Mark Bishop (WA, Australian Labor Party) Share this | Hansard source

I rise in support of the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and other associated bills. As we have all heard ad nauseam, the intent of these bills is to increase the luxury car tax from 25 per cent to 33 per cent, effective on and from 1 July this year. At the outset, we need to be mindful of the fact that there has been a luxury car tax in place in this country since at least 1979. It has been supported by every successive government since that time. It has been a fact of life, accepted across the political divide for very sound policy reasons. As we also know, the current act was introduced by the previous government. It was introduced some five or six years ago as part of the goods and services tax and it replaced the wholesale sales tax, which had previously applied to this market segment. Since 2000 the rate of tax has remained the same, although the threshold for the tax has increased.

This measure, it needs to be stated front and centre, will have somewhere between an absolutely limited and an absolutely minimal impact on Australia’s domestic car manufacturing industry. Australian made luxury cars represent less than one per cent of all new car sales in this country. It will in fact have a limited impact, a minimal impact, on Australian families purchasing a new car. The luxury car tax threshold currently stands at around $57,000. The previous government, in its wisdom, saw fit to index that threshold annually. That view, I note in passing, is very different from their view on the Medicare levy surcharge threshold, which they chose year in year out not to index. Apparently it was quite satisfactory to index and increase the luxury car tax threshold. It is clear that the luxury car tax did not affect the budgets of working families in the same way as the Medicare surcharge did, and therein lies the explanation as to why one was indexed and increased every year and one was ignored for many years.

As the Senate report indicates, over one million cars were sold in this country in the year just passed, 2007. I understand that that was an industry record and represented, in 2007, an increase in new car sales of nine per cent over the previous year. Only 10 per cent of those one million units sold—or 100,000 new cars purchased—incurred the impost of the luxury car tax. So it had minimal application. Despite recent comments by members opposite, these vehicles are predominantly if not universally by European car manufacturers and have highly recognisable, prestige brand names. But, of the top 20 selling cars in Australia, less than four per cent—I think about that—are subject to the luxury car tax. In 2007 the median price of a family car was approximately $34,000. That is almost $23,000 per unit less than the threshold where the luxury car tax kicks in.

As we all know, this government is greatly mindful of the pressure on the budgets of working families. Changes to the tax rate will not affect people with disabilities as existing exemptions will continue to apply. That includes the GST exemption on the purchase of a car by a disabled veteran or an individual up to the value of the luxury car tax threshold. Exemptions to the tax will continue to apply to emergency vehicles, motor homes and campervans. And the farming community and the rural community should be relatively unaffected by the luxury car tax as it does not apply to commercial vehicles.

However, the bills upfront will increase the cost of luxury imported cars. Isn’t that a terrible thing? If you want to purchase a vehicle such as an Audi Q7, a BMW X5, a Range Rover Sport or sedans such as BMW 3, 5 or 7 series or a Porsche 911, you will pay more. Isn’t that a terrible encumbrance? For cars from $57,000 up to $300,000 a luxury car tax will be imposed, and isn’t that a terrible, woeful situation? On the other hand most of the Toyota Tarago range, for example, is not subject to the luxury car tax, so working families again have been looked after and protected by this government.

I find it ironic that in the debate about the luxury car tax senators have been urged to increase thresholds so as not to capture vehicles not considered luxurious. The Motor Traders Association of New South Wales actually advocated that the threshold should be raised to $100,000. So not only do they not have a problem in principle with the luxury car tax but they seek that it be applied widely and be increased up to $100,000. By contrast, at a recent public hearing down in Melbourne, on hearing changes to the Medicare levy surcharge almost universally senators were urged not to increase thresholds to $100,000. This is despite the fact that an additional 30 per cent of Australians have now been captured by a measure originally intended to target high-income earners.

This measure is about one thing: it is about the budget bottom line. Treasury estimates it will provide an additional $555 million over the next four years. It is part of a package of measures which are designed to do what? They are designed to put the fairness back into our tax system. They are also part of the mix that underpins and provides support for a strong budget surplus that will put downward pressure on inflation and interest rates—and I will return to that shortly. That, if it should turn out to be economically successful, is a most worthwhile objective.

Having introduced the fact that this budget bill is part of a package of half a dozen bills and part of a set of bills that are designed to introduce something in the order of almost $6 billion in additional revenue, it is useful to consider why the government wants to do that, why this bill and these imposts are critical, why the Senate should in no way oppose them and why all parties should combine to give urgent and speedy passage to this entire set of bills that affect the budget bottom line. Let us talk about the government’s election mandate. Let us talk about the government’s budget. Let us talk about economic responsibility and let us then talk about the opposite of economic responsibility—that is, deliberate vandalism by the opposition.

As you well know, Madam Acting Deputy President, this government was elected to implement, principally through the budget process, the commitments that we went to the Australian people on all last year and particularly in the period August-September-October-November, as we released our policies, policies taken to the Australian people on tax, income support and childcare to help those under financial pressure—that is, working families with huge, ongoing expenses. Nothing was hidden. Nothing was covered up. The policies were put out repeatedly in August-September-October-November, and we received an overwhelming swing and an overwhelming mandate to bring these sorts of budget measures before the parliament and to have them passed as a matter of principle and as a matter of urgency.

