Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | Hansard source

I am very directly addressing the legislation and it is very clear that the Labor Party has no idea on tourism. Let me explain for the benefit of Labor members in the chamber or watching on TV the way in which the luxury car tax will impact very directly on tourism. The member for Denison should perhaps listen. He displays his ignorance by raising that point of order. Those operating in the tourism business rely on so-called luxury cars to run their businesses. Let me make it very clear. When tourists come to this country, for example to visit the Blue Mountains in New South Wales, they often like to take four-wheel drive tours of the national parks. They do those tours in four-wheel drives—four-wheel drives that are over the luxury car tax threshold. In no way is this on the margins of this bill. In no way is this not relevant to this bill. It really underscores how little the Labor Party understand tourism in this country that one of their own stands up and says: ‘What has luxury car tax got to do with tourism? We’re taking it a little bit far now, Mr Deputy Speaker.’ No, we are not taking it very far at all. This is front and centre of the debate, and the interjection by the Labor member at the table demonstrates that Labor simply do not understand the impact of their taxes. That is exactly why the opposition are taking this opportunity to put on record our concern over this whole process and that Labor do not even know the consequences of their actions. If that interjection illustrates one thing, it illustrates how important it is that the Labor government start to understand the consequences of their actions. That is the reason why we are going to refer this bill to a Senate committee.

It is very clear that Labor have no idea about the negative impacts of their policy changes. You can almost see them sitting around the table at ERC, saying: ‘We need to cut spending but we also need to raise taxes; what can we hit? I know: let’s package up the luxury car taxes in some way so that we can slug the rich’—the undeserving rich, as the Labor Party like to refer to them, not expecting or anticipating or, most importantly, understanding that, in making changes with the so-called luxury car tax, they have in fact had a negative impact on Australia’s tourism industry, which at the moment is facing some of the toughest conditions it has ever faced. With the Aussie dollar nearly at parity with the US dollar, with international destinations around the world competing more aggressively than ever, and with a budget that delivered a tax cut in real terms to our tourism marketing body, it is clear that Labor had no idea that increases in luxury car tax were also going to be a big negative on tourism exports. What Labor have done with this increase in luxury car tax is put a tax on exports. An increased tax on exports is the consequence of this policy decision.

I have been speaking to the peak tourism export body, the Australian Tourism Export Council, about their forecasts of the consequence of this increase in the luxury car tax. ATEC estimates that each year approximately 8,000 vehicles that operate directly in the tourism industry are going to be caught by this tax—vehicles such as those bought by car rental companies, hire car companies and tour operators that use vehicles that are captured by this increase to the luxury car tax. The vast bulk of these businesses are small to medium-sized Australian businesses. It is some of those 2.4 million small businesses, which employ 4.4 million people, that the Labor Party has now slugged with a new tax that is dressed up as a tax on the undeserving rich but that in reality is guaranteed to do one thing—and that is increase the amount of unemployment that Australia’s tourism export employers will have to deal with as a result of this higher tax increasing their costs.

Another thing that the Labor Party do not seem to understand is that, when they suddenly make a snap policy change—like this one with luxury car tax—without consulting industry, without giving any warning to industry and without taking into account the concerns of industry, there are other unintended consequences. Australia’s tourism operators put brochures out in the marketplace saying, ‘Come and take a tour with XYZ Tour Company; it will cost you $100 per person per day,’ based on the costs that they were then dealing with, the costs of their vehicle, their cost base and profit margins as they understood them to be. But, because the tricky Labor Party thought that they could just go about changing the luxury car tax threshold without any warning and without any consideration of consequences, these tour operators now have thousands of these brochures out there in the marketplace, with no ability to change their pricing structure, even though their cost base is being hiked up significantly thanks to this new Labor tax. That is the consequence now. So we have tour operators forced into a situation where they will simply not have the profit margin that they had, because they now have to cover this increase in their cost base.

Had the Labor government done the decent thing and perhaps taken the opportunity to consult with the industry and to consider the needs of industry, we would not be faced with this situation. It is very clear that Labor have no regard at all for those in Australia who are trying to export tourism and no regard at all for the fact that this is an approximately $22 billion industry and one of Australia’s key export industries. They are more than happy to whack a new tax—or an increased tax—on it as they have done with this luxury car tax. I find it particularly strange and particularly galling that they would go about hiking up this luxury car tax without any forewarning, when in fact their own ministers do not even support it. It was interesting when I reviewed the comments of the Minister for Small Business, Independent Contractors and the Service Economy, Dr Emerson. The federal member for Rankin is on the record with respect to luxury car tax. In this very chamber he spoke about the impact of GST and luxury car tax. He said:

… the luxury car tax will be charged on the GST—these results are untenable in the context of the Government’s stated goal of the tax reform process in general and the GST in particular.

