Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

In continuation of my remarks from the other day on the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related legislation, it is interesting to note that we used to have a senator here, who was well known to all of us and a hard player—a gentleman known by the name of George Campbell. He was one of the great protectors of the Australian manufacturing workers and the Australian manufacturing industry. He was a hard player and was well respected. He was also a very affable person and would come around and have a drink with you at night. But apparently he was not hard or tough enough around this show. He had to be replaced and the Labor Party replaced him with someone who said that he was really going to take a strong line on the protection of manufacturing workers’ jobs.

The person who took his position was, of course, Senator Doug Cameron, who is a lovely bloke. I remember the sort of curry the Labor Party used to give me on issues last year and how they would put the torch on me. One of the first things that Doug did when he arrived here was to roll over on a tax that is going to put manufacturing workers out of a job—the luxury car tax. It is a tax that is going to affect the car industry in South Australia and Victoria. I know that Senator Cameron is a decent bloke. I know he knows that this is going to affect his workers and his union. But he has rolled over for them. He has rolled over and has basically become a doormat. Once more the Labor Left has become a doormat to the Right. They have been walked all over, trodden on and kicked around the room because the Right run the show. And the Right do not care about manufacturing workers’ jobs and they are intent on putting a blowtorch to the Australian car industry. And the tax will cost Australian working families their jobs in the most direct form.

The Labor Party are trying to glam this over and cover this up by saying, ‘You are out there protecting people who drive Porsches, Maseratis, Jaguars and Ferraris.’ I was interested because I thought that I must be able to pick up one of these cars for $57,180. So I went shopping. I had a bit of a wander around to see if I could get myself a Porsche 911 for $57,180. You could have knocked me down with a feather. Do you know how much those things cost? They cost $425,000. I said to them, ‘Senator Cameron reckons I can get one of these for $57,180. He reckons there must be one out the back. Have you got a cheaper version of the Porsche 911?’ But I cannot find one. I thought: ‘Not a problem. I will try a Jaguar XK Coupe. I should be able to get hold of one of them because the Labor Party keep telling me that this is the tax that is protecting these cars.’ I said, ‘Have you got a Jaguar XK Coupe for $57,180?’ And they said, ‘Don’t be crazy. That car is a quarter of a million dollars.’ So I had a look at a Ferrari because we are protecting people who drive Ferraris. The Labor Party, including Senator Carr, put an inflection in their voices when they say, ‘You are protecting Ferrari drivers.’ You would be surprised to find out that the Ferrari 599 is $574,000. They had none for $57,180. I looked everywhere. I looked up and down the car lots saying that there must be one of these Ferraris around here for $57,180. Not a chance. They are $574,000. What is that? It is 574 gorillas. That is a big hit. You just do not seem to be able to get any BMWs under that price either. They are not around. A Maserati Quattroporte was $281,000. But apparently the Labor Party know where you can find them for $57,180.

As we have said before, if someone is down the pub trying to sell you a Ferrari 599 for $57,180, it is hot. It is red hot and dodgy. That is like this policy that the Labor Party has brought out: it is red hot and dodgy. Not only are they putting their own manufacturing workers union members out of a job and not only are they putting excessive pressure on the working families of Victoria and South Australia, but they are apparently in the business of finding dodgy cars. I walked around the lot and asked: ‘What cars can I get for $57,180? I want something that is comfortable.’ They said, ‘If you want to pay a little bit more money, we can get you a Ford.’ I asked: ‘Who makes them?’ And they said, ‘Australia.’ I asked: ‘What about Holdens?’ They said, ‘Yep, we can get you one of those.’ I asked: ‘Where are they made?’ They said, ‘Australia.’ I asked: ‘What about Toyota?’ They said, ‘Yep, Australia.’ In fact every car manufacturing plant in Australia produces numbers of cars that are in this group.

It stands to reason that if you send a price mechanism signal to the consumer not to buy the product, they will not buy an Australian product. What we are exporting—to my good colleagues on the other side—are Australian jobs. That is what we are exporting. We should be exporting cars but instead you are going to export the jobs—just like you will later on with the emissions trading scheme. I wonder how George Campbell is feeling today. I wonder how he is going, sitting back, thinking: ‘Gee, haven’t things changed. Haven’t things got tougher since I left. Haven’t they done a great job looking after the Australian workers since I left there.’ Since George Campbell has left here, we have had the Right of the Labor Party overtaking and walking all over the Left. The Left do not exist; they just turn up to make up the numbers. They do not even have the courage or conviction to clearly display in this chamber what they know and believe to be right. They are absolutely being walked over. That is a shame because, as they are being walked over and do not have the courage and conviction to stand up and go in to bat for their people, it is their people—the working families of both Victoria and South Australia who work in the manufacturing plants—whose jobs are definitely under threat by this.

A clear example of that is the stresses that are on the manufacturing industry at the moment. They are just holding on by their nails to keep this industry in Australia. And the government talk in pipe dreams of things that might happen in the future. They say, ‘We will produce a hybrid car and we will do this and we will do that and the world will be rosy.’ But, right now, they are putting this tax on them—right now! This is the peculiarity that we have.

In this policy, which now looks like a shambles, we in the National Party will be party to an amendment, even though we completely disagree with the whole concept. If the Labor Party has a policy to push you out of a completely reasonable plane, we will then have to move an amendment to wear a parachute. Moving an amendment to wear a parachute does not mean that we agree with the concept of going out of a perfectly decent plane. Our amendment will be nice and simple. All these other amendments are more complex than Kafka’s palace. They are incredible—something to behold. Our amendment will be moved by Senator Williams and Senator Abetz. It will basically say that if a car is $90,000 or less it is exempt from the increase in the tax.

It will mean something to the people who live in towns like Tamworth, Inverell and Roma—irregardless of whether or not they own rural land, irregardless of whether they are a contractor on a farm or the owner of a farm, irregardless of whether they are making the fences on the farm or they own the farm, irregardless of whether they are mustering cattle on the farm or whether they own the place—because we do not want to divide communities down the middle. We want to try to keep them together. (Time expired)

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

The debate on the Tax Laws Amendment (Luxury Car Tax) Bill 2008 and related bills reminds me just a little of the movie Groundhog Day. We did the same thing a couple of weeks ago and we are doing it all over again. It remains to be seen whether there will be a different result at the end of the day. But, I do respect the right of the opposition to speak to this in the second reading stage. I think it would have been fundamentally wrong for that not to occur, given that that was the wish of the opposition.

I want to make some brief remarks given the developments that have occurred since we last debated this. My position in the debate on the second reading is that I will support this bill and the related bills at the second reading stage, but I will reserve my position in respect of the third reading. As I noted the first time I spoke to this bill, the Australian automotive manufacturing industry is a major part of the national economy, with exports growing to just under $5 billion in 2007. As an independent senator for South Australia I am acutely aware of and proud of the significant contribution that the automotive manufacturing industry makes to South Australia’s economy. And, can I say, it was an occasion of great regret—not just for me but I think for every South Australian—when Mitsubishi closed down its operations not so long ago. They made a great car but unfortunately it was not selling. It was a great car made by a great workforce and I hope that all of those who were dislocated by that closure have found work, because they deserve to.

I will in a moment address the comments made by Senator Joyce about the importance of the manufacturing industry and its potential impact. But there are a number of other factors that are very significant to the viability of the Australian motor vehicle manufacturing industry. One of those is the whole issue of tariffs. I support the 10 per cent tariff. I do not support it being reduced to five per cent in 2010. I note the contents of the Bracks review. I think it is absolutely important—given the upheaval with Mitsubishi and the changes to the world car market relating to low-emission vehicles such as hybrid vehicles, which is an emerging and significant trend that I will refer to in the context of the amendments that the Greens have pushed for and that I have been highly supportive of—that we keep the 10 per cent tariff well beyond 2010. That is the key issue. If you are concerned about the motor vehicle manufacturing industry in this country, keep the 10 per cent tariff beyond 2010.

The intent of this bill has changed a little since its first introduction. Namely, it aims to raise the luxury car tax from 25 per cent to 33 per cent for vehicles over $57,180. These vehicles will be taxed for that portion of the cost that is above the threshold, with a projected increase in tax revenue of $555 million over the next four years. I note that in the budget forecasts there were, as I understand it, certain assumptions made with respect to the exchange rate. My question to the government is: to what extent will the movements in the exchange rate—the significant drop in the Australian dollar—impact on the projected tax take from these bills? I think it is important that we in the Senate know what that is because clearly it has changed one of the parameters.

But let us put this in context. This increase in the luxury car tax is part of the $6 billion of tax increases that are in dispute and that make up the projected $96 billion budget surplus. I am sympathetic to initiatives to support the local automotive industry. Keeping the tariffs at 10 per cent is a very significant bulwark, if you like, for the industry. I also support measures to encourage so-called green cars in terms of low-emission vehicles. But let us put this in perspective in terms of the concerns raised by Senator Joyce and others—and they are very legitimate concerns. Given that the vast majority of cars subject to this tax are in fact imported—close to 90 percent—I believe that this tax will not diminish the viability of the Australian automotive manufacturing industry. In fact, I think it will enhance it because this proposed tax overwhelmingly and disproportionately impacts on foreign cars.

I have concerns that this is a tax that in some respects is filling a hole to do with the government’s core promise to deliver tax cuts at the last election. There was a bidding war between the two major parties on tax cuts. Some would say it was a me-too tax cut announced by the then opposition to catch up with the then government’s proposed tax cuts. I would have thought a neater and more effective way of doing this, but it would breach a core promise of the Rudd government, would be to have a simple increase of about 0.4 per cent per annum on the top tax rate implemented earlier this year. There was a tax cut, but if there was a 0.4 per cent increase on the top marginal tax rate, the information I have is that that would raise about $510 million in revenue over the next four years. That would have been, I think, a more transparent and neater way of dealing with it. That would impact on approximately 200,000 Australians at that top rate and I believe it would be a more transparent way of taxing the better off, if that is what the government is really trying to do.

I had reservations about the bill in its original form but was prepared to support the second reading on the basis that there were going to be a number of amendments put to the chamber. I foreshadowed a number of areas which, if addressed, would have made it a fairer and more constructive bill. These areas centred on the 13 May cut-off date, the indexation of the threshold and the exemption of low-emission vehicles. As the bill was defeated at the second reading, and I respect that process, I was not able to have these discussions or to seek amendments. However, the reintroduction of the bill would seem to signal the government’s intention to respond to the concerns raised by me and other senators.

For my part, I have actively sought briefings from the Treasurer’s office and consulted the various interest groups in preparation for this bill’s reintroduction. I do not think anyone, except perhaps Treasurers and Treasury officials, likes increased taxes. However, the government must raise revenue to fund its priorities, and I do not wish to obstruct it unnecessarily in this aim. That said, I still have a number of concerns that I have raised with the Treasurer’s office. These concerns relate to: firstly, the indexation of the threshold now and into the future; secondly, exemptions for low-emission vehicles; thirdly, contracts for vehicles signed before 13 May but not delivered until after 1 July; and, fourthly, the impact of these changes on primary producers.

In relation to indexation I note that in 1986 around 4.5 per cent of vehicles were classified as luxury cars—there was a different tax rate, but it was effectively a luxury car tax—and in 2007 that figure had grown to 12 per cent. This gradual creep in the threshold is a matter of concern. It occurs because there is a distinction in the method of indexation: there is a CPIMV as distinct from the ordinary CPI cost of living increases. That is why the threshold has not increased to the same extent as actual cost of living increases. It is based on a formula that has been well described in the Economics Committee’s report in terms of a quality adjustment that is part of the CPIMV. I discussed this in the speech I made in the first second reading debate on this legislation, and the Economics Committee’s report gives a fairly good and robust explanation. I have concerns that, if indexing is not addressed, one day my $18,000 Toyota Yaris may well be deemed to be a luxury car. It may not be in the near future, but it may be eventually because, as you can see if you look at the graph and the material set out at page 7 of the committee’s report, the CPIMV is pretty flat or has actually declined for some years whereas the CPI is growing at a steady rate. That is something that needs to be addressed.

I put those concerns to the government. I did circulate an amendment based on CPI from day one of this proposed new tax or increase in tax. I am not persisting with that amendment. I have withdrawn it, if that is the proper terminology, on the basis of information I received from the Treasurer’s office—and it is a pity we cannot have a guessing game here now, asking honourable senators what they think that figure is. I asked the Treasurer’s office what the cost would be of indexing from 1 July this year. I imagined it would be $10 million to $20 million a year, based on the ordinary CPI. The information I received from the Treasurer’s office in an email is:

The revenue cost of indexing the LCT threshold to the CPI rather than CPIMV would be in excess of $400 million, assuming enacted from 2009-10 and costed out to 2012-13. This is a rough costing only but unsurprising given the measure’s broad impact.

I appreciate the Treasurer’s office did seek advice from Treasury and did their level best based on the limited time available, but that does seem to be an extraordinarily high figure.

Further information I have received from the Treasurer’s office indicates the basic methodology was that this model was indexed to the LCT threshold with the CPI, that it took into account the growth in car sales and that the assumptions were as follows: that the CPI was in keeping with the budget forecasts; that Treasury’s car sales growth rate is a weighted average because of the budget forecasts for vehicle sales growth and Treasury’s analysis of VFACTS—the car industry car sales growth data—to determine luxury car sales; that the car price reach model was averaged across the variants; and that the financial impact was determined by assessing the difference between the LCT revenue collections based on the current indexation treatment and the proposed treatment, keeping all else constant. It may be that other senators will have questions to ask about that. It seems to be an extraordinarily high figure, but I have accepted that figure in good faith on the basis of what I have received from Treasury. However, I do call on the government to provide specific details in the committee stage of the bill as to what percentage of vehicles will be classed as luxury cars and fall within the threshold in future years—perhaps in two, three, four, even 10 years time—if indexation is not applied. I think there ought to be some genuine attempt on the part of the government to advise us of that.

I note, however, that the government will be referring the issue of this tax to the Henry review of taxation. I would like clarification from the government as to whether this issue of indexation will be a specific issue that is referred to the Henry review by the Treasurer so that there is no ambiguity in relation to that. I appreciate the government’s undertaking that this and other issues relating to emissions will be going to the Henry review. I want to hear from the government in the committee stage as to how it calculated indexation. I believe that we deserve more details on that. I reserve my position on whether there ought to be an amendment to look at the whole issue of indexation from after this forward estimates period in four years time so that at least we can say there is a line in the sand. We would then examine whether we should still continue to use the CPIMV method of indexation or simply the CPI.

In relation to my concerns around greenhouse emissions, I note the work of the government and the Greens with this matter and foreshadow my support for these amendments, pending consideration of the technical aspects in the committee stage. I particularly welcome these amendments and congratulate Senator Milne for the work that she has done in relation to this. I believe that the future of the Australian car industry lies with green vehicles. That is the future. If we send a price signal now about exemptions for these green, low-emissions vehicles, that will send a very strong signal to our manufacturing industry here in Australia to plan for the future. We know what Toyota is doing with the hybrid Camry. That is a good step. But I believe that this would really kick-start sales and make a very significant difference by getting rid of that luxury car tax threshold on low-emissions vehicles with that ceiling of some $75,000. That is the way of the future for motor vehicle manufacturers in this country. That is the way that we can secure the future of this industry. That is why I believe that this approach of having those exemptions is the way to go. That is where our jobs will lie: in producing clean, green vehicles.

I also foreshadow that I will be introducing an amendment in the committee stage to address concerns about people who entered into a contract before the announcement of the changes in the luxury car tax but did not take delivery until after 1 July and hence were liable for the tax. For the benefit of senators, the initial amendment that I circulated had some issues with the wording, for which I am responsible. The wording is now clearer. That is something that I should have addressed earlier. But I think that the wording is now sufficiently clear to ensure that if a contract was entered into before 13 May and the budget announcement and delivery took a bit longer than expected then the tax should not apply. I see this as a matter of fairness to consumers. Those who entered into a contract in good faith should not be forced to pay a surprise tax because their vehicle was not delivered until after 1 July 2008.

I also note that my advice is that the amendments to be moved by Senator Fielding—and I know that they will be discussed in the committee stage—are amendments that I in principle support. They are to do with exemptions for primary producers and for tourist operators. I ask what the proposed cost of that will be. I commend Senator Fielding for his work in relation to that. It seems to me to be one way of making this bill fairer for those primary producers and tourism operators. I support this bill proceeding through the second reading stage, but reserve my position in respect to the third reading. From a personal point of view, I hope that this will not be like Groundhog Day and that we can deal with this bill effectively.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I would like have my input on the Tax Laws Amendment (Luxury Car Tax) Bill 2008. First of all, I oppose the tax totally. It is hurting the industry. I have a graph from representatives from the industry showing the effect on the motor vehicle industry since the introduction of this tax—a tax that is now being collected by retailers and held in trust. The demand for such vehicles has dropped down enormously.

Let us reflect back to the year of 1948. Sixty years ago from this year, the first Australian car, with all its glitter and the chrome on its bumper bar, was proudly pushed out onto the road, the 1948 Holden. What a proud moment that was for Australia. Now we have situation 60 years later in which the government of today is prepared to put a tax on this industry to, as I see it, help close it down.

We heard yesterday from my friend Senator Birmingham about the 4,500 Holden Statesmans built last year which will fall under the umbrella of this increase in tax. We have seen a huge drop-off in demand for these types of vehicles. That spells the loss of jobs in Australian industry. It will be interesting to hear what Senator Carr, as Minister for Innovation, Industry, Science and Research, has to say about this situation later on.

We heard time and again about working families as we ran into the federal election. It was like a scratched record; it was as though the Rudd campaign had taken a Working for the man 45 from Roy Orbison and scratched it or restamped it. It went on and on. Working families? What about the working families in our car industry; in Holden and Ford? Don’t they count? Are we going to tax them out of existence?

It is simple. In my time on the farm, we would often be around the sheep yards working in the sun—or hopefully sometimes in the rain—drenching sheep and I would often listen to John Laws, the man with the golden microphone. He had a lot to say, and I often agreed with him. One of his common statements was, ‘The more you tax something, the less you have of it’. It is as simple as that. This government is going to tax our car industry and push it to the wall. It was a tragic day when we saw Mitsubishi close down in Adelaide. I lived in South Australia and I remember when it was Chrysler and Valiants that were made there. My uncle worked there. They were vital jobs. But that has gone. What will be next? These industries are being put under threat by this government.

Tough times are ahead. I fear what is happening in the overseas financial markets; the troubles that we have seen in the United States and the flow-on around the world. We are coming into some very tough times. I hope that I am wrong. But there is clear evidence that things are becoming very scary and very dangerous around the world, and we need to have a government that is prepared to look at what they are actually doing in terms of protecting our jobs, our families and our industries.

Why do they want the extra money? They are fortunate to have been handed a budget well into surplus; they are fortunate to have taken over a government that is debt free—the $96 billion has been paid off. Now they want to grab some more. It is crazy because the economy is definitely slowing. It has certainly slowed in the regions I come from because we have had seven years of drought. There is no need to put the handbrake on them any more; they have had enough.

I simply say this: if the government are concerned about working families, do not assume that all who work in Ford and Holden are bachelors and spinsters and do not have families; in fact they are working families and they will be under threat. I think it is a disgraceful tax, and it is a tax that the government are using to try to show to the people that they are fiscal conservatives. We know it is not true. I live in New South Wales, and we have seen how the Labor Party manages money in New South Wales. We saw what their predecessors pre-1996 did when it came to managing money. They had no hope of managing money.

What about those who live and work in country areas? Take the vet. The vet might have a four-wheel drive wagon. If he is called out to the farm he goes out on the dirt track. The creeks might be running a bit, the road could be rough—bulldust, holes, corrugation; I am familiar with them all. I have travelled them for many years, I can tell you. That vet might have a four-wheel drive wagon that cost more than $57,180. It is essential to his or her job, to carry out their work, but the government views that as a luxury. What are they supposed to drive? Some little imported Hyundai Excel? The first time you drive across a grid you wipe the bottom of the car out. They need to drive in safety. They need to be able to carry out their operations in a safe way. We hear about OH&S—it is thumbed to us all the time in New South Wales by the government there with all the red tape and rot that they go on with. But here they are bringing in a tax that is going to encourage people not to travel in a safe vehicle on rough roads.

We move on to the contractors. As Senator Joyce said yesterday, the only tractor you should have on a farm these days is a contractor, and how right he is because of the cost of machinery. I refer to, say, the wheat harvest coming up. Thankfully this year we have had some rain in the last couple of weeks that saved the wheat crop. Look at the typical contractor. Say he and his wife have three or four headers. You need $400,000 or $500,000 today to buy a new header. The average farmer cannot outlay that sort of money unless they have a lot of acreage of wheat to harvest—some 5,000 to 10,000 acres or whatever. So the contractor comes around. He might have three headers and three header drivers, because they do not drive themselves. He might have a couple of trucks to cart the grain into the storage on farm or to the silo or whatever. What is he supposed to do? Drive a Toyota tray top, which is not exposed to this tax, and cart the workers in the back of the ute? No; what he has got to do is have a wagon to cart people around—a wagon with some weight, size and strength in it. That will certainly be above $57,000. The situation is this: he probably has a trailer behind it with the spare parts, the oil, the grease and everything that contractors take with them but he is going to be taxed. Under the amendments that are being proposed he will not be exempt from it. The amendments—I will get to them later on—are simply unfair and to me look like a dog’s breakfast. The vet and the contractor are some that will not be exempt from the tax.

Then there are those people who choose to live out of town. They might be schoolteachers, wives, kids. They just need a vehicle. They might have four children and therefore need a bigger vehicle—a Toyota Prado, say, that comes in at around $64,000. They might have a couple of hundred acres of land. It is their right to buy that and to live out of town. But if the majority of their income is not sourced through primary production, they are not exempt under any amendments that are going to come forward today. It is just a tax on those country people for having a vehicle for their safety and their security and to be able to get along the rough, wet or muddy roads perhaps even to get their children to a doctor or a hospital in the case of an emergency. But this government says, ‘We are going to tax them out of existence. They are irrelevant.’ It is disgraceful.

I thought that when I came down to this place the first thing I would see would be governments having some compassion. This tax shows no compassion to people, especially those in the rural and regional areas that I am here to proudly represent. So when these amendments come up there will certainly be some strong arguments against them.

The tax is a socialist tax. I will go back to what John Laws used to say before he retired, ‘You do not make the poor rich by making the rich poor.’ And that is what this is about. Someone gets out and works hard, becomes successful and then faces an extra tax because Treasurer Wayne Swan wants to grab the show and say: ‘I’m a great fiscal manager. Look, I have a $22 billion surplus.’ The only reason he has a surplus at all is because of the previous government and the way they managed the money—no other reason at all.

I will give you one example. A friend of mine rang me before I entered this parliament back in about June and he told me what was going on. This bloke comes from a little town called Bundarra, just south of Inverell. He is a shearer. I know those on the other side of the chamber are probably not familiar with shearers but in fact the shearers and the AWU actually started their party. That is how the Labor Party started. He is a shearer and a bulldozer operator and he worked hard and became a little bit successful. Isn’t that what life is about in this free enterprise world? Work hard, work smart and develop wealth? That is certainly the wish of most people I know. Now he faces a luxury tax because his 14-year-old Toyota LandCruiser has done about half a million kilometres and is now due for changeover. He is landed with the tax. So this is what this tax is about—penalise those who have a go. To me that is not the Australian way.

I want to refer to a couple of other issues. I have received some information from Andrew McKellar from the Federal Chamber of Automotive Industries. I have graphs, which I will not present to you, but you can believe me that he has forwarded them to me. They show the way the industry has lost demand since the introduction of this tax. I have been in business for many years. In the last nine years I started my own business from scratch. It is a pretty hard game when you get out into small business and you start from scratch. The first thing you need is a market. No matter what you have got, whether it be goods or services, you need to be able to sell what you are selling. And here is a drop-off in demand in the industry to such an extent that I really fear how these people are going to maintain their jobs and what is going to happen, especially in our domestic motor vehicle industry.

What is one of the worst things you can have happen to a family? One of the worst things is mum or dad comes home Friday night and says, ‘Here’s the good news!’—being a touch sarcastic—‘I finish up in two weeks time.’ The first thing the family thinks is: ‘How do we pay our mortgage, how do we make our payments on our home, what happens to the car’—they might not have paid for it—‘is it going to be repossessed?’ What sort of stress does that put on families? It puts a huge amount of stress on families. I have been through it myself and it is not a lot of fun, as I said in my maiden speech on Monday. But this government says, ‘That doesn’t matter. We’ve got $20 billion in the bank and we want to make it a bit more, so we’re going to tax these people.’ These are the battlers of our nation that are prepared to have a go. ‘That is what we’re going to do and we think it’s good fiscal policy.’ I say it is crazy policy.

I want to refer to those people living out of towns who look at four-wheel drives. My main concern about this tax is for the people who need a four-wheel drive for safety reasons. I have driven about three million kilometres since I left school: a million in semitrailers and about two million in all sorts of other vehicles. One thing that I learnt long ago is that, in Australia, when you are out in the bush, wherever there are trees there are roos. It is as simple as that: if there are trees there, there are roos there. I have yet to go through any timbered area in this nation and there not be kangaroos there. And thanks to the development over 100 years of better water supplies, bores and pumps and everything else, the roo population is extremely high. In the old days they died in the drought—there was no water. That is not the situation today.

If you are travelling at night, mum and dad are bringing the kids home from a school eisteddfod or whatever, the first thing you need is a strong vehicle that can support a strong roo bar. If not, you can imagine, where I live—minus three degrees, 11 o’clock at night and you put the fan through the radiator and you are on Shanks’s pony—it is not a very safe place to be. That is why people, not only the farmers—and Senator Fielding has got some exemptions, I believe, in his amendments for them—but the people who work on these farms and choose to live out in these areas, should not be taxed for being safe, for protecting their wife and children to be able to get home at night without walking along. These are the issues that the government should consider before they push through this tax grab.

Senator Xenophon and Senator Fielding, coming from South Australia and Victoria, should realise that they have industries in their states that are vital for jobs. It is vital that those industries stay alive in this tough, competitive world where we see imports of vehicles from countries where you are lucky if you are paid $5 a day. I have been through the factories in Thailand over many years and seen the conditions that people work in. I certainly hope they improve in time, especially when it comes to some of the safety issues there. Senator Xenophon and Senator Fielding should realise that this is going to hurt their industries. But the blame will come back on the government. When the economy slows further, as no doubt it will with the traumas around the world, they are the ones who are going to have to answer. And do not think for a minute that everyone in South Australia, Victoria and the rest of Australia are suffering from amnesia, because they will remember it come election time. They will know who put the pressure on industry, who made it harder for the people out in the bush—the contractors and everyone else—and who is going to suffer the most.

As a proud National, I will be putting some amendments up. They are just simple amendments—not a dog’s breakfast, not complicated, not a situation where they will have paperwork to do and claim up to $3,000 back or whatever, but simply a two-tiered system. At $57,180 the status quo remains at 25 per cent luxury car tax. Then at $90,000 the second tier will cut in where the tax will go to 33 per cent. So the situation is this: the money grabbers on the other side, who want to tell the rest of Australia that they are fiscal conservatives—we have heard it all before—and really can manage money, can get the money out of their Maseratis and Ferraris and Porsches and all those things that the Treasurer is holding up after we rejected it last time. I have yet to see a Porsche in Inverell or any country town. Likewise, a Ferrari or these other names of cars I cannot even spell, because we have never seen them. We have hardly ever heard of them, let alone seen them and read the badge on them. They can get their 33 per cent. That doesn’t worry me at all, because they do not exist where people such as myself and Senator Nash have our offices—two of the lucky senators in New South Wales who have our offices not in the city but out in the country areas, because people live there and people need representation. I must thank Senator Faulkner, too, for allowing that to happen. I am very pleased that Senator Faulkner did sign off to allow me to have my office in a country community. I do thank you very much for that.

Our amendment will be simple. There will be two tiers. The current system will remain at $57,180, which will not put more stress on our domestic industries, to keep them alive. Over $90,000 they can grab the tax, because the GXL Toyota LandCruiser 4.5 diesel is under that rate, and that is about the heaviest and strongest vehicle, along with some of the bigger Nissan Patrols, that are the common ones in country areas. If they want to go to a BMW four-wheel drive at $120,000, so be it; we don’t see many of them in the bush either. The amendments will be simple. We will propose to CPI those two levels so that a bit of fairness comes into the tax. That is where we stand on it, to protect the people.

Our first goal is to throw this tax out. It is not necessary, it is not needed. They do not have to crank hard on the fiscal policy of this nation, because the country is slowing. We have seen interest rates drop already. The pessimism is because the government has talked the economy down, they have put the bears into the sentiment. People are becoming negative. We see business and consumer confidence dropping to all-time lows because the government said they had inherited an economy that was so wrong. We will be putting these amendments up; we will be fighting for the people we represent. And I suggest that Senator Fielding and Senator Xenophon, who come from those states where these cars are manufactured, have a good look at our amendments, because they will be the ones answering to their states, and the people do not have amnesia, as I said before. I urge people to have a good, close look at the Nationals amendments—they will be supported by the Liberals and our friends over there—so some commonsense and fairness can get into this whole debate.

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

Labor almost always get it wrong on tax. Year after year, budget after budget Labor routinely voted against the personal income tax cuts, for instance, which we put forward in government. I say that Labor almost always get tax wrong because there was the odd exception, most notably our 2007 income tax policy, which Labor as we all know copied and have legislated. But now that we are out of government, Labor have got it wrong again. As we always said: without the coalition in government to copy, Labor would get policy wrong. They have, and this legislation is yet another example, so I rise to join with my coalition colleagues in opposing this old-style Labor tax grab. The coalition have opposed and will continue to oppose the government’s punitive increase in the so-called luxury car tax. We oppose it for a simple reason: it is bad policy. We also oppose it because it was not an election commitment. The government have no mandate for this. As an opposition and as a coalition, we oppose tax increases as a matter of principle. We are the two parties in this parliament of lower taxation.

What we are seeing here is Labor true to form. It is again the politics of envy and class warfare, the sort of politics that Labor senators opposite have practised all their political lives. We heard a great statement by Kevin Rudd before the election that he was not a socialist. He had put behind him the days of his Christian socialism. He might still doff the cap to Dietrich Bonhoeffer but he was not a socialist—that was all behind him. The politics of Lathamesque class envy were banished from the Labor Party. But we are seeing the resurrection of that sort of socialism here with this tax grab. We are seeing it also with Labor’s attack on private health insurance. We have seen it with their attacks on Catholic and independent school funding. Most recently we are seeing the politics of envy manifest itself in the very vicious and quite personal attacks on the member for Wentworth and Leader of the Opposition, Mr Turnbull.

Labor are resorting to what they know best: the politics of envy. They are using it on this occasion to justify this tax slug. Labor’s claim that the coalition is protecting the Rolls-Royce, Porsche and Ferrari drivers from a tax increase is false, as Senator Williams said. The coalition is acting to protect families, those in rural areas, the tourism industry, those in the Australian car-manufacturing industry and also those on the floors of car dealerships—those who actually sell these cars. Labor’s decision to reintroduce the tax after it was defeated is playing politics with the Australian automotive industry, which is now faced with continued uncertainty and reduced sales at a time that it can least afford it.

The facts are pretty straightforward. Almost 70 per cent of cars subjected to the luxury car tax are below $75,000—cars such as Toyota LandCruisers, Holden Commodores, Toyota Taragos, Mitsubishi Pajeros and Ford Falcons. Only 17 Rolls-Royces were sold in Australia last year and only 522 Porsche 911s were sold, yet over 6,000 LandCruisers were sold. In fact, the LandCruiser is the top-selling so-called luxury car, averaging around $74,000 each. The Toyota LandCruiser is not a luxury car. It is a rural workhorse and it comes standard without carpet. We have to face it: who on earth buys a LandCruiser as a status symbol? Labor is slugging Australian LandCruiser drivers $6 million extra per year, but Rolls-Royce drivers will only be slugged $1 million per year. Worse, under Labor’s deal with the Greens, for example, an imported BMW 3-series diesel would be exempt from a roughly $900 tax increase, but a roughly equivalent optioned-up Australian made Holden Commodore would not. That is bizarre—and Labor pretends to support the Australian automotive industry.

On top of all this, even Labor senators in their majority report after the Senate inquiry into this tax grab concluded that the tax would be inflationary. Labor’s only rationale for this tax is to increase revenue to boost the surplus and supposedly fight inflation. Yet even Labor senators concede in their own majority report that the impact of this tax would be inflationary. The whole argument for increasing this tax was as part of a so-called war on inflation. But I think we are seeing a new Labor doctrine here: fight inflation by increasing prices through higher taxes. I have to admit I have not heard of this particular inflation-fighting concept before, but Labor are always coming up with new economic ideas.

You do not want to take it from me that this tax increase will be inflationary; take it from the words of the Labor senators themselves. At paragraph 2.19 of their report they acknowledge that this measure will be inflationary. The inflationary impact will not be massive—I have to admit that. But I would have thought that, if your objective is to fight inflation and you say that there is an inflation crisis and that there are genies jumping out bottles all over the place, you would not actually do that by introducing a measure that your own senators acknowledge would be inflationary. I would expect that the measure be neutral at worst and anti-inflationary at best. But, no, that is not what we have here. Even Labor senators acknowledge that point—they put their names to that point in their majority report and they have signed off on it.

The Senate economics committee hearings into the proposed increase in the luxury car tax oddly wound up without taking evidence from someone who I think is a key witness—Mr Steve Bracks. Mr Bracks was of course appointed by Senator Carr to conduct a review of the Australian automotive industry. The government refused to release the Bracks review at that time, and its evidence, to the Senate inquiry even though it was sitting on Senator Carr’s desk at that time. Mr Bracks was specifically tasked, amongst other things, with examining the luxury car tax in his review, and indeed in his interim report flagged reducing the tax, not increasing it. Despite having the review, Senator Carr refused to release it.

Debate interrupted.