Nick Xenophon (SA, Independent) Share this | Hansard source

Senator Heffernan makes the point that a LandCruiser is not a Hummer. I was not suggesting in any way that the two should be compared. I am not suggesting that at all. I am talking about the gas-guzzling vehicles. I think the Hummer has fairly poor fuel economy for what it does and I believe that there ought to be some consideration given to the ultra fuel-efficient vehicles.

I can indicate that I will support the second reading stage of this bill, but I reserve my position with respect to the third reading. I look forward to hearing from the government as to the whole issue of indexation, which is a particular concern to me—as to what they say it will cost. In relation to that, could I just raise the whole issue of unintended consequences. I think that we should learn from the lessons. I think it was at the time of the Hawke government back in 1990, and the tax was introduced in the 1986 budget. It was increased, according to the dissenting report of the coalition, in May 1990, but by August 1990 the tax was dropped. My understanding is that it was dropped because there was an overall drop in revenue because sales of the vehicles that fitted into this category had plummeted. So I think it is important that, in the context of considering the consequences of this legislation, we bear that lesson in mind that occurred at the time of the Hawke government.

I can indicate that I did raise with the government—and I would be grateful if this could be placed on the record, in terms of the government’s response—the modelling that has been done in terms of the revenue forecasts for this luxury car tax, in terms of buyer behaviour, consumer behaviour. My understanding is—and the government can confirm this—that it has just been done on a pro rata basis. I guess that is one way of looking at it, but I think we need to learn from the lesson of 1990: if you push the rate up too high, you may have some unintended consequences. I am not suggesting that what is being proposed here is as high as the shock, if you like, of what occurred back in 1990, but it is a salutary lesson and that is why I am keen to hear from the government in relation to the whole issue of indexation. I look forward, should this bill pass the second reading stage, to the committee stage of this bill.