As part of that package, we said to the Australian people: ‘We are going to be fiscal conservatives. We are going to manage the economy of this country responsibly and that is going to involve significant budget surpluses over time.’ What did we do in May of this year? The Treasurer brought down his first budget—the first of many, we hope. It had a strong surplus of some $22 billion. That figure was designed to put maximum downward pressure on inflation, because the government had inherited inflation at 16-year highs after 10 consecutive interest rate rises and the second-highest interest rates in the developed world. That budget surplus is about the future. It is about going forward. It is about protection for the Australian economy. It is about protection for working families in Australia. That surplus is a buffer against international turmoil that we see every day in the papers around Australia and it will fund investment into the future when the dark times come.

The opposition, in threatening to torpedo this set of luxury car tax bills and a range of other bills that go to other matters, is not only acting irresponsibly but also deliberately seeking to torpedo, to hurt, to harm, to wreck budget measures brought before the parliament in the interests of working families—to whom the Australian Labor Party put out its policies, which were overwhelmingly endorsed in late November of last year. In these difficult, changing and varying economic times, the worst thing that could occur is that the opposition might—for no reason apart from a little bit of topical gain—deliberately blow a hole in the government’s budget bottom line.

The government is committed to ensuring we have a strong fiscal buffer for the future. The government is laying the foundations of a program of responsible economic management in the face of increasing global economic uncertainty. With increasing global economic uncertainty, the worst thing you can do is to send a message of uncertainty, a message of irresponsibility, a message of change without reason, a message of vandalism without purpose, about whether or not the surplus is going to remain intact. Either you are economically responsible managers, having concern for the economic welfare of this country, or you are not.

The opposition, for reasons that it has not yet bothered to explain, for reasons that are unclear to any observer, simply seeks to make momentary political gain in an economically populist fashion that does not have any appeal to or any impact on working families or even those on middle incomes. At a threshold of $57,000, where the luxury car tax comes in, we know who the beneficiaries are, even though the opposition chooses to portray otherwise. The opposition, for reasons of its own irrelevance, is seeking to become centre stage, and its vehicle for driving itself onto centre stage is destroying the surplus that this government, through hard measures and hard decisions, through reductions in spending, has managed to create and that will go into investments into the future. Those in the opposition are political vandals and economic opportunists.

Let us talk about the government’s election mandate and the long term—how you build, how you maintain and how you create a strong economy, one that benefits working families. It relates not just to the immediate bill before the chair in terms of the luxury car tax but to the whole package of bills that the opposition has indicated it intends to wreck, vandalise and turn over, hence driving down the budget surplus from something in the order of $22 billion to something over $15 billion. A whole package of measures are going to be coming to this chamber in due course, measures that will affect the health of the Australian economy for the long term, that will benefit working families in this country and that will go not only to the matters in the bill that is before the chair but to matters of climate change, the education revolution and long-term returns on investment in hospitals and the health system.

It is clear to everyone who is listening to this debate that the Rudd Labor government is acting now for Australia’s long-term future. We are preparing Australia for a stronger future, a sounder future, where interest rates come down and stay down, where inflation comes down and stays down and where there are jobs on the east coast and the west coast and opportunity for all. The absolutely critical and pivotal part of being able to establish those sorts of strong economic trends now and into the future is the large budget surplus that this government took to the people last year and that was overwhelmingly endorsed by them.

The Australian people are not fools. They understand that a budget surplus has the effect of reducing pressure on interest rates and reducing the impact of inflation and bringing both down and keeping both down over time. It is a struggle worth fighting for. But what do we get from the opposition? We get a mob who are shallow and divided. They do not have any long-term plans. They do not have any long-term leadership. All they know is to come in here and say, ‘We oppose, we oppose, we oppose.’ That is not good enough.

The measures that are behind this bill will result in the economy emerging in strong shape from these tough international times so that we can provide jobs in this country for all those who want them—quality jobs on both the east coast and the west coast, well-paid jobs, well-rewarded jobs. But that can only occur if there is a sustained commitment by all parties in this place to responsible economic management—the same commitment that the Australian Labor Party gave repeatedly and continuously from 1996 to 2007. Responsible economic management was always a hallmark of our time in opposition. It did not change then and it will not change now.

Why are we saying that that is important? We are saying that is important in providing for working families, making sure our economy emerges in a strong shape from these difficult global economic times, providing, as I said, quality jobs and security for all those who seek those things in this life. It is about scrapping the Liberal’s unfair Work Choices laws which stripped away penalty rates and overtime and reduced the take-home pay for Australian working families. It is about making workplace laws fair and balanced through Fair Work Australia and preparing Australia’s workforce for the real changes that are going to occur and for the real challenges that are emerging in our economy that will provide worthwhile, well-paid, high-reward jobs over the long term. In that context, the Australian people made it unequivocal what their decision was. They voted out Work Choices, and that is what the government will be doing in due course.

But, of course, the opposition have demonstrated in this debate and have foreshadowed in a range of other debates the position they will be taking on a range of budget measures the government is going to bring into this place in due course. The Liberal Party and the National Party still believe in Work Choices. They introduced Work Choices laws that stripped the take-home pay of Australian working families, and they would reintroduce them as quickly as they could if they had the opportunity. If the worst should happen and the government should fall tomorrow, you could bet that within a month we would have a revised package of Work Choices laws that in substance and in principle would be identical to those brought in by the former Howard government some two or three years ago.

What did that package of measures leave us with? It left us with 10 interest rate rises over the last three years and the highest inflation rate in 16 years. There is nothing more harmful to living standards, investments and returns than the insidious effect of inflation eating away at the value of wealth that people, firms and companies have accumulated over time. Again, we know that is on the agenda and coming to a chamber near you. In that context, do we get any sensible position from the opposition on climate change, on one of the most critical features pressing on this country, with its resource dependency and its energy intensive— (Time expired)