The minister for small business held the view some time ago when the coalition was in government that the luxury car tax was untenable because it was levied on top of the GST.

It is clear that the small business minister, who I have no doubt raised these concerns within the ministry or cabinet, was steamrolled on this and was told, ‘Look, don’t worry about that; we will be able to package it as being an increased tax on the wealthy, on the undeserving rich.’ That would have been the line that he would have heard from the Labor Party. He would have been steamrolled on this, even though he knew, and was on the record as having said, that the luxury car tax is untenable.

So I urge the Rudd Labor government to please listen to what some of their ministers are saying, in the same way that the Rudd Labor government should listen to what the cabinet minister—the Minister for Resources and Energy and Minister for Tourism—said when he released a letter talking about Fuelwatch and its negative impact. Start listening to what the frontbench is saying, Prime Minister. For as long as this Labor Prime Minister refuses to listen to the feedback that he is getting from, for example, the minister for small business and from the Minister for Resources and Energy and Minister for Tourism then this government will forever lose its way on these kinds of policy issues.

We know that this new tax is going to raise $555 million over the forward estimates. It will raise $130 million additional revenue next year, $140 million in the year following and in the year after that and $145 million in the period after that. That is over half a billion dollars of new tax revenue as a result of these changes. There was no warning given to industry and no consideration or care given to the fact that it will have a significant detrimental impact on our key tourism exporters such as the tourism industry and no understanding of the consequences of this change, which is why these bills must go to a Senate committee.

Olivia Worth, General Manager, Public Affairs, with the Tourism and Transport Forum, TTF, another key tourism peak body, said that increased taxes were a concern. She said:

This is money that could be better spent by tourists on shops, restaurants and tourism attractions.

Australia is a long haul destination, and a relatively expensive place to visit—increased visa and travel charges add to the cost—

as, too, do increased hire car charges and tour operator charges.

Let me cite a very real life example of the kinds of companies that are now going to struggle thanks to this increase in luxury car tax. Australian Wild Escapes operate a fleet of 30 vehicles for luxury ecotours in the Blue Mountains region in New South Wales. They turn over, on average, four or five vehicles every year. It is going to cost them about an additional $30,000 or $40,000 as a result of these changes to the luxury car tax. Those that undertake these small tours go through parks like those in the Blue Mountains or places like the Daintree rainforest in Far North Queensland. I have no doubt the member for Denison would know that tour groups go through the majesty of Tasmania’s forests and gain an appreciation of how important it is to protect and preserve some of the old-growth forests. All of these tours are undertaken in high-quality vehicles, which are predominantly Toyota LandCruisers. To coin a phrase, these vehicles are the backbone for these tour operators. Now, because of this increased tax, we are going to see extra costs for Australian Wild Escapes, for example, of some $30,000 to $40,000 a year.

It is very clear that these bills need to be referred to a Senate committee. This matter needs to be comprehensively assessed. The impacts, both positive and negative—and I am being generous when I say positive—need to be assessed. The Labor Party needs to get its head around the fact that changing policy like this overnight without any consultation with industry has a very real and very negative impact. This Tarago tax, as those of us in the coalition refer to it because that is what it is, is not about luxury cars at all. It is about tour operators and it is about large families. More importantly, it is not about the vehicle that is being driven; it is about the process. It is about the fact that this Labor government is so caught up with spin and so caught up with how it presents itself that it will ram through policy decisions taken on the run, like this increase in the luxury car tax, without talking to industry, without considering the impact on those, for example, with a disabled child, without considering the impact on large families and without considering the impact on a very important part of Australia’s exports—that is, the tourism industry.

Can I say very directly to the Prime Minister but to all of the Labor frontbench: it is time you realised the consequences of your actions and it is time you stopped displaying your ignorance on matters relating to tourism. It is time that the Prime Minister started listening to his frontbench and understood that suddenly changing things overnight has very serious and dire consequences. In that respect, this government should embrace the coalition’s position and refer this matter to a committee. (Time expired)

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