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

I wish to support the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and associated bills. The government proposes in these bills to increase the luxury car tax from 25 per cent to 33 per cent. There will be no changes to the luxury car tax threshold, which is currently $57,180. There has been no change to the rate of the luxury car tax since it was introduced with the GST taxation system in 2000, and it is important in this debate to note that the tax is only paid on the cost that is in excess of $57,180. This is quite important, as quite a few of the vehicles that have been listed and spoken about in this debate are only marginally above that threshold amount and therefore the additional cost of the tax is fairly small. The opposition have in fact accused Labor of hurting large families and people with disabilities who require large people-movers to get around. That is not so. The debate seems to have shifted somewhat since then, but the opposition seem to have relied on misinformation and exaggeration to support their case. The proposed tax is on the price of cars before the retail price, so it does not include the GST and is not a straight tax on whatever is the listed retail price of the car. That also changes the debate that we have heard.

Senator Abetz asked: what is a luxury car? I think it is worth going into a bit of discussion on this because the opposition was initially calling this ‘the Tarago tax’ and claiming that it did affect people who had large families or who needed large cars. That is an example of how the opposition has misrepresented the facts. I have the range of prices for the Tarago range. There are five models of Tarago, starting at the four-cylinder GLi model from $50,000. There is the four-cylinder GLX model, which is $53,000—and that is the retail price. There is the Tarago V6 GLi, which is a 3.5-litre V6 six-speed auto, from $55,240. There is the VX GLX, which is described as having new levels of luxury. It is a 3.5-litre V6 six-speed auto from $56,990. Those four models are below the luxury car tax threshold. The only model of Tarago that is above the luxury car tax threshold is the V6 Ultima, which is $73,384. So it is perfectly possible to buy a Tarago under the luxury car tax threshold.

I do not particularly want to be an advertisement for Tarago, but I want to go a little into the V6 GLX, which is under the luxury car tax threshold. It has power steering, cruise control, power windows, all of the safety features: ABS, electronic brake force distribution, break assist, traction control, vehicle stability, vehicle swerve control, driver airbags, front passenger airbags, front seat side airbags, seat mounted front seat airbags, front seat side curtain airbags, rear second-row airbags and rear second-row seat side curtain airbags. It has a six-disc CD changer. There are other smaller, and all standard, features on the V6 GLX, which is under the luxury car tax threshold.

We have also heard how dreadful it was that people on farms would have their utes taxed if they managed to put a bull bar or other optional extras on. On the Holden website—and, since it is made in South Australia, I am much happier about publicising Holden—there is the SS Ute, which many would call a luxury ute. Even with every single one of the options selected, including satellite navigation, Bluetooth, reverse parking sensors, towing packages, headlamp protector, bonnet protector, floor mats and roo bar, the total price is $49,330. It is under the luxury car tax threshold.

We have heard also about how people in the country require 4WDs to get around. I have spent a reasonable amount of time in country and outback Australia, and I do not see many people driving around in 4WDs that are $60,000-plus. Indeed, in the Senate Standing Committee on Economics report into the bills, table 1.1 lists 4WDs that are under the luxury car tax threshold, the Ford Territory TS Wagon and the Subaru Forrester, and one that is above, the Nissan Patrol Wagon five-speed manual, which is $58,490. You would pay an increase under this proposed luxury car tax increase of $241 on that.

So there has been a great deal of exaggeration of the effects of this luxury car tax by the opposition. They have needed to gee up their case to complain about the luxury car tax because they are trying to portray it as a tax on—and I have even heard this word—battlers. That is, battlers who buy cars worth $60,000-plus. It is just absurd. Most people are struggling to buy a second-hand car for around $20,000. They could not aspire to buy a car of over $60,000. So we are not dealing with vehicles that battlers are buying, that people who are struggling are buying. We are increasing a tax that has not been increased since the year 2000. It is a tax that will affect people who can afford to pay a little extra. And the more expensive you go of course the higher the tax is and the wealthier is the person who is about to buy the car.

