 25 imported models that directly compete with Australian-made cars? The government are saying that the tax increase will not change the number of car sales and it will not impact on the Australian car industry, yet they introduce a measure to reduce taxation to try to encourage so-called green cars. How does that work? It seems that only tax decreases seem to change consumer behaviour and tax increases do not!

This is the same government that gave us the mastery of the bank guarantee legislation, which is now causing problems right round the country. Not only have 250,000 people had their savings locked away courtesy of the ill-thought-out guarantee, but the state governments are now getting in on the act and complaining about this rushed and flawed legislation. This is now becoming a hallmark of this government. We saw it with the rushed bank guarantee legislation having problems. We then had Fuelwatch—a disaster. We had GROCERYchoice—a disaster. We had the luxury car tax—a disaster. The government are having to bring legislation back into the parliament to amend it. This is now becoming a hallmark of this government. All they are ever concerned about is the 24-hour news cycle. They are concerned about the spin, not the substance. It was a great victory for them to get the luxury car tax through, and they saw themselves as being very smart and clever. Well, here we are tonight finding out that they were not that smart and not that clever.

The fact that we are here tonight is indicative of the fact that being in government is clearly beyond those opposite. They are causing themselves and the economy all sorts of problems—in the macro area with the bank guarantee legislation and in the micro area with the luxury car tax. As they have made such a monumental muck-up of this legislation, we may well have been minded, but for the Christmas season, to cause them some more pain and anguish. But I think 10 minutes is sufficient time in which to put on record the opposition’s concern as to the government’s economic management capacities—or, should I say, incapacities—and, given that it is the season of goodwill, I can indicate that the opposition will be supporting this amendment bill.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

In September Family First successfully negotiated an exemption for farmers and tourism operators from the extra luxury car tax, which is worth $40 million over four years. But some weeks ago it was pointed out to me by the industry that a technical problem meant that farmers and tourism operators who leased a car would not get a refund of the extra tax. Family First immediately contacted the government to negotiate a way to fix the problem. The Tax Laws Amendment (Luxury Car Tax—Minor Amendments) Bill 2008 is the result of those negotiations.

The new laws will mean primary producers such as farmers and fishermen, as well as tourism operators, will be able to lease a car and still be refunded the extra car tax because their four-wheel drives are a tool of trade. Vehicles purchased by farmers and tourism operators are tools of trade. Other businesses get full exemptions for their vehicles from the car tax so farmers and tourism operators should not be slugged with that extra car tax. Farmers and tourism operators can only claim depreciation and GST input tax credits up to the $57,180 car tax threshold so these tax breaks do not cover the extra car tax.

The tourism industry is heavily dependent on the eight-seater diesel Toyota LandCruiser and similar vehicles. The extra car tax would have unfairly hit small tourism operators in regional Australia that need four-wheel drive vehicles. Farmers are also dependent on heavy duty four-wheel drive vehicles like the LandCruiser which offer reliability and safety in regional and remote areas, especially on poorly maintained roads. This bill will enable primary producers and tourism operators to claim back the extra eight per cent car tax from the Australian Taxation Office once they have purchased their four-wheel-drive vehicle.

These are people whose small businesses have already been hard hit by difficult economic times. They depend on their vehicles as a core element of their business. This tax would cripple many of them and it is unfair for them to be singled out when their vehicles are key tools of trade. The amendments Family First has achieved allow claims of up to $3,000 per year for primary producers and $3,000 per year for tourism operators. Family First supports this bill as a way of achieving the original intent of amendments passed by the Senate in September.

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

I thank all senators who have made a contribution to the debate on the Tax Laws Amendment (Luxury Car Tax—Minor Amendments) Bill 2008. The technical amendments debated in the Senate today ensure that the amendments to the luxury car tax moved by the non-government senators and passed by the Senate in September operate as intended. The technical issues addressed in this bill were not raised in that Senate debate. The debate raised a large number of issues but not those addressed in these amendments.

Subsequent to the passage through the Senate of the luxury car tax, the motor vehicle industry and the finance industry approached the government and raised some anomalies that existed due to the interaction of previous amendments with vehicle financing arrangements. The government has listened to those concerns and has acted quickly to clarify the operation of the law for car buyers, finance companies and dealers. These amendments make it clear that luxury car tax refunds are payable to eligible businesses regardless of the arrangement used to finance the vehicle. The amendments also ensure that vehicles contracted before budget night are not subject to the higher rate of luxury car tax regardless of how the purchase is financed.

In conclusion, I would like to respond to points that have been raised in the context of these amendments. The opposition referred to 60 per cent of luxury car buyers being affected by this amendment. I am advised that figure applies to all vehicles that are financed, not just those that are leased—that is, it includes vehicles purchased under an ordinary car loan which do not need to be covered by these amendments. Finally, I note that the opposition has recorded its support for the bill. I urge all senators to support the bill and I commend the bill to the Senate.

Question agreed to.

Bill read a second time.