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Monday, 30 November 1998
Page: 904

Ms GAMBARO —My question is addressed to the Treasurer. Is the Treasurer aware of claims that the car industry will pass on lower price reductions than those estimated in the government's tax package? What is the Treasurer's response to such a claim?

Mr COSTELLO (Treasurer) —I thank the honourable member for Petrie for her question. I am aware of claims that the car industry will pass on lower price reductions than those estimated by the government in its tax package. Such claims were made by none other than the member for Hotham in this House on 12 November when he asked:

Is the Treasurer aware that the spokesman for the car industry Mr Peter Sturrock has said that the industry will pass on significantly less than that?

It takes a few days, but you can always run these falsehoods to ground. I have now had the opportunity to get hold of Mr Sturrock's speech. Mr Sturrock stated in his speech:

. . . the abolition of the wholesale sales tax and the implementation of a value added component will result in a saving to the consumer of around six per cent.

I think those on this side of the House would say, `Isn't that a good thing to be reducing prices by six per cent?'

Mr Crean —What about your figures?

Mr COSTELLO —The member for Hotham says, `Only six per cent, you are only reducing prices by six per cent,' as if this is some rather big point. The Labor Party is reducing prices on cars by how much? Zero per cent. The Labor Party wants to keep a wholesale sales tax.

Mr Crean —Mr Speaker, I raise a point of order that goes to relevance. Don't the government's own tax package figures show that the price fall in the car will be 8.3 per cent. Six per cent is significantly—

Mr SPEAKER —The member for Hotham will resume his seat. The Treasurer has the call. There is no point of order that bears any resemblance to relevance.

Mr COSTELLO —On this side of the House, we would say even a six per cent reduction in the cost of motor vehicles was something to be welcomed. We oppose Labor's proposal to keep the cost of cars high.

As Mr Sturrock makes entirely clear in his calculations, the six per cent saving is the difference between a wholesale sales tax and a value added tax. What Mr Sturrock does not do is he does not model into the price the abolition of other taxes that impact on motor car manufacturers—financial institutions duty abolished under the coalition, imposed by Labor; bank account debits taxes abolished under the coalition, imposed by Labor; stamp duties abolished under the coalition, imposed by Labor. It is entirely clear when you read his speech that he is talking about one change and one change only—wholesale sales tax and value added tax. Mr Sturrock then went on to say this:

It is quite possible that the size of our market within five years will be between 850 and 950 thousand vehicles: quite enormous gains. No doubt the growth will be at least in part due to tax reforms now to be implemented by your Federal Government.

So not only does it reduce the price but it is going to boost the volume and boost motor car manufacturing. We had jobs for Australians. How can you get nought out of three? The member for Hotham then gets up and asks about exports. Let me read to you what Mr Sturrock, the man he was misrepresenting in this place on 12 November, said:

The impact of tax reform on international growth will be positive. According to government figures, cost reductions in the order of 3.9 per cent will be possible on goods which this industry sells offshore.

Listen to this:

For our burgeoning export industry now in its tenth successive growth year this is very good news. Industry exports in 1997 reached a record . . . Over the 10 years exports have grown . . . Annual automotive exports of vehicles, engines and components will reach six billion by the year 2005. This will mean at least 100,000 Australian made vehicles will be exported annually, of great assistance to the nation's balance of payments.

Precisely the point that the Prime Minister was making. Anybody who is interested in the balance of payments in this country will be supporting taking taxes off exports under the government's tax plan—$4.5 billion of taxes off exports—boosting Australian exports, dealing with the balance of payments, increasing jobs and getting those industries going. That is why this side of the House stands for tax reform. The no policy, policy free zone Australian Labor Party stands for higher export costs, fewer jobs and a worse balance of payments.