If the opposition oppose a tax on luxury cars, fair enough—argue that on ideological grounds—but do not distort the facts in order to bolster the argument. Another fact which has been very much distorted by Senator Abetz is the claim that Labor senators on the Standing Committee on Economics admitted that it would increase inflation. I will read out to the Senate the facts of this matter. The paragraph referred to, paragraph 2.19, says:

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.

I will just repeat that: ‘a one-off increase of 0.01 per cent’. That, according to Senator Abetz, is an admission by Labor senators that inflation is going to increase. This is the level the opposition has to descend to in order to justify their opposition to this tax. This is the sort of mangling of truth that is required in order to build up any kind of case against this luxury car tax—a luxury car tax that has been in place for the entire time that the former Howard government was in office and which they did nothing to redress. Yet somehow it has now become an outrage that needs to be fixed. We also need to fix the threshold at which it is set, again something that the Howard government did not do in the 11 years or so that it was in office. Suddenly it has become a matter that affects country people, tourism operators and buyers of large cars for their large families.

The opposition’s case rings extremely hollow. The economic grounds on which they argue are also extremely hollow. They are saying that the government cannot introduce a tax increase that has a one-off inflation factor of 0.01 per cent in order to increase the surplus. They say that they spent all their time in government paying off a debt from the former Labor government. We are going to spend all of our time in office making up for the deficiencies of the Howard government in the infrastructure that is now required in this country and in catching up on education and productivity. The opposition proposes to block the government measures which will allow this to happen. They say that the surplus should be returned to investors. I do not know whether they claim that that will not increase inflation but clearly it will, and we are battling to fight inflation in this current climate. We are battling inflation and interest rate increases and this opposition is playing sheer politics. In its voting record it is playing sheer politics in the way it frames its arguments and uses the facts. It is arguing on quite small grounds in order to justify its position.

No-one likes a tax increase, and certainly we on the Senate economics committee heard a lot of evidence from dealers in luxury cars and people associated with the motor industry saying that they did not like the tax increase and that they should have been consulted. The government’s view that it does not consult on budget measures is a very common one. I am not decrying the evidence of any of those dealers or motor associations. Clearly these are difficult times. The economy is slowing down and they will struggle to sell more expensive cars. So it is a problem for them and it is a difficulty. But the government did foreshadow that this would be a tough budget. Those luxury car dealers are no more than anyone else exempt from the fact that we all have to tighten up and make sure that we get this country and this economy through a very difficult global time.

Is the opposition not going to allow a duly elected government, a government which has only been elected a few months, to fight inflation and interest rate rises in its own way by putting a tax on luxury cars which is not going to affect the battlers and those working families that are struggling to pay childcare fees, mortgages and increased grocery prices? It is not going to affect those families; it is going to affect families that can afford to pay $60,000-plus for a new car. I would suggest that those people are in a better situation than battling middle-class working families to pay a little increased tax. If the opposition care to call that the politics of envy then that is the opposition’s point of view; it is certainly not the Labor Party’s point of view and not a view to which I would subscribe.

It is a matter of finding ways to rein in our economy, to rein in inflation and to reduce interest rates. Those macroeconomic goals will assist every one in the economy. Wild claims that it will affect the safety of vehicles—that Mercedes-Benz or Volvo or Audi or Lamborghini will stop putting safety features on their cars because Australia is putting in a luxury tax—really show the desperation of the opposition’s argument in this instance to justify a position where they are not allowing through measures in the budget that will allow this government to govern in an orderly, responsible and reasoned manner.

The opposition should go away and get positive policies for a way to run this country, not work away at a government budget that is reasonable, balanced and responsible. I have had no representations from the battlers in Elizabeth or anywhere else in Australia saying that they are going to struggle to pay the luxury car tax. The battlers in South Australia would not dream of paying anywhere near those prices for cars. I think this is a reasonable and responsible measure in a reasonable and responsible budget, and I urge members to read the report of the committee and to support this